[ccm Report] - Group 3 - K17410c.docx

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY UNIVERSITY OF ECONOMICS AND LAW --------------------

RUSSIA’S BUSINESS: “When in Rome, do as the Romans do” Subject: Cross-Cultural Management Lecturer: Dang Thi Phuoc Toan Group 3

Members: 1. Nguyen Hoang Yen Mi 2. Ha Cat Minh 3. Ha Trong Nghia 4. Nguyen Thi Kim Ngoc

K174101190 K174101191 K174101192 K174101193

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INDEX Abstract

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Chapter 1: Overview of Russia 1.1. Geography position 1.2. Natural conditions 1.2.1. Terrain 1.2.2. Climate 1.2.3. Natural resources 1.3. Demographics 1.3.1. Ethnicity and race 1.3.2. Language 1.3.3. Religion 1.3.4. Population 1.4. Social structure of Russia 1.5. Economic conditions 1.6. The politics 1.7. Education

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Chapter 2: Hofstede's six Cultural Dimensions and Trompenaars’s analysis of Russian 2.1. Hofstede's six Cultural Dimensions For Russian 2.1.1. Power Distance 2.1.2. Individualism - Collectivism 2.1.3. Masculinity 2.1.4. Uncertainty Avoidance 2.1.5. Long term oriented 2.1.6. Indulgence 2.2. Trompenaars’s analysis of Russian 2.2.1. Universalism versus Particularism 2.2.2. Individualism versus Communitarianism 2.2.3. Affective versus Neutral 2.2.4. Specific versus Diffuse 2.2.5. Achievement versus Ascription 2.2.6. Attitude towards time 2.2.7. Attitude towards nature Chapter 3: The note about differences in business culture of Russia

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3.1. The norm in business of Russia 3.1.1. Russia appearance 3.1.2. Russia behavior 3.1.2.1. Russian gifting etiquette 3.1.3. Russia communication 3.1.4. Meetings 3.1.4.1. First meeting 3.1.4.2. Business meeting 3.1.4.3. Arranging meetings 3.2. The note in the business negotiations 3.2.1. Attitudes and styles 3.2.2. Sharing of information 3.2.3. Pace of negotiation 3.2.4. Bargaining 3.2.5. Decision making 3.3. How to motivate employees 3.4. Intercultural Management in Russia 3.4.1. Being a manager in Russia 3.4.2. The role of a manager 3.4.3. Approach to change 3.4.4. Approach to time and priorities 3.5. Leadership Issues

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Conclusion

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References

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ABSTRACT 2

The global market is a beautiful picture of cultural diversity. Every country, every nation has an identity as well as its own rules. Therefore, the right thing which can do in this place can be culturally wrong in somewhere else. That’s why, you, foreigners, must know and understand the culture when you want to cooperate or enter the new market. This is an important requirement that determines most of your success and is a part of a strategy to expand your business overseas. If you get interested in Russia and want to do business in this beautiful country, this report is for you. It was said that “When in Rome, do as the Romans do”. Enterprises entering into any market must study and consider customs, practices, and culture. You need to make sensitive decisions in accordance with the preferences and identities of Russia. Through this report, you will know: 1/ Russia’s overview such as social structure, economic condition, the politic,… 2/ Hofstede's six Cultural Dimensions for Russian and Trompenaars' analysis of Russian 3/ The norm in the business of Russia such as behavior, communication, meeting,… If you were well-prepared with market information as well as cultural characteristics when entering Russia, the result would be more over than you expected. Hope that this report will be helpful for your business.

Moscow (Source: Top attractions in Moscow: The best things to do in Russia's capital, 2018)

CHAPTER 1: OVERVIEW OF RUSSIA

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Russia (Source: Cruising the Volga Dream: Moscow to St. Petersburg, )

Russia is known to be one of the true giants with the largest area in the world along with an extremely diverse population structure. Besides, Russia is a country that gives us quite a lot of questions because when it comes to Russia, most people know, but only a few of them can understand this country very well. Now let's find out about Russia in brief! 1.1. Geography position. The Russian has the largest area in the world at about 17.1 million km2, on both major Asian and European continents. Stretching almost the equator, adjacent to 14 different countries and the only country has 11 time zones. (Nga) 1.2. Natural conditions. The Russian is divided into two main regions: the East and the West with its own terrain, climate and distinctive natural resources. (Nga) 1.2.1. Terrain. Western Russian: Mainly plains such as the East plains, West Xibia and the Uranian mountains with many minerals. Besides, there are also big rivers like Volga, Obi, Enisei … Eastern Russian: Contrary to the Eastern part of the Russian, most of the mountains and plateaus are located. There are many large rivers flowing to the North, typically the Lena river. (Nga) 1.2.2. Climate. Western Russian: Wenzhou coastal ocean, subtropical and extreme cold close. Conditions are more humid than the East. Eastern Russian: Temperate, subtropical and subtropical. (Thông tin cơ bản về LB Nga và quan hệ Việt Nam - Liên bang Nga) 1.2.3. Natural resources. Western Russian: The land is mainly fertile black soil favorable for agricultural development. The most productive assets are oil, coal and iron.

