Diogo Cordeiro Ferreira S080460
Case 2: Lumene in Russia
1. Noiro had limited experience in international trade; it had only made some occasional exports to Scandinavia and to Russia by mid 1980’s, when it was still part of the Soviet Union. So, when Noiro started exporting all products in the early 1990’s, it was done so without any marketing or exporting strategy, just to make profit for the mother company, Orion. The decision to internationalise was taken after Noiro had secured a strong grip in its home market. Since Russia was a country whose mentality and culture was already understood by Noiro (and due to its geographical proximity to Finland) it was an obvious first step when internationalising. This is plausible with the concept of psychic distance. Psychic distance is defined as the distance between the home market and a foreignmarket resulting from the perception and understanding of cultural and business differences. (Evans and Bridson, 2005, 70)
The psychic distance between Noiro and Russia was small, making it a natural choice for internationalisation. When the Soviet Union collapsed, a more business-friendly environment was created, and entrepreneurs in Russia and the CIS countries made possible new business opportunities. Noiro then decided to change its export strategy and the method for foreign operations, by having now 20 distributors in Russsia, that would channel the Noiro products to the stores. The crises of the financial system in Russia of 1995 and 1998 led to the reduction of its distributors, from 20 to 16 and then to only one: Multilink Trading LLC. This was done in order to change the whole marketing strategy in Russia and to have control over its own brands, since Multilink was the most trusted distributor. This was a risky decision: by consolidating all of its exports to Russia into just one distributor, Noiro was subject to whatever problems would affect the Russian company, like bankruptcy or bad management. In...