|← Department of Defense||American "Car Culture" in the 20th Century →|
Bessy Health Solutions businessis the largest fresh juice bar chain. This business specializes in the development of health-conscious pure, fresh juices, ice, fresh and frozen yoghurt, and fruit sorbet. It also provides nutrition and food supplements that boost immunity of the human body. The company aims to supply individuals with health dietaries that enhance active lifestyles. The smoothies made are suitable for all purposes ranging from power breakfasts, energy enhancers, meals on the run, to work out snacks. The concept of Bessy Health Solutions is a unique food service that combines the taste of meals with promoting health and wellness to the consumers of the product. Bessy Health Solutions is a partnership and medium sized business specializing in wholesale and retail activities. The objective of Bessy Health Solutions business is to ensure that customers receive a health alternative that has quality, nutrition, and is convenient.
In the recent years, Bessy Health Solutions business has been expanding globally with the aid of the franchise business model to enter the diversity of markets (Smith, 2009). The goal is to establish a feasible market in Russia and more specifically in the city of Moscow. With its large population comprised of mainly intellectuals, Moscow serves as an ideal location for Bessy Health Solutions. It is also experiencing a rapid growth in its both economy and infrastructure. This rapid growth attracts numerous investors into the city, making it more cosmopolitan, fast-paced, and westernized. The steady rise in the population of Moscow fosters faster penetration of western brands into the market. This is also a major contributing factor to the change in the lifestyle of the upper and middle-class population (Wilson, 2010). It has also increased demand for quality products synonymous with European and American-brand names.
Initially, the business will cover two divisions of the country but the greatest prospect of the business is the whole country. The company’s management philosophy relies on the responsibilities and the mutual respect portrayed by the management. The management reflects the participation of the owners of the company. This remarkably strong organizational culture strives for excellence in all activities as well as believes in teamwork.
The success factor of the business lies in employee training. This training ensures that employees use the best juice preparation techniques. Marketing strategies used are aimed at building a solid base of loyal customers. This is achieved through customer satisfaction with high quality juices and services. The management also treats its employees on equal terms to build a strong working relationship. This also facilitates the creation of a unique, innovative, and upscale atmosphere that makes the business stand out from others.
In Russia, the business will focus on the product line of smoothies, juices and booster shots. Concentrating on a single line of product enhances efficiency in productivity and results, in quality products. The target market being women, the product line, needs to be streamlined to produce fast and exotic alternatives that women prefer. Another strategy is to have some prior knowledge on the tastes and preferences of the people of Russia. It is also essential to maintain the Bessy Health Solutions logo and colours used globally to maintain a global market.
The promotion of Bessy Health Solutions will be through advertisements that will highlight its benefits as a healthy alternative and emphasize smoothies as a meal replacement. This is with the target concern of keeping fit. During the promotional activities, it is also beneficial to provide free samples to prove the quality of the products. The next step in promotion will be to take the brand visibility a notch higher by using the media. For this purpose, advertisements will have to be placed in the metro newspapers and radio stations.
This paper will focus on the opportunities available in Russia that favour setting up the business. It will also look into the cultural environment in Russia, legal and political environment, the economic and ethical environment, as well as how each of them affects business, both positively and negatively.
Russia has a strong market favourable for Bessy Health Solutions business. In the past years, Russia has been experiencing a consistent GDP growth rate. The population of Russia comprised mainly of women and youth, is approximately one hundred and forty million people. The larger fraction of the population is made up of individuals aged between fifteen to sixty-four years (Bush, 2006). The presence of a large, middle class population provides an excellent opportunity for investment in Russia since Bessy Health Solutions business targets the rising social class.
The political system of Russia has opened up to the global market, facilitating the presence of improved trade patterns and global security. Despite the endemic problems of bribery, bureaucracy, and corruption, the pressures brought about by globalization have forced Russia to be more transparent, less bureaucratic, and less state-controlled. The result is a country with a political climate that gives reason for cautious optimism (Windemuth, 2009).
The political risks involved in doing business in Russia include overly centralized government, the ongoing regional military conflicts, opaque regulations as well as inefficient and corrupt legal system.
Measures undertaken by the Russian government to stabilize the country‘s economy provide an ideal environment for franchising. The demand for western brands with increased consumer consumption rates provides an excellent opportunity for the development of Bessy Health Solutions business in Russia. There is also a high level of trust in foreign-brand quality with increased incomes of the people of Russia.
The economic environment of Russia is favourable for the development of Bessy Health Solutions business. Despite the economic downturn in the early 1990s and ensuing financial crisis of 1998, the Russian economy has managed to recover extremely fast. The privatization and liberalization of business have provided proper guidelines and created opportunities for development. The privatization of small and medium-sized business is underway. The long-awaited land reforms have also been implemented facilitating freedom of land ownership. Russia has an independent national bank and a floating exchange rate that facilitates the growth of international business transactions. Free-market forces work efficiently in the larger part of the economy now, with the regulation of the worst cases of ultra-liberalism. This has facilitated the stabilization of the large-scale economy and permanently thriving Russian economy (Andreasen & Kelstrup, 2005).