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Eastern region of the Russian: Most of the land is in the depot. The assets are quite abundant such as oil, coal, gold,… (Thông tin cơ bản về LB Nga và quan hệ VIệt Nam - Liên bang Nga, n.d.) 1.3. Demographics. The Russian is a "multi-ethnic" society with 160 ethnic groups and different natives. Because of this point, Russia is very diverse in religion, language,… 1.3.1. Ethnicity and race. The Russian is very diverse in ethnicity with more than 185 different ethnic groups, the population of these ethnic groups is quite large, from millions of people (like Russians) to several thousand people (Sami people). In 85 subjects forming the Russian, there are 25 ethnic minority areas, 5 autonomous okrugs and 1 autonomous region. 1.3.2. Language. Russia has a very diverse language system with more than 100 different languages used. However, native Russian is also the official language used in the federation. (Nga) 1.3.3. Religion. For many years since the establishment of the Russian (December 25, 1991), the demographic in this country has also changed a lot, followed by religious diversity. Although there are many religions introduced into Russia, only four religions are considered the media religions here, namely: Christianity, Islam, Judaism and Buddhism. Above all, these religions are said to be part of Russia's "historical heritage". (Nga) 1.3.4. Population. According to the latest statistics from the United Nations in early 2019, Russia's total population is about 144 million, ranking ninth in the world after Bangladesh and Nigeria. Although the population is quite high, the population density is quite low due to the territorial area (9 people/km2), with 74.4% of the total population being urban. The average age in the Russian Federation is quite high (39 years) and is continuing to increase in recent years. Especially Russia is one of the countries with the natural population growth rate with negative numbers. (Nga) 1.4. Social structure of Russia. Currently, the level of consistency between citizens and the Russian government is quite low. This is really a current difficulty of this country. The main reason is that Russia does not pay attention to social benefits. Since then, Russia has gradually restricted interaction with civil society institutions, instead of turning into channels of "top-down" one-way directions. In Russia, the formation of "civic society" takes place simultaneously with the transition to a democratic political system and market economy. This may be a good condition for this country. In other words, this is an incentive to develop the country, towards building a rule of law state with a market economy. Russian Characteristics: First: "the positive nature of the protests and protests." Russian law does not hold peaceful protests, with banners, marches, and stalls. Therefore citizens choose these methods to express their own opinions about most areas of the nation's weakness or reclaim their rights. Currently, the government has tried to listen to the people more and respond if possible, so in recent years protests and protests in Russia are not extreme.

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Second: "ethnicity, locality stand out". The main reason for forming this feature is the ethnic diversity in Russian society and the large disparity in civil relations between rural and urban areas. It is because of this inequity that has led to social conflicts, and can only be eliminated by developing local autonomous governments. Third: "the dependence of independent mass media" It means that in Russia, independent mass media, formed not only by civil society but by the coordination of civil society with the state. This also met many lines of contrary opinions. Fourth: "Presidential PR campaign", everyone has the right to speak directly to his president via phone, Email,... This even America - the most democratic country still not yet implemented, so this is considered a feature of Russian society. (VietTimes.vn, 2018) 1.5. Economic conditions. The economic structure in Russia relies heavily on the exploitation and processing of natural resources, with key economic sectors: chemicals, petroleum, metallurgy, mining, machinery manufacturing,... The Russian Federation is a country that produces crude oil with large reserves of 2 in the world, and stops in producing steel, non-ferrous metals, fertilizers, ... This country has many strong corporations such as Gazprom, Lukoil, Rosneft (petroleum); Norilsk Nike, Rusal, Severstal (metallurgy)… Trade: Russia is the 24th commodity export market in the world. Russia's trade policy is still highly protected, especially for goods such as cars, iron, steel, and agricultural products,… Russia's main trading partners in the international arena are EU, China,... Main export items are oil, gas, machinery, weapons, fertilizers,... Imported goods Russia's main exports are machinery, agricultural products, automobiles, garments,… ODA Policy: ODA development aid falls into US $500 million/year, through most multilateral mechanisms and plays a role in the purpose of hunger eradication and prevention,... Russia is currently considering established Development Aid Agency, similar to many other countries in the world. (Nga) 1.6. The politics. According to the constitution passed on December 12, 1993, it was confirmed that Russia was officially a "semi-presidential republic", followed by the President as head of state and Prime Minister as the head of government. Get the "representative democracy" as the foundation. Like the majority of other countries in the world, the legal system of the Russian Federation is also divided into three main branches: Legislative, executive and judicial. (Nga) 1.7. Education. According to the Russian citizen constitution guaranteed a free education system. The Russian Federation has a literacy rate of about 99.7% (according to 2015 statistics). Highly competitive input cries. Russia's education is highly appreciated by countries, the most developed disciplines are economics, health, mathematics, science and space science. (Nga)

CHAPTER 2: HOFSTEDE'S SIX CULTURAL DIMENSIONS AND TROMPENAARS’S ANALYSIS OF RUSSIAN

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2.1. Hofstede's six Cultural Dimensions For Russian. The aim of this part is to show the cultural conditioning and behavior in business of Russia. The analysis will be investigated from the point of view of Hofstede. Hofstede has developed five dimensions of his study around 117,000 employees of the IBM Company. (Russia and my native country: Cross cultural comparison) The importance of this model is connected with the fact that we can use it to understand how people from Russia different from others better, so that we can prevent misunderstandings and enjoy a better working relationship with them. This is especially useful if we do business with people from around the world. Power distance

