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Risk Conditions of Doing Business in Russia

Running Head: Special Topic in Management

Risk Conditions of Doing Business in Russia

Russia in the past few years has presented investors with the potential of investment when they see what returns will be in their portfolios. Based on the World Bank report, Russia has been experiencing an annual average growth rate of 6.7% since 1998. While on the other hand, between 1999 and year 2007 the stock markets has delivered over 800% return. For this reason many investors have seen Russia as an investment. However, like all kinds of investments, Russia has presented its own risks.

Regulatory Risk

When an investor decides to invest in Russia he/she should bear in mind that there is a possibility of regulatory risk. The government of Russia may decide to take an action that may affect your business such as company and industry nationalization.

Currency Risk

The overall value of investments can be affected by the strength or the weakness of a rubel against the U.S. dollar. When the dollar strength is high the value of investment in Russia comes down. When the rubel is stronger than the dollar the value of investment increases. In this case, these currencies fluctuations can create large volumes of volatility in your portfolio.

Lack of Openness

The requirement of a company to be listed on the American stock exchanges is the compliance with the Securities and Exchange Act of 1934. As a requirement the companies are supposed to remit their financial information to the Securities and Exchange Commission on a regular basis. This helps the investors to see the overall financial position of the company. But Russia has no such regulations and this may have a direct impact to investment especially in the telecommunication.

Economic Risks

In consideration to the fact that Russia is a developing country, there might be times when there is strong economic growth followed by slower times slower than other parts of the world. Such economy swings affect the country’s ability to pay back on the debt and this may affect the telecommunication investment directly.

Risk Conditions of Doing Business In India

Like the global counterparts investing India is subject to risks.

The economy

To begin with, GDP of India is 9% and has an inflation rate of 8 to 10 percent. This shows the gap that there is a growing gap between the supply and the demand. Despite the fact that India has enormous population, lack of adequate public education system has largely contributed to the shortage of qualified skilled professionals. For this reason the cost of wages has gone higher and higher taking off the cost advantage of business operations in India.

The infrastructure

In this sector India has to pull up their socks as in the day-to-day course investors have witnessed the inadequacy of the seaports, power grids, up-to-the-mark airport, health care, education and most of all the communication system.

Corruption in Government

Corruption through the economy increases the cost of doing business. In the end this presents legal and ethical challenges for the foreign investors. In the Indian courts there is a back log of more than 25 million cases and not forgetting that they take decades to be solved. Also the protection of patent is slow and grudge. And another thing is that the labors laws are unfriendly as what is passed by the government officials is not what is practiced in reality.

Cultural Differences

When it comes to investing or doing business in India the investor has to consider the cultural difference. There might be indirection, ambiguity and constant revisits of settled issues in business   negotiations. In some business negotiation, agreement is said to be the starting point of the next negotiations.

Therefore it is very important to understand these risks before deciding if Russia or India is the right place to invest in telecommunication.

Question 2

What Are Economic Indicators?

This is simply any economic statistics that varies from GDP, unemployment rate, inflation rate or how the economy is performing or the future prediction of how the economy will be. The investors use such information to make decisions (Bastia, 2000). If the economy will do well or not in the future as foretold by these economic indicators, the investors are able to change their strategies of investing.

Indicators Used In Indexing Procedure

Risk/enabling indicators: used in the measurement of the external factors

Input indicators: These indicators measure the means of project implementation.

Process indicators: They measure the delivery activities of the all programs devoted resources. Their intention is to monitor the achievement during the process in regard to the targeted results.

The Indicators That Would Be Of Great Importance for the Company Marketing the Laptop

The following three are the indictors that should be considered in the process of decision making are; Risk/enabling indicators, Process indicators and Input indicators.

Marketing potential index for Emerging markets

Marketers have found themselves in a dilemma of the international markets to venture and the appropriate strategies for marketing in these countries. The emerging economies are made of half the world’s population (globaledge, 2011) (Snyder, 2011). This indexing is a study that is carried out by MSU-CIBER to assist the companies in the comparison of the Emerging Markets using several dimensions. There are eight dimensions that are used in the representation of a country over a scale of 1 to 100. And the dimensions are measured using indicators and are weighed in the determination of the contribution of the Overall Market Potential Index.

