IBC 201 – MS LA THI CAM TU

INDIVIDUAL ASSIGNMENT
Name: Nguyen Thanh Phat Code: SS150373
Nguyen Quang Hoang Phuc Code: SS150376

I. Introduction

Russia is an empire: it sees itself as an empire, it has an imperial history, and it sees itself
as continuing to play the role of an empire in geopolitics today. As a result, most Russian
discussions, not just those performed by the Russian government, but also those
conducted by Russian businesspeople, are handled from a power standpoint.

Negotiation is viewed by Russians as a "power game," or "силa" (force). They will

usually take a firm stance at the start of a negotiation, and they will respond with tough
comments to their rivals even in the last phases.

Even though negotiation theorists talk about the entire opportunity and achieving "win-
win" outcomes that benefit both parties, Russians have a tough time adapting to this
negotiation style. Indeed, the word "winning" in Russian signifies that the opposing team
loses or abandons the game. The Russian negotiation mentality is an incredibly powerful
and uncompromising approach, which ignores emotional and psychological concerns that
are frequently mentioned in negotiation theory.

1. Russian historical context

Since the start of the 21st century, Russia has undergone the following domestic
transformations:
- During the first decade of the new millennium, the economy grew steadily.
- Much of the most heinous crime and lawlessness of the 1990s was ended.
- However, political freedom has worsened since Vladimir Putin's first term, according to
experts (the mass media are controlled by the state)
- Vladimir Putin's third term, which began in 2012, has been marked by a greater
emphasis on social conservatism than his previous two.
- Putin aimed to establish Russia as a distinct society with values distinct from those of
the European Union and the United States.
-Russia has emerged as a commercial and financial hub, as well as a major producer of
oil and natural gas, over the last two decades.

2. Russian cultural analysis based on Hofstede’s method

*POWER DISTANCE:
This component deals with the fact that not everyone in a society is equal — it displays
the culture's attitude toward inequalities among us. The extent to which less powerful
members of institutions and organizations within a society expect and accept unequal
power distribution is characterized as power distance.

Russia, with a score of 93, is a country with very distant power holders. This is
emphasized by the fact that the world's largest country is incredibly centralized: two-
thirds of all foreign investments go to Moscow, which also houses 80 percent of the
world's financial potential. Because of the tremendous disparity between the powerful
and the less powerful, status symbols are extremely important. In all aspects of corporate
interactions, including visits, discussions, and cooperation, behavior must reflect and
represent the status roles. The approach should be top-down, with clear mandates for any
work.

*INDIVIDUALISM:

The degree of interconnectedness that a society maintains among its members is the key
issue addressed by this dimension. It all comes down to whether people define their self-
image in terms of "I" or "We." Individualist civilizations expect people to look after only
themselves and their immediate family. People in collectivist civilizations are members
of "in groups" that look after them in exchange for loyalty.

If Russians want to go out with their friends, they will say "We with friends" instead of "I
and my friends," and if they talk about siblings and sisters, it is likely that they are talking
about cousins, thus a lower score of 39 is reflected in the language. To cope with the
hardships of ordinary life, family, friends, and, frequently, the neighborhood are
essential. Relationships are essential for collecting information, being introduced, and
negotiating successfully. Before one can focus on duties and develop on a careful to the
receiver, implicit communication style, they must be personal, real, and trustworthy.

*MASCULINITY:

A high score (Masculine) on this dimension indicates that competition, achievement, and
success will drive society, with success defined by the winner/best in field - a value
system that begins in school and extends throughout organizational life.
A low score (Feminine) on the dimension indicates that caring for others and quality of
life are the prevailing values in society. In a Feminine society, living a good life is a sign
of success, and standing out from the norm is frowned upon. The primary question here is
whether people are motivated by a desire to be the best (masculine) or by a desire to
enjoy what they do (Feminine).

Russia's low score of 36 may surprise you in terms of its affinity for status symbols, but
this is due to the country's high Power Distance. On second thought, it appears that
Russians, both at work and when meeting a stranger, tend to understate their own
accomplishments, contributions, or capacities. They talk modestly about themselves, and
scientists, researchers, and doctors are frequently required to live on a low income. When
it emanates from the boss, dominance is tolerated, but it is not tolerated among peers.

*UNCERTAINTY AVOIDANCE:

Uncertainty Avoidance is a dimension that deals with how a society deals with the reality
that the future cannot be predicted: should we strive to control it or just let it happen?
This ambiguity causes anxiety, which different societies have learned to cope with in
different ways. The score on Uncertainty Avoidance reflects the extent to which
individuals of a culture feel frightened by ambiguous or unclear events and have
constructed beliefs and institutions to try to avoid them.