Individualism

Masculinity

Uncertainty avoidance

Long-term

Indulgence

93 High

39 Low

36 Low

95 High

81 High

20 Low

Table 1: Hofstede's six cultural dimensions scores

2.1.1. Power Distance. Power distance is the level at which the least powerful members of society, institutions, or organisations expect that power will be distributed unequally. When viewed as the value system of the least powerful members, the distribution of power is typically explained as the behaviour of the most powerful members. (Naumov & Puffer, 2000) Hofstede had estimated Russian power distance to be 93 points. Russia, is a nation where power holders are very distant in society. In Russia leaders basically command and control and then punish or reward – the Russian president is one good example and role model. That behavior has two implications. Subordinates do not question commands and, being afraid to make mistakes, expect clear instructions for each and every step. (Zashev, 2004). Leaders slide into micromanagement as they need to describe in detail and check the execution of each and every step. Therefore, the entire Russian management is quite more directive and centralized. The boss acts like a ‘big boss’. Very little consultation is taken from lower level officials of the company while the boss enjoys issuing direct orders to other employees whom they have to follow. Not only lower level but also the middle level is not possessed with much power to interfere in the strategy making or decision taking of the higher - level officials. Too much of consultation from lower level officials is considered a sign of 7

weakness as well as lack of decisiveness in the business structure of Russia. However, middle-level officials only get the power to interfere when they after years of service get promoted to the decision making higher level. The real decision maker – the superior boss of the organization, always does the end decision. Kets de Vries (2001) - Professor of leadership development and organizational change at INSEAD stated that most of the traditional organizations visited by him in Russia were centrally controlled, hierarchical and bureaucratic. He describes the situation quite vividly: “When we ask Russian managers to draw an image they have in their mind when we say ― organizational, two thirds draw a pyramid… They know how to order and control but they, at the same time, need to be ordered and controlled. This is what management means to them… Most workers in today‘s Russia still need structure, not freedom of action”. (Russia and my native country: Cross cultural comparison) To correspond with Vietnam, on this dimension, Vietnam achieves high scores at 70, which means centralisation is popular leading to the expectation and acceptance of the prevailing of leaders‟ authority, the Confucian style values, the high value of age and seniority and the soft manner when presenting feedback in the workplace. Inequalities, status differences are expected and desired. The big picture shows that formal communication and strict control manifested through close supervision, subordinates‟ limited autonomy and top leaders‟ full power. This natural order of inequalities results in the necessity for guidance and leadership. It is quite common that staff expect to be told what to do. Nevertheless, this can be treated as a strongly complementary potential for smoothly executing mechanisms, rules and regulations. 2.1.2. Individualism. A significant portion of the world's population lives in societies where the group takes precedence over the individual. Individualism is more prevalent where the links between individuals are tenuous and people are expected to look out mostly for themselves and their immediate family. Collectivism is characterised by interest in tightly woven groups where members are protected in return for unconditional loyalty to the group. (Naumov & Puffer, 2000) At a low score of 39, Russia is considered as a collectivism orientation. Collectivism is educated for Russian since they were young. It is delivered through literature, music, art, etc which are taught at school. Vladimir Putin’s ‘millennium speech’ (1999) with its stress on traditional Russian values – such as patriotism (pride in Russia, its history and accomplishments), derzhavnost’ (belief in a Great Russia), gosudarstvenny chet vo (etatism or ‘the state as source and protector of order and as driving force of change’) and sotsial’ naya solidarnost’ (social solidarity) – is a schoolbook example of the preference of collectivism. (Smaele, 2007) There is no difference between Vietnam and Russia in this dimension, with the lowest scores at 20 among all the six dimensions, Vietnam is a collectivistic society manifesting the management of groups, strong relationships, high respect to “in-group” loyalty, harmony and saving face. It is noted that employer/employee relationships, even hiring and promotion are based on moral terms like a family link. Additionally, when expressing a personal idea, they prefer “we’’ as personal pronouns and feel more comfortable shouldering responsibility as a team member. 8

