Marketing 716-103
Macro Environmental Analysis
Assignment: 1

To: Prof. Brian Press

By:

Nadeem Shaikh (300768229)

2/09/2015

Introduction:

In this project, we have disclosed the overall plan for the company Herculean which is a new Canadian company which manufactures soft-shell jackets under the brand name of “Herculean”. This company has its different product lines. For instance, Safety jackets, winter jackets and so on and is seeking to expand its arm in the international market. And it has its eye on Russian market. There are various factors, which is taken into consideration by the company while choosing an international market. Since, Russia has 60 percent of middle class and lower wellness people who are also called working class for whom affordable safety jackets are mandatory. On the top of that, the Russian winter is considered as the most severe winters in the world where people needs high quality of winter jackets to stay warm during winters. This company has propensity to manufacture these kinds of high quality and long life sustaining jackets which is more convenient for the Russian market.

Country Analysis:

1. Russian Trade & Economic situation:

Facts:

Because of high prices charged by Russia for the main exports like oil & gas primarily, the country had maintained the stability in macroeconomic by growing the real GDP by 40% followed with cutting down the annual average inflation rate by 6.5%. The public expenditure has also been brought under control. Due to the 1998 crisis, Russian government learnt how to overcome from this kind of situation. For instance, high revenues of oil has been taken in the four years of budget surplus, the currency exchange value loose during 1998 has been recovered to its 50 % of the value and still appreciating in real terms. Financial stabilization and the growth had led to the large surplus income (16% cash income rose in 2003) and to a reduction in the level of poverty. There has also been dramatically improvement in external balance: current account gain the surplus of 15% of GDP, capital outflow decreased in 2003, 60% of increment in international reserves, reduced external debts etc.

Implications:

According to the Russian trade & economic situation, Russia proves to be a wealthy market and help us to make the most diversified marketing strategy for the company Herculean. As seen from the above, Russia had improved its economic situation well since 1998 and some areas are still improving which shows to promote the product according to the market segment. The company will make the marketing strategy according to the market segmentation. For instance, the company will promote its product into the improved and developed area of the market so that the company can get highest amount of return on the investment.

2. Russian Political Situation:

Facts:

As can be seen that Russia has certain degree of corruption but despite this fact, big business ownership has been widened with occupying a dominant position. Moreover, there is an immense increment in private and public sectors with state owned, government and major private firms.

As per the Alon and Martin’s, following are the political risks which could affect the foreign firms doing business in Russia,

| |Internal Risks |External Risks |
|Government -related |Degree of elite repression & illegitimacy. |Possibility of regulatory restrictions on |
| | |investment, capital or trade. |
|Society-related |Degree of fragmentation for social conflict. |Regional diversity and incongruent interest. |
|Economy -related |Income distribution |Likelihood balance of payment problems. |

Implications:

Most of the firms expand their business beyond borders to have good business and our finding by a survey clearly shows the striving of the companies for the salvage of globalization benefits. To maintain the international business success for long term is depends upon the ability of the company to come up with the political risk implications and to manipulate the same in business to reduce the risk. By the consideration of political risk in the process of the business, management of the business is enabled to come up with some productive decision for the branding, intellectual property protection, sourcing, community and expansion, of business globally.

3. Russian legal situation:

Facts:

According to the jurisdictions of civil law, the legal system of Russia is built on the laws which are codified. In general, code of civil is a merger regulation of principles which are legal and basic that unpin the relations of economy. The basic legislative which is also known as primary legislative also help in the operation of regulation of the Russian business.

