A comparative study of political, economic and social-cultures issues of the Russia and India

Prepared for:
Dr. Joe Zhou Peng

Submitted: 11 May 2015

Prepared by:
Zahara CitraArifin
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Table of Contents
INTRODUCTION 1
Task 1
1.1 Economy of Russia and India 2 Terrorist aspects of globalization 2
1.2 Political System of Russia and India 3 Discrimination against Woman 4 Corruption 4
1.3 Socio-Cultural of Russia and India 5 Hofstede’s Cultural Dimension of Russia and India 5 Written and Unwritten Laws 6
Task 2
2.1 Culture Shock 7
2.2 Cross Cultural Training 8
2.3 Compensation and Motivational 8

CONCLUSION 9
BIBLIOGRAPHY 10
APPENDIX 11

INTRODUCTION

The aim of this study is to compare and analyze major political or legal, economic and socio-cultural issues of Russia and India, with a view to increase new international manager awareness of the implication of cultural differences and similarities for international management. At the same time, it is important to be sensitive to potential risks associated with doing business in international trade and have knowledge or practice about culture of destination country. However, it is a challenge for managers to adapt, promote diversity and maintain solid organizational culture.
This report begins with Part 1.1 by explaining economic development for Russia and India. Part 1.2 considers the political and legal issues, focusing on government structure, but also examines problems that arise due to political situations such as discrimination and corruption. Part 1.3 compares both countries socio-cultural issues, acknowledging the importance of Hofstede cultural dimension, as well as written and unwritten laws for international interpretation. Part 2.1 examines cultural shock as a result of overseas posting, also consider cross cultural training which will increase new manager cultural competency.

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Task 1 1.1 Economy of Russia and India
Economy has become one of the major systems for internationalism. As part of BRICs members, Russia and India share common traits in terms of their economic condition. Both were planned socialist economics characterized by centralized distribution of resources, nationalized industries with a focus heavy industry, highly protected economies where structural and bureaucratic impediments were vigorously fostered and underutilization of foreign trade (Mukherjee 2007). Russia is one of the world’s leading producers of oil and natural gas and is also top exporter of metal such as steel and primary aluminum (CIA 2014). Meanwhile, India is now home to globally recognized companies in pharmaceuticals and steel (World Bank 2015). Besides that, India’s diverse economy encompasses traditional village farming, handicrafts, wide range of modern industries and become a major exporter of information technology services, business outsourcing services, and software workers.
Terrorist aspects of globalization
However, both countries have many challenges that it has yet to fully address such as terrorism. The threat posed by various domestic and international terrorist groups in India is substantial. Coordinated terrorist attacks on locations frequented by foreigners and expatriates in November 2008 highlighted the risk of collateral damage in India and it is possible that future attacks could target Western iconic locations and those places frequented by foreigner and expatriates (Government of UK 2014). Whereas, Russia has been bracing itself for terrorist attack since July, when Doku Umarov, the self-proclaimed emir of the northern Caucasus and a Chechen terrorist leader, pledged to disrupt the Sochi winter Olympics and lifted a moratorium on civilian targets in Russia that he had imposed in the wake of anti-government protests in December 2011 and it due to the failures of the Russian state and the indiscriminate use of violence by the security services that had fuelled radicalization and the spread of Islamist fundamentalism in the region (The Economist 2014). Those are some of economic issues that need to be concerned of by international managers who are being transferred either to India or Russia.
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1.2 Political Systems of Russia and India
The second major issue in internationalization is political risks. Russia is the largest country on earth in terms of surface area - emerged from a decade of post-Soviet economic and political turmoil to reassert itself as a world power (BBC 2015). It is federation form of government which the nation’s politics have been dominated for more than a decade by the regime of President Vladimir Putin, who has re-nationalized private assets, cracked down on freedom of expression and pursued an expansion of regional influence (The New York Times, 2015) Whereas India is a Sovereign Socialist Secular Democratic Republic with a Parliamentary forms of government which is federal in structure with unitary features (CIA 2014). There is a Council of Ministers with the Prime Minster as its head to advice the President who is the constitutional head of the country (Government of India 2015). Political risk is a major concern for global companies in a wide range of industries. According to World Bank (2014) more than half of all organizations believe that political risk will be the most important constraint on investments in emerging markets. Policies by host governments may favor national interest, not market forces (Deresky & Christopher 2012) Russia has high levels of political risk, reflecting its effectively authoritarian government and accordingly, high levels of political interference in key sectors (Rapoza 2013). Meanwhile, In India political risks vary significantly from state to state. Some states have had highly publicized conflicts with some foreign companies but also offer significant investment incentives, such as highly educated workforce (Accenture 2012).