2.1.3. Masculinity. Masculinity as a model of behaviour of the average citizen is more prevalent in societies with sharply defined social roles for men and women. Femininity refers to typical behaviour where the social roles of both sexes overlap to a great extent: both men and women can be moderate in their behaviour and think about more than just material well-being. (Naumov & Puffer, 2000) Russia’s relatively low score of 36 may surprise with regard to its preference for status symbols, but these are in Russia related to the high Power Distance. At second glance one can see, that Russians at workplace as well as when meeting a stranger rather understate their personal achievements, contributions or capacities. They talk modestly about themselves and scientists, researchers or doctors are most often expected to live on a very modest standard of living. Dominant behaviour might be accepted when it comes from the boss, but is not appreciated among peers. (Russia and my native country: Cross cultural comparison) In comparison with Vietnam, with a score of 40, Vietnam is hence regarded as a feminine society, which highly appreciates equality, solidarity, stability, sentimentality, caring for others and quality of life. The fundamental issue here is “work to live” that requires supportive managers, like-mindedness, flexible working conditions and motivations, compromise and negotiation in solving conflicts leading to the practice of involvement in decision making. Money and profit are not highly valued as people and good relationships. Vietnamese are characterised as hospitable, modest and foster their relationships as a good relationship is more important than success. 2.1.4. Uncertainty Avoidance. Hofstede defines uncertainty avoidance as the degree to which members of a given culture perceive and react to an undefined threat and unknown situations. This condition translates into the level of stress on, and the desire for predictability in, rules both written and unwritten. (Naumov & Puffer, 2000) Scoring 90 Russians feel very much threatened by ambiguous situations, as well as they have established one of the most complex bureaucracies in the world. Presentations are either not prepared, e.g. when negotiations are being started and the focus is on the relationship building, or extremely detailed and well prepared. Also, detailed planning and briefing is very common. Russians prefer to have context and background information. As long as Russians interact with people considered to be strangers they appear very formal and distant. At the same time formality is used as a sign of respect. (Russia) Correspondence with Vietnam, achieve 30 score, Vietnamese society clearly adopts a more relaxing attitude in which practice and experience are more important than rules, and divergence from the established standards is more easily accepted. In the workplace, people can work hard but it is not a means to an end. They tend to be flexible in schedules and do not find innovation urgent. 2.1.5. Long - term oriented. This dimension describes how every society has to maintain some links with its own past while dealing with the challenges of the present and future, and societies prioritise these two existential goals differently. Normative societies. which score low on this dimension, for example, prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion. Those with a culture which scores high, on the other hand, take a 9

more pragmatic approach: they encourage thrift and efforts in modern education as a way to prepare for the future. (Russia) With a very high score of 81, Russia is definitely a country with a pragmatic mindset. In societies with a pragmatic orientation, people believe that truth depends very much on situation, context and time. They show an ability to adapt traditions easily to changed conditions, a strong propensity to save and invest. thriftiness and perseverance in achieving results. (Russia) To parallel Vietnam with Russia, The score of 57 describes Vietnam as a pragmatic culture believing that truth varies in accordance to context, time and situations. Vietnamese people exhibit a strong inclination to adapt to new conditions when necessary. The most significant practice is to encourage thriftiness and endeavour in education to prepare for the future. However, they also encourage lifetime employment as it establishes the connection between the employer and employee and inspires loyalty, which can benefit the management. This orientation facilitates cooperation, engagement, mutual understanding and trust leading to sharing available and relevant information and consensus in decision making. 2.1.6. Indulgence. One challenge that confronts humanity, now and in the past, is the degree to which small children are socialized. Without socialization we do not become “human”. This dimension is defined as the extent to which people try to control their desires and impulses, based on the way they were raised. Relatively weak control is called “Indulgence” and relatively strong control is called “Restraint”. Cultures can, therefore, be described as Indulgent or Restrained. (Russia) Russia has a very low indulgence score only 20, making it a more restrained culture. Hofstede also notes that retrained societies do not put much emphasis on leisure time and control the gratification of their desires. People with this orientation have the perception that their actions are restrained by social norms and feel that indulging themselves is somewhat wrong. (Russia) Similarity with Russia, indulgence score of Vietnam is 35, which is not very high so Vietnam is also considered as a restrained society. As a developing country, Vietnamese people always have to face with stress and pressure in their daily life. Therefore, their desires may be limited. Besides, Vietnamese are controlled tightly by social norms which make them have no space to live as who they are. 2.2. Trompenaars’s analysis of Russian. The other model should be considered is “The seven dimensions”, which were identified by management consultants Fons Trompenaars and Charles Hampden-Turner, and was published in their 1997 book, "Riding the Waves of Culture." Trompenaars and HampdenTurner developed the model after spending 10 years researching the preferences and values of people in dozens of cultures around the world. As part of this, they sent questionnaires to more than 46,000 managers in 40 countries. The first five dimensions relate to the relationship between people, while the last two refer to people’s attitudes towards time and the environment. (Russia and my native country: Cross cultural comparison) As we mentioned before the purpose of this model is the same as Hofstede’s model: Helping us doing business in Russia easier. However, this model has more dimensions than Hofstede’s one which means it not only brings to us more knowledge but also gives us a 10

comprehensive view about culture and behavior of Russia but also gives us a comprehensive view. Universalism Particularism