With a score of 95, Russians are particularly concerned with unclear circumstances, and
they have created one of the world's most sophisticated bureaucracies. Presentations are
either not prepared at all, such as when negotiations are just begun and the focus is on
creating relationships, or they are incredibly thorough and well prepared. It's also fairly
normal to do extensive planning and briefing. Russians prefer to know what's going on in
their lives. When Russians connect with individuals they don't recognise, they come out
as formal and distant. Formality is utilized as a sign of respect at the same time.
*LONG-TERM ORIENTATION:

This dimension shows how, despite dealing with the issues of the present and future,
every society must maintain some ties to its own past, and cultures prioritize these two
existential aims differently. Societies that follow the rules. Which have a low score on
this dimension, for example, like to keep time-honored traditions and customs while
being suspicious of society change. Those with a high-scoring culture, on the other hand,
take a more pragmatic approach, encouraging thrift and investment in contemporary
education as a means of preparing for the future.

Russia has a very high score of 81, indicating that it is a pragmatic country. People in
pragmatic civilizations believe that truth is highly dependent on situation, context, and
time. They demonstrate a capacity to easily adapt traditions to changing circumstances, as
well as a strong desire to save and invest. frugality and tenacity in accomplishing goals
*INDULGENCE:

The degree to which little children are socialized is a difficulty that humanity faces now
and in the past. We do not become "human" without socialization. This dimension is
described as how far people try to regulate their urges and impulses as a result of their
upbringing. Indulgence refers to a lack of control, while restraint refers to a strong level
of control. As a result, cultures might be classified as either indulgent or restrained.

Russian culture is characterized by its restraint, as evidenced by its low score of 20 on

this category. Cynicism and pessimism are common in societies with a low score on this
area. In addition, unlike Indulgent civilizations, Restrained societies place less
importance on leisure time and exercise greater control over the fulfillment of their needs.
People with this viewpoint believe that their behaviors are constrained by social norms,
and that indulging themselves is unethical.

3. Business environment in general:

In recent months, the Russian Federation has been a hotspot of political activity,
criticism, and controversy, attracting the attention of worldwide media and causing global
retailers to be wary about expanding into the country. New Look, a well-known British
retailer, pulled out of Russia and Ukraine in late 2014, citing concerns about the
countries' political stability, and many others have followed suit. The retail community is
hesitant to take advantage of Russia's large ecommerce potential because of the tense
atmosphere and retail retreat. Is now the moment to take advantage of Russia's vast
ecommerce potential, or will the stumbling hurdles outweigh the opportunity?

Government interference in business:

Russia is well-known for the elevated levels of government regulation and red tape that
accompany corporate transactions, and it is obvious that the Russian government
maintains tight control over commercial procedures and infrastructure, as well as the
economy. Natural monopolies, for example, are strictly regulated by law and government
agencies, primarily the Federal Antimonopoly Service (FAS). Forbes magazine ranked
Russia 91st out of 146 nations for its business climate and 30th for government
intervention in business in its eighth annual list of the Best Counties for Business in 2014.
It is easy to see why Russia's economic environment would not be regarded as
particularly welcoming to a foreign e-Retailer entering the country.

Russia's recent macroeconomic policies, on the other hand, point to future improvement
in this sector, and long-term measures have been put in place with the goal of establishing
a nurturing and progressive environment for foreign and local business. Advancement in
this field is thus eagerly expected in the future years; organizations may expect to see a
reduction in government oversight of enterprises, as well as a reduction in administrative
barriers connected to day-to-day operations. Additionally, plans call for the merger of
state regulatory authority.

Social demographics:

Extensive socioeconomic upheaval has spread over the Russian Federation in recent
decades, appearing to be an unavoidable outcome of the territory's economic policy
progress. Economic liberalization has been designated as a priority, and the consequences
of this ideological change are visible. Significant developments include a growth in the
privatization of state-owned enterprises, a rising consumer market, and a transition from a
centrally planned economy to a market-based one.

Such shifts in the Russian Federation's macroeconomic orientation have resulted in

increased social mobility. Private-sector employment has grown, and entrepreneurship
has thrived - at least in certain parts of Russia. Consequently, Russian society's structure
is becoming less rigid, and this greater flexibility has yielded some outstanding public
achievements.

Employment and wages:

The Russian Federation's low unemployment rate has been one of the country's most
notable economic successes during the previous 15 years. However, as predicted, the
territory's economic crisis is having an impact on the labor force. Though Russia's jobless
rate fell by 2.1 percent year on year in January 2015, the picture is less encouraging
month on month. According to the FSSS, unemployment in the Russian Federation grew
by 3% between December 2014 and January 2015, reaching 4,176 million individuals, or
5.5 percent of the economically active population. This rate has risen to 5.8 percent by
February 2015. As Russia's financial woes worsen, unemployment rates are projected to
rise further.

The national minimum wage in the Russian Federation from January 2015, as approved
by Federal Law No. 408-FZ of 1 December 2014, is RUB 5,965 per calendar month
(approximately USD 101 as of March 2015), though individual regions of Russia could
set the minimum wage in their specific territory. For example, the minimum salary in the
Moscow area is RUB 9,000 PCM, but the minimum wage in Moscow itself is RUB
12,200. The Krasnodar area has a minimum pay of RUB 6,469 PCM, whereas St.
Petersburg has a minimum wage of RUB 8,326.

