Essay about Pestel Analysis Russian Federation

3424 Words Nov 2nd, 2012 14 Pages
4.1.1 PESTEL Analysis
This part of the dissertation will analyze main political, economic, social, technological, environmental and legal issues within the Russian Federation. All of the Interviewees outlined the political aspect as the most important when investing into Russia, however the Author would like to acknowledge that the economical and legal factors have a critical weight in the issues of FDI, therefore their analysis will play a comprehensive role in the thesis, assuming that the initial reader has no background knowledge of the environment. Please refer to section titled Analytical Tools (3.2.3) for the theoretical underpinning of the model used.

PESTEL Analysis
Political

◊ New democracy
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According to the Deputy CEO (Question no. 20, 2010), there international opinion of Russia is that it uses energy as a ‘political instrument’. President Medvedev is seen to be keen on a much more open environment. Russia has currently been attempting to diversify its exports to Asia and has close links with China, which is recognized internationally as a potentially leading economy in the future (Anker & Aronsen, 2010).
Corruption index in Russia is one of the highest in the world. According to the Transparency International’s Corruption Perceptions Index (2009) - Russia ranks 147th out of 179 countries. Corruption levels are comparable to Niger and the Democratic Republic of Congo, considering the economic power of the Russian Federation (7th in the world in terms of Purchasing Power Parity), the amount and size of bribes is soaring, despite government’s policies on anti-corruption (new legislation requires government officials to register their income) (Index of Economic Freedom, 2010).
Risk Exposure: The political analysis leaves foreign investors subject to cultural and systematic legal risks as the corruption makes administration process longer.

Economic
When making a decision to make a Direct Investment into a country economic analysis is crucial as the economy of the country is a foundation for all aspects of the business environment. The analysis will focus the key areas of the Russian economy: the Gross Domestic Product (GDP),

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