Individualism Communitaria nism

Affective Specific Neutral Diffuse

Achievement Ascription

Attitude towards time

Attitude towards nature

87 Particularism

86 Individualism

24 Affective

30 Ascription

4.73 Sequential

49 Outer direction

83 Diffuse

Table 2: Trompenaars’s analysis scores 2.2.1. Universalism versus Particularism. This dimension defines how societies judge people’s behavior. Universalist societies are rulebased; the members of these societies follow rules that are accepted by a majority of the population and should be followed equally. Rule exceptions are not desirable because they weaken the rules and may lead to a collapse of the system. Particularist societies focus on relationships and circumstances while judging a situation. People are not treated as equal “citizens”, but differentiated according to their relationship status as a friend, brother, child or an important person. Thus, relationships override rules and regulations. (Kryzhko, 2015) Russian political life, for example, is highly characterized by particular in-groups versus outgroups: different clans (whether cheka’s or oligarchs) fight each other while valuing their particular interests higher than the common interest. In economics, personal, particularistic relations, often linked with corruption and privileges, are still more important than professional, impersonal, universal market relations, procedures and institutions (Bryant 1994, 70). Journalists, in turn, rely on their own personal contacts and ‘back doors’ to receive information while only rarely they send formal letters of inquiry. (Smaele, 2007) For Vietnam, it is absolutely true when we say that this country is a particularist orientation. Vietnamese focus on relationships and circumstances while judging a situation even in law. Depend on your background and the networking you have, you can be treated differently. 2.2.2. Individualism versus Communitarianism. This dimension refers to the conflict between the interests of an individual and the group. Individualist societies focus on the needs of individuals and emphasize the role of individual achievement and responsibility. In contrast, communitarian societies stress the importance of the group, its well-being, joint achievements, and responsibilities. In business, communitarian cultures prefer plural representation, look for consensus, and take their time in decision making. (Kryzhko, 2015) Russians are big individualists. Individualism in Russian business sphere is revealing in leadership – most firms are organized for individual leader to satisfy his interests and they have a great mark of his personality. Some top managers still interfere with all the operations of their company at all the levels. The organization is mean to reach what its employees want for themselves. If they are ready to collaborate, it means their personal interests are touched.

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Everybody fulfills his own function and gets a reward. (Russia and my native country: Cross cultural comparison) To compare with Vietnam, this country has communitarianism oriented culture. For example, most of families in Vietnam are close - knit families. Relatives always caring and gather together in holidays. Furthermore, it is normal that multi - generations live together as well as children still live with parents despite they are mature. Since Vietnamese depend a lot on their families and spend amount of time for their families. 2.2.3. Affective versus Neutral. This dimension refers to the role that reason and emotion play in a society. Affective people willingly show their emotions by laughing, gesturing, and obvious facial expressions. In contrast, neutral societies control their feelings and thoughts. Their emotions are usually inhibited, but occasionally explode. Physical contact and facial expressions during meetings in neutral cultures are often taboos. (Kryzhko, 2015) There is no wrong to admit that Russia is an affective oriented culture. Russians’ life perception is expressed in the fact that they need close human contacts and emotionally depend on the environment. For Russian emotions often prevail over mind and passions prevail over material interests. While solving a problem a Russian would listen to his heart, but not to his mind. It is difficult to expect objectivity, rationality, easy-tempered approach to any business and clear logic. (Russia and my native country: Cross cultural comparison) In contrast with Vietnam, when you do business you have to hide your emotions, you can let the other know how you feel, cause those emotions may affect the deal with partners. In addition, a smile should be always on, it necessary for you to show that you are happy and friendly through a smile. Even when you be mad at, be yelled at by the person who older you are not allowed to express chagrin. Those evidences demonstrate that Vietnam is a neutral cultural orientation cause in most of situation, they are not free to express their feeling and they believe that a bad compromise is better than a good lawsuit. 2.2.4. Specific versus Diffuse. Trompenaars and Hampden-Turner define this dimension as: “the degree to which we engage others in specific areas of life and single levels of personality, or diffusely in multiple areas of our lives and at several levels of personality at the same time”. In specific cultures, people clearly differentiate between work, family, and friends. The discussion topics among friends and work colleagues are not the same. In business, specific societies prefer management by objectives; they are fair, direct, and precise in their statements and actions. In diffuse-oriented societies, private and professional life mingles. Since private and public spaces are mixed, it takes much longer to establish contact with strangers. They “talk business” only after a “private space” relationship has been established. Diffuse oriented societies are indirect and tactful; morality is highly personal and context dependent. (Kryzhko, 2015) Considering the fact that personal relations in Russia are more important than business, there is no doubt about Russian culture is diffuse orientation. Employees often consider their organization as a part of their personal space and expect more interest in their problems and more care from the company’s side. Russians still value a leader who is able to put himself in an employee’s place, to look into his problems and, if necessary, support him not only at work, but in personal matters as well. (Russia and my native country: Cross cultural comparison) 12

