Business Model Canvas (BMC)- A new venture concept
Engro fertilizer company[1]
1. Company Introduction
Engro Fertilizers Limited, a wholly owned Engro subsidiary, is a premier fertilizer
manufacturing and marketing company with products that focus on balanced crop nutrition and
increased yield. The company markets primary and secondary fertilizers.
Organizational Culture
Engro is about the people who are a part of us. Our culture is dynamic and energetic, with
emphasis on our core values and loyalty of our employees. Our work environment promotes
leadership, integrity, teamwork, diversity and excellence.
Products and Brands of Engro Fertilizer
Engro UREA
Engro is the first company to have setup urea production facility in Pakistan, a landmark event in
agricultural sector of the country. This together with the fact that urea is the most widely used
fertilizer in the country, gives Engro Urea a special standing in the domestic fertilizer market.
Engro DAP
For a healthy growth the plant requires three major nutrients namely Nitrogen, Phosphorus and
Potassium. Di-Ammonium Phosphate (DAP), which contains 46% Phosphorus, is the most
widely used source of Phosphorus for the plant. DAP strengthens the roots of the plant and
improves nutrient uptake. DAP was imported in Pakistan by the fertilizer import department until
1994 and since then the private sector has been responsible for all imports.
Engro Fertilizers has been importing and marketing DAP in the country since 1996. Engro
Fertilizers is the most trusted and one of the largest importer of DAP in the country.
Zorawar
For a healthy growth the plant requires three major nutrients namely Nitrogen, Phosphorus and
Potassium. Engro Zorawar is a specialist product which provides the plant with Phosphorus
content for its growth. Zorawar was introduced in 2003 and is the highest Phosphate content
product available in the market. It has 52% Phosphorus content which is higher than DAP (which
has 46%).
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2. Engro NP
NP formulations that contain Nitrogen and Phosphorus in almost equal quantity have been
especially important to Pakistani farmers, given the peculiar deficiency of both components in
most of the Pakistani soils. This category serves the needs of a particular niche of farming
community in the country; where application of nitrogen and phosphorus is required in almost
equal proportions.
Engro Zarkhez
Plants require three major nutrients (i.e. Nitrogen, Phosphorus and Potassium) for quality higher
yield. Zarkhez, introduced in 2002, is the only branded fertilizer in Pakistan which contains all
three nutrients. Presence of all the macro nutrients results in synergistic plant nutrient uptake.
The resultant yield is of high quality; sucrose content of sugar cane increases, quality and size of
potato improves, fruit and vegetables appear and taste better. Zarkhez is a high quality fertilizer
containing correct proportions of the three nutrients in each of its granule. This helps ensure
uniform and balanced nutrient application across the crop field.
Zingro
Zinc is a micronutrient, it is a nutrient which the crop requires in small dosages and it
compliments functions of major nutrients. Over the years zinc deficiency has been well
established on a variety of crops and in rice specifically. Zingro brings to the market the trust of
Engro and high quality standard which has made it distinct from all the competition.
Why Russia?
Climatic and geographic factors limit Russia's agricultural activity to about 10 percent of the
country's total land area. Of that amount, about 60 percent is used for crops, the remainder for
pasture and meadow. In the European part of Russia, the most productive land is in the Central
Chernozem Economic Region and the Volga Economic Region, which occupy the grasslands
between Ukraine and Kazakstan. More than 65 percent of the land in those regions is devoted to
agriculture. In Siberia and the Far East, the most productive areas are the southernmost regions.
Fodder crops dominate in the colder regions, and intensity of cultivation generally is higher in
European Russia.
Crops
Grains are among Russia's most important crops, occupying more than 50 percent of cropland.
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3. Potatoes, a vital crop for food and for the production of vodka, are grown in colder regions
Sugar beet production has expanded in recent years; the beets are grown mainly in the rich
black-earth districts of European Russia.
Flax, also a plant tolerant of cold and poor soils, is Russia's most important raw material for
textiles
Flax also yields linseed oil, which together with sunflowers (in the North Caucasus) and
soybeans (in the Far East) is an important source of vegetable oil.
Production of fruits and vegetables increased as private farms began to expand around 1990. In
the mid-1990s, the largest yields in that category were in cabbages, apples, tomatoes, and
carrots.
Agricultural Policy
Soviet Policy
A number of factors made the Soviet collectivized system inefficient throughout its history.
