Global Business Cultural Analysis-Russia

Edward A. Beard Global Business Cultural Analysis-Russia Liberty University

Honor Code I have neither given nor received any assistance on this assignment that has not been disclosed in the document submitted. I have not violated nor observed any violations of the Liberty University Honor Code as it applies to this assignment. Signed: Edward A. Beard

Global Business Cultural Analysis-Russia

Abstract I chose to review Russias global business and culture, and I did so because I was completely ignorant about the country and its business relations and lack thereof. This paper will focus on research, data analysis and identifying Russias major elements and dimensions of culture, aspects and dimensions integrated by locals conducting business, contrast to that of US culture and businesses and implications for US businesses that wish to conduct business in Russia. References will be provided through discussion of interviews from actual residents from within different districts throughout Russia, as well as work attire, women in the workforce, examine Russian self-employed, womens experiences, communication, interpretations, expectations of gender employment and various social schemes. This should prove to broaden a basic understanding of foreign and cross border relationships and assist with an understanding of business practices in Russia.

Global Business Cultural Analysis-Russia

What are the major elements and dimensions of culture in this region? Ethics When discussing Russia and their corporate ethics contrast to that of the United States there are quite Russian ethics are quite different and separate in terms of being an individual. Self grooming is a must. Corporate leaders are expected to maintain all standard pertaining to grooming. An individuals appearance such as haircuts and certain lengths, cleansed nails and dress. Russians believe in first impressions so much that will make a deal based upon their first meeting with you. This is developed and mentored in leaders upon a young age; thus it being so critical and important after their first meeting. One such ethical value is avoiding flashy colors in men, and women but a certain degree of flashiness is expected in women. Pants are not encouraged among women and skirts are otherwise regarded highly thus it is a sign of disrespect for any lady who darns a trouser (Yakovlev, 2006). Late meetings are common in Russian business circles with most participants arriving two or more hours after the designated time. This is often regarded as a test for patience especially if you are new in the country hence a chance to develop the virtue of patience. Across Russia, especially in business, if one must be successful they would have to know and understand certain values are needed for successful business meetings with the Russians. It may be considered to be old school or traditional, but a firm handshake coupled with direct eye contact is critical in a business evaluation and meeting. This is used to assess the confidence and personality of the individual wishing

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to do business in Russia. According Yakovlev upon reaching subsequent business meetings with Russian business leaders it is important to know, effectively communicate and convey business strategies from the last meeting, and memorize three names for the partners and constantly refer to the potential business partner the using various names throughout the conversations. Social structures One of the most significant dimensions of the Russian social structure is the nature of society is determined by the distribution of human and material resources. This is why it is possible, right now, to speak quite confidently of the type of structure Russian society belongs to and the most distinct characteristic features. When progressing in business with different cultures you have first understand your current position. When developing your understanding you should consider the mirror method. How are your potential business partners going to view you? It proves to be of great importance especially in Russia. One of the social structures is the totalitarian society which is defined as a social class where the political power is used to avail the necessary resources to all in society to ensure that all are equally supplied with the resources. Here, it must be noted that the issue of the formation of class structure in Russia as the leading model of the social structure as a whole remains subject to discussion and debate at present, and no single unequivocal opinion is held.

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Russias leading specialists such a society is aimed at transforming the entire society as well as, those who make up the society namely the men and women in that class. Conversely, it is also perfectly reasonable to address the issue of the emergence of a class structure of society in Russia, including a lower class, and not just stratification by incomes. (Barkhatova, Peter & Mellor, 2001). Religion There are over three million Muslims in Russia. The Muslim population in Russia is highly prominent Shabanova states the Muslims are attributed to be one-third of Russias religions. The entire Muslim population in Russia is attributed to be 4 million according to a consensus completed in the mid 2000s. Islam has been up and growing since the late 1980s. This is largely due to over abundance and expanding immigration. The immigration rates have been growing in gross amounts for over twenty years. However, as most religions that are practiced in the country are ethnic-based, Islam and Judaism are determined by the number of nationals in the nation (Shabanova 2010). This way the number of individuals from that ethnic background is used to evaluate the probable number of followers in that religion. This is especially prominent in Judaism where drastic shrinking in numbers was experienced after the migration of ethnic groups out of Russia in the mid-20t century. Russia has been and will remain, at least for the foreseeable future, a multi-ethnic and multi-faith country. The number of Muslims will increase steadily. Whereas today they number approximately 20 million; including,