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Discrimination against Women
Violence, discrimination against women and inequality are still pervasive in both countries. The majority of Russia’s unemployed are women and some Russia organization still reserves certain jobs for men (McFarlin & Sweeney 2011). Therefore, Russia government set some laws such as standard rules on the equalization of opportunities for person with disabilities that relate to equality and anti- discrimination (Equal Right Trust 2015). However, gender discrimination continues to be an enormous problem within Indian society. Women are commonly married young, quickly become mothers, and are then burdened by stringent domestic and financial responsibilities (Foundation of sustainable development 2014). Hence, India government set policy which includes state shall not deny to any person equality before the law or the equal protection of the laws within the territory of India and shall not discriminate against any citizen (Fredman 2012, p.19). However, both countries have many challenges that it has yet to fully address such as corruption.
Corruption
Corruption is endemic and well entrenched in Russia and India. It is major concern for business operating there. Therefore, according to Government of UK (2014) the Russian authorities are making some efforts to curb corruption and bribery. Whereas, corruption in India has the potential to become destabilized socially and politically (Asia risk 2011). It was downgraded on the back of elevated regulatory risks and ongoing corruption and moderately high levels of political interference (Wilson 2014).

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1.3 Socio-Cultural Risks of Russia and India
The third dimension in internationalization is socio cultural risk. Business culture differs from country to country due to the influence of its national culture. The national culture of a country is shaped by various factor rights from the origin of the country to the present day social changes (Boopathi 2014) The organizations operating in an international business environment may have set of standard policies and rules but it is obvious that those policies are followed differently within its own organization as the people from different countries do things in different ways. Moreover, people within the organizations will also have different attitudes and behaviors due to the influence of their national culture ( Troompenars & Turner 1998). Therefore, it is inevitable that national culture affects its business environment and business organizations as business must interface with people, either as employees, customers, suppliers or stakeholders from different parts of the world (Jones 2007).
Hofstede’s Cultural Dimension
According to Hofstede (2014) Both Russia and India score high on power distance dimension which indicate an appreciation for hierarchy and a top down structure in society and organizations. In terms of masculinity, Russia scores low compared to India which show that Russian prefer talk modestly about themselves, while India is very masculine in terms of visual display of success and power (Deresky & Christopher 2012, p109). Russia whose culture is high in uncertainty avoidance, feel very much threatened by ambiguous situations, whereas India there is acceptance of imperfections (Hofstede 2014) Both Russia and India receive a low score in indulgence dimension, meaning that it is a culture of restraint which has tendency to cynicism and pessimism (Deresky & Christopher 2012, p.111). In terms of individualism, India is a society with both collectivistic and individualistic traits. Hiring and promoting decision are often made based on relationship but also Indian individually responsible for the way they lead their lives (Hofstede 2010). Meanwhile, Russia score high on collectivism. Russian perceives relationships are crucial in obtaining information, getting introduced or successful negotiations (Hofstede 2014)
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Written and unwritten laws for international interpretation
The ineffectiveness of the rule of law is one of the main obstacles to Russian and India economic political development. Tax evasion, capital flight and abuses of corporate governance are some of the problems for foreign investments. According to the Moscow Times (2000) whenever Russian government faces unexpected expenses, banker’s industrialists and others will receive phone calls from high-ranking officials and be asked for substantial donations. These practices are to large extent responsible for non-transparency of Russia economy, mainly because they are regulated by what is referred to as informal arrangements, unwritten codes or unspecified rules (Ledeneva 2011, p.3)

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Task 2
Nowadays, globalization is the most critical challenge international company face today. Companies are more global and employee groups more diverse than ever before. Therefore, many companies send their new international managers overseas to work. Postings can be difficult for families such as spouse’s career has been compromised, not to mention children have to cope with difficult travel condition to and from school. As a result, overseas posting will lead to culture shock. According to Oberg (2006, p.142) culture shock is precipitated by the anxiety that results from losing all our familiar signs and symbols of social intercourse. There are four stages of culture shocks such as honeymoon, frustration, adjustment and acceptance stage. In order to deal with culture shock, managers need to gather information about the culture of destination country, making friends and develop local interest. Hence, managers who are being transferred to India need to know particular problems. In terms of language spoken, India now claims to be the world's second-largest English-speaking country (Masani 2012). It means there will be no communication difficulties. However, water remains a major problem with almost quarter of the city's household not having a regular water supply (BBC 2014). Providing safe drinking water remains a major infrastructure and public health challenge in India (Yee 2012). Since mostly Indian people are vegetarian, it is difficult for restaurant to legally source or serves beef to customers. Even though, there is no national law for banning the sale or consumption of beef, many states in India have forbid people to consume beef (Independent 2015). It means new international manager and family are expected to respect animals such as Cows and Bullocks.

