Organisational Strategy

Organisational Strategy

Introduction

In this study I have taken three different questions and tried my best to give the ideal answers of all three. All three questions are related to modern day to day business philosophy and advantages.

1) Discuss the threats and opportunities a firm faces in doing business in Russia. How would you mitigate the threats and take advantage of the opportunities?

European and Chinese. firms increasingly are doing business with Russia as market reforms create a more businesslike arena daily. Foreign direct investment in Russia is about $60 billion annually. This places Russia second behind the Germany as the most desirable country in the world for foreign investment. Russia is modernizing its stock and bond markets so that companies can depend less on banks for financing (Elgin, 1996). Moscow is the centerpiece of Russia's efforts to reform, privatize, and expand imports and exports worldwide. As the twenty-first century begins, Moscow is still an attractive city/nation to establish business operations, but Russia is moving Moscow more towards regulation and government control, thus being more like USA.

Russia's privatization process began in July 1992, when President Boris Yeltsin signed a decree requiring all large-scale enterprises to transform themselves into joint stock companies by October 1, 1992. In less than five years, this initiative introduced private ownership into more than 14,000 large and medium-size companies and turned 40 million Russians into shareholders.

Currently, more than 80 percent of Russia's enterprises are wholly or partly privately owned, with more than half of the labor force working for enterprises with private or mixed ownership. As a result of the privatization process, a Russian equities market was born. Shares traded in Russia today are mostly the product of Russia's mass privatization program. This process started in April-June 1994 when minority share holdings in over 300 of Russia's largest companies were auctioned off, including Gazprom, RAO UES, LUKoil, ZiL, and Norilsk Nickel. Since scale and speed were important goals of the privatization process, most enterprises did not obtain a strong strategic owner to replace the state. In fact, most were neither restructured nor provided with any cash infusion as part of the privatization process. However, substantial blocks of assets remain to be privatized; these include land, as a number of mainly agricultural regions see privatization as a prerequisite for building an effective agricultural sector. The manner in which these assets will be divested by the state will be crucial to the future shape of Russia's equity market and economy.

Russia's economy has never been healthier. Gross domestic product is growing 6% annually. Investment is growing 14% annually. Inflation is falling. Foreign debt is low. Higher prices for Russian oil are increasing trade surpluses by $30 billion annually which is increasing the country's money supply by 40% each year. Real incomes of Russian people are increasing 10% annually and the Russian stock market advanced over 30% in 2003. While it would have been seen as nothing short of a miracle in many larger economies, Russia's estimated 2002 growth of ...