Plekhanov Russian University of Economics

International Business School – IBS-Plekhanov

Doing Business in Russia

(Compulsory course for Foreign Exchange Students) The course of Doing Business in Russia provides an authoritative appraisal of the current economic, legal systems, cultural environment and investment climate, an update on market potential in key industry sectors, and unique best practice advice on all aspects of investing in and trading with Russia. With a population of nearly 150 million, Russia has a huge potential consumer market. With its improved economic and political performance, the pro-global economies of RF government and major Russian corporations, together with the country’s seemingly endless supplies of many of the world’s most vital resources, now is a particularly attractive time for embarking upon business co-operation with this vast country.

I. Topics covered include:

1. Cross-cultural communication opportunities and challenges2. Psychological aspects of effective business communication3. Russia in the world historical development4. Russia (Overview and Business Environment)5. Social structure of modern Russia 6. The Russian Court and Legal System, Employment7. Promoting foreign investment in the Russian Federation8. Business Risks Insurance9. Marketing in Russia10. Establishing a legal presence

II. Course requirements:

The course is compulsory for all international students.. Classes will be held on Mondays and Wednesdays, from 15.40 till 17.10 and from 17.20 till 18.50. The classes start on February, 17 and finish on April, 30. The exams will be on May, 12 and 14. Room numbers will be advised during the first week of February.The lectures are delivered by leading professors of the University as well as business people who work for international and Russian companies.

To enforce the theoretical aspects of the course, company visits to the leading foreign-based companies operating in Russia and as well as Russian companies will be organized.

At the end all the students are to submit the final project and make a team presentation which will be assessed by an Examination Board consisting of three Professors who deliver lectures within the course.

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The final mark for the course is made up by the following aspects:o 20% participation/ lecture attendance o 20% company visito 40% written report o 20% presentation

In case of breaking deadlines or late project submission the grade for the written report will not be regarded/calculated and will account for 0% and consequently the result for the course will be low.

Please read this information with attention (signing up for the course means accepting these terms):

"I am fully aware that the course “Doing Business in Russia” requires handing in (registered in IBS Dean’s office room 160 building 1) and e-mailing (dbrussia@mail.ru) the Final Report/Project Work a week prior the Examination, i.e. May, 5.

I recognize that failing to hand in the written as well as the e-mail versions of the Final Report/Project Work by the established deadline will result in 30% loss of the mark for the written part to the effect that the maximum mark in the event of an excellently prepared and delivered presentation cannot be higher than 70%.

I realize that no extension to the deadline is allowed and it is upon my responsibility to follow up and to ensure that the written report as well as the e-mailed version of this report has been received by the Members of Examination Board. (Confirmation receipt from the head of Doing Business in Russia Prof. Irina P. Shirochenskaya is required when e-mailing to DBR e-mail address.

Name ___________________ Signature ____________Date ____________________"

III. Project work - Developing an International Business Entry Strategy:

a) The Business Problem

You are in charge to make strategic decision on entering the Russian market. You have been asked by the chief executive officer (CEO) of a EU based manufacturer to identify opportunities for business development in a foreign country (Russian Federation). The CEO has stipulated that this country and market has very big potential, and could be attractive for your company to entry with your products/ services. The CEO wants you to produce a business entry strategy which takes into consideration the following points:1. Your organisation’s current corporate and business strategy.2. Comprehensive economic and cultural analyses of your target country, including the

implications for business development in that country (i.e. how to do business in (with) Russia).

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3. The presentation of a fully evaluated business entry strategy which is consistent with the situation you identify in steps (1) and (2).

4. Next steps and actions for implementation.

b) Allocated Time

The project will be completed in your own time. Lectures of the course “Doing Business in Russia” will be read to help you in order to understand the peculiarities of economic development, historical and cultural specification, investments climate, political, and legal regulations, taxation policy, marketing and sales peculiarities.

c) Format and Project teams

Project is to be completed as follows:

The project is to be completed by a team of 5-7 students. The students form the teams on their own initiative. Each student should take part in project completion. Each group meets to choose the target company. Company can be real or hypothetical, international or local, based on your own country/ies. The main interest is to describe market entry strategy for this company to penetrate to the Russian market.

d) Deadlines

Printed copies of project reports are to be submitted by the May, 5 to the International Department of IBS Dean’s office(room 160 b.1) during its working hours . Project report must also be e-mailed by this date to dbrussia@mail.ru :

e) Report.

The report should be typed in English (Times New Roman, 12 fonts). There is no limit to the maximum length of the report, but the minimum length should not be less than 15 pages and not more than 30 pages (excluding appendices). However, your aim should be to convey the essential information to a senior executive as concisely as possible, in order that s/he can make an informed strategic decision on your recommended business entry strategy. The report may include diagrams, charts, tables and graphs as appropriate. The report should take the following basic form:

Title pageContents list with page numbersExecutive summaryIntroduction and backgroundMain body of the report

The nature of the business opportunityStrategic AnalysisEconomic AnalysisCultural AnalysisFinancial Analysis: incl. Investments ClimateMarket entry strategy: investment and functional strategyMarketing mix program for chosen entry strategy

Conclusions and RecommendationsBibliography, references and Sources

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Appendices

f) If You Need Help!

If in doubt ask! Any problems or queries concerning the course are to be directed to dbrussia@mail.ru . and we will be happy to assist.

g) Establish the Corporate and Business Strategy

It is essential to know what the corporate and business strategy is for your company which is based in your home country. Without this, it is impossible to know if any business decision you make, or are proposing for entering the Russian market, fits the overall strategy of the corporation and the business. Details of corporate and business strategy analysis can be found in the course material and readings.

h) Economic Analysis

You will need to consider the economic situation of Russian market or its parts (regional markets). The analysis should include general country/market factors such as:

Surrogate indicators of market potential and growth, such as population, population density, GNP per capita, consumption of the product (or substitute product).

Indicators of risks of market entry, e.g. expropriation, restrictions in imports and exports, foreign exchange, inflation, currency devaluations etc.

Indicators relating to the marketing infrastructure, e-g- mass media, TV, radio and magazines, as well as indicators relating to the available channels of distribution.

The objective of this stage of the project is to demonstrate an understanding of this general economic material and highlight those points of particular significance to your team’s efforts and also comparative analysis of economic development of your own country and Russian market – not to collect all the information available on the various subjects indicated.

i) Cultural Analysis

The project requires that you and your team develop an in-depth understanding of the culture of the target country. This process of acculturation, understanding and adjusting to a specific culture other than one’s own is one of the key factors for success in international management.

You should develop a clear understanding of Russia through discussions with your team members concerning each of these variables. You may wish to go beyond the specific variables mentioned in order to gain a broader/deeper understanding.

The information in this analysis must be more than a collection of facts. You should attempt to interpret the meaning of the cultural information – that is, hoe does this information help in understanding consumer behaviour, purchasing habits, markets, and similar business characteristics. (Comparative analysis of cultural characteristics of your own country and Russia are welcome).

j) Evaluation of Your Business Entry Strategy

You are required to present a proposal for a business entry strategy which you believe will allow you to accomplish you company's goals and objectives. The proposal should be fully

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evaluated using a recognised financial method of project evaluation such as the return on investment (ROI), payback period, net present value (NPV), internal rate of return (IRR), etc.

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