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Different cultures require different employment approaches. Hence, new manager need to practice training programs in order to prepare them for the challenges of managing new employees. One of popular training program is cross cultural. The objective is to increase the cultural competency of all those who will be part of the overseas assignment (Deresky 2012, p.316) Three types of cross cultural training, cultural-general awareness training aims to prepare people for experiences before departure which can significantly diminish risk of falling interact effectively (Peng 2015) Second is country-specific training which emphasize on a generalist approaches to living and working successfully in the host country, whereas cross-cultural communication training helps expatriates to negotiate more effectively across culture (Moran & Harris 2011) The good news is that cultural challenges are manageable if managers and team members choose the right strategy and avoid imposing single-culture-based approaches on multicultural situations (Brett, Behfar & Kern 2006). Indian employee would like to receive feedback on their status. In high power distance cultures as in India, workers are accustomed to leaders who are more authoritarian (Harvard Business Review 2015). A culture of high masculinity such as India suggests that most people would be more comfortable with the traditional division of work and roles. Senior managers are expected to find appropriate motivational techniques to persuade employees. Senior managers need to understand how to effectively reward their subordinate.

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CONCLUSION
Due to globalization, the number of companies operating internationally is growing constantly. Firms must follow local rules and regulations of the countries in which they operate. In some countries, the government controls more aspects of daily life than in others. Authoritarian governments such as Russia and India centralize all control in the hands of one strong leader is tend to use more fear and corruption to maintain control. Therefore, businesses must focus on is how a country’s political system impacts the economy as well as the particular firm and industry. Firms need to assess the balance to determine how local policies, rules, and regulations will affect their business. In fact, political stability is a key part of government efforts to attract foreign investment to their country. At the same time, culture is also become one of obstacles for firm entering new foreign country. Understand how local employee behave will help international manager adapting with local culture. However, international manager and families will experience culture shock while moving to India. They have to cope with new living conditions and deal with domestic problem such as hygiene and terrorism.

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BIBLIOGRAPHY

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APPENDIX: Key economic and demographic details | India | Russia | Government style | Federal Republic | Federation | Population (million) | 1,236,344,631 | 142,470,272 (July 2014 est.) | Current GDP per capita (US$) | $5,800 (2014 est.) | $24,800 (2014 est.) | GDP (US$ billions) | $7.277 trillion (2014 est.) | $3.568 trillion (2014 est.) | Growth rate of GDP | 5.6% (2014 est.) | 0.5% (2014 est.) | Inflation rate | 8% (2014 est.) | 9.1% (2014 est.) | Unemployment rate | 8.6% (2014 est.) | 4.9% (2014 est.) | Labor force | 502.2 million (2014 est.) | 75.25 million (2014 est.) | Expenditure on education | 3.8% (2012 est.) | 4% (2008 est.) | Literacy level | 560,687,797 persons | 99.7% of populations | Languages spoken | English enjoys the status of subsidiary official language but is the most important language for national, political, and commercial communication. Hindi is the most widely spoken language and primary tongue of 41% of the people | Russian (official) 96.3%, Dolgang 5.3%, German 1.5%, Chechen 1%, Tatar 3%, other 10.3% | Religion/s | Hindu 80.5%, Muslim 13.4%, Christian 2.3%, Sikh 1.9%, other 1.8% | Russian Orthodox 15-20%, Muslim 10-15%, other Christian 2% (2006 est.) |

Sources used:
CIA https://www.cia.gov/library/publications/the-world-factbook/
Ministry of Home Affairs India http://censusindia.gov.in/Census_And_You/literacy_and_level_of_education.aspx
World Bank http://data.worldbank.org/indicator/SE.XPD.TOTL.GB.ZS/countries
Global Economy http://www.theglobaleconomy.com/Russia/Education_spending/

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