Doing Business In Russia

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Doing Business In Russia

• Intercultural Management
• Ekaterina Blinova

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Ekaterina Blinova E-mail ekaterinablinova_at_yande
x.ru Business Development Manager Human Resource
Club   Sales Director Wackenhut
Moscow (subsidiary of the US-based Wackenhut
Corporation) Managing Director Riviera Tour
Express, Moscow Russian Travel Centre,
Moscow REA International Center Dep. Head PGS
Deputy Dean
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Doing business in Russia Setting up a company
in Russia

• 1.What are the goals of establishing a company in
  Russia?
• 2. Why in Russia ? (Pro)
• 3. What do you need to know before setting up a
  company in Russia?
• 4. What will be the difficulties (dangers) in
  setting up a company in Russia /operating in
  Russia?
• 5. Please describe your 5 steps in setting up a
  company in Russia.

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Individuals differ in

• patterns of thinking,
• feeling
• potential acting
• The sources of ones mental programmes lie within
  the social environments in which one grew up and
  collected ones life experiences.

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CULTURE - 1

• civilisation or refinement of the mind and in
  particular the results of such refinement,
• like education, art and literature
• CULTURE IN A NARROW SENSE

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• Culture is always a collective phenomenon,
  because it is at least partly shared with people
  who live or lived within the same social
  environment, which is where it was learned.
• Culture as mental software 2
• is the collective programming of the mind,
  which distinguishes the members of one group or
  category of people from another.

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• Culture can be loosely defined
• as a mental state largely shared among members
  of a society who live within national borders

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CULTURE

• the sum total of the
• values,
• beliefs,
• behaviors,
• expectations
• common to a group of people at a given time and
  in a given place. It includes a group's history,
  customs, traditions, habits, dress, practices,
  religions, language, art, architecture,
  artifacts, music, literature, and shared
  attitudes and feelings.

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CILTURE includes

• group's history, customs,
• traditions, habits, dress,
• practices, religions, language,
• art, architecture, artifacts,
• music, literature,
• shared attitudes and feelings.

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UNDERSTANDING CULTURAL DIFFERENCES IS IMPORTANT
TO

• 1. In communicating, transacting business, and
  negotiating with colleagues from other countries
• 2. In working for a foreign-based company
• 3. In managing human resources in another
  country, whether the employees are indigenous to
  that country or hired from yet another country
• 4. In managing foreign-born or culturally
  diverse workers in the domestic industry
• 5. In accommodating international guests

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CULTURE

• is learned, not inherited. It derives from ones
  social environment not from ones genes. Culture
  should be distinguished from human nature on one
  side and from an individuals personality on the
  other,

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Cultural differences MANIFESTATIONS

• Symbols are words, gestures, pictures or objects
  that carry a particular meaning which is only
  recognised by those who share the culture
  (language, flag, national monuments, dress,
  hairstyle).
• Heroes are persons, alive or dead, real or
  imaginary, who possess characteristics which are
  highly prized in a culture and who thus serve as
  models for behaviour. (Napoleon in France,
  cartoon figure Batman in USA).

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Cultural differences MANIFESTATIONS

• Rituals
• are collective activities, technically redundant
  in reaching desired ends, but which, within a
  culture, are considered as socially essential
  they are therefore carried out for their own
  sake. (wedding ceremony, national and family
  festivals, celebrations)
• Values
• are broad tendencies to prefer certain states of
  affairs over others. Values are feelings with an
  arrow to it they have a plus and a minus side.
  Explain that values deal with evil vs. good,
  dirty vs. clean, ugly vs. beautiful, unnatural
  vs. natural, abnormal vs. normal, paradoxical vs.
  logical and irrational vs. rational

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Cultures differ in

• Social inequality, including the relationship
  with authority
• The relationship between the individual and the
  group
• Concepts of masculinity and femininity the
  social implications of having been born as a boy
  or a girl
• Ways of dealing with uncertainty, relating to the
  control of aggression and the expression of
  emotions.

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• Hofstede called those dimensions
• power distance (from small to large),
• collectivism versus individualism,
• femininity versus masculinity
• uncertainty avoidance (from weak to strong).

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The Historical Context

• European style democracy no roots in Russia -
  alien culture?
• Climate - energy sapping. Winters create a mood
  of melancholy and helplessness - an aversion to
  life.
• Physical environment - hostile
• Geography - shaper of character
• Is Russia European?

