Essay About Russian Culture And Dominant Large Appliance Firms

Mabe – Learning to Be a Multinational
MABE: Learning to be a MultinationalCase AnalysisTable of ContentsProblem IdentificationMain IssuesAnalysisExternal AnalysisPESTEL AnalysisIndustry Analysis Porter’s Five ForcesInternalValue Chain AnalysisFinancial AnalysisAlternatives and Recommendation AlternativesRecommendationImplementationAppendicesAppendix A: Internal Analysis – Financials Liquidity RatiosLeverage IndicatorsProblem IdentificationMain IssuesUnderstanding Russian culture and business in order to effectively implement a proper strategyCompeting with dominant large appliance firms, such as LG and Samsung, that are geographically situated close to Russia (South Korea). Russia’s major decline in 2009 and its ability to rebound back into a sustainable market to do business in Russia is very unique compared to most of the markets Mabe operates in, so they have to really focus on implementing a proper strategy. First of all, it suggests that Russians do not trust foreign (western countries) managers, which will mainly affect the communication between Russian workers and their current management. Another issue is that older and younger Russian citizens have very different mindsets and do not work well with each other, causing communication issues. It also will be difficult receiving bank loans and any forms of debt financing considering the economy is dominated by one bank. This will make it difficult to finance their facilities and operations meaning they have to heavily rely on equity. Mabe also has the issue of competing with closely situated, large dominant firms. Samsung and LG have amassed 16 million in 2011 sales, where GE and Mabe have only reached 8 million. This means that Mabe has to significantly differentiate their product mix, or drive costs well below these well-established major firms in order to be competitive  in the Russian market, which may be unfeasible. In addition to the competition, the Russian economy is a mess. The education system is weak, creating bad human capital all around. Life expectancy is a concern considering it has gotten worse from 1961 (less technological advancements). Russia is also considered risky and less profitable the most other asian nations by its own investors.