Because farmers were paid the same wages regardless of productivity, there was no incentive to
work harder and more efficiently. Administrators who were unaware of the needs and
capabilities of the individual farms decided input allocation and output levels, and the high
degree of subsidization eliminated incentives to adopt more efficient production methods.
The Gorbachev Reforms
The Gorbachev agricultural reform program aimed to improve production incentives. Gorbachev
sought to increase agricultural labor productivity by forming contract brigades consisting of ten
to thirty farm workers who managed a piece of land leased from a state or collective farm. The
brigades were responsible for the yield of the land, which in turn determined their remuneration
Although Gorbachev's reforms increased output in the agricultural sector in 1986, they failed to
address fundamental problems of the system, such as the government's continued control over
the prices of agricultural commodities, the distribution of agricultural inputs, and production and
investment decisions. In the contract brigade system, farmers still had no real vested interest in
the farms on which they worked, and production suffered accordingly. In the 1980s, the Soviet
Union went from being self-sufficient in food production to becoming a net food importer.
Yeltsin's Agricultural Policies
In December 1990, the Congress of People's Deputies of the Russian Republic enacted a number
of laws that were designed to restructure the agricultural sector and make it more commercially
viable. The Law on Peasant Farms legalized private farms and allowed them to operate alongside
state and collective farms, to hire labor, and to sell produce without state supervision. The same
session of the congress passed the Law on Land Reform, which permitted land to be bequeathed
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4. as an inheritance from one generation to the next, but not to be bought or sold. The government
also established the State Committee for Agrarian Reform, whose responsibility was to oversee
the transfer of available land to private farming.
The decree required that farmers choose either to reorganize into joint-stock companies,
cooperatives, or individual private farms, or to maintain their existing structure. Under the first
two arrangements, workers would hold shares in the farms and be responsible for managing the
enterprises. An individual farmer could later decide to break from the larger unit and establish
private ownership of his or her share of the land, as determined by an established procedure.
As of 1996, individual private farming had not assumed the significance in Russian agriculture
that reformers and Western supporters had envisioned. Although the number of private farms
increased considerably following the reforms of 1990, by the early 1990s the growth of farms
had stalled, and by the mid-1990s the number of private farms actually may have dropped as
some individuals opted to return to a form of cooperative enterprise or left farming entirely. By
the end of 1995, Russia's 280,000 private farms accounted for only 5 percent of the arable land in
Russia.
A number of factors have contributed to the slow progress of agricultural reform. Until the mid-
1990s, the state government continued to act as the chief marketing agent for the food sector by
establishing fixed orders for goods, thus guaranteeing farmers a market. The government also
subsidized farms through guaranteed prices, which reduced the incentive of farmers to become
efficient producers.
Perhaps most important, effective land reform has not been accomplished in Russia. The original
land reform law and subsequent decrees did not provide a clear definition of private property,
and they did not prescribe landholders' rights and protections.
In addition, the fiscal position of the federal government has forced it to reduce subsidies to
many sectors of the economy, including agriculture. Subsidies are among the targets of major
budget cuts to comply with the standards of the IMF and other Western lenders and achieve
macroeconomic stabilization.
Constraints to fertilizer use in Russia
Structure of agriculture: the lack of small and medium size enterprises
• Low farm gate prices for agricultural commodities
• Inadequate use of modern agricultural technologies + predominance of extensive farming
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5. • Inadequate fertilizer distribution system
• Slow recovery of advisory and soil analysis system
• Slow technology transfer from research institutions to farms
National program on “Development of agriculture” 2008-2012
The program focused on animal husbandry, stimulation of private farm production up to 30% of
agricultural output through subsidies for bank interests, establishment of farm’s cooperatives,
land mortgages, and house building for young agricultural specialists.
The government implemented guaranteed minimal price for such cereals as wheat, barley, rye
and maize. If market price falls below this fixed minimal price the government starts buying the
excess of grain at a minimal price. For 2009 the minimal price for wheat is fixed at the level
USD 145-180 per ton depending on protein content in grain.
The government abolished income tax for agricultural producers until the 1st of January of 2013
and VAT has been reduced to 10% (for the rest it is 17%).
Government compensates producer’s rates for credit used to buy machinery, fertilizers and seeds
and gives direct subsidies to compensate fertilizer cost.
