International Business Strategy: Moscow Exchange, Sberbank Growth

This report provides an in-depth analysis of the Moscow Exchange, a rapidly growing stock exchange in Russia, and its strategic importance. It begins with an executive summary highlighting the exchange's growth and the role of Sberbank, a key player in the Russian financial market. The report then delves into the macro environment of the Moscow Exchange using PESTAL analysis, examining political, economic, social, technological, environmental, and legal factors influencing its operations. A significant portion of the report is dedicated to Sberbank's growth strategy over the next decade, including internal and external factors, mission and vision, and strategies for market position, financial and quality indicators, and international expansion. The report also identifies capability gaps of the Moscow Exchange by comparing it with the London Stock Exchange and the New York Stock Exchange, focusing on operational history, revenue, market share, working capital, and other key metrics. The analysis includes a review of the competitive landscape, the challenges and opportunities, and recommendations for improving the exchange's competitiveness and attracting more investors. This report is a valuable resource for understanding the dynamics of international business strategy within the context of emerging markets.

INTERNATIONAL
BUSINESS STRATEGY
WITH SIMULATION

Executive summery
Moscow stock is a fast growing stock exchange established 7 years ago and become a premiere
stock exchange of Russia. It is able to extract more investors in Europe due to less fluctuation in
market as well as many small and large investors are able to invest in this stock exchange. In
this we have taken example of Sberbank and discussed strategies it uses for its growth and
expansion in market place. Apart from it for sustaining in competitive market it is essential to
identify and make stratifies to overcome those capability gap , here capability gap and
opportunities have being discussed in comparison with London stock exchange and New York
stock exchange. Like other stock exchange Moscow stock exchange also have growth and
expansion strategies like fetching more investors, enhancing capability of their employee and
acquiring new markets and ventures.

INTRODUCTION
Stock exchange is a type of exchange where traders and stock brokers can sell and buy
their shares, securities and bonds. Apart from it they provide faculties like reduction of
securities, issue of shares and other capital events including payment and settlements of dividend
and shares. Moscow stock exchange provides securities on stocks issued by derivatives, pooled
investors, unit trusts, bonds and listed companies(Burritt, 2014). Moscow exchange is a
“continuous auction” market where trading activities keeps on commenting on trading floor. It is
considered as a largest stock exchange market in Russia(Giroux, 2011). It was founded and
established in 2011 by merging Moscow exchanges, Russia trading system and Moscow
interbank currency exchange They are having 57% free floating shares and other major
shareholders are like central bank of Russia (11.75%), Sberbank (9.9%) and
Vnesheconombank(8.4%). Russia in current scenario has targeted to become an international
financial hub.
TASK 1
P1 Macro environment of Moscow Exchange, growth of Sberbank in next 10 years and
strategies
It is an important factor to observe external environment of as organisation so PESTAL
is a suitable tool to analyse any environment. PESTAL analysis involves political, economic,
social, technological, environmental and legal factor for analysis as considered as a very
effective tool in observation of external environment(Kunc, 2011).
PESTAL analyse of Moscow exchange
Political factor – Russian government is a federal semi-presidential republic with
president is a head of state so all the factor related to business and future investment scope of
company are dependent on its decisions. So companies dependent on policies for making
investments in Moscow stock exchanges. Moscow must ensure that all they must aware all
investors about country's policies to safeguard their values.

