Description Conducting business internationally requires a keen understanding of the cultural, legal and political systems of foreign markets. The business executive must closely monitor changes in the political environment that may pose new and increasing risks and be prepared to act. Since freeing itself from communism over 20 years ago, Russia has been undergoing an evolution, from communism to a supposed free market economy and now, on to something else yet to be clearly defined. Most recently, Russia has been described as a quasi-totalitarian state under the firm hand of its president, Vladimir Putin. During Russia’s early transition, many foreign businesses, including U.S. firms and venture capitalists had viewed Russia as a large and under served market with great potential. Fast forward to 2014. Pro-Russian separatists, actively backed by the Russian military and Russian weaponry, invaded the eastern borders of its neighbor Ukraine. Subsequently, Russia annexed Ukraine’s Crimean peninsula claiming that its ethnic Russia inhabitants voted to leave Ukraine and join the Russian Federation. Economic actions by western nations have been levied against Russia in an effort to compel Russia to withdraw. The result to date has been devaluation of the Russian ruble and a flight of foreign investment. Exasperating the economic situation, oil prices have dropped significantly. Oil is the commodity that generates the bulk of Russia’s foreign income. With this backdrop, you are to research the current situation in Russia to determine what is happening to foreign businesses and foreign investments. What is the current business climate and economic situation in Russia today (try to provide ‘real time’ information)? Are most foreign businesses continuing to operate in a ‘business as usual’ mode, etc.? What risks are there to Russian-based foreign-owned businesses? If you were advising management of a U.S. company currently operating in Russia, what actions would you recommend they take? If your business was actively planning to enter the Russian market, would you proceed and why?
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