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of course, those in the North Caucasus according to some calculations their number will reach 30 million in only fifteen to twenty years. The Orthodox (theological) perspective is clearly indicated throughout Russia. The church is involved in the coordination and implementation of Foundations of Religious Cultures and Secular Ethics" (FRCSE), and the educational or informative goal is to acculturate through a confessional approach. Nevertheless, the intent relies heavily on tradition. The "Foundations of Orthodox Culture" (FOC) textbook (another section of the Orthodox theology education) does this by implying that the traditions and foundations are not necessarily true for non-Orthodox people. Interestingly, if children are not identified as Orthodox by their ethnic background, they have little opportunity to define their own views on religion. In contrast Religious education is organized and controlled by the state (Williams 2012). Among other religions in Russia Christianity is both prominent and significant. It is equally important, because Christianity is the second largest religion in Russia. The Roman Catholics are easily the second largest religious group in Russia. They account for one-third of the population combining Protestant and Roman Catholics. According to Kargarlitsky the Roman Catholics in Russia and statistics places them as the third religion in the country after Russian Orthodoxy and Protestants. The Archbishop of Moscow promotes the Roman Catholic Church in the country. He predicts the Roman Catholic Church is headed by the most current one being support of education in state sponsored schools. The business schools in Russia need to create programs that

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will best suit the needs of these students. There is an increasing demand for top level managers which marked the rise of business education with programs such as an MBA. The new generation of Russias businesspeople into the MBA education market is making the composition of the trainees more diversified. Communication The official language used to communicate in Russia is Russian. However, majority of the Russians do speak English which is taught in third grade at school hence those who have been through the Russian education system can accurately communicate in English. Russia is extremely committed to ensuring their constituents and school age children are competent in speaking English. This is largely due to the commitment from the Ministry of Education. The high literacy rate, of almost 100%, in Russian population is able to speak fluent English (Yakovlev, 2006). In the manner of communication, Russians have a high tendency to speak loudly, and use vulgar language in settings that are not kosher with Americans. As a general rule it is advised that great conversationalist who are quick witted with a touch seriousness handle all business engagements. It is for this reason that strangers and natives are asked to initiate good topics for conversations such as the current changes in the Russian political or economic scene (Ludlum and Moskalionov, 2008). Speaking and being loud and unruly especially during business meeting is something business minded Americans do approve of. This generally brings a lot

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animosity and character questioning. Thus sending someone who can elegantly migrate through this potential minefield of international business relations. Education The education system in Russia is free and it is offered to all citizens in line with the constitution. Educational services as well as the tasks of enhancing the quality of business education is much needed in Russia. For over eleven years secondary and higher level institutions of learning have been funded by the government until the recent years when commercial institutions have mushroomed. Services are rendered to ensure Russian business education is able to construct timely responses to external challenges. The basic principle for the educational foundation in Russia and higher education is highly competitive. The vacancies allowed at each education institution are limited. This is the basic education but for the higher education, entry is ultra competitive as the vacancies are often limited. The students in these higher levels of learning are provided with free housing and a stipend by the government to sustain their needs (Miller, 2010). The Ministry of Science and Education strive more actively to act as a factor in the business success of entrepreneurs. They know and understand the urgency to contend with major colleges in the business sectors. This is done in an effort to pace their counterparts in other countries. Russias relationships among the global leaders must improve and modernize as well as align with world realities and tendencies. The government has further invested in science and technology-based courses. Science and mathematics also appear top on the list of the most preferred courses in the country and

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the government is and has been the leading giver. In addition to the sciences and mathematics Russia has grown for an increased production, industrial and manufacturing competencies. In order to proceed and assist with these models senior officials as well as managers at companies were asked to examine all levels of abilities throughout their organizations. Officials were also asked to make recommendations of those leaders who consistently exemplified attributes of outstanding leadership. The ministry then used the knowledge to communicate the standards of which they are seeking to assist with taking Russia to the next economical, manufacturing and production levels they are capable of. The end result was of the creation of effective and efficient leaders. Education plays a vital role in culture as it enables the Russian children to undergo through the normal education systems while at the same time presenting a globally recognized profile. The aspect of learning language and subjects which are relevant to the fields that are required in the Russian job market makes the culture of education vital to Russia. This has also been the case with elevated levels of skilled and non-skilled manpower without having to import the same from other countries. In this regard, there is no brain drain in Russia which has led to generation of businesses along the lines of descendants and Russians who are self-sufficient. In contrast to that of the United Sates we struggle in integration of multi-language and subjects: beginning from school aged children into high school aged. It is not until we begin to see the thirst and yearning for more bilingual avenues and profiles until we

