Challenges of the Russian market and their impact upon the selection between exporting, joint ventures and FDI : Study of Swedish enterprises within the automotive industry

Russia is a rapidly growing market with enormous potential for international companies. In many industries competition is underdeveloped as Russian local companies are often unable to satisfy constantly growing demand of the market. On the other hand, international enterprises hesitate to enter the market due to its complexity and difficulties like e.g. bureaucracy and corruption. The aim of the present bachelor thesis is to define main challenges of the Russian market with the help of a modified PESTEL model which emphasizes political, economic, social, and legal aspects of the market. Having identified the main market challenges exporting, joint ventures and foreign direct investments as means of market entry are assessed in terms of coping with these challenges. As an outcome of the theoretical section, a model assessing the chosen entry modes is developed together with a list of challenges of the Russian market. The developed theoretical model is applied to a Swedish automotive industry through conduction of semi-structured interviews with key representatives of a number of Swedish enterprises operating in Russia. After the empirical analysis, the theoretical model is reviewed and the main challenges of the Russian market experienced by the interviewees are stated. Moreover, the most common entry modes within the Swedish automotive industry are identified. This thesis will be applicable both for students who would like to learn about different entry modes and ways of analyzing foreign markets through a theoretical framework, and for Swedish companies that aim to enter the Russian market and need to understand its challenges in order to avoid failures in the initial stage and gain ideas about the most suitable entry mode for them