management russian presentation
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Management in Russia
Russian Proverbs about Work
“Work tastes bitter, but bread tastes sweet.”
“To the person who gets up early, God shall give everything.”
“To live without work means to blacken the sky with smoke.”
Meaning: an idle life is a life wasted
Motivation
Before: Companies not meeting payroll, lack of training, poor working conditions
In a research by Davidson and Linz found that:
Organizational Commitment stronger among managers than workers
Managers erroneously believe workers value their praises
Low expectations on receiving a reward they desire
Financial Compensation and Friendliness of Workers top ranked motivators by workers
Younger people placed more importance on opportunity to develop skills and abilities, getting a promotion, and accomplishing something worthwhile. They placed less importance on pay, security on the job, and respect from co-workers.
However, pay at the top for both
What motivates Russian workers?
Planning
Spontaneous and Intuitive approach: creative and rapid results
Plans are made but often times not followed
Planning done by the upper positions then vertically communicated downward
Entrepreneurs lack succession plans, not looking to expand their businesses discourages investors
Change aversion and view of the future as uncertain are obstacles for management planning
Four Common Organization Designs in Russia Bureaucratic Organization
Strict administrative hierarchy separating the identity and responsibilities of employees through where they sit in the hierarchy
Upward mobility is difficult
Information is not shared with employees
Power Organization Manager or owner is the undoubted leader with final say
Top managers are appointed to serve as link to employees
Employees can take part in decision making though
Person-oriented Organization Employees maintain high level of personal responsibility and
independence (flexible schedules and access to information)
Work is co-coordinated by supervisors (more egalitarian)
Because of its independent and egalitarian culture, employees must compromise
Problem-oriented Organization Employees are given specific task-oriented responsibilities and are
strictly controlled through reporting
Decisions are made collectively though, and information is shared
Controls During the Soviet Union, companies lacked transparency because of
double ethical standards, murky procedures, and unclear goals
Many companies still lack transparency because of a lack of information distribution between employees
Accounting practices can lead to transparency issues as well
Profit and loss accounts are not foreseen and are booked without details
There have been improvements to Russian Business controls though
Companies must file taxes every quarter, receive multiple signatures for documents, and careful accounting must be practiced because tax authorities are beginning to crackdown
Between 2001 and 2004, entry regulation (registration and licensing) and regulations with existing businesses (inspections) were simplified, which has encouraged businesses to be legally regulated
Businesses have began to implement the control method
They set specific company goals
They are more transparent
Their employees are empowered, and therefore, feel more obliged to conduct proper business methods
Quality Russian Companies have began to implement western quality
control methods such as TQM
TQM has been difficult to implement though
The concepts of customer focus, continuous improvement, process approach, quality management, employee involvement, and social responsibility are alien
Key issues that have to be addressed are a change in philosophy, a lack of knowledge, a resistance to change, and a lack of senior management support
Russian companies have also implemented BS EN ISO 9001:2000, benchmarking, and self-assessment strategies
1,710 Russian companies achieved BS EN ISO 9001:2000 certification
However, many did so for marketing purposes, not actual quality improvement purposes
Yet, the future does look promising, as a true quality philosophy is beginning to embed itself in Russian culture and is supported by the state
Competition Since the Soviet Union, many
reforms have been made to improve competition
Price Controls have been lifted on more than 90% of wholesale and retail goods
State-owned enterprises have been privatized leading to the GDP from the private sector increasing drastically
Legislation has been passed to improve competition
Innovative companies can receive funding from the government
However, due to the difficult transition that Russia has faced, competition is still greatly inhibited
Practices Inhibiting Competition according to the IMF:
Horizontal dominance in regional markets (high seller and buyer concentration)
Four-firm concentration is equal to the United States at 60 %, but the average market share for them is greater than 95%
Exclusive buyer-seller relationships