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reached post high school into college. The ability for American students to learn the importance and true benefits for conquering language barriers is largely delayed learning of cross border business relationships. Hofstedes dimensions of culture Power distance Power distance is the level at which the least powerful members of society, institutions, or organizations expect that power will be distributed unequally. When viewed as the value system of the least powerful members, the distribution of power is typically explained as the behavior of the most powerful members. In Russia these are predominately business owners. Paternalism The paternalism measure consisted of seven items taken from Hofstede and Bond's (1988) long-term-short-term dimension. The average score was 59 points, somewhat higher than the average found across countries by Hofstede and Bond, and 10 points higher than Hofstede's estimate for Russia. Significant results by subgroups showed that greater paternalism was associated with older respondents employed business students showed the least paternalism among occupational groups and individuals with no subordinates were less paternalistic than those who had subordinates; a category in which Russian officials measured for higher education purposes. Masculinity and femininity

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Naumov states that masculinity is a model of behavior of the average citizens while femininity refers to typical behavior where the social roles of both sexes overlap to a great extent. Conversely both men and women can be moderate in their behavior and think about more than just material well-being. The score on the masculinity dimension for the present Russian sample was 55, somewhat higher than Hofstede's estimate (40 points), and similar to Greece (57 points), Argentina (56 points) and Belgium (54 points). Bollinger (1994) reported a lower score of 28 for the 55 Russian managers he surveyed, and Veiga et al. (1995) also found masculinity to be low. Significant subgroup results were found in the present study for work experience, with respondents who possessed five years or less of work experience having the highest scores on masculinity. Manners and Customs Individualism is more prevalent where the links between individuals are tenuous and people are expected to look out mostly for themselves and their immediate family. A significant portion of the world's population lives in societies where the group takes precedence over the individual. When discussing Collectivism it should be characterized as having a distinct interest with close groups. In contrast to the individualism index for the Russian respondents surveyed was (41 points), which puts Russia in the same league as Iran (41 points) and Jamaica (39 points). The European countries closest to Russia are Spain (51

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points) and Greece (35 points), both Mediterranean countries. When examining these statistics it becomes alarming that Russia would be in the company of Iran. However, this is largely because of Russias religious beliefs and their dominate culture and religion(s) associated. Businesses across borders in other countries can become difficult to conquer. Many reasons surround this opportunity including ethics, etiquette communication barriers. International business is often coupled with numerous challenges and problems which are not necessarily language-based as sometimes culture, ethics and etiquette among various members of the international business market often vary. This hierarchy is brought about by wealth and money such that the distance between the rich and the poor determines who will be in charge of the conversation or decisions-making process. Confucian dynamis Russia confucian dynamis score is high. It be considered a country who has been through a considerable amount of turmoil, various economical stress and government infirmities. The country and is still striving toward keeping various long lasting traditions. On the contrary in order to move forward sometimes it is necessary to don new idea and structural organizations. For this is the only way to keep pace and assure country-self preservation.

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How do both of the above items compare with US culture and business? Religious beliefs and business in Russia When conducting business in Russia it is important to be remindful that all personnel are not under the same rules and regulations. Because of the high religious beliefs and values in Russia it is imperative to know common business practices. One key term and idea to know and remember is the importance and tolerance of cross talks and potential irritation. Manners while conducting business is also important. In the United States it is common practice to attend a meeting or business session until it has ended or until you have been dismissed. However, in Russia it is common practice for meetings to end abruptly with potential business partners walking out enraged. Often times meetings end in enragement and reluctance to compromise. Therefore, a thick skin is compulsory so as to withstand the heated arguments, loss of tempers to strike a deal and handle (Miller, 2010). As a midlevel leader or employee in Russia it is important to note they will not be in the room sitting idle. The conversations of lower level employees are encouraged in all meeting. This is something that is practiced and developed at a young age, while in school. The significance of this vital team attribute is everyone has a voice and it will be heard. The idea of being self conscious about ideas and input is minimized; something that is drastically different from business meeting.

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The importance of having employee and leaders around you that are not completely self conscious of ideas and presentation of ideas is invaluable. Researchers implies the senior leaders are often criticized about not facilitating healthy environments such as the type if Russia. Lastly, we must be careful not to mistake business meeting in Russia as complete candor, because in doing so we will fail in building close relationships and ultimately offend our counterparts. Values Russian manners as equivocal aspects of the ethical values in business lay a foundation for the result of the deal. In the United States Americans can be perceived as aggressive, charismatic, caring and time conscious. When conducting cross border commerce business opportunities we must understand that our Russian counterparts behaviors and characteristics. The better we know and understand them the better off our business venture will be. The central important piece is to remember when tempers flare and walkouts occur, because they will, during business meeting this becomes unethical and impacts the investor/buyer (Ludlum, 2008). To effectively communicate, we must realize that we are all different in the way we perceive the world and use this understanding as a guide to our communication with others (Robbins 2012). Cultural differences affect business negotiation deeply as a part of communication. In a globalizing world today, with international business happening frequently, cultural differences bring influence to communication. Any misunderstanding of it may directly affect the business. Therefore, it makes sense for the countries of