Towards Vietnam, it is obvious that Vietnam culture is a diffuse orientation. An well performed employee has to help his boss even after working time or outside office. In working time employees can chatting, eating and stay longer at office later to finish their work. Moreover, Vietnamese employees often use company property for private purpose such as using company’s car for taking their children to school and going shopping. 2.2.5. Achievement versus Ascription. The last interpersonal dimension deals with the question of how a society confers status. Though all societies signal that certain members should receive more attention by giving them a higher status, some societies give status based on achievements while other societies ascribe status according to age, class, gender, education, family, and so on – that is, to those who “naturally” evoke admiration. Achievement-oriented societies use their titles only if they are relevant to the performed task; they respect their superior in the hierarchy, who may be of any age or gender, for his or her knowledge and for what he or she has achieved for the organization. In contrast, ascription-oriented societies extensively use titles to show status. Their respect for the superior in the organization, who is usually male and middle-aged, symbolizes their commitment to the organization. (Kryzhko, 2015) Russia, it is a country highly oriented on status. However, a person’s status in Russia mostly depends on many external factors (social environment or social context of his business), which are not connected with his actions and behaviour (origin, elite education, heritage, religion, etc.). In other words, very little depends upon a person himself. More important are his clothes, sort of his car, expensive flats, kind of sport, previous working experience in authorities, etc. Moreover, the hierarchical nature of Russian society with very large power distance is very important to remember in business dealings. Who approaches whom in business dealings is crucial to the success. Nowadays, Russian business people pay a lot of attention to how they are dressed. Russian people in general probably spend more money from their family budget on clothing than any other nation in the world. Those who cannot afford to buy top fashion brand clothing (such as Versace, Armani or Hugo Boss) prefer to be dressed in cheaper but still well-made clothing. Those evidences show that Russia is an ascription cultural orientation. (Russia and my native country: Cross cultural comparison) Same as Russia, Vietnam is also a ascription cultural orientation. For instance, If you have a large networking, it easier for you to do anything, get a good job, fasten process of business, etc. Moreover, Vietnamese usually judge others by their appearances, backgrounds, etc. They don’t care what you achieve but care more about who you are. 2.2.6. Attitude towards time. Just as members of societies relate to each other in different ways, so too do societies approach time differently. Trompenaars and Hampden-Turner differentiate between a sequential and a synchronic view of time. Whereas societies with a sequential view of time interpret it as a series of passing events, societies with synchronic time see past, present, and future as interrelated and inseparable from each other. A sequential time orientation is reflected in a prevalent tendency toward planning and the subsequent following of the initial plans, focusing on only one activity at a time, and adhering to a schedule. In contrast, a synchronic time orientation is characterized by a tendency to chase the end-goal rather than to follow the schedule, to do more than one activity at the same time, and to treat appointments as approximate. (Kryzhko, 2015) 13

Russia is a synchronic cultural orientation. Russian look to the past – real or imaginary – for inspiration, motivation, sustenance, hope, guidance and direction. Russia's culture tends to direct their efforts and resources and invest them in what already exists. Therefore, Russia is bound to be materialistic, figurative, substantive, and earthly. They are likely to prefer old age to youth, old habits to new, old buildings to modern architecture, etc. That cultural element can be justified if we consider the big history and the long traditions that Russia have, thing that makes the conception of the time obviously more oriented towards the past and not towards the present or the future. (Russia and my native country: Cross cultural comparison) About this dimension, it clearly that Russia has some similarities with Vietnam. Our country is also a synchronic culture orientation. Vietnamese always consider the experience in the past in order to make decisions. Besides, all the folk verses and proverb are still regarded until now. Especially, time for appointments can be flexible from 15 to 20 minutes. 2.2.7. Attitude towards nature. The last dimension refers to the roles people assign to their natural environment. Regarding their attitudes towards nature, all cultures can be grouped into inner- or outer-directed. Innerdirected cultures think that nature could and should be controlled; such cultures have rather aggressive attitudes towards their environment, and they believe that they can optimize their lives by changing it. Outer-directed cultures, on the contrary, act with the environment, obeying its laws, directions, and forces. The individuals in such countries see themselves as products of nature; they look for harmony and are willing to compromise. (Kryzhko, 2015) Such characteristics of outer-directed cultures as flexible attitude to the environment, desire to find a compromise, tenderness, centre on the customers and partners are typical for Russian business culture. Besides, different historical events (revolutions, communism, changing of the government policy, etc.) greatly influence Russians’ standard of living, revealing in quality of the goods, prices, salary and so on. (Russia and my native country: Cross cultural comparison) In contrast with Vietnam, there is no doubt that Vietnam is an outer-directed, too. Nowadays, Vietnamese still believe in fate, divination. Even the superstition phenomenon is widespread. Vietnam, though relatively skillful in communication, is not as sophisticated as Japan and Vietnamese businesses do not place customers in high positions.

CHAPTER 3: THE NOTE ABOUT DIFFERENCES IN BUSINESS CULTURE OF RUSSIA

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Business (Source: Unsplash) 3.1. The norm in business of Russia country. When you want to work with any foreign company, you have to know their culture, people in this country and some rules in this place. Then, Russia is a country with diverse culture, in this part we can see this. Because of these differences, Russians are considered to have specific behaviours. Indeed, it will give you some advice to build relationship with your Russia’s counterparts. You will be surprised by how negotiation conducted in Russia and you have to avoid doing things that make a negotiation disrupted. In this part, it also tells you how to manage a company in Russia that includes motivating employees, how to be a manager, some leadership issues. 3.1.1. Russia appearance. After being suffered from the fall in the Russian rouble and global oil prices together with sanctions imposed by the Western states from 2014, the economy is gradually recovering from the recession and recorded positive real GDP growth of 1.8 percent in 2017 with forecast of growth of 1.5 - 2.0 percent in the coming years. (Export market - Russia) Russia is the world’s largest energy exporter which should mean that its economy is strong and that its people prosper. It does undoubtedly have massive potential. Moreover, Russia’s size and diversity mean that it is almost always possible to find a place where the local authorities are really interested in the arrival of large and small foreign players. This makes a partnership between an investor and the government quite likely. However, the main obstacle in achieving this, of course, is the imperfect Russian legal system, which makes investors and businessmen working in the country anxious and worried about their properties. With Russia’s middle class rapidly increasing in size, many foreign businesses are finding that Russian consumers are highly receptive to their brands, particularly in the realm of luxury goods and food and drink. Depending on your industry, you might find that Russia is home to the perfect market for your company. At present, Russia has initiated new investment programmes and is encouraging foreign investment, which could prove beneficial for businesses looking to find funds and continue the expansion process. In conclusion,

