Success factors for market penetration in CIS countries

MA-Thesis / Master von Nataliya Geppert

Abstract:

When investment businesses decide on pursuing a course of market penetration into CIS countries, there is unfortunately now prescribed way for them to follow. They have to plan and implement their entry into the international market according to criteria which they themselves have decided on. They have to ask themselves several questions. Why are we planning to invest in a foreign country? What are our motives and goals with regard to market penetration? In which country we will invest? Which countries should be penetrated first? When will this process begin? Which forms of market penetration should we chose?

The main objective of this study is to identify success factors for market penetration with regard to CIS countries. The model for investment businesses is used to define possible entry strategies into the CIS markets, and to analyse these theoretically and empirically.

This paper looks closely at investment possibilities in Russia and in three of the CIS countries: the Ukraine, Moldavia and the Republic of Belarus. This study examines the experiences of 26 companies who have penetrated the markets in CIS countries.

Table of Contents:

Text Sample:

Chapter 4.4, Russia as a Bridge to the CIS Countries:

A PEST Analysis of Russia gives an indication of market penetration possibilities in CIS countries. Geographically Russia lies between the other former USSR countries in Eastern Europe, the Caucasian countries and Central Asia. The collapse of the former Soviet Union also brought about the collapse of Moscow’s economic control of the fifteen states. The CIS countries each started to develop their economies according to their specific cultural and economic characteristics. Despite this new independence, however, Russia still plays a key role in the economic relations between members of the CIS countries. Today many markets can still be successfully penetrated from Russia. Because of the existing infrastructure and communication networks between Russia and the former Soviet states, market penetration in these states is relatively uncomplicated when a company has already established a base in Russia.

Most of the former USSR states have declared their intention to work towards democratisation and the Ukraine and Armenia wish to apply for membership in the European Union. Armenia, Georgia, Kyrgyzstan and Moldavia are already members of the World Trade Organisation.

In 2003 the Ukraine, Russia, the Republic of Belarus and Kazakhstan united to form a single economic area. Free trade areas between the Russian Federation and these other countries facilitate trade especially with the Republic of Belarus and provide exciting opportunities for investors who wish to enter Low-Cost Economies.

Because of their territorial and psychological affinity to Russia, only the Ukraine, Moldavia and the Republic of Belarus will be considered here.