Since Russia had the world’s largest gas reserves and second largest oil reserves and we know that economies of scale are one of the keys to success for appliance manufacturers.Also the JV market share increase for 0.9% in 2008 to 4.9% at the end of 2012 so we believe in the future Russia could have more stability.Furthermore, As one of our purposes which is entering into the international market so that we choose to stay in Russia and continue with exportation. However, this joint venture could raise the problem of differentiate culture and a complex organizational structure and so on. To implement this, we may have to make some adjustments.
Due to we have the cultural distance and after 4 years of operations, Mabe understand the culture which is weak legislative and enforcement regimes and the incidents of corruption and bribery at all levels of state bureaucracy. Also Mabe learned through the previous expansion that the importance of instilling the firm’s culture ...view middle of the document...
Due to the political interference in business, arbitrariness in the application of laws, complexity of the tax system.Thus, we may have to learn the economy, government and understand it and then have a good solution of how to have a better operate with the JV or in the Russia market.
Because the country’s financial system was dominated by one big bank, and very few Russians invested at home, so loans of any kind were difficult to acquire. The mortgage market was virtually nonexistent, representing only three per cent of GDP, the lowest of any emerging market. Thus we should have a strong cash flow to ensure our business.
Due to we reliance on GE for R&D too much before,thus in the Russia market we should more emphasis on the development of proprietary technology.
Short term plan:
• We should choose the best location for ensure a better market share.
• Do not build manufacturing plant for the Low risk for Mabe.
• Inject sufficient funds to improve the defect of lack of financial institutions.
• Learn the culture, economy, government (laws) or social environment differences to make our own differential core strategies with other competitors in the following months and years within two months.
Long term plan:
• Stay business in Russia but keep the main market in the United States and the Brazilian market.
• Continue to use the methodology of “action learning” on the Russia market. whereby multidisciplinary teams of executives collaborated to recommend ways to enter new markets.
• Continue to use Mave’s internationalization strategy of brand portfolio on the Russia market.
• Due to the strong influence of Russia politics thus we may always focus on the changes until the new government was in power before making any significant investment decisions.
• Always focus on energy and water efficiency and technological innovation.
For our best safety concern, we need to follow the first alternative and the recommendations if the income statements and balance sheet statements and the cash flow statements run successfully as we expected. Otherwise, we may have some backup plans like the following alternatives suggested, or totally use our own management structures and resources and equipment to make sure we can leave or move to other market in the fastest speed.