This chapter provides an answer on the research question by combining all the information and results from previous parts of the study. Discussion section integrates literature review, analysis of secondary data and interview results.
The research question is:
What are successful strategies that foreign companies took during economic recession on the Russian market?
Before answering on this question it is important to clarify, what is successful strategy and how to determine the success. Success is the achievement of goals, selected target, is a pos-itive result of something or the public recognition of anything or anyone. In the context of strategy success is achieving the goals, the result of which will increase profits, strengthen-ing market position or will contribute to company's development. It is easy to determine successful strategy for past periods but analysis of current company‘s strategy is difficult to evaluate. It is possible to define was it successful or not successful strategy for the com-pany in crisis 2008 or 1998, however for crisis 2014-2015 assessment is unclear, because result of chosen strategy could be not so obvious or unknown.
There are following external and internal factors that affect on the company‘s strategy dur-ing economic recession described in this paper:
Cyclicity of economic development and company‘s plans;
Nature of the crisis;
Specific characteristics of Russian market;
Russian politics and economic security;
Proactive risk management and crisis management in the company;
Management of uncertainty within the company.
Theories of cyclicity of economic development consider crisis as a part of this develop-ment. Take into account these concepts company could monitor economic, financial index-es and predict possibility of occurrence of the crisis. Keep an eye on global external
envi-ronment will help company to build successful strategy and help to overcome the period of economic recession.
Crises are different from each other and company should estimate specific crisis characte-ristics during strategy development. Crises have different reasons, actors, duration and consequences. Economic recession could be in other country but despite of this affect on the company‘s activities. Sometimes a manifestation of the crisis is hidden and it is not clear, and may appear much later. To be competitive on the market company must recog-nize nature of the crisis and its specific characteristics.
Place of company operations is also important for strategy during economic recession.
Specific characteristics of the region could help company to overcome the crisis, or vice versa to make the consequences even more severe. Russia is attractive market for foreign investors, however there several peculiarities that company should take into account:
Government regulation and intervention;
Corruption and bureaucracy;
Comprehensive tax code;
Rapid GDP growth;
Large proportion of middle class;
Large reserves of recoverable natural resources;
High population growth rate;
Revenue Growth;
Lack of innovations;
Possibility for R&D;
High educated specialists;
Huge territory with different environmental conditions;
Wealth of energy resources;
Antimonopoly legislation and its requirements (from PESTEL analysis of the the-sis).
All these characteristics of Russian market could provide opportunities / difficulties for strategy development and implementation during the crisis. Foreign company need to adapt its business model for market conditions. During the crisis period inadaptability become
more visible and provide additional difficulties for the company. Many companies use cri-sis as an excuse for main office, but the main problem of unsuccessful operations is inap-propriate business model.
Proactive risk management and crisis management within the company are internal factors that affect strategy during economic recession. Most companies are aware of the crisis sit-uation when it is already occurred and had its effect on the company's business processes and employees. Crisis does not arise instantly; it is a process which is gradually beginning to have an impact on company‘s customers, partners, suppliers and employees. Company is needed to be prepared for crisis. One of the first duty of competent leader are to take measures in the early stages of the crisis evaluate current situation correctly and use it to achieve the result. Presence in the company crisis manager who will monitor external envi-ronment and develop possible strategies for overcome crises will increase company‘s chances to get out from the crisis with minimum losses. In order to build successful strate-gy and effectively use crisis management tools, company should focus on its competitive advantages and core competencies. Effective utilization of company‘s strengths and exter-nal opportunities will create solid foundation for future company development.
Management of uncertainty in the company also helps to successfully overcome crisis.
Ability of employees to act effectively in an uncertain situation and make decisions fast, allows company get out of the crisis quicker. Sometimes stabile company position has a negative impact on workers, they become non creative and passive. To be successful man-agers should constantly improve their skills, for self-development and company growth.
After analysis of all the external and internal factors that affected on company‘s strategy during economic recession and investigation of the results of conducted interviews the fol-lowing successful strategies were identified:
Continue operations on the Russian market (only 2 companies decided to leave);
Collaboration with Russian State companies (Russian Helicopters, RZD);
Cost cutting activities (in different scales);
Adaptations to environment conditions (provide new type of services and increase Russian domestic services).
Almost all respondents claimed that companies will continue operations on Russian mar-ket. General Motors decided to leave Russia and make restructuring of business model due to lack of localization that caused drop in sales and vast decrease in profits. However, company had this problems before so the real reason of moving is unstable situation in Russia and weak position of ruble. This conclusion confirms another car manufacturer Ssang Yong. So inadaptability to local environment becomes critical for the company dur-ing current crisis.
One of the examples of successful strategy during crisis 2008 on Russian market is deci-sion of Finnish Consultancy Company to change strategic focus to media marketing. This strategy allows entering new market, bringing new clients and increasing profits. As a proof of success of the chosen course company continue to develop this anti-crisis strategy after the crisis. Company became market leader in media marketing in Russia, and started to develop services in Russian regions. During current unstable situation Finnish Consul-tancy Company continue to develop chosen strategy, monitor uncertain external environ-ment and use its core competencies to benefit from crisis. Nowadays there are new changes in Russian legislation which provide additional work for company‘s specialists and in-crease profits. Revision of the offering services allow to save sources for more promising company‘s activities development. All these arrangements most likely will be successful for future company development, however now it is impossible to analyze results of cho-sen strategy.
Another example is Nurminen Logistics case. Company suffered in crisis 2008 because of drop in import from Finland to Russia which is a main direction of company‘s services.
During current unstable situation company decided to develop Russian domestic services, they started operations in different regions tailored to the needs of these regions (rail trans-portation, transportation of oversized and heavy cargo), built solid relations with main railway company (RZD). As a result of these initiatives company get new clients, increase profits and strengthened its market position. Chosen strategy can be considered as a suc-cess, but the final outcome is still too early to sum.