4. Approaches to resolve disagreements and conflicts in business and politics:

The approach Russia takes to managing conflict is a form of coercive diplomacy: a

strategic combination of hard power and diplomatic knowledge. In managing conflicts in
a manner that respects the national interest of Russia, it has often been highly efficient.
The aim is to stop the struggle and not transform societies.
- Ten principles of Russian Conflict Management:
1. The goal is to stop the fighting, not to transform societies.
2. A strong state is the only way to guarantee stability.
3. Engaged, powerful States are better mediators than neutral, weak countries.
4. For powerbrokers, peace talks are
5. Military and peace talks are intricately linked.
6. Effective peace-making calls for control of information.
7. The end justifies the resources.
8. Humanitarian
9. All conflicts have a regional dimension.
10. The West is part of the problem, not part of the solution.

5. National negotiating style, strategies and techniques

Russian negotiation culture is based on force, originated from empire mentality, and it is
very formal.

Russia is a powerful country, it sees itself as an empire, has an imperial history, and
currently in geopolitics it continues to play the role of an empire. Therefor, most Russian
negotiations, from the Russian government, to those carried out by Russian businessmen,
come from a power perspective.

Russians perceive negotiation as a power game. They will normally show a very tough
stance at the beginning of a negotiation, and will offer critical responses to their
counterparts even at the last stages of negotiations.

Another important element in Russian negotiation culture is called “отношения”

(otnosheniya). However, the word “отношения” cannot literally means “relationships,”
because “отношения” is something much more fundamental than what we usually
perceive as “relationships.”. For dealing in Russia, entrepreneurs need to undergo long
periods of developing relationships, and only when they have been admitted to the circles
of relationships, will they be able to conduct business. A person will never be able to
finalize a deal, unless he or she has established long-standing relationships.

6. Qualities, Strengths and Weaknesses of Russian negotiators

Although theorists speak about the overall opportunity, and looking for “win-win”
outcomes that can benefit both parties, Russians find it hard to adapt to this approach.
Indeed, “victory” in Russian language means that the other side loses or leaves the game.
The Russian negotiation mentality is a very strong approach, and even an inflexible one,
which to some degree bypasses emotional and psychological context often discussed in
negotiation theory.

While Westerners will often approach negotiations with a cooperative attitude, the
Russian businessman or politician will approach it with force and a confrontation
mentality. The Western negotiation paradigm is based on sharing information. Whereas
in Russia, negotiators do not want to disclose any information. This difference often
prevents the two sides from reaching common ground for the duration of the negotiation
Russians also dislike bargaining because of the empire mentality. For Russians,
bargaining can feel cheap, overly crass and commercial, unworthy of respect and dignity.
From their perspective, in politics or business they do not bargain, they negotiate.
Therefore, Russians might have clashes when encountering “bargaining cultures”, such as
India, Arab, Italia, Latin America, etc.
7. Best practice for negotiating with Russian managers

As a foreign negotiator, credentials and authority must be proven quickly, as Russians

consider status and technical expertise in high level. While Russians respect firmness and
dignity, you must also be approachable and sociable. For effective communication, you
should realize that Russians might seem reserved at first, but they usually open up during
socializing. Meals and entertainment are a pleasant setting for developing relationships
and support personal interaction. In fact, such interactions are vital, due to most Russians
do not trust people who are “all business”. Russians tend to treat schedules and deadlines
flexible and complete their assignments at the last minute. However, under certain
conditions, you might meet Russians using a different approach and obeying to relatively
strict standards of timeliness.

II. Conclusion
Russia considers itself as a world leading power for a long time. It keeps and desire to
play the key role in geopolitics nowadays. Therefore, most of Russian discussions, not
only from the authority but also from corporations are handled from a power standpoint.

This approach possesses several advantages and disadvantages for Russian negotiators.
They could easily dominate the negotiation process, obtaining major objective through
aggressive style, but often ignores or looks down on their counterparties’ cooperation
wish, bargain, or openness. In the end, to effectively deal with Russians, you might want
to be knowledgeable, reliable, and sociable. You also need to prove your status or
expertise to gain trust from Russians.

References:

https://www.marshallcenter.org/en/publications/marshall-center-books/russias-global-
reach-security-and-statecraft-assessment/chapter-13-russian-diplomacy-and-conflict-
management
https://foreignpolicy.com/2018/06/12/russia-doesnt-solve-conflicts-it-silences-them/
https://embahs.skolkovo.ru/en/emba-hs/blog/culture-and-negotiations-the-russian-style/
https://newrepublic.com/article/91887/thoughts-negotiating-russia
https://www.todaytranslations.com/consultancy-services/business-culture-and-
etiquette/doing-business-in-russia/