And finally the government will support agricultural sector to survive during the globe financial
crisis of
2008- 2009 giving additional subsidies for agricultural producers in amount of 30 billion USD
International plant nutrition Institute has developed software that will forecast fertilizer needs of
the land, the name of the software agristats by using past 10 year data. By using this software
IPNI has forecasted that fertilizer needs have will increase in Russia. The nutrition requirement
of the land is nitrogen, phosphorus and potassium
By above policies the market for chemicals had largely recovered and reached pre-crisis levels in
Russia by the end of 2010 and the prospects for the future look good in most branches. The
International Fertilizer Association forecasts that by 2014 the volume of demand for mineral
fertilizers should grow by almost 12%6 as a result both of population growth worldwide and the
reducing amount of fertile farmland. Owing to the wildfires which plagued Russia during the
summer and caused significant damage to the harvest, demand for fertilizing chemicals remains
high. The nitric fertilizer industry appears to be stagnating somewhat but the demand for
phosphorous- and potassium-based fertilizers is forecast to grow strongly.
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6. In addition WTO membership for Russia – Should Russia finally be accepted into the WTO
in 2011, solving the current problems with the organization on issues such as protectionism, state
enterprises, the cost of oil/gas and intellectual property rights, this will mean amongst other
things that Russia will provide for improved market access for foreign firms and a much
healthier competitive environment domestically. Through commitment to WTO rules and norms,
trade with, investment in and expansion onto the Russian market will become much more
predictable for foreign firms, thus reducing the ―risk cost‖ of the entry ticket onto the market.
The most recent reports suggest that Russia could be looking at an April 2011 accession to the
organization
Entry strategy for market
Alliance and Joint Venture
Entering into a JV with a Russian partner will derive certain benefits, such as
Facilitating the start of the foreign investor’s business operation by taking advantage of the
Russian partner’s relationships with, and experience of, the Russian authorities, suppliers and
consumers;
Reducing the risk of the Russian partner competing; and
Enabling (e.g. for tax purposes) a transfer of the Russian partner’s assets to some sort of
control by the foreign investor without having to finance an acquisition of Russian assets.
More over Russia exports its fertilizer products, as there is established market for exporting
fertilizer products Engro fertilizer can take benefit of that market by jointly working with partner
Find the Right Russian Partner
The right business partner is the single, most important factor to a company’s successful entry
into the Russian marketplace. Again, give serious consideration to working with qualified
outside consultants to locate potential Russian partners and to conduct comprehensive due
diligence investigations. The task of finding the right Russian partner should not be left to a staff
member who does not have knowledge of and experience in the Russian market.
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7. Negotiating With Russians
Although Russians are inexperienced in western business practice, they are often very skilled and
shrewd negotiators. In many, many instances, a stubborn Russian negotiator gets the best of an
businessman who is in a rush to close a deal.
For newcomers, negotiating with Russians can be a trying experience. The delays, the fibs, the
continual need to consult with higher authority, and the stubbornness have sent many business
delegations home in anger. However, those who live in Russia and get used to Russian
techniques often find negotiating Russian style to be an intricate, formalized game of power
politics. To negotiate with Russians successfully, you must be thick-skinned, bull-headed, and
warm-hearted, and always remember: the Russians are the world's greatest chess players.
The Outrageous Initial Position
The first phase in Russian negotiation is the outrageous initial position. This position is put
forward as a test of your character. Regrettably, Americans, anxious to please, sometimes agree
to the initial demands with only minor changes. This then teaches the Russian that he can make
further outrageous demands. Sometimes, the initial position is used as a way to get the
businessman angry or off-balance. Don’t take initial Russian positions too seriously. Often, it is
best to counter with your own equally outrageous initial position.
The Critic
Sometimes, a Russian manager enters a negotiation with a burst of criticism. The Russian then
requests concessions as a way to mend the relationship. When the businessman resists, the
Russian repeats the litany, and the demands, often with greater emotion. Hear the Russian out --
you may learn something. Then, consider attack him for his sins against you; or, if all else fails,
apologize. Frequently, the honest exchange of emotions puts your relationship on firmer ground.
