Worldwide Market Potential - Essay Example

Globalization is becoming inevitable for businesses seeking to exploit the worldwide market potential and enhance competitiveness with other companies. In whatever business sector a company is operating in, cultural differences have an impact on its profitability. However, cross-cultural differences in certain regions are acting as a barrier to business expansion and companies are required to do good feasibility studies before joining these markets more so in the Asian continent. There are major differences in this region compared to the United States of America (USA). Particularly this discussion will be looking at the issues that American businesses going into Russia need to understand in order to formulate an effective entry strategy.

These two countries have major cultural differences in language, authority, customs, and norms thus conducting business in Russia presents a communication and management challenge. Communication is essential for any business, Russia unlike America has several official languages due to the large number of ethnic communities of about one hundred (Bloshteyn, 2007). This will need the company to have people who understand a variety of these ethnic languages while in the US English is their official language. Body language helps to convey certain messages like nodding the head to show agreement Russians do not use body language as such as Americans do but are said to be very emotional for instance they can walk out on you during a meeting to show disagreement.

 Authority in Russia is centralized and the chain of command is from top to bottom the junior staff is expected to perform their tasks without any questioning while the Americans top managers give directions and give room for debate. Russian organizational structures are very bureaucratic in nature and this makes it difficult to do business for instance according to an executive director of the Russo-British commerce chamber Stephen Danziel, ‘‘you have to fill forms for all most everything and have them signed by the right authorities usually in triplicate’’. According to Trompenaars & Woolliams ( 2003), culture is the core value of any society, businesses have to understand the cultural background of the customer in order to be able to meet their needs. The ideologies and gender views of these two countries are different, Russians are seen as communalism and believe in collectivity while Americans are entrepreneurs and very competitive. Therefore American businesses need to be aware of this background which will enable the company to adopt suitable means of conducting business. There is also a need to consider the dress code especially because of the religious background of Russia being Islam there are very conservative on dressing.

In business, the market has the 4 Ps as product, price, place, and promotion and they vary from market to market depending on the regions.  In America, while businesses decide on products and services that are needed by individuals and come up with them in Russia the government exercises control on the market on what products to make as well as services to be offered (Graham & Dezhina, 2008).  In terms of place, Americans do not only rely on stores but have policies that promote and protect online businesses so that they are able to reach a wide target globally. In Russia, online business has not flourished well due to the past practices of a closed economy and also limited use of technology in business.

 According to Bloshteyn (2007), prices in the US are set by individual firms as well as forces of demand and supply while in Russia the government controls the market prices. Promotion and advertisement in the US are through both electronic and print media so as to be able to reach a wider market, getting the marketing messages is relatively easy compared to Russia. There are legal and other restrictions that are imposed by the government while running promotions in Russia while in America have liberal systems on running promotions. However, the situation in Russia is changing rapidly with the increased adoption and use of social media platforms for advertisement.

The ethical issues would be engaging in corruption and bribery. Many countries around the world see these practices as vices that are barriers to economic growth. According to Orttung & Latta (2008), Russians are said to engage in corruption and are ranked among the most problematic countries in the world in 2006. The was legislation that was passed in the US known as Foreign Corrupt  Practices Act that forbids US companies worldwide to engage in such illegal activities(Patrick et al, 2010). There is a need to understand the different laws and rules of conduct that guide their targeted customers. It has been observed that people in Russia avoid direct questioning which is seen as rudeness while in the US this is their norm.