1. Management in Russia

2. 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

3. 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

4. What motivates Russian
workers?

5. 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

6. Four Common Organization Designs in
 Bureaucratic Organization
Russia
 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

7. 
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

8. 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

9. 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

10. 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 %)

11. 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

12. Marketing Strategy
 Desire to see a
 Russian perception of brands performance, something
 Local brand loyalty - intriguing, spirited
cheaper  Ideally featuring elements of
 Healthy and habitual acting while combining image and
 International brands - product qualities
higher quality and more  Real differences between neighboring
expensive regions in Russia may in fact be
 Rely on local suppliers greater than differences between
 who have well-developed neighboring European countries
service networks, available  Not just one nation-wide plan, but
spare parts, and shorter several business plans or a
delivery times multifaceted plan to reflect the
 Thus, they are able to unique aspects and demands of
secure lower prices different regions
 Best marketing strategies are those
that balance both media and trade
promotions tactics

14. 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

15. Marketing Strategy
Low-cost digital campaigns can impact
sales in a big way

16. 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

17. Tips for Doing Business
in Russia
Tip 1: Take time to build relationships
Tip 2: Contracts are only as valid as a combination
of your ability to enforce the law and the importance
placed upon the relationship
Tip 3: Middle managers cannot make decisions
Tip 4: Go straight to the top if possible
Tip 5: Managers manage- give precise and detailed
instructions

18. Continued…
Tip 6: Meetings disseminate information or give
direct instruction
Tip 7: Smaller, more informal meetings often occur
behind closed doors
Tip 8: Keep the team together if possible
Tip 9: Russians like to think in silence before
answering a question
Tip 10: Dress smartly and try to look important
Tip 11: Do not underestimate the importance of
entertaining
Tip for women: Women play little part in business at
the senior levels

19. References
 Goreskaya, N. (2009). Changes to russian
competition legislation. Baker &
McKenzie, Retrieved from
http://www.bakermckenzie.com/RROperatin
gRussianCompetitionLaw09/
 Broadman, H. (2001, June). Competition
and business entry in russia. Finance &
development, 38(2), Retrieved from
http://www.imf.org/external/pubs/ft/fandd/20
01/06/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/ne
ws_archive/news.htm?refid=Ref1439