Doing Business With The Former Soviet Republic CASE 1.2 Doing Business with the Former Soviet Republic 1.FACTS – as managers become aware of all the different people with old U.S.S.R., U.S. businesses are realizing that they face not just one but fifteen or more new markets opening themselves to western trade. – The former Soviet Republics are eager to do business in part because they are all suffering from severe economic woes. – Their gross national products are falling, their budget deficits are rising, and inflation is dissolving citizens buying power. – So all the republics need to sell products to bring in stable western currencies and most are negotiating to sell their natural resources like oil, gold, furs, fish, and reindeer products. – Companies are also eager to use waste as a natural resource. – Recycling, mining, metallurgical, and agricultural waste may prove to be a big business.
– Japanese companies are already buying coal wastes from Russia to turn into chemicals for manafacturing. – Western businesses must deal with poor communication and transportation networks, a lack of experience in Western business practices, and a currency that is not convertible. – The former Soviet republics can lure Western companies with their low-cost labor, but most workers need extensive training to work with modern technology and methods. 2.STATE THE PROBLEMS 1. When approaching the old U.S.S.R.
market about Western trade you must approach fifteen or more markets instead of just one. 2. Their gross national products are failing, and they are suffering from severe economic woes. 3. Western businesses must deal with poor communication and transportation networks, a lack of experience in Western business practices and a currency that is not convertible. 4.
How long of a wait for positive feedback? 5. How much time, money, and managers will we be giving up? 3.STATE SOLUTIONS TO PROBLEMS 1. Work around the gross national products to try and find some other natural resources and keep currency since it is not convertible. 2. Send top managers and top planners over to train individuals in certain areas and keep currency since it is not convertible. Wait a couple of years for positive feedback on workers and production of oil, gold, furs, fish etc.
3. Pay Ukranian or Lituanian workers low-cost labor and take the chance that everything works out. 4. Do Nothing 4.RANK SOLUTIONS Fair Possible Time Legal Cost = Total Solution #1- 3 4 1 3 2 13 Solution #2- 5 5 3 5 5 23 Solution #3- 4 4 2 4 5 19 Solution #4- 2 3 5 5 5 20 5.BEST SOLUTION The best solution at hand would be to send some of our top market managers and top planners over to train individuals in certain areas. Than wait a couple years for positive feedback in the economy, workers, and the production of oil, gold, furs, and fish. 6.IMPLIMENT THE DECISION Send top managers and planners over now to start training on individuals for preparation in selling products to improve the economy of the Soviet republics.
7.FEEDBACK After two years economic growth has occurred, gross national products are evening out, budget deficits are down and buying power has returned to the citizens. Legal Issues.