Contracts are difficult to enforce, so trust through continued service is necessary
Mergers and acquisitions occur not expansion of industry
Interregional barriers to trade and investment
Duties on the sale of alcohol, regional pricing differs, registration of workers from different oblasts is required, and taxes/credit preferences are given to local businesses
High barriers to entry
Lack of access to funding through long term, inexpensive loans
Difficulty obtaining real estate due to inability to privatize land and pre-existing monopolies on commercial real estate
Corrupt business licensing, registration, and inspections through overcharging
Organized crime must receive a cut of the profits (often around 5 %)
Negative Effects of Lack of Competition and How to Increase
It Negative Effects of Competition
Consumers face high prices, reduced output, diminished product and service quality
Diminished incentives for companies to incur transactions between regions
Decreases the amount of foreign investment
Lack of the great benefit of capitalism, which is innovation
Most importantly, small to mid-sized firms have a lot of difficulty entering and succeeding in industries
Unless competition improves, the desire to conduct business in Russia will remain minimal
On a positive note, Russia is transitioning and identifying the necessary systematic reforms is fairly simple
Marketing Strategy
Russian perception of brands Local brand loyalty -
cheaper Healthy and
habitual International brands -
higher quality and more expensive
Rely on local suppliers who have well-
developed service networks, available spare parts, and shorter delivery times
Thus, they are able to secure lower prices
Desire to see a performance, something intriguing, spirited Ideally featuring elements of
acting while combining image and product qualities
Real differences between neighboring regions in Russia may in fact be greater than differences between neighboring European countries Not just one nation-wide
plan, but several business plans or a multifaceted plan to reflect the unique aspects and demands of different regions
Best marketing strategies are those that balance both media and trade promotions tactics
Examples of Marketing
Marketing Russia is not a “country”; no unified marketing concept applies
ELEVEN TIME ZONES, dozens of nationalities/ethnicities and languages, a huge quilt of mores, religions, buying habits, per-capita incomes, distribution infrastructures
Marketing based in statistics and quantitative data Russian markets are so dynamic that selling points that work today
may become out of place tomorrow No reliable national statistics
Official data may be wildly inaccurate Draconian taxes and organized crime have led to
widespread under-reporting Usually a qualitative process based on experience and intuition
Marketing StrategyLow-cost digital campaigns can impact sales in a big way
Corporate Culture Dangerous to ever generalize about Russia Good quality relationships should not be underestimated
The state has always been seen as an organ of oppression and repression
Laws and statutes are therefore seen as the 'enemy'
The laws are being rewritten constantly –unenforceable
Most agreements have to be made on a trust basis
Networking and extended interpersonal allegiances are essential
One strong central figure -with little or no consultation with anyone
Too much consultation from a senior manager could be seen as a sign of weakness and a lack of decisiveness
Companies tend to have a short-term view of business activities
Open debate in meetings are not usual or welcome Russians tend to dress as well as their salaries will allow
Tips for Doing Business in Russia
Tip 1: Take time to build relationshipsTip 2: Contracts are only as valid as a combination of your ability to enforce the law and the importance placed upon the relationshipTip 3: Middle managers cannot make decisionsTip 4: Go straight to the top if possible Tip 5: Managers manage- give precise and detailed instructions
Continued…Tip 6: Meetings disseminate information or give direct instructionTip 7: Smaller, more informal meetings often occur behind closed doors Tip 8: Keep the team together if possibleTip 9: Russians like to think in silence before answering a questionTip 10: Dress smartly and try to look importantTip 11: Do not underestimate the importance of entertainingTip for women: Women play little part in business at the senior levels
References
Goreskaya, N. (2009). Changes to russian competition legislation. Baker & McKenzie, Retrieved from http://www.bakermckenzie.com/RROperatingRussianCompetitionLaw09/
Broadman, H. (2001, June). Competition and business entry in russia. Finance & development, 38(2), Retrieved from http://www.imf.org/external/pubs/ft/fandd/2001/06/broadman.htm
Frost, R. (2011). Russia's premier vladimir putin underlines importance of iso international standards. ISO, Retrieved from http://www.iso.org/iso/home/news_index/news_archive/news.htm?refid=Ref1439