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international expansion to Russia could open up opportunities to export to other countries in the Commonwealth of Independent States. 3.1.2. Russia behaviour. Russians consider introductions as informal and direct ways. A smile is only used for Russian executives prefer to meet with people of similar rank and position. Smiling is not respectful on formal occasions and smiling for no reason is a sign of idiocy. They also think of themselves as being absolutely honest and trustworthy. So don't show distrust. They have a strong respect for religion, so you shouldn’t be disrespectful in Russian churches. Older Russians tend to be more conservative when conducting business and prefer to do so in groups. Younger Russians are more individualistic and dynamic in their approach. (Russia) Russians do not like being rushed. Meetings and negotiations are slow. Hierarchy is important to Russians. They respect age, rank and position. The most senior person reaches decisions. Russians score very high uncertainty avoidance with a 95. This is apparent in how they online shop. Many Russians are not trusting of online transactions, so many still opt for cash-on-delivery payments. A great way to modify foreign campaign, is to translate your campaigns into Russian, ensure it’s clear that your products and services are not fraudulent. This may be done by providing a live online customer service option will help comfort Russians that may feel wary of buying from foreign companies online. 3.1.2.1. Russian Gifting Etiquette. Russia might have a lot in common with the rest of the Western world when it comes to gifting etiquette, yet the nation does possess a few unique traditions that are worth observing. Cheaper gifts are not expected to be wrapped in paper, but expensive ones are and should be accompanied with an appropriate card. When selecting a present for a Russian, be sure to understand that Russians like to spend a good deal of money on their gifts. Cheap gestures such as stationery, low quality wine or vodka, and candles are rarely met with much success. Yellow flowers are best avoided as they denote separation and the end of a relationship, when red flowers are typically the safest choice. Also, be weary that an even number of flowers would suggest you’re going to a funeral, so make sure your bouquet contains an odd number. (Thomas, 2018) 3.1.3. Russia communication. Russians often appreciate an interest from foreigner in the Russian language, so an attempt to learn or at least partially speak with them in their language is a good idea. You also need to avoid asking personal questions, but be prepared to have personal questions asked of you. Bringing up the subject of Russian culture and history will be an appreciated gesture. Politics are Russian’s favorite subject, therefore they are enthusiastic about discussing politics and the challenges of living in their country. Participating in this kind of discussion is more welcome than being an active listener, but a word of caution: keep the conversation light and avoid touchy subjects such as communism. (Danisewicz, 2014) About history, Russian history can be an appreciated gesture if you bring it up , but let your Russian colleagues take the lead with controversial historical topics. Russians are extremely educated, so be prepared to talk about U.S. history as well. Approach compliments with caution as they could cause a sense of misplaced obligation. For example, compliment a Russian’s vase sitting on their kitchen table and they may feel obligated to send you home with it. You also need to avoid having complaints about Russia, the Holocaust, Czarism and monarchy, conflicts with ethnic minorities and comparing Russia to other developing countries. Furthermore, face-to-face meetings are usually more productive than written correspondence because they allow 16

participants to more fully discuss and explain issues (Williams, 2016). With a high neutral culture, Russians rarely demonstrate body language in meeting and listen silently without even nodding in agreement. Russians are transactional by nature and you should err on the side of formality when you first make contact. Establishing long-standing personal relationships with Russians prior to doing business isn’t necessary. 3.1.4. Meetings. 3.1.4.1. First meeting. In Russia, meetings are formal, serious gatherings, and casual behavior is considered a sign of disrespect. Russians will greet strangers with a firm, almost bone-crushing handshake (when men shake hands with women, the handshake is less firm) while maintaining direct eye contact. Until invited to do so, don’t use first names, as it is important to respect authority and formality. (Danisewicz, 2014) The first meeting is often a vehicle to determine if you and the company you represent are credible and worthy of consideration for future business dealings. 3.1.4.2. Business meeting.