Economical- Economic factor have epochal on organisation which guide organisation to
do their business and gain profit from market structure. They include several factors including
interest rates, infatuation, disposable incomes, economic growth and businesses. A company
while investing in Moscow stock exchange helps them to fetch maximum profit from stock
exchange.
Social factors – It gives details about social- cultural parameters and attitudes, behaviour
and belief of an organisation. They directly influence mind of investors e.g. for bank it is
important to observe the cost of living of people which will help in planning better in business
environment.
Technological factor- It deals with technological factors. Like in all over Russia they are
well known form manufacturing of arms and dealings and keep on developing new techniques
for up gradations. So many companies related to services and assisting technology are growing
by investing in market place. Moscow enchained must study buying and selling of arms like
bigger arms dealing between countries and its effect on social environment.
Environmental factors- These factors includes natural climate of a region. In Russia
there is very cold climate and harsh conditions, there are scarcity of raw materials, foods and
adequate resources in some region so it is important to observe environment and do business. For
doing business successfully they must have a better planning about their marketing strategies.
Legal factors – These factors includes government policies include equal opportunities,
consumer rights and product safety. While investing in Stock Exchange Company must ensure
that they have information about legal policies of stock exchange and current and future planning
of Russian government. Moscow exchange must provide transparency among their investors.
Burbank and its growth strategy in next 10 years
It is a state- Owned bank operating in different European countries as well as post-Soviet
countries. It is a largest bank in Eastern Europe and Russia with share prices of 9.9% in Moscow
exchange. Burbank have separated their vision of development for next 10 years. In initial phase
they have a vision 2020(Johnson, 2016). where they emphasis on some basic factors first for
making a good base in stock market and then plan to invest in stocks and share market they must
focus on both internal and external factors for sustaining in market place

In internal phase-
Mission and visions – Bank has set some benchmarks for creation of new vision and
mission. Their aim is to become largest bank in all over Europe in next 10 years.
Astute management leadership- For assuring future of bank management try to
formulate strategies considering opinions of their employee irrespective to their level and
hierarchy
Information strategy – Bank emphasis on increasing their technological base will will
provide better communication in the organisation. They have targeted to make all their
employees target oriented which will fetch more investors and customers in future prospects.
Operating processes – Try to increase their employee base as well as making them
serviced oriented and customer based. This eases decision making process as collaboration and
coordination increases.
Customer service – Apart from increasing investor base they must ensure they give best
customer service and gain better feedback them. For enhancing it they must use digital platforms
effective.
Communications - Communications in organisation plays an impactful role in
organisational structure. They have branches in different regions and countries so a better
communication practice will help in better coordination and help in generating transparency.
External factors -
By PESTAL analysis we have discussed several factors which are to be considered for growth
in next 10 years.
Political structure – They must observe political factors like what are future plans of
government and how can they take gain benefits like - In recent years Russian government have
predicted that there will be a huge demand of arms and emanations as well as price of crude oil is
increasing people, so they must focus on investing on these factors and bank must capitalised on
providing loans and funding companies(Bhanot , 2012).
Economical – In decent economic conditions of Russia it has been observer that cost of
living of people have increased as they are focussed on their mines in stock market. So bank is
focussing on increasing their customer bases. More inclusion of customer to their bank will
enhance their value in market.

Social- Company must be socially active for growth they must be ethical in their
approach. Must understand how people behave, react and response in social environment. Like
organisation is having different branches all over the Europe so as having did rent social
behaviour. They must adopt different strategies according to customer’s behaviours.
Technological factor - Enhancement of technology in both internal and external sectors
help them in biter communications(Wang, 2011). Which will increase investment activities as it
will provide a better transparency to their investment activity.
Strategies for growth of Sberbank
Sberbank from last decade is working on growth strategies in their growth strategy
concentrate on four factors like market position, financial indicators, quality indicators,
international market
Market position
 Strengthen of their position in banking
sector.
 Sustaining positions regarding personal
market .
 Maintenance of 25-30% shares in
banking asserts.
Financial indicators
 Increase of net profit value by 2.3 -3%
every year.
 Return of equity mist be more than
20%.
 Hiring efficient employees.
Quality indicators
 Leaders in marketing skills.
 Skills staff.
 Strong goodwill among customers .
International market
 They have 9.9% stock in Moscow
exchange.
 Focus on expansion of business in
crane , Kazakhstan and Belarus.
 Entering Chinese and Indian market.
Strategies to be implemented to achieve development strategies
Client – They must focus on clients and improve standard and quality of their services.
Till last survey in 2014 they have 58 million bank accounts, 82,000 ATM terminals, and a 12

