Global Business Marketing

This report states and discusses the global market expansion of Ugg Australia™ in the Russian market. Business organizations tend to expand globally themselves in order to gain a competitive advantage as well as to sustain in the competitive business market. Ugg Australia™ is a Sydney based ugg boot manufacturer that is facing legal issues with the internationally recognised American Ugg boot manufacturer. Due to the legal battle, several small and medium sized ugg boot manufacturers in Australia have shut down.

Running head: GLOBAL BUSINESS MARKETING
Global Business Marketing
Name of the Student:
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Executive summary
This report states and discusses the global market expansion of Ugg Australia™ in the Russian
market. Business organizations tend to expand globally themselves in order to gain a competitive
advantage as well as to sustain in the competitive business market. Ugg Australia™ is a Sydney
based ugg boot manufacturer that is facing legal issues with the internationally recognised
American Ugg boot manufacturer. Due to the legal battle, several small and medium sized ugg
boot manufacturers in Australia have shut down. However, the owner of Ugg Australia™ claims
their distinct business strategy from the American ugg boot manufacturer. Ugg Australia™ has
been manufacturing classic sheepskin boot in Australia since early 1990. Ugg Australia™ has
aimed towards globally expanding their business to Russia. For judging the suitability of Russia
for international expansion, Ugg Australia™ analysed the external environment of Russia. The
analysis of the external environment of Russia suggested a stable and encouraging political,
economic, social, technological, legal and environmental scenario thereby, influencing the global
expansion of Ugg Australia™ in Russia.

Table of Contents
Introduction......................................................................................................................................3
Overview of Ugg Australia™..........................................................................................................3
PESTLE Analysis of Russia............................................................................................................4
Doing business in Russia.................................................................................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................11

Introduction
In this competitive market, global business marketing provides an opportunity for the
business organizations to sustain in the competitive market. After a certain time, the domestic
market becomes saturated for the business organization thereby, hampering the overall revenue
and business. The business organization develops and implements international marketing in
order to ensure growth for their company. Global business marketing allows the business
organizations to create new market along with increasing their customer base thereby, increasing
the annual revenue.
This report introduces the PESTLE analysis of Russia, as Ugg Australia™ aim towards
globally expanding their business to Russia.
Overview of Ugg Australia™
Australian Leather Pty Ltd is a footwear manufacturing company that is manufacturing
ugg boots since early 1990. The Sydney manufacturer uses sheepskins to manufacture the boots
and is estimated to manufacture more than 50,000 pairs of boots annually. An estimated cost of
the Australian leather ugg boots is $89 ("Australian Ugg Boots Pty Ltd", 2017). However, the
Sydney manufacturer of ugg boots is facing a legal battle with a global American footwear
company that is preventing the Sydney manufacturer to use the name “ugg” (Cormack, 2017).
The court has taken legal action against the Sydney ugg boots manufacturer in the favour of the
Deckers Corporation partnered American ugg footwear manufacturer. However, the owner of the
Sydney ugg boot manufacturer has stated that they are nothing like the American ugg footwear.
Due to the clash of the name “ugg”, the global American Ugg manufacturers have shut down

several Australian small manufacturers of ugg boots ("Ugg Boots | Uggs | Australian UGG |
Sheepskin Boots ~ Jumbo Ugg", 2017).
The Australian Leather Pty Ltd has aimed towards globally expanding their business to
Russia, as the Australian market has become saturated due to the rise of various small ugg boot
manufacturers. The Ugg Australia™ predicts competitive advantage and business growth by
expanding the business internationally to Russia.
PESTLE Analysis of Russia
Ugg Australia™ conducts a PESTLE analysis in order to analyse the external
environment of Russia thereby, judging the suitability and predicting the success of the global
expansion.
The PESTLE analysis of Russia is furnished below:
Political  Russia is federation of Russia with semi-presidential
republic
 Open foreign relationship strategy
 Russia had official relationship with 191 countries and
144 embassies until 2009
 The political side takes the main role of running the
business of the entire country.
Economic  Russia is greatly dependent on the natural resources, that
is, oil and gas.
 The GDP of Russia ranks 10th in the world economy

 In respect to agriculture, Russia is considered the 4th
largest
 Constantly growing economy
Social  Russia is highly affected by HIV and alcohol poisoning
 Russia is well-known for literature, music, ballet,
philosophers, and sports
 Unevenly distributed population throughout Russia
 Russia’s society health is negatively affected due to health
conditions, diseases and depressions.
Technological  Rich in science tradition
 Russia is the first country to sent people in space
 Russia has paid more attention to developing advanced
technology such as Rosnano and Nanotechnology
 Russia surprised the entire world by their advanced
aerospace engineering.
Legal  The legal structure facilitates foreign investors
 Biased courts
 Judiciary suffers from state interference and corruption
 Russia ranks 3rd in terms of the pending human rights
cases in the European Court
Environmental  Government has taken initiative to reduce pollution
 Low water quality along with poor agricultural practices
 Higher rate of carbon emission

 Degradation of natural resource base
Political: Russia has become the federation of the semi-presidential republic in 12th December
1993. Since Putin’s president ship in 2000, Russia has encountered several changes in the
political system thereby, becoming active on the international stage. Therefore, the legislative
and the political power of Russia are centralized and are shared between the Prime Minister and
President of the country. The political nature of the country influences opens foreign relationship
strategy. As a result, no difference is present between the national and international foreign
investors. Until 2009, Russia had an official relationship with 191 countries and 144 embassies
that facilitated business. The political department of the country holds the main role thereby,
regulating the entire business of the country (Brovkin, 2015).
Economic: The economy of Russia is unpredictable and highly volatile. Russia is greatly
dependent on the natural resources such as the price of the crude oil. Due to the decline in the oil
prices and trade wars between the US and the Europe, Russia encountered recession in 2014 and
2015. Though considered as a developed country, Russia has unstable economic parameters such
as labour productivity. Russia has the 10th largest economy in the world and the 4th largest
agriculture (Malle, 2013).

Figure 1: Russian Federation Annual GDP Growth % in 2009-2015
(Source: Jeffries, 2013)
The 2008 recession largely affected the economy and Russia encountered an adverse financial
crisis. Reports suggest that the annual GDP growth for Russia in 2008 was 5.24% but declined
drastically to -7.281% due to the recession. However, the spontaneous and active actions by the
Central Bank and the Government, Russia uplifted the declining economy by 2014. The
International Monetary Fund and the Central Bank predicts that Russia will be able to resume the
normal GDP by 2017 (Lipman et al., 2012).
Social: Russia is well known for its contribution to literature, philosophies, music, ballet, and
sports. However, Russia has unevenly distributed population, as the western and the southern
part of the country are densely populated. Russia is one of the largest countries in the world
covering approximately 16 million square kilometers with different time and climate zones. The
Russian population encounters severe health issues due to alcohol poisoning, HIV, heart

conditions, and depressions. The average life expectancy in Russia is lower than 70.9 years that
is expected to increase due to a healthier lifestyle (Dias, 2013).
Technological: Russia is extremely rich in science tradition and culture and is one of the first
countries that sent people to space. Russia has greatly emphasized in developing advanced
technology such as Rosnano and Nanotechnology and has surprised the world by their advanced
aerospace engineering successfully. Russia ranks 62nd among 138 countries in terms of the
technological readiness and is ranked 56th in terms of innovations (Wcislo, 2014). Compared to
the other OCED countries, 10% of the Russian companies are reported to use technological
advancements. Digitalization and extensive use of the internet have changed the traditional way
of doing business for Russia. More than 70 million Russian business organizations use internet
for business thereby, providing endless opportunity for the companies. However, on the contrary,
in terms of using technology in education, Russia has failed to reach the standard of the
European countries (Lee, Speight & Loyalka, 2014).
Legal: The strength and independence of the rule of law are considered poor in Russia compared
to other countries in the world. The legal system and judiciary of Russia suffer corruption and
state interferences thereby, resulting in biased courts. However, the legal structure of Russia
highly facilitates foreign investors. Russia ranks 3rd in terms of the pending human rights cases in
the European Court (Epifanova et al., 2015). According to the Constitutional Court of Russia, the
decisions of the international court can be overruled if they fail to correspond with the Russian
Constitution. Compared to the state agencies, the inter-firm court rulings are much fairer
(Boussena & Locatelli, 2013).

Environmental: As Russia is highly dependent on the natural resources such as oil and gases, it
is predicted that the country would exhaust the natural resources completely very soon. Russia
has low water quality thereby, resulting in poor agricultural practices. Russia has a higher rate of
carbon emission that results in global warming, dangerous weather events. Considering the
higher rate of environmental impact, the Government of Russia has developed policies that
address climate change, environmental sustainability and issues (Jorgens, 2012).
Doing business in Russia
After conducting the PESTLE analysis, it can be said that Russia is a suitable country for
global market expansion for Ugg Australia™. The partnership between World Trade
Organization and Russian Federation facilitates business for the foreign investors and companies
(Zhao, 2012). The steady recovery of the Russian economy from the hard-hit recession provides
many opportunities for Ugg Australia™ to commence business in the country. Additionally, the
suitable political and legal structure of Russia also provides a suitable business opportunity for
Ugg Australia™, as Russia does not distinguish between national and international business
organizations (Cavusgil, Ghauri & Akcal, 2012). Additionally, the technological advancements
of Russia are also a justified reason for Ugg Australia™ to expand globally their business in the
country. Ugg Australia™ needs to implement franchising entry mode for entering the Russian
market. The franchising entry mode strategy will provide an opportunity for globally to minimize
the risk of growth and expanding their capital easily (Ardichvili et al., 2012).
Conclusion
In this report, it can be concluded that Ugg Australia™ is a Sydney based ugg boot
manufacturer that is facing legal issues with the internationally recognized American Ugg

footwear. However, the owner of Ugg Australia™ has claimed that they have no similarity with
the American ugg footwear manufacturer. Ugg Australia™ aim towards globally expanding their
business to Russia due to saturated home country market and sustain in the competitive market.
The analysis of the external environment of Russia suggested that the country is suitable for
global expansion for Ugg Australia™ due to stable and encouraging political, economic, social,
technological, legal and environmental scenarios.

References
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