Russia represents one of the most important sources of global economic growth, its gross domestic product rising more than 6 percent per year since the end of the financial crisis in 1998. While growth has been predicated on high prices for oil and other commodities, it has also been supported by reforms in the public sector and improvement in the management of private companies. Looking forward, the Russian economy presents both exciting opportunities and serious challenges for Russian and international companies seeking to do business in the country. For Russian companies, the main challenge over the next several years will be to transform the groups of disparate assets that were created by privatization in the 1990s into modern corporations able to compete on equal terms with their international counterparts. This will require the following:
- Adopting the Proper Strategy: Companies must select strategies to achieve shareholder objectives that match a realistic assessment of their actual and potential capabilities with a clear understanding of current and future opportunities presented by the market.
- Building Stable Platforms: Implementing the optimal strategy requires a strong organizational base, including a well-aligned corporate structure, efficient business processes, and a solid human-resources base. The followingare some of the key questions that face Russian companies:
- How should the proper role of the corporate center be definedin relation to the role of business units?
- How should the need for independence and entrepreneurship be balancedagainst the need to maintain control?
- What needs to be doneto attract and retain the best managers in an increasingly tight market?
- How is the most appropriate financing mix determined and achieved?
- Achieving Operational Excellence: Russian companies many of which are built on former Soviet state enterprises are generally characterized by low asset and labor productivity. Competing in an increasingly global economy requires achieving global standards in operations.
The Boston Consulting Group has worked with major Russian companies on all of these issues, adapting internationally proven tools to fit the needs of the Russian market. In our work with Russian companies, BCG focuses on creating value within the vision and goals set by shareholders—whether this means conducting an IPO, a sale to or a partnership with a strategic investor, or long-term management. We leverage our global expertise to help Russian companies understand the global context of their businesses, forecast developments in their industry on the basis of the experience of other countries, and adopt global best practices to their operations in Russia.
BCG's international clients also see the tremendous potential of the Russian economy, not only as an attractive market in which to sell their products or services, but also as a low-cost base from which to produce for export or for offshore research and development activities.
BCG has worked with some of the world's leading companies on the most important issues facing their businesses in Russia. These concerns involve market entry strategies, including decisions regarding importing versus producing locally; acquisition versus greenfield production; and brand positioning, sales, and distribution.
The value that BCG brings to these clients is informed by a unique combination of a thorough understanding of their global business, based on longstanding relationships in multiple markets and a deep knowledge of the Russian business environment.