The Savior
Other times, a Russian manager may tell of a tale of woe -- unpaid workers, lost orders, a
bankrupt factory with no prospects. Despite his poverty, because he is a good host, he spends his
last ruble on food, drink, and gifts for his guest. He calls upon the good-hearted businessman to
help him in his troubles. (Most of the time, the factory's troubles are all too true; though,
sometimes, the troubled factory manager has a new Mercedes parked outside.) Many
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8. businessmen find themselves transformed from business managers into social workers trying to
save a troubled Russian factory. Try to avoid this. Try to enter and maintain a business
relationship between equals. The "factory savior" approach to business in Russia usually ends
badly for both sides.
Delay as a Negotiating Tactic
Russians are skilled at using delay as a negotiating tactic. When Russians know you are anxious
to move quickly (usually the case), they will use this anxiety against you. They will delay on
setting a date for a meeting, delay on fixing a time and place, delay on reaching an agreement,
and delay on implementing. The Russian may be using delay as a way to extract further
concessions from you (or, the Russian may have better things to do.) Sometimes, business
delegations arriving Sunday are kept stewing Monday and Tuesday just so the Russians can
establish a position of initial advantage during the Wednesday meetings. Don’t be in a rush. Use
this free time to your advantage by meeting with the Russian’s competitors, or at least, seeing the
Kremlin or hermitage, and, of course, consulting with us&fcs commercial officers.
Concealment
Your Russian counterpart will not tell you everything. Make sure you don't tell him everything.
Concealment -- of assets, of rivals, of tactics, of legal arguments, of technologies --is tried and
true strength of Russian negotiators. Don’t fire all your ammunition in the first engagement. A
valuable Russian saying: "don't hurry to reply, but hurry to listen."
"I Do Not Have The Authority."
Russians use this phrase (and variations) as a polite way of saying "no." Sometimes, it's true --
other times, it just means no. Feel free to use this tactic yourself; it’s works.
"I Get Half - You Get Half"
Russians place great stake in reciprocity. If you give me this, I will give you that. I get half; you
get half. You can use this national desire for reciprocity as a tool to reaching agreement --
eventually.
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9. Legal Issues
Russia is therefore often perceived as a country that is struggling to observe the rule of law.
Russia has a civil, as opposed to a common, law system. Between 1994 and 2002, Russia
adopted an entirely new civil code which covers most areas of business law.
As well as being new, the Russian legal system is also in a state of almost constant flux, as rafts
of new laws come into effect to replace the old and to fill in gaps in legislation. The inevitable
uncertainty this creates is exacerbated by the fact that there is little guidance in doctrine and no
developed system of jurisprudence from which to draw benefit: precedent cases are difficult to
access, and are published mainly in the form of guidance notes by the supreme commercial court
or the supreme court of common jurisdiction. This makes it very difficult to opine on the
interpretation that a court may give to a specific provision of Russian law.
If an international treaty or agreement ratified by the Russian Federation establishes rules other
than those established by domestic law, the rules of the international agreement apply
So it is advisable to hire a consultant which has years of experience about Russian law in doing
business with Russians.
Political risk
Political stability has been achieved but it is young and widely criticized and its political stability
rests largely on the authority of one man, Prime Minister. Bureaucracy is another problem in
Russia, Corruption, the rule of law, questions as to the independence of the judiciary, red tape
and customs formalities are just some of the problems which can be located under the broad
umbrella of bureaucracy. Corrupt practices are usually widespread in Russia, and are considered
normal.
Practices corrupt by western standards run through the fabric of Russian society, from school
teachers taking cash from parents to give students better grades, to federal ministers and
parliamentary deputies running private business empires. Some estimates put the size of Russia’s
―corruption economy‖ at 10–15% of GDP—a conservative estimate since it only reflects
traditional cash bribes, not more sophisticated practices such as using a government job to
promote private business interests
These come in many forms including:
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10. • Voluntary contributions to special projects or the funds of regional and local administrations or
government departments (police, emergency services, etc.)
• Traditional bribes and more complex schemes to influence courts and prosecutors
• Extortion demands from power ministries (police, secret services, etc.)
• Bribes in return for necessary approvals from various agencies (e.g., fire inspection, building
safety inspection) or to obtain licenses (e.g., telecom frequency licenses).
• Commissions to high-level officials in the case of high-profile deals requiring their
authorization
• Petty bribes to traffic inspectors, doctors, teachers, etc.
Culture – Key Concepts and Values
Work Practices
A strong organizational culture with clear sustainable organizational practices that are used to
achieve specific goals has a positive correlation with high-performance in Russia. In the decades
of communism most Russian organizations were dull places to work because they provided little
meaning or opportunity for the majority of their members. Office politics, double ethical
standards, murky procedures, and unclear goals reigned. Companies that emerged during the first
decade of Russian capitalism often suffered from the same diseases of non-transparency and
arbitrary rule. As a result, the efforts of some Western companies to build strong and transparent
organizational cultures at their Russian subsidiaries have created a very positive response from
most Russian employees. This type of environment emulates the famous words from the film
Field of Dreams: ―Build it and they will come.‖
Russia’s work ethic is increasingly influenced by western culture, but the Russians also have a
unique set of values and attitudes and a different approach to communication, negotiation and
decision-making which could affect anyone doing business in Russia.
Structure and Culture of Companies
The new wave of Russian capitalism confirms this tradition: regardless of a successful Russian
entrepreneur’s competencies and management style, he or she invariably has enormous power
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11. within the organization. Followers look to the leader as a superior being who has unique rights
and, by definition, deserves compliance. Russians have a need for powerful charismatic leaders
and tend to create them often irrespective of the leaders’ intentions. Russians’ expectations of
foreigners in leadership positions, however, are more complex. The formal title of CEO does not
guarantee its holder the same level of compliance from Russian subordinates when a Russian
does not hold that position. Respect and conformity will come only if the foreign leader
demonstrates superior competence and delivers tangible results. Many foreign executives suggest
that creating an empowered organization in Russia is their largest management challenge. Yet
those who have made significant progress down the road to empowerment emphasize the
positive impact that it can have on employees’ motivation and performance if implemented
correctly, at a reasonable speed, and to the right extent considering employee readiness. First
and foremost, firms that have been successful with empowering their employees recognize that
empowerment should be a process, not an event. It cannot be implemented overnight and
requires continuous step by step efforts. At the same time, empowerment should produce some
visible results quickly to excite employees. Two elements are especially critical here – tolerance
of mistakes and refusal to make decisions that has been delegated to an empowered employee.
While empowerment is a challenge in many countries, in Russia it is particularly challenging and
important because of Russia’s tradition of limited empowerment and severe punishment of
mistakes. This tradition leads to reluctance to make decisions even when management has
delegated such power. In some instances when one tries to empower employees in Russia, the
actions are met with some resistance. For example, one manager at Gillette commented that
several times after he had delegated a decision he would find employees returning to him asking
him to make the decision.
Culture should not be considered as a side dish by foreign organisations in Russia. Focusing
solely on the bottom line and market shares may be a very short-term tactics but in no way a
sustainable strategy to enter the Russian market.
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12. Geert Hofstede Cultural Dimensions
COUNTRIES PDI IDV MAS UAI LTO
Pakistan 55 14 50 70 0
Russia 93 39 36 95 -
Pdi Power distance index
IDV Individualism
MAS Masculinity
UAI Uncertainty Avoidance Index
LTO Long-Term Orientation
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13. However when compared to Pakistan, Hofstede dimensions clearly prove that Russia and
Pakistan are quite different to each other in terms of cultural dimensions. So this means we have
to be aware about Russian culture before making entry in this market.
Russia’s highest Hofstede Dimension is Uncertainty Avoidance (UAI) is 95, indicating the
society’s low level of tolerance for uncertainty. As a result of this high Uncertainty Avoidance
characteristic, the society does not readily accept change and is very risk averse In an effort to
minimize or reduce this level of uncertainty, strict rules, regulations, laws, and policies are
adopted and implemented. The ultimate goal would be to control everything in order to eliminate
or avoid the unexpected. Therefore, Engro fertilizer has to be extremely careful with this. As the
Russian culture depicts that they believe in facts and figure and they believe in power of
legitimacy, so we have to provide them authenticated facts and figures and persuade them about
future prospect. Everything should be mentioned during meeting and agreement and there should
be no hidden clause, to reduce their uncertainty avoidance level.
Power distance index PDI is around 93, indicating that Russian obeys orders of their
superiors, companies follow centralized decision making and tall organization structures (many
levels of management). Russians prefer autocratic or majority rule decision making and are
reluctant to trust one another. On other side in Pakistan (Power distance index) PDI is 55,
indicating moderate structure it varies from organization to organization, some follow centralize
decisions or vice versa. Therefore, Engro Fertilizer has to give authority to their partners in
Russia and deal with the top management.
Masculinity culture dimension index of both countries indicates that they give more
importance on value tradition, belonging and family. This shows that Russian are concerned with
others, they have strong feelings and empathy towards others, where as Pakistan is in between
the scale. Therefore Engro Fertilizer management has to give importance to both the dimensions
and not to just earning, advancement and wealth. For their success, Engro Fertilizer has to be
making strong long term relationships with their counter parts along with the societal and
economic development.
Individualism score in Russia is around 39 which shows that Russian give salaries and
promotions on the basis of seniority. People of Russia value group, cooperation and satisfaction,
which is further higher in Pakistan as individualism score is 14. Results showed a surprising
level of individualism in the respondents from CEE; those from Hungary, Czechoslovakia,
Poland, Bulgaria, Romania and Russia all scoring in the top quartile for individualism. Russian is
a collectivism society, where promotions, advancement and earnings are based on seniority and
people look after each other in return of loyalty. So, the Engro Fertilizer has to considered this in
the HR policy and the procedures has to be formed on the basis of this ,objectives and targets
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14. should be formulated in such a manner that individual should meet their targets along with the
considerations of other needs.
Trompenaaar:
Specific versus Diffuse: Managers from specific cultures such as Denmark are much more
prone to criticize subordinates directly and openly without regarding their criticism as a personal
matter. Russia is more tuned towards diffuse culture which suggests that individuals are
protective regarding their public spaces. Russian have a diffuse culture, individualism are much
more protected about their public spaces. Engro Fertilizer has to look carefully for this things and
individual should be given equal respect everywhere and protect the individual public space.
Universalism vs. Particularism: Russians often modify legal contracts and change the
way deals are executed which suggest they are more towards particularism and decisions are
mostly made according to the situation rather than predefined methods of decisions. Russian
execute their operation in accordance with the local responsiveness, therefore Engro Fertilizer
will not face many difficulties in their operations because Russians are flexible to mold
themselves.
Neutral vs. Emotional Cultures: Russians’ culture is more towards emotional cultures.
People of Russia love to smile, talk loudly and express their feelings with enthusiasm but they
are conservative to strangers. It can also be extracted from their buying patterns as Russians are
patriotic while buying products and they don’t accept any foreigner to talk against their country.
Engro Fertilizer has to be extremely cautious, because Russians are emotional and patriotic. We
have to keep these factors in mind. All the documents, agreements, packaging and promotions
campaigns should be associated with Russian culture and history, in order to build strong
bonding between Engro Fertilizer and Russians. Russian language should be used in all
promotional activities and packaging. So Engro Fertilizer manager should be careful in dealing
with Russians and don’t talk about any negative aspect of Russian individual, culture and history.
Achievement vs. Ascription: Russians give importance to what or who the person is, to
them a person who is a friend will be more important and they would love to give time to those
who are known to them. Therefore Engro Fertilizer has to nurture the strong relationship
between employees.
Use of time: People of Russia are mostly following synchronous i.e. they don’t mind getting a
little late but want others to be on time. Synchronous time is used; they don’t have any pre-
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15. determined schedule and can alter their schedules due to personal engagement. Russians do more
than one task at one time. Russians can be late themselves but they want others to be punctual.
So Engro Fertilizer has to put this thing in consideration while having meeting with Russians
counterpart.
Communication
Language: The official language of the RF is Russian. It is also widely used in former
Republics of the USSR. Foreign languages studied in Russia are primarily English and German,
and at many schools English is an obligatory subject.
Verbal communication
Russia is a high-context culture. They tend to be indirect in their communications and their
understanding of a situation is typically based on a whole host of factors, rather than the
immediate threat alone.
The language itself is 'high-context' - Russia's defining feature is its contradictory nature. So,
even though it is generally high-context, you will often encounter very low-context Russian
behavior. Probably the best example is a person you've maybe met once approaching you,
suggesting a time and place to meet, and saying "agreed?‖ This sort of blunt exchange, stripped
of all contexts (i.e., 'i don't even know you'), will surprise even the most low-context of people.
In sum, Russians are high-context in general but be aware that they can sometimes switch to
low-context behavior without warning.
Russians will tend to wait and think before responding to a point made to them - do not be
impatient. Allow the Russians the time and space needed to take part fully in the conversation
and remember that they are probably struggling with foreign language as well.
In practice, the use of nicknames (or diminutives), inside jokes or corporate traditions are the
most visible features. The newcomer needs to be initiated to belong to the group.
Nonverbal communication
There tends to be very little visual or verbal feedback during meetings in Russia. People listen
silently and with little obvious body language being displayed. This does not, however, mean
that the listener is disinterested or does not understand - it is merely a cultural characteristic
which Russians share with.
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16. For example many people in Russia consider smiling at strangers in public to be unusual and
even suspicious behavior. Yet many Americans smile freely at strangers in public places
(although this is less common in big cities). Some Russians believe that Americans smile in the
wrong places; some Americans believe that Russians don't smile enough.
As we got to know from the research the Russia is at a midpoint between Japan and U.S, so
Engro Fertilizer has to deal very delicately in communicating with Russians because they tend to
be more direct and straight forward in some situations and in certain situation they tend to be
implicit and try to express themselves with gestures, body language therefore Engro Fertilizer
management has to Be careful in distinguish the different context and understanding the meaning
behind the words and gestures. For example in understand the consumer behavior and their
attitude it will be difficult to understand the behavior of high context cultural followers, so it will
be beneficial to appoint local researchers to conduct research and better understand the implicit
factors.
HR policy should be designed in considering both the culture and understanding the employs
behaviors and attitudes in order to satisfy and motivate them, Procedures and policies also be
according to them.
Tips for Doing Business in Russia
The following tips will help you ensure make the most of your experience doing business in
Russia:
Since personal and informal contact is crucial when doing business in Russia, be ready to
spend some time establishing rapport before discussing business. Getting past the initial
formality and silence you may experience with your Russian colleagues might take time
but it will result in stronger relationships and improved business interactions.
Russians are very patriotic. Avoid criticizing any aspects of Russian history, culture or
politics. Good neutral discussion topics are sports (especially winter sports) and family.
In meetings, Russians prefer a direct approach. You should be well prepared and your
presentations should be straightforward and comprehensible.
Russians are very status conscious and prefer to have meetings with those of equal status.
Decisions tend to be made by the most senior person.
Avoid praising or rewarding anyone in public as this may be viewed with suspicion and can
cause envy and jealousy. Any praise or criticism will be much better received in private.
The typical greeting is often a (very) firm handshake with the appropriate greeting for the
time of day like good morning, good afternoon or good evening.
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17. On the whole Russians have three names. The first name is the given name while the last
name is the father's family name. The middle name is a version of the father's first name,
known as a patronymic; for a man, it ends with the suffixes "vich" or "ovich" meaning 'son
of.' For a woman, the patronymic is also the father's first name but with suffixes "a" or
"ova" added, which means 'daughter of.'
When doing business in Russia make sure you take a business card. It is always a good idea
if you plan to maintain contacts in Russia to have one side translated into Russian. If you
do so make sure you add your title and any degrees or qualifications you have.
Always be punctual when doing business in Russia. However do not take offense if your
Russian counterpart is not. It is not unknown for Russian business people to turn up hours
late. A good indication of how serious a meeting is taken is how punctual they are.
Initial meetings are usually approached as a formality. It is at this stage that your credibility
will be assessed. The best strategy is to appear very firm and dignified, while maintaining
an air of warmth and approachability.
Pitches or presentations should be simple and straightforward. Generally Russians are not
impressed by foreigners doing business in Russia who use special visuals, flashy
PowerPoint presentations and the like. These do not sway decisions. The most critical
element is demonstrating your knowledge, professionalism and expertise.
Many Russian business personnel speak good English so presenting in the language is not a
problem. If it could be then hire a Russian interpreter. It is however that you make the
effort to present anything written in Russian.
Negotiations are an interesting affair for anyone doing business in Russia. They are tough
and like to indulge in a fair amount of theatre if necessary. Their main aim is to gain
concessions so there will be a lengthy process of grinding you down. Caving in too early is
a sign of weakness so stand your ground. If you do feel the need to concede ask for the
gesture to be reciprocated in some way. Generally speaking, Russians view compromise as
a sign of weakness. Don't be surprised by loss of tempers, walkouts, threats to end the deal,
and similar incidents. It's all part of the fun.
Conclusion
Russia is considered as riskiest place to do business but if one can understand its cultural values,
communication styles, their negotiation techniques and their rules and regulations can get good
profits. Certainly there is big difference in Pakistani cultural and other dimension from Russia
one need to understand and apply those things that are mentioned above, to successfully run their
business in Russia.
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