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different cultural backgrounds to understand each other (Gong 2011). With the entry into the 21st century the economy has developed rapidly, Russia will be required to address the necessity to establish and understand cultural differences and make full use of the beneficial strategies. Verbal difference and non-verbal difference are covered in the affecting factors. How are these elements and dimensions integrated by locals conducting business in Russia? Cultural differences Cultural differences in the United States and Russia have developed into a place where English is the common denominator and the most powerful form of communication. As a direct result there are more sufficient mixing and adding of mainstream integration for new investors. The idea to diversify all issues regarding the nature of businesses among Russian natives and shareholders must be balanced and planned in order for both parties to feel like that have not taken a major lost. This will also enhance Americans ability leverage more foreign investors into Russia. Non-individualism Non-individualism is a term used to refer to collectivism of natives such that it becomes equally difficult to penetrate the local business arena (Miller, 2010). This theme has the likely potential to disagree with potential shareholders that is unknown in

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primary business arenas throughout Russia and cross borders. However, in the United States we are known more for self empowerment; everyone has the same ability to do what they dream; regardless of race, color, creed or economical position. After all, we have an African American President. Non-individuality provides a broader understanding and facilitates new market ideas and ventures, both internally and cross border. This is especially true when pertaining to approaching new business ideas in markets where potential shareholders are not familiar with the current ethical and moral view. Business environment In Russia subject matter experts and managers alike become extremely competent business decision makers because the natives have been educated in country. In contrast when doing business outside its country Russian business leaders tend to struggle. Which begs to the question why? To offset this in the United States polices are established as well as strict rules to ensure ethical values are met and maintained. Lastly, overall, the Russian government has always worked earnestly to ensure the taxes are reduced at the time of establishment of small businesses. As various business desires begin to drive our thought process we cannot totally do away with the governments mindset. It has been said that self-rule will settle and the inner thoughts and conversations will stop. The idea of emotional constraint is vital when conducting business in Russia.

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What are the implications for US businesses that wish to conduct business in Russia? Levies Russian businesses have been experiencing horrific levies in form of defaults. The large corporations in the country will take loans and then avoid paying thus causing loans to arrive in defaults resulting in the government becoming in debt. Large corporations have been trying to avoid these levies for quite some time. The evasion process has become more prevalent and it seems that companies are finding this to be an immediate way to for additional income as well as evade and avoid paying the gross amount borrowed. (The Economist Intelligence Unit, 2007). Corruption has been an issue over time, the guidelines and policies of different department often contradict or overlap thus causing to double billing of errors; to evade such an event from affecting the normal operations of the business (Olimpieva, 2005). Bribery and or corruption are opportunities for small and medium sized companies in Russia. The country and its business are currently trying to revamp the challenges faced in the current legislative. The directive and guidelines cry for bureaucratic businesses to regulate the countrys current business rules. Stating the shadowy nature for which most businesses in Russia operate need to be changed (Shabanova, 2010). The current laws are considered to be impractical, and will end with bribery advocates winning. Business problems in Russia

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In the United States it is a known fact that we conduct business differently. Bribery is something we will not tolerate. However, in Russia they battle this problem daily. In extreme cases it has been reported that contact directly and indirectly have been made confirm licensing firms, building permit holders and various statesmen. The engagement level to confirm a business deal in Russia is unparalleled to that of the United States. To combat the major bribery schemes mediators have been hired. However, according to Estrin While bureaucratic intermediaries are supposed to act as intermediaries for paving way to new market, the United States businesses in Russia have to contend with faulty or illegal permits courtesy of the bureaucratic intermediaries (Estrin 2009). The United States culture and business has established a fundamental ground for which the cultural aspect of the country has led to increased business opportunities. When exploring business opportunities across borders the first thing to remember as a mature business leader is to keep God as well as his practices and values first. An example is to give diligence to Him and things like Him; faith and wisdom. When discussing values, training opportunities, religious differences, communication barriers or lack of women in the workforce the core principles are instilled in all people. The interpretation of the rules and are what separates us. "Truly I say to you, if you have faith, and do not doubt, you shall not only do what was done to the fig tree, but even if you say to this mountain, 'Be taken up and cast into the sea,' it shall happen Matthew 21:21.

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