The PEST analysis is used in this report to evaluate the political, economic, social and technological aspects of the macroeconomic environment in the targeted market, Russia. This study helps to frame the basis for the decision-making about a possible market entry. Thus, it is of vital importance to scrutinize the macroeconomic environment as part of the market research. Political and Legal Aspects
According to the Russian 1993 Constitution, Russia is a democratic federative state with a republican form of government grounded in the rule of law (pwc, 2012). After the fall of the Soviet Union in 1991, Russia has gradually opened up and after a seven-year transitional period with numerous market reforms, political stability was achieved under Prime Minister Putin and President Medvedev. Moreover, since 1999 when Putin became president for the first time, Russia’s political system has shown continuity in its policies.
The Russian judicial system is based on statutory law, but has been ineffective and weak since the fall of the Soviet Union. However, the introduction of many reforms is expected to eventually bring about improvements. Russia has also entered various legal assistance programs with countries across the world, as unfair competition practices are hindering FDI inflows into the country (Datamonitor, 2011; pwc, 2012). However, corruption and crime are still major challenges for doing business in Russia. Russia has been ranked 143rd in Transparency International’s corruption perception index of 2011 concerning perceived public sector corruption. In addition, the high degree of bureaucracy within the country makes doing business slow and complicated. The business environment is further negatively affected by the high number of corrupt state officials (Datamonitor, 2011). Terrorist activity is one of the major concerns in Russia as bomb explosions and suicide attacks (such as those in the Moscow-St. Petersburg express train in 2009 or in...
Please join StudyMode to read the full document