The trade patterns of Russia have also undergone major changes, the higher priority being given now to trade ties with the West. Russia is still in process of carrying out substantial reforms in different sectors of the economy. Their slow pace is yet another factor that may hinder the development of Bessy Health Solutions business. An accelerated growth in trade surplus the country has witnessed over the recent years has been largely due to oil exports. However, there has been occasional shrinking in the imports. Reforms have also had negative ramifications, such as reduction in the productivity levels, a rising black economy and currency flight. The rise in crime rates in some parts of the country has also slowed down the reform process.
Another obstacle to the economic growth in Russia is its poorly developed banking sector, trade barriers, and the presence of an inefficient customs service. Becoming a member of the WTO will be the solution to abolishing the existing price differences on energy that favours Russia’s production and transport sector. The depreciated value of the Russian rouble, whose value against the US dollar is weak, stimulates the country’s foreign sales. Before the outbreak of the financial crisis in 1998, the exchange rate was 9.71 per US dollar. In 1999, the value dropped to 24.6 roubles. The presence of a weak exchange rate facilitates industrial production in the country. This enhanced competition between local produced goods and imported goods in the domestic market. (Andreasen & Kelstrup, 2005).
The drying up of capital inflows was devastating to the Russian economy. There was a sharp decline in the growth rate with the real GDP growth rate contracting sharply in 2009. This contributed to a 25% decline in GDP per capita. The return of the growth rate took place in 2010 through with a minimal margin.
The legal environment of Russia is a risk to franchising in Russia. Despite the fact that efforts are being made to tackle the problem, it still poses a major threat to investors. Enactment of franchise legislation took place when franchising had not penetrated into Russia (Anttonen, Tuunanen, & Alon, 2006). This resulted in restrictions being imposed on franchisors, making it hard for a franchisee to renew an agreement on the same terms. More to that, the franchisor under the same code can be held liable for claims filed against the franchisee. Therefore, it will be essential to contact the competent legal council to sort out the issue on legal codes during the drafting of the franchise agreement for Bessy Health Solutions.
The Russian judicial system consists of the constitutional court, courts of jurisdiction, military courts, and arbitrage courts. The constitutional courts of Russia deal with limited, subject matters. The court also has the authority to rule over violations of constitutional rights, and appeals from various bodies. It also participates in impeaching proceedings against the President. Under the law enacted in 1994, the court is prohibited in examining cases on individual initiatives and has a maximum value to which it can listen to issues. Efforts to increase judicial independence have not yet produced any tangible results, and Russia still has a poor judicial system. Despite all this, World Bank ranks Russia as one of the favourable countries where it is easy to enforce commercial contracts.
Another challenge a business may face in Russia is the changes in the current ethnic makeup. With the decline in the number of orthodox Christians and Russia’s ethnic Slavs, the population of Muslims in Russia is growing fast transforming the ethnic composition of the Russian society. The fertility rates are higher among the Muslims than the ethnic Slavs. In 2006, the predominantly Muslim regions had high population growth rates. (Scherbakova, 2006). Since 1990, there has been a steady increase in the Muslim population. Currently, Muslims account for 40% of Moscow’s population. Basing on the population, Muslims are expected to comprise one fifth of the country’s population by the year 2015 with the Russian army being made up of predominantly Muslims (Mainville, 2006). This drastic cultural and ideological changes in Russia makes the ethnic Russians feel uneasy, as they tend to undermine the prevailing national Russian identity.
The loss of Russia’s national identity is a blow to the business sector. These difficulties have resulted in the use of the terms “russkie” which refers to the ethnic Russians, who are descendants of eastern Slavs, and “rossiyane,” which refers to the Russian citizens, regardless of ethnicity. Russians in the ultranationalist movement focus on the first identity, while most of the Russia's ethnic minorities identify themselves with the second definition. The Russian -speaking persons outside the Russian borders are “russkies” and get protection within the Russian ethnics. This makes the development of a multiethnic society or multi faith impossible. (Abdulatipov, 2003). Considering these differences, there is a hindrance in developing business.
Another limitation in setting up Bessy Health Solutions in Russia is the presence of competition. The stiff completion is Russia due to the presence of many western brands striving to take over the franchising market. In addition, the presence of fast-food shops in the town will also provide competition to Bessy Health Solutions business. Currently, the largest competitor of Bessy Health Solutions in Russia is Zumo Bar, which is a Moscow, based franchisee offering the same services and having a large platform in the city. Individually-owned kiosks with the street markets also pose a threat to Bessy Health Solutions. Their competition is on the basis of the low prices of their commodities and operation costs. This is a minor threat as Bessy Health Solutions offers quality products and has a vast experience in the sector.