In most of the countries, there are legal daily requirements for the sustainability of the company in Russia. There are fairly clear regulations as well as well developed procedures on the registration of the new companies in the Russian law. For instanÎ “on disclosure procedures in connection with acquisition or holding of securities, on major and related-party transactions, on 30% takeovers, on dealing with the Ministry of the Russian Federation for Antimonopoly Policy (MAP) when the company is involved (depending on whether a transaction meets certain thresholds) in it taking a dominant position in the market or if the company plans to acquire a substantial stake in or assets of a Russian company and on other various aspects of maintaining a company under Russian law”

Implications:

As per the Russian laws, the procedures and fair regulations will support the business in marketing the products by providing several tax free duties and subsidies for the new company to expand and cover the most part of the area into the market. The company “Herculean” will gain more attraction by the Russian market because of its affordable price of the product at high quality standard and the growing market will create more customers for the company and according to it company has to prepare for the marketing strategy.

4. Social and cultural forces:

Russian culture is divided into various divisions like literature, classical music, and art. It has a lengthy history and can have a long tradition which is further dividend in various aspects of art, philosophy, painting, cinema, ballet, animation, which all had significant influence on world’s culture. The country has an appetizing material culture and a new tradition in terms of technology.

Russia is always in greatest Orthodox nation over the globe. At various parts of history, the country is powerfully influenced by Western culture especially Europe. But during 20th century when communist ideology turn out into major factor in culture of the Soviet Union, the condition changed and Russia become the greatest and leading part.

Language: Russia's has more than 160 ethnic groups who speak over 100 languages. It is estimated that 142 million people speak Russian followed by Tatar and Ukrainian with 5.4 and 1.9 million speakers.

Literature: The literature of Russia is amongst the most powerful and advanced in the world, with some of the most well-known literary works fit in to it.

Philosophy: The philosophy of Russia was connected to literature, creativity. Also with society, politics and religion.

Humour: It advances much of its wittiness from language, agreeing for plays on words and unexpected associations. As with any other culture's humour, its vast scope ranges from lewd jokes and wordplay to political satire.

Facts:

Nowadays, Russian traditional custom is graded at seventh place in the Nation Brands Index, on the base of meetings more than 20,000 persons mainly from Western Europe and other eastern countries.

So due to this fact, that owed to the comparatively dawn participation of Russia in present globalization and worldwide tourism, many features of Russian culture, Eg, Russian jokes and the Soviet Art, remain mostly unknown to foreign person.

Implications:

As Russian is the largest country and has largest Federation is the world. In past, Marketers have created their policies on the supposition of countless resources and ecological impact. With the mounting acknowledgment of restricted resources and high eco-friendly costs, dealers need to reexamine their model and observes. They need to review their rules on product expansion, pricing, supply, and marking. The current monetary meltdown has additional layer of anxiety as consumers regulate their lifestyles to a poorer level of salary and expenditure. Companies must equilibrium more judiciously their development goals with the necessity for sustainability. Increased courtesy will be paid to retaining de-marketing and community marketing rational to meet the new tasks.

5. Situation with respect to other environmental variables:

Climatic variations: As shown in the map, the climate of Russia is cold as the most part of the Russia is surrounded by Ocean. So it has humid climate which is good indication for our company.

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Facts:

Due to culture and climate variations, wide range of people need winter jackets to protect themselves from cold. So it is the opportunity to produce wide variety of products with high quality and get huge market and long-lasting market standing.

Implications:

These environment variables have significant implication on our market strategy. Firstly we have to consider the weather before production or export. If there is high demand of product, then we have to meet the demands by more supply with proper supply chain management.

References:

http://www.ruscham.com/en/rossinfo/db/12.html

http://www.lib.tsinghua.edu.cn/find/guide/russia.pdf

http://books.google.ca/books?id=GLQoW5U1AgEC&pg=PA186&lpg=PA186&dq=political+situation+for+business+in+russia&source=bl&ots=olTxKJgEva&sig=T4TKTx1hRC7D_y0aox7VtlMcZ3Q&hl=en&sa=X&ei=M1skU56FH-TYyAH2t4HoDg&sqi=2&ved=0CHUQ6AEwBw#v=onepage&q=political%20situation%20for%20business%20in%20russia&f=false

http://www.wilsoncenter.org/publication/russia-today-political-and-foreign-policy-implications-the-economic-crisis