Introduction. on «International Business Strategy»

Group essay

on «International Business Strategy»

Topic: «How political connections of Russian firms operating in food industry influence their international activities»

 

Made by:

MIB-2014 students

Koltunova Eva

Zhumaeva Zauresh

 

 

St. Petersburg,

Introduction

 

Overall, from Russian perspective, the outward expansion of Russian firms is essential for both individual companies and the Russian economy as a whole. The companies must become more international in order to survive global competition, which becomes increasingly fierce nowadays.

However, the outward expansion is hardly applicable for Russian firms operating in food industry. Undoubtedly, an effective development of the food industry is of strategic importance for any country and is one of the indicators of its economic security. However, having the high growth potential, the food industry in the Russian Federation, at the same time, lags behind developed countries on key dimensions by the level of performance. Thus, the profitability of domestic enterprises engaged in the production of food, beverages and tobacco, as of July 1, 2011 was only 7.87%.

This situation is expected to change in the foreseeable future – the «Strategy of Food Processing Industry Development until 2020» implies significant state investments - more than 900 billion rubles. Of this money, half is planned to be spent for technical modernization to improve the competitiveness of the industry after WTO accession.

Mainly, implementation of investment projects is done by large agricultural producers, those who need to process the increasing amount of their own products. At the same time they create a modern high-tech industries, bringing technology and equipment from abroad. They are forced to bring innovations constantly due to increase domestic competition and risks associated with Russian entry into WTO. Increase of state support is expected to encourage more private investment[1].

The situation in Russian food industry now is that largest part of the companies presented in it came from abroad, while majority of domestic companies are hardly developed and mature enough to go international. Moreover, most Russian food producing companies are small, private-owned and have no political connections.