million mobile banking system(Schmidt, 2014). Which they want to increase and improve their
quality
Industrials scale system – Motto is to standardize, centralised function and
consolidation. In their Basel meet they have focussed on increasing security of their clients in
future.
Burbank Production system (SPS) philosophy of management – For maintaining a
continuous approach of management they behave implemented theories like six sigma and lean
theory, where they have offered people for training in suburban program for changes. Through
this bank has enhances their skills and by learning effective use and optimisation of resource and
increasing intellectual level of their employee(Yang, 2011). In last 4 years their productive has
increased to 25%.
Investing on individual – They have modernised Human Resource Management through
they invest on each employee by giving them adequate training and development and mentoring
for creation of a large pool of high efficient employee(Brice , 2014).
Cross border growth – They have thought of expansion in market so they are entitled to
be regarded as international organisation like recently- also have acquired banks in Turkey and
Eastern Europe which have extended their reach around 22 countries with 10 million people
already in Russia.
TASK 2
Identification and filling of capability gap of Moscow Exchange and New York stock exchange
For increasing their capability gap.
As of most recent data available
Factors Moscow stock
exchange
London stock
exchange
New york stock
exchange
Operational history 7 years 11 years 47
Revenue 22,521,327,900,743.60
RUB
N/a N/a
Market share Ordinary shares — US$1.2 million Revenues (most recent

RUR10 billion (min)
Privileged shares —
RUR3 billion(min)
(GBP700,000) fiscal year) US$75
million
Working capital Not sufficient Sufficient N/a
Float share 10.00% 25.00% Revenues (most recent
fiscal year) US$75
million
Equity market RUR105,000 —
RUR265,000
) Market capitalization
(GBP million): Under
5, maximum
GBP6,389 5-50,
maximum GBP44,189
50-250, maximum
GBP107,189 250-500,
maximum
GBP133,439 Over
500, maximum
GBP369
) Market capitalization
(GBP million): Under
5, maximum
GBP6,389 5-50,
maximum GBP44,189
50-250, maximum
GBP107,189 250-500,
maximum
GBP133,439 Over
500, maximum
GBP369
Annual exchange fees RUR15,000 From GBP4,200 to
GBP41,400 based on
market capitalization
US$0.00093 per share,
minimum US$38,000
Accounting standard Russian
statutory/IFRS
IFRS, US, Japan US GAAP/IFRS
acceptable for FPI
Time line of going
public
4 months 4-24 months 12-24 months
These are some of the factors on which Moscow exchange identify capability gap and improve
on the basis of it
 Moscow stock exchange is comparative new in market so they must provide high rate of
return to their shareholders and try to fetch more shareholder to their exchange.

 Generally in international market it is difficult to find revenue of all stock exchange as
market keep on fluctuating
 Based on revenue (I RUR – 1.25 POUND – 0.02 USD) so comparing revenue NYSE and
LSE are having higher value.
 Moscow has less money for working capital so they are bound to invest less in their
growth.
 They have less floating share as compared to other which makes it a stable market.
 Annual exchange fee is a bunch of scheme and pricing level used for deploying initial
listing. Here London exchange does it smartly by changing pricing based on market
capitalisation.
 Accounting standards are termed as guidelines and norms which are to be followed by
different stock exchanges easier norms in trading practices will help free flow of
business. So for growth Russian firs should ease some norms for easier investment and
trading practice.
 Time line varies with circumstances and investor countries .It is very important to have a
quick time line for investors it is an advantages aspect of Moscow organisation as they
have many small scale businessman across Russia who are eager to do business in their
existing country.
As comparing different factors it has been found it is a new stock exchange but a fast
growing one and have planning to match potential of other organisations. The above mention
factors are important aspects in determining capabilities of and a stock exchange. According to
latest data standings of IPO can be determined fruitfully, hence Moscow exchange can observe
and utilise these values effectively and make strategies for their growth.
Promising market for Moscow exchange and their expansion in next 10 years there are several
government policies of Russia which have eased restrictions on trading as well as increasing
opportunities for large scale and small scale investors. Moscow exchange can grow in adding
more investors in their exchange market. Sectors where they can expand arms and aircraft -
Russia is known for technologies so they have high tech arms and latest aircraft. In current
scenario countries like India and Pakistan are biggest buyers.