Businessmen (Source: Unsplash Hunters race ) There are many things you should do when you have a business meeting. Firstly, your costumes should be worn formally for meetings. Both men and women should wear business suits and women should make sure their skirts aren’t too short. Shoes should be polished and suitable for the occasion. (Danisewicz, 2014) Secondly, punctuality is very important. Because when Russians have a meeting with foreigners, they will always be on time. In case, they are late you still should be on time because it is considered to be a test of your patience. However, meetings are frequently interrupted because of some different situation involved. Business cards are handed out liberally in Russia and are always exchanged at business meetings. The ceremony of presenting and receiving business cards is important. Thirdly, on your business cards, always print one side in your language and the other in Russian. (Heinze, 2014) One thing for sure that you need to confirm the meeting when you arrive in the country and again a day or two in advance. Because of high uncertainty avoidance, Russians are afraid of cooperating with another foreign company and they always want something that convinces them to trust this company or this project. Therefore, your Russian counterparts will expect you to give a detailed outline 17

of your company and what you can do for them better than other companies can. Therefore, you should use the time effectively to demonstrate what differentiates your company from the competition. Furthermore, Russians expect long and detailed presentations including a history of the subject and a review of existing precedents. It is common for several side conversations that have nothing to do with the topic of the meeting to be carried on during the meeting. At the end of the meeting, expect to sign a 'protokol', which is a summary of what was discussed. It is common to combine business meetings with food and drink. We know that the Russians are highly hospitable and have a reputation for their love of vodka, so they may use these two things to gain an advantage in a business situation. Despite these ‘business meetings’ lasting well into the night, Russians are rarely late to work the next day. 3.1.4.3. Arranging meetings. Meetings shouldn’t be arranged in the first week of May because of having several public holidays. Arrange business meetings well in advance. It is advisable to arrange meetings with government officials at least six weeks ahead. Confirm the meeting a couple of days before the date. 3.2. The note in the business negotiations. 3.2.1. Attitudes and styles. The primary negotiation style in the country is very competitive and people may become outright adversarial. Most Russians view negotiating a zero-sum game in which one side’s gain equals the other side’s loss. Russians see negotiations as win-lose and view compromise as a weakness. Negotiations may become more personable and at least a little more cooperative if strong relationships have been established between the parties. Negotiations are slow in Russia, so be cautious about letting your associates know they are under pressure or they could delay decisions even more. (Katz, 2013) Avoid high - pressure sales tactics as they are considered rude and unprofessional. Also, Russians can show great emotions during negotiations, to the point of walking out of a meeting and/or threatening to end the relationship, in an effort to coerce you toward a different decision. Foreign negotiators believe that Russians focus on general goals, but don’t pay enough attention to the means of achieving them, while these means are what matters most. For this reason, negotiations can become lengthy. The unique aspect of the Russian business style is that from the outset of negotiations, the Russian side makes attempts to take strong positions, and for that reason expresses excessive demands. As a result of negotiations the parties’ positions begin to converge. Russians love technology, have great respect for Western expertise, and are easily impressed by size and numbers. Do not underestimate the strength of your negotiating position. (Katz, 2013) 3.2.2. Sharing of information. Information is rarely shared freely, since Russians believe that privileged information creates bargaining advantages. (Katz, 2013) 3.2.3. Pace of negotiation. Expect negotiations to be very slow and protracted. Especially during the early bargaining stages you may feel that you are making little progress; discussions often stay high-level for quite some time until your counterparts eventually decide to get down to the details of the deal. Success requires extreme patience in this country. (Katz, 2013) When negotiating, they often take a holistic approach and may jump back and forth between topics rather than addressing them in sequential order. It is not unusual for them to re-open a discussion over items that had already been agreed upon. If your counterparts appear to be stalling the negotiation, assess carefully whether their slowing down the process indicates

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that they are evaluating alternatives or that they are not interested in doing business with you. (Katz, 2013) 3.2.4. Bargaining. Russians often view compromise as a sign of weakness and may frequently refuse to change their position unless the other side offers sufficient concessions or shows exceptional firmness. Similarly, they may make minor concessions while asking for major ones in return. Therefore, the best approach is to be polite but remain tough throughout the bargaining process. (Katz, 2013) Final offers may be made more than once and are almost never final. Time pressure can be difficult to counter. If negotiators learn that you are working against a deadline, they may exploit this knowledge to increase the pressure on you to make concessions. Even if you allowed plenty of time, they may suddenly request last-minute concessions and ‘take-it-orleave-it’-type changes near the end of a negotiation. When using your own pressure tactics, clearly explain your offer and its benefits to your counterpart. Time pressure does not work against them since Russians can be very patient and fatalistic. However, convincing your counterparts to hold the negotiation in the West does give you a strong advantage. They will now be the ones under time pressure, which deprives them of a strong negotiation tool. (Katz, 2013) Negotiators can be aggressive or outright adversarial, and negotiations in the country often include strong confrontational elements. Extreme openings are frequent as a way to start the bargaining process. Negotiators may make direct threats and warnings, openly display anger or lose their temper, or they may walk out of the room, even several times in a row. Other emotional techniques, such as attitudinal bargaining, attempting to make you feel guilty, grimacing, or appealing to personal relationships, are often used. Russians may also resort to defensive tactics. They may change subjects frequently, revisit previously agreed points, introduce all kind of distractions, or ask very direct questions, attempting to take you by surprise. (Katz, 2013) Personal benefits may be requested openly as part of a deal. It is important to prepare for this upfront. Keep in mind that people may draw the line differently, viewing minor payments as rewards for getting a job done rather than as bribes. Also, consider that there is a fine line between giving gifts and bribing (Katz, 2013). In Russia, it is common practice to give and accept gifts during the festