Essay Pest for Russia

1491 Words6 Pages
Assignment 1- PEST Analysis: Business Environment in Russia
(982 words)

Pest Analysis: Business Environment in Russia
Introduction
Russia, with a wide base of natural resources and one of the BRIC countries is seen as an attractive market to gain a toehold in by global investors including the United Kingdom’s retail industry. This report aims to analyze the business environment in Russia for British retailers using the PEST analysis. The PEST analysis will focus on four different aspects of the business environment which are the political, economic, sociocultural and technological factors.

Political
The political factor will consider the level of corruption in Russia and how it affects the retail industry seeking expansion.
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The World Bank stated that ‘Russia is likely to grow by 4.2 percent in 2010, followed by 4.5 percent in 2011 and 3.5 percent in 2012’ (The World Bank, 2010, pp. 2). They went on to claim that Russia would increase in world growth by 3.5% in 2010, followed by 3.2 % in 2011 and 3.6 % in 2012 (ibid.).
Furthermore, Russia has the 7th largest labour force in the world. The unemployment rate has also improved from 8.4% in 2009 to 7.6% in 2010 (CIA, 2011). These statistics signify that the Russian economy is moving in an upward trend.
Based on the Global Retail Development Index (GRDI) carried out by management consulting firm A.T. Kearney (2011), Russia managed to clinch the 2nd spot in 2009 but dropped to the 10th spot in 2010. Although Russia fell to tenth on the GRDI, it still remains as one of the most high priority market for retailers.
Besides that, Russia’s Federal State Statistics Service (2011) showed that the retail trade turnover Russia has also increased from 3693,2 billion rubles in 2009 to 4191,0 rubles in 2010 proving that the retail market there is very profitable.

Social
The sociocultural factors on the other hand will consider the perceptions of Russian consumers in addition to their population growth, income distribution and living standards. According to the research carried out by Huddleston et al. (2011, pp.179), Russians ‘do perceive differences in product quality

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