[challenge:future] eu and russias opportunities (euro): the future of work
TRANSCRIPT
EU and Russia’s Opportunities (EURO)
Team name – EUROSelected EE country – Russia Name – Roman Frayman (individual work)Country – RussiaSchool – MSB University (Switzerland)Mentor – Prof. Y. de Grandbois
Main players in Russia According to RT (2013) the top Russian
companies are (the list of companies is not complete)
Gazprom (gas producer) Gazpromneft (energy producer) Rosneft (oil producer) TNK-BP (oil producer) Lukoil (energy producer) Novatek (gas producer) Surgutneftegas (oil producer) NLMK (steel producer) MMK (steel producer) Evraz (steel producer) Severstal (steel producer) Mechel (steel producer)
Other types of successful companies: Yandex (search engine) Mail.ru (diversified internet services
company) Utkonos (e-commerce company) AnywayAnyday (online airline tickets) Vkontakte (social network) RBK (online media group) In Touch Insurance (insurance company) Kaspersky Lab (IT security vendor) VTB24 (bank) Magnit (retail) X5 Retail Group (retail) Alfa Group Consortium (investment group) TKS (bank)(Starkell, N.,2013)
1%
75%
3% 8%
3% 10%
Russian exports to the EU, 2010
Machinery and transport equipment
Mineral fuels
Crude materials
Other manufac-tured goods
Chemicals
Other goods
Russia’s competitiveness Russia is improving its investment
climate “Russian government pursues a
policy aiming at the improvement of investment climate. In the recent Doing Business rating Russia grew by sixth positions and the goal is to be in the first twenty countries by 2018” Adomanis, M (2013).
There is a low level of competition in many areas, which is a fantastic opportunity for businesses
Strengths and weaknesses of doing business in Russia will be discussed in the next three slides
As it can be seen from the pie chart (Eurostat, 2011), the EU is interested in Russia as a mineral fuels supplier. However, it is believed that the situation will change in the next ten years
Interviews and discussions All information from the next slides summarize interviews and
discussions with citizens of Russia, Poland, Latvia, Lithuania, Estonia, Belarus, Moldova, Romania and Ukraine. Most of these people are entrepreneurs, students and people who work in well-known companies. Their ages are between 20-30 years old.
The focus industries of this presentation are in the area of logistics, agriculture and entrepreneurship (see next slides)
All companies related to the financial, IT, logistics, e-commerce, investment industries, etc. will emerge. The strong get stronger and the weak weaker. The majority of « strong » companies will emerge.
However, it is important for EE citizens to accept that it is difficult to compete with Asia, WE and USA in many industries
The most wanted profession in 2022 will be related to on-line businesses.
Results of interviews and discussions
EXTERNAL ENVIRONMENT Weaknesses:
Corruption Drugs Demographical issues
(immigration) Reputation Poor recycling Poor use of alternative enegry Culture (imitation of WE’s and
USA’s worst consequences of democracy and core values)
Not attractive to tourists (low level of infrastructure and services)
Weaknesses in legislation Climate
Opportunities will be discussed in slide 6
INDUSTRY ENVIRONMENT Opportunities:
Language (almost all students study one or two foreign languages in schools and universities)
Mentality (Russians are happy to cooperate with foreigners)
Demand and supply are not met Low level of competition in many
areas Many businesses are not customer
oriented Low salaries High motivation
Weaknesses: History of relations between EE and
Russia Low level of cooperation between EE
and Russia Some business areas are dependent
on government decisions Strong foreign competitors
Author’s vision for future industries
Importance of Russia for EE
WTO
BRICS
CIS and Customs Union of Belarus, Kazakhstan, and Russia
EU (close location, common borders)
Huge markets, low competition, low taxes
Natural Resources
Government support for import/export activities
Russia is interested in import of consumer goods
Cheap labor cost (e.g. $1000 is a good salary for “office jobs”)
Emerged markets
High education level of many individuals
3 main options for development: Russia can improve the
communication between Asia and Europe (logistics)
Since the population is rising in many countries, Russia can supply food to other countries (agriculture)
Since it is difficult to compete with USA, WE and Asian countries, entrepreneurs should be promoted. Young, ambitious and patriotic entrepreneurs will be able to improve the situation in EE (entrepreneurship)
Future companies will be much smaller than today. Possibly, in future small companies won’t have an office, due to advanced on-line technologies.
First option - Logistics Low level of logistics (there are huge
opportunities for developing the industry; logistics develop other businesses) Domestic and regional logistics
Companies like DHL, UPS, FEDex are not operating as efficiently as in WE
There are problems with payment (Russians prefer cash on delivery, therefore logistics are able to develop online payments, e.g. PayPal)
Online opportunities Undiscovered markets in many regions and
cities International logistics (between Russia and
other countries) Poor efficiency Rail (a new rail system will be built between
China and EE through Russia) Poor packaging and insurance services International trade is rising
Second option - Agriculture
There is a high level of importation e.g. Russian companies purchase
potatoes from Poland and fruit from Israel
Manure storage destroys agriculture In the majority of places not recycled Purchase of foreign fertilizer Polluted ground water, air and soil
Very poor domestic agricultural yields This is a huge opportunity to
implement best agricultural technologies and practices Russia could easily export food in
future
Third option - Entrepreneurship
Entrepreneurs It is assumed that the majority of EE citizens
have realized what happened with their countries. They understand that many businesses
are managed by multinational enterprises (MNE) with the country of origin far away from EE
Entrepreneurs think better/faster than MNE’s
Each MNE was a start up in the past
Entrepreneurs take loans, they are cost efficient, they would rather outsource activities than employ more personnel
Entrepreneurs are often self educated and dynamic people
Entrepreneurs in the future
The size of future companies will be much smaller than today, due to cost efficiency, technology and software, level of education, outsourcing, etc.
It is believed that a company with 30 employees will be considered a huge company.
Higher leverage factor: entrepreneurs in the future will issue more bonds, attract more investors and partners than they do today. Additionally, IPO will be considered as a normal business process.
All companies will use modern communications (Twitter, Facebook, LinkedIn, Skype, Viber, etc.) instead of private meetings
Conclusion References RT (2013). Top Russian companies.
Available: www.rt.com. Last accessed 13 Feb 2013.
Starkell, N. (2013). 30 top Russian Internet companies according to Forbes Russia. Available: http://goaleurope.com/2012/03/08/russia-internet-eastern-europe-30-top-russian-internet-companies-according-to-forbes-russia/. Last accessed 20 Feb 2013.
Adomanis, M. (2013). A Further Clarification on Russian Capital Flight from Alexander Ivlev, Managing Partner for Ernst and Young Russia. Available: http://www.forbes.com/sites/markadomanis/2013/01/03/a-further-clarification-on-russian-capital-flight-from-alexander-ivlev-managing-partner-for-ernst-and-young-russia/ . Last accessed 21 Feb 2013
Eurostat. (2011). Russia-EU - basic statistical indicators. Available: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Russia-EU_-_basic_statistical_indicators . Last accessed 22 Feb 2013.
Three ideas of improvement of the situation in all EE countries through cooperation with Russia have been considered. These three options – logistics, agriculture and entrepreneurship will develop all other industries and the society of each EE country.
The current situation in Russia was discussed. These ideas were based on primary research, statistics and other sources of secondary research.