Going global is a common practice in international business. It has proved to be beneficial for winning new markets and increasing revenues. However, expanding business requires a thorough investigation of the background in the host country and designing an accurate strategic plan including communicational barriers, leadership styles, and motivational systems, which would be effective and successful in the target environment. This paper will provide the proposals for developing a strategic plan for expanding business to Russia and potential problems, which might emerge in this process.
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Strategic planning implies designing a comprehensive strategy and a plan for allocating resources in order to reach the projected objectives (Ball, Geringer, Minor, & McNett, 2012). When a company decides to expand its business, first of all, it should investigate the business environment in a target country. When we speak about Russia, we should be aware of the fact that its business environment has undergone drastic changes.
In addition to the Western sanctions, geopolitical uncertainty, and weak national currency, Russian lawmakers recently amended corporate legislation regarding the field of interaction between companies and stakeholders. It makes the process of business expansion even more intricate because the most significant changes in legislation refer to leadership rules, shareholder management, and reclassification of legal entities (Batchilo, 2015). Similar changes might have a negative impact on the value of the company’s assets and operating profits (Ball et al., 2012).
Nevertheless, if the company still wants to expand its business activities to Russia, its strategic business plan should incorporate leadership and motivational systems, which would be the most efficient in Russian business environment. First of all, it is paramount to understand what type of leadership Russians require. Because of the existence of the set business ethics in the country and the overall habit to live under the strict hierarchy, people always want to see a strong leader, who can be trusted in guaranteeing the prosperity of the company.
In general, Russian people are used to working under strong hand and knowing that they have a boss, who can be both rigorous and take care of them (Belan, 2014). That said, it is impossible to determine single leadership style, which would be productive in the case of working in the Russian business environment. Instead, it should be a unique style incorporating the elements of transformational and transactional leadership manners.
It should be focused on the positive development of the employees’ values system in the future as in the case of transformational leadership. At the same time, winning followers is impossible without promising them the exchange between reaching the planned target and particular reward, which is the feature of transactional leadership style (Nanjundeswaraswamy & Swamy, 2014).
The same approach can be applied to choosing motivational system. In general, motivation implies waking up the desire to achieve particular strategic objectives such as improving organizational performance or increasing revenues (Ball et al., 2012). However, in the case of working with Russian people, this statement is not always applicable. Because they often put personal values higher than professional aspirations, this specific mindset should be taken into consideration (Belan, 2014).
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The best motivational system would be the combination of reward and punishment, i.e. positive and negative motivation. Because of the peculiar business ethos, Russians tend to work better when they know that they could be rewarded for their performance. The same is true about punishments. If Russians know that low levels of performance might lead to sanctions, they improve their productivity. Moreover, the stress should be made on group motivation because individualism is rarely seen as a positive phenomenon in the Russian business environment. Instead, it is believed to be suspicious (Ahlstrom & Bruton, 2010).
In addition to it, the sense of belonging to a team is seen as the guarantee of success and security, i.e. lower risk of failing to cope with the task if compared to individual work. That said, the primary focus should be made on motivating the increasing performance of group productivity.
Furthermore, the company should be aware of potential communication barriers, which might emerge when expanding business activities to Russia. In this case, we speak about cross-cultural communication, i.e. communication of people, who have diverse backgrounds (Ball et al., 2012). It might be worsened by the language barrier. Even though Russian companies are integrated into the global business environment, the language barrier is still a significant challenge (Belan, 2014).
To overcome these thresholds, managers might be interested in investigating the peculiarities of Russian culture including verbal and non-verbal communication methods, business ethos, and studying the language. One more efficient technique to cope with the task might be reading Russian newspapers and watching news in order to know the latest developments in the national economy and country as the whole. Being familiar with the latest news and culture might help overcome the communication barrier.
Another strategy to solve this problem might include introducing various educational programs aimed at increasing the level of English-speaking employees. However, the process of breaking down the barrier implies mutual actions of both sides.
Ahlstrom, D., & Bruton, G. D. (2010). International management: Strategy and culture in the emerging world. Mason, OH: Cengage.
Ball, D. A., Geringer, J. M., Minor, M. S., & McNett, J. M. (2012). International business: The challenge of global competition (13th ed.). New York, NY: McGraw-Hill Education.
Batchilo, A. (2015). The changes to Russia’s business environment that flew below the radar. Forbes. Web.
Belan, K. (2014). Top 6 facts you should know about Russian business environment (to dare to work there). Web.
King, A. (2007). Russia – culture smart! The essential guide to customs & culture. New York, NY: Kuperard.
Nanjundeswaraswamy, T. S., & Swamy, D. R. (2014). Leadership styles. Advances in Management, 7(2), 57-62.