MPI for 2010

Countries Market Size Market Growth Rate Market Intensity Market Consumption Capacity Commercial Infrastructure Economic Freedom Market Receptivity Country Risk Overall Index Rank Index Rank Index Rank Index Rank Index Rank Index Rank Index Rank Index Rank Index Rank Index Hong Kong 24 1 6 45 1 100 17 48 1 100 2 93 2 81 1 100 1 100 China 1 100 1 100 26 1 13 60 21 33 25 2 23 2 8 64 2 92 Singapore 26 1 17 25 2 81 14 57 3 89 8 77 1 100 2 98 3 90 Korea, South 7 10 16 31 6 64 1 100 4 85 4 83 9 15 4 73 4 71 Czech Rep. 22 1 24 13 13 51 2 94 2 91 3 88 10 13 3 78 5 56 Poland 15 4 13 33 10 60 5 78 6 79 7 77 14 5 9 63 6 51 Israel 23 1 20 22 4 70 7 74 7 72 6 79 5 19 7 66 7 51 Hungary 25 1 25 1 3 71 3 90 5 82 5 82 6 17 10 60 8 49 India 2 38 2 78 24 26 11 60 25 9 18 47 20 3 13 50 9 48 Turkey 8 6 10 36 5 67 9 65 15 48 12 58 13 10 17 40 10 36 Brazil 4 21 11 36 17 47 23 20 13 52 14 55 25 1 12 50 11 28 Indonesia 5 11 4 53 19 41 10 63 20 33 15 50 24 1 22 33 12 27 Mexico 6 10 22 18 8 61 21 27 16 46 9 70 7 17 11 51 13 27 Malaysia 19 3 21 19 23 29 8 73 9 59 16 49 4 28 20 37 14 26 Chile 20 2 23 13 14 50 22 24 14 50 1 100 12 11 6 71 15 26 Egypt 13 4 7 45 11 58 6 75 19 39 22 25 17 4 21 34 16 25 Saudi Arabia 14 4 5 49 25 17 – – 11 54 23 22 11 12 5 71 17 23 Thailand 16 4 14 33 22 36 15 52 12 54 19 43 8 16 19 38 18 21 Argentina 12 4 8 43 12 52 19 45 10 57 17 48 19 3 24 14 19 19 Peru 21 2 9 41 15 50 20 36 22 33 10 69 18 3 16 41 20 17 Russia 3 24 26 1 20 40 16 49 8 65 24 11 22 2 15 44 21 17 Pakistan 10 6 3 58 9 61 4 79 26 1 21 29 26 1 26 1 22 14 Philippines 11 5 18 24 7 62 18 48 23 31 20 41 15 5 23 26 23 12 South Africa 9 6 19 24 18 46 25 1 24 12 11 67 3 29 14 48 24 8 Colombia 18 3 15 32 16 48 24 9 17 45 13 55 21 2 18 39 25 7 Venezuela 17 3 12 34 21 40 12 60 18 43 26 1 16 4 25 6 26 1

Considering the MPI rankings which developing countries would you advise such a company to enter first?

According to the chart i would choose China as the first country for the company to invest first.

Question Three

Exhibitions and Sponsorships as an Advertising Method In The Airline Industry

Sponsorship as a Marketing Tool

This is a financial support of an activity that is used to reach the desired goals of the business. Today sponsorship is seen as the fastest marketing strategy but it still in the process of picking up in relation to the trade show arena. In these case sponsorships should not be confused with advertising. Advertising is seen as a quantitative medium while on the other hand sponsorship is seen as qualitative (Snyder, 2011). This allows the company the company to reach markets that are targeted without waste of resources. Recently Delta Airlines announced its effort to sponsor Los Angeles Lakers.

In the past few years sports sponsorship by the airline industry has been as a common thing in spite of the high cost. In the US sports is life and people have been seen to have tight connection with their sport teams. Just think of soccer in Europe, cricket in India and football in America. This is seen as a global phenomenon and thus it’s very natural for the airlines who want to tap this relationship. An airline such as Emirates has been given the right to use their name with in-conjunction with the team they are sponsoring for the purpose of creating good will.

Airlines have also been seen sponsoring arenas, stadiums or even an entire league. Or others even sponsor individual players. In the past Southwest airlines have sponsored multiple leagues and its commercial has bombarded viewers with their commercials (Snyder, 2011). Other airlines such as JetBlue are now sponsors of Boston Red Sox and LA Dodgers. The question is what these teams have in common with these teams. But the obvious answer is cities where these airlines have large and growing population. The significance of sponsoring is to become part of the community and this has proven to be effective.

Exhibitions Marketing in the Airline Industry

Basically what marketing is to promote the product to the target audience in the right way. There is no point of promoting a product to the people who may have zero interest of buying. The key to marketing is ensuring that the audience is well informed about the products and the greatest way is to achieve this is through exhibition stands. This has been proven to be effective if it is coordinated in the right way.

This helps in the brand distribution and the sales margin goes up in as the business is promoted to the customers. Airlines in specific have applied this method of advertising and it has attracted potential customers, A few years back   Delta airlines transported women artists from Asia on the inaugural flight that departed from Amman, Jordan to John F. Kennedy International airport. The exhibit constituted 72 works from 51 women that were representing more than 20 Islamic countries. Delta was the official sponsor of the U.S Tour of Breaking the Veil in 2007. Because of such sponsorship Delta Air lines for the last few years added more international carriage than other major U.S airline.


Bastia, T. (2000). Qualitative and Quantitative Indicators for the Monitoring and Evaluation of the ILO Gender Mainstreaming Strategy. Retrieved June 23, 2011, from

Globaledge. (2011). Market Potential Index. Retrieved June 23, 2011, from Market Potential Index for Emerging Markets – 2010:

Snyder, B. (2011). Why Airlines Bother to Sponsor Sport Teams. Retrieved June 23, 2011, from


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