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International Market Entry For The Mobile Telecommunications Market In The Russian Federation

4194 words - 17 pages

Grenoble Graduate School of Business: International Marketing MBA AssignmentInternational Market Entry for the Mobile TelecommunicationsMarket in the Russian FederationPatrick PetitProgram Lecturer: Paul Gaffney professor at Grenoble GraduateSchool of Business and Oxford Brooks Business SchoolAbstractThis paper presents and analyzes of the findings from a research diary (provided in an appendix),which aims is to explore the market entry and development strategies for the mobiletelecommunication market in the Russian Federation. The research diary uses references fromrelevant academic sources, trade journals and online publications that are available in theReferences Cited section. The diary ...view middle of the document...

In addition, Russia is a young and dynamic market(Smith, 2006) capable of rapid changes leading to risks as well as opportunities for new entrants.Other incentives for entering the Russian market include the country's large natural resources,potentially exploitable technologies and a well educated workforce. It is undeniable that dealingwith Russia's sometimes difficult to understand business environment has caused problems formany foreign companies. The difficulty to understand Russia's business environment can also be anadvantage as it serves as an entry barrier that assists those who do enter and learn how to operateeffectively to reap higher returns (Fallon and Jones, 2004; Fey and Shekshnia, 2008)The economic environment of the Russian FederationThe Russian Federation is the largest country in the world with a population of 142 million peoplescattered throughout eleven time zones. This country has large natural resources (gas and oil),whose industries account for nearly a quarter of the country's GDP and one-third in tax revenues ofthe state incomes. However, until 2000, doing business in Russia was hindered by poor03/28/08 1 © Petit P. 2008Grenoble Graduate School of Business: International Marketing MBA Assignmentmacroeconomic performance, its structural economic weakness, and the absence of political andinstitutional support for business (Fallon & Jones, 2004). Sustainable market growth has becomemore possible since the election of president Putin in early 2000. He introduced the new economicreform program by June 2000. The program, based on free market principals, called for anextension of fair business activities, guarantee property rights and the elimination of bureaucraticconstraints on businesses. Reform objectives included: taxation, budgetary measures, legal andcorporate governance, labor laws. It resulted in undeniable success, despite oligarchs' attempts toblock reforms, which helped create a market environment in which successful economic transitionand western businesses investments would become possible (Fallon & Jones, 2004).Business analysts have revised Russia's credit ratings upward, reflecting the growing confidence ofthe country's political stability, along with an increasing enthusiasm from western businesses andinvestors. Following Moody s and Fitch's upgrades in October 2003 and November 2004respectively. S&P s finally agreed that Russia warrants an investment grade rating BBB-, stableoutlook. (PCM, 2005)In effect, with one of the world's fastest GDP growth rates is estimated to 6.3% for 2008 (7.5%from 2001 to 2005), and a substantial average growth in purchasing power of more that 400 % from2001-2005, Russia has definitely become an attractive destination for foreign investments (Fey andShekshnia, 2008).This represents a dramatic investor confidence change from the mid-1990 when Russian marketwas perceived by analysts as a high risk market. However, challenges remain. Many analysts thinkthat the...

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