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Russians

• Russians have the ability to arouse directly
  contradictory opinions about those who encounter
  them. Some people find them open, helpful,
  hospitable, generous. Others find them sullen,
  suspicious, underhanded and servile. The truth
  for once is not somewhere between these two
  extremes, but rather that they both represent
  aspects of the Russian stereotype, for both kinds
  of behaviour are met within different contexts.
  Russian tourist guide.

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a riddle, wrapped in a mystery in an enigma.
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Kliuchevski (C19th) No other people in Europe
can generate such spasms of energy as the
Russians. Nor can we find anywhere in Europe
such lack of steady, disciplined, evenly
deployed work.
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Impact of Geography

• Absence of mountains and seas
• Vast open plains
• Boundless expanse
• A fear of invaders
• Exploratory instinct
• Insatiable curiosity
• Restlessness
• Extensive development of the environment

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The climate and geography were principal shapers
of the Russian national character and bred a
psychological type distinguished by a lack of
methodical consistency, lack of patience for
measured and long-lasting effort, aversion
towards perfectionism and thrift and a contempt
for materialism and regimentation of any kind.
Such qualities are ill-suited to an
industrialised and democratic way of life.
(Dmitri Mikheyev)
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Cultural Types

• Traditional - rural areas
• Industrial - large cities
• Technocratic - Moscow and St Petersburg
• both coexistance and competition
• polarisation of society

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Totalitarianism

• Pretense
• Cheating
• Hypocrisy
• Stealing
• Superstition
• all effective survival strategies

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Societal Hierarchy

• Self - perpetuating oligarchs
• politics, diplomacy, industry, science,
  education, arts
• Professionals
• Intelligentsia
• New Russians
• showy, risk takers, proud of avoiding paying
  taxes
• manipulative, mainly trade
• Mafia

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New Structure of Business

• New Russian private enterprises
• Semi governmental bodies
• New companies with international links
• Large (struggling) Russian enterprises
• State enterprises

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Senior Management Perspective

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Characteristics

• Different logical thought processes
• Networking and contacts incl nepotism
• Trading of favours
• Lack of written communication
• Complex inter-relationships
• Lies and deceit
• Time-keeping
• Hierarchical
• Business discipline poor
• Role of the manager
• Planning history - but not strategic
• Little sense of big picture
• What we say we will do is not what we will do
• Presentation less important than content

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Strategies for Managing

• Take time
• to understand the complexities in relationships -
  people are not always what they say they are
• build relationships by following the rules
• build trust
• implement change
• Observe and listen

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People Management

• Main issues
• people management
• managing conflict
• leading and motivating staff

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In the Family
Children encouraged to have a will of their
own Parents treated as equals Student-centred
education Learning represents
impersonaltruth Hierarchy means inequality
of roles, established for convenience Subordina
tes expect to be consulted Ideal manager is
resourceful democrat
Children educated towards obedience to
parents Parents treated as superiors Teacher-
centred education Learning represents
personal wisdom from the teacher
guru Roles more equal and can
be interchanged Subordinates expect to be
told what to do Ideal manager is benevolent
autocrat (good father)
At School
At Work
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In the Family
Stress on relationships Solidarity Resolution
of conflicts by compromise and negotiation Ave
rage student is norm System rewards
students social adaptation Student failure at
school is relatively minor accident
Stress on achievement Competition Resolution
of conflicts by fighting them out Best
students are norm System rewards academic
performance Students failure is a disaster
At School
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At Work
Assertiveness ridiculed Undersell
yourself Stress on life quality Intuition
Assertiveness appreciated Oversell
yourself Stress on careers Decisiveness
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In the Family
Education towards we consciousness Opinions
predetermined by the group Obligations to
family or in group harmony respect shame Lea
rning is for the young only Learning how to
do Value standards differ for the in group v
out group Other people seen as members of
their group
Education towards I consciousness Private
opinions expected Obligation to
self self-interest self-actualisation guilt
Permanent education/learning for life Learn
how to learn Same value standards for
all Other people seen as potential resources
At School
At Work
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In the Family
What is different is ridiculous or
different Ease, indolence, low
stress Aggression and emotions not
shown Students uncomfortable
with unstructured learning vague
objections broad assignments no
timetables teachers may say I dont
know Dislike of rules Less formalisation
and standardisation
What is different is dangerous Higher anxiety
and stress Showing of aggression and emotion
accepted Students comfortable with structured
learning precise objectives detailed
assignments strict timetables teachers should
have all the answers Emotional need for
rules Formalised and standardised
In School
At Work