International Business Across Borders: Overview of Russia

This assignment provides an overview of international business across borders with a focus on Russia. It includes a PEST analysis, information on natural resources and factor endowments, foreign currency and exchange influences, existing trade policies and levels of foreign direct investment.

International Business Across Borders
Name of the Student
Name of the University
Author Note

Table of Contents
Introduction
General overview of the country
PEST Analysis of Russia
Natural Resource and Factor endowments of Russia
Foreign Currency and Exchange Influences
Existing trade policies in Russia
Existing Levels of Foreign Direct Investment
Conclusion
Reference

Introduction
The assignment has delved with the general overview of the country. In this
regard, the political, economic, socio-cultural as well as technological aspects
needs to be taken into consideration. The national resource as well as factor
endowments that created competitive advantage will also get considered.
Along with this, the countries existing trade policies as well as existing levels
of foreign direct investment will addressed as well. The contemporary Russian
trade policy, which is relying upon an export-oriented economy will be
resulting in a scenario when the country’s pattern of participation in global
trade exchanges will be facilitating certain processes in the national economy.

General Overview of the Country
 Within 2000 and 2008, there occurred a 83% growth of GDP and a 70%
growth in productivity
 There occurred a considerable increase in the welfare of the population, in
which a growth of real wages occurred by 3.4 times as well as real pensions
rose by 2.8 times
 There occurred an unexpected slowdown in respect of the Russian
government. In 2012, the official forecast regarding GDP growth for 2013-
2015 was 13% and at present, it is -1%

General Overview of the Country
 The government did the pursuing of a counter-cyclical policy that
dampened the influence of external fluctuations on the economical scenario
of Russia
 The major growth driver in the Russian economy prior to the crisis was the
huge inflow of external resources into the country.
 The Russian economy did the experiencing of various disadvantageous
adjustments relating to basic distribution of income over the past few years
 The potential regarding the present model of growth regarding the economy
of Russia is reflected in the long-term forecasts related to growth

PEST Analysis of Russia
Political Environment
 The country is having an open foreign relationship strategy. Till 2009, the
country was having an official association with 191 countries as well as 144
embassies, which is considered being a better scope regarding the country’s
trade as well as economical scenario
 The technological development in military is also supporting Russia’s
position globally
 The political side is taking the major role for running the overall business of
the country

PEST Analysis of Russia
Economical Environment
 The country is having a steadfast economic growth that is having the
expectation for reaching $3.18 trillion by 2018
 The country’s economic growth is having a major dependence on its natural
resources
 The two major natural resources of the country are considered to be oil as
well as gas
 The Russian economy is facing the challenge that it is having too much
dependence upon the price regarding crude oil

PEST Analysis of Russia
Socio-cultural Environment
 Post the economic recession of the 90s that instigated constitutional crisis
of Russia, the country officially became the Russian federation having a
semi-presidential republic
 The country is famous for its literature, music, ballet dances and so on. The
growth in entertainment standard as well as social activities does the
contribution of a significant aspect towards improving the standard of
living within Russia

PEST Analysis of Russia
Technological Environment
 The country is having a good reputation relating to science as well as
technology
 The technological development will be pushing the expansion within the
country’s trade and will be opening new scopes for economical growth that
will be a making the country’s trade to be increasingly active with the
market changes
 The technological improvement will also be helping in the development of
the standard of living and will be improving the rate of employment

Natural Resources & Factor
Endowments
Natural Resources
 The major natural resource wealth in respect of Russia did the fuelling of rapid
extraction of wealth but created challenges relating to political as well as
economical aspects
 This level of resource wealth is considered being significant and did the fuelling
of a boom since 2000
 the natural resources wealth of this size will be creating huge incentives for
capturing as well as utilizing the power and wealth, which is provided by
abundant resources, which will put pressure upon the fragile political structures
as well as government establishments of Russia

Natural Resources & Factor
Endowments
Factor Endowments
 The massive geographic area regarding Russia does the creation of the
requirement for efficient regional governance structures for improving the
environment of business at the lower geographical levels
 The history of Russia being a planned economy left the country with an
economic legacy that does the reflection of political decisions as an
alternative of economic effectiveness
 The organizational units were mostly considered being huge regarding
productive capacities at a specified value chain stage

Foreign currency & Exchange
Influences
 Russia does the employment of a floating exchange rate regime stating that
the ruble exchange rate in opposition to foreign currencies is set by the
market
 The aspect of introducing the floating exchange rate regime will be stating
that the Bank of Russia does the abandoning of the practice in respect of
standard floating exchange interferences for influencing the ruble exchange
rate
 The Bank of Russia might also be conducting operations within the floating
exchange market for replenishing the global reserves

Existing trade policies in Russia
 The contemporary Russian trade policy, which is relying upon an export-
oriented economy will be resulting in a scenario when the country’s pattern
of participation in global trade exchanges will be facilitating certain
processes in the national economy.
 The system will be covering the aspect relating to monetary assistance,
which will include export loans, provision of guarantees regarding export
functions and so on
 There is also the requirement for optimizing the national method relating to
the preferences of trade

Existing Levels of FDI
 The Russian government is continuously expressing interest to attract
increased levels of domestic as well as foreign investment through private
organizations. In the first quarter of 2014, the country’s capital outflow
reached approx. $63.7 billion
 The Russian government has kept stressing on the fact that foreign
investment as well as transfer of technology are essential towards the
economic modernization of Russia

Conclusion
To conclude the assignment, it can be stated that the Russian government has
kept stressing on the fact that foreign investment as well as transfer of
technology are essential towards the economic modernization of Russia.
Simultaneously, the government is also continuing to limit foreign investment in
sectors that are considered having strategic importance in respect of national
defence as well as security of the state via the Strategic Sectors Law of 2008.
For ensuring competitive advantages as well as enhancing the economic
capacity, there occurred the development of state support measures for
supporting the export of industrial products and to stipulate the application of
trade.

Reference
 Allen, D., Lee, Y. T., & Reiche, S. (2015). Global work in the multinational
enterprise: New avenues and challenges for strategically managing human
capital across borders. Journal of Management, 41(7), 2032-2035.
 Andersson, U., Cuervo-Cazurra, A., & Nielsen, B. B. (2014). From the
editors: Explaining interaction effects within and across levels of analysis.
 Forsgren, M., & Johanson, J. (2014). Managing networks in international
business. Routledge.
 Hamilton, L., & Webster, P. (2015). The international business
environment. Oxford University Press, USA.

Reference
 Hornsby, J., Rutherford, M., Simmons, S., & Messersmith, J. (2017).
Entrepreneurship Everywhere... Across campus, Across communities and
Across borders.
 Kolk, A. (2016). The social responsibility of international business: From ethics
and the environment to CSR and sustainable development. Journal of World
Business, 51(1), 23-34.
 Meyer, K., & Peng, M. W. (2016). International business. Cengage Learning.
 Niepmann, F. (2015). Banking across borders. Journal of International
Economics, 96(2), 244-265.

Thank You