Task 3
Planning for expansion in next ten years of Moscow exchange
Moscow exchange has an important aspect and growth opportunity in Russian an Europe
market due to leniency of business policies of Russian government many small and large
businesses has erupted in Russia who wish to grow in international market.
Scope of expansion of Moscow exchange through applying different theories in different market
Oil and refinery – With easing of taxations and increase of demand of oil in the world
many refinery like Roseneft, Lukoil, Gazprom Meft, Surgutneftegas and Tatneft have grown in
market, they are the largest investor in Moscow exchange
Arms and ammunitions – It is a biggest source of earning of Russia as they deal with
arms and high-tech technology hence countries like North Korea, India and Pakistan are be
biggest buyers of their aircraft and latest latest technology companies like Almaz Antey,United
aircraft corporation,tactical missiles corporation, Russian helicopters are some of the biggest
gainers in market scenario. They do not do trading in Moscow policies but in future with an
effective scope of market they will enter stock market will be a boost for Moscow exchange in
future.
Russia, Mongolia china corridor – Famously called as economic silk route which is
about top open very shortly this will boost economy of both china and Russia as easy
transportation will increase trading practices between two countries which will give opportunity
to big organisation as well as small organisation. Hence it will improve productivity of Russia
ultimately Moscow exchange will be booming with investors.

Grains farming: Grains farming are also successful businesses if it is seen with a view
to earn higher profits and even government of Russia is providing loans at lower interest rate to
the grain farmers. Earlier the Russia was among the largest importer of grains and an immense
change is seen with country and they become the top exporter of grains in other countries of
world and even they have a great vast fertile area which can be used for the farm(Choi, 2012).
Moreover, with this they can attain their goal and objective in ease manner as well.
Cloth and accessories business: In today’s era the standards of living is high and even
the millions of people is also growing with time and in Russia clothing and accessories is such
which is a another prospering the small business in Russia. Even country is coldest among the
other countries as well and in such situation a small firm with kind sort of clothes, shoes and
caps which will make people to cover themselves from the coldest time period. In Russia most
part of it is coldest one and even people also looking forward to have better and quality products
for them. Hence, the thing which needs to be undertaken is required to establish clothing and
accessories shop at the right place with a quite good amount of capital in business and with such
the revenue is great and enterprise can earn higher profit in huge manner.
Retail trading: Russia even though becoming a big place for running their business in
proper manner and an option of retail trading at such place can make to earn boom revenue from
it only. The best thing about this thing is that a business is just not knotted for a particular
product. Although as much as product can be retailed according to the needs of market and thus
it should be done in correct prospect too(Pasin,2011). Although according to researcher it has
seen that the Russia is such country which is on the 6th rank in having a highest purchasing power
scenario which brings out the most profitable business venture in Russia. Therefore, retailing can
be done of any product and service in Russian market and even people of such country also
spend their amount on purchasing and they usually go with quality products and services.
Russia is 6th largest country in terms of buying behaviour and power as well as with
comparison to other countries. Although the government of Russia also imparting small business
enterprise to come up with new idea and increase the economy condition of country as well.
.

Conclusion
As from the studies it is being concluded that for growing of any share market in is essential to
do analysis of external environment. Moscow exchanges have sensed opportunity to grow with
the change in policies of government organisation. Government mainly plans to grow in market
investing in arms and oil industry. There are many small scale industries like wool and food
grains have also sensed opportunity with coming up of about they have planned to add more of
small scale industries which will help them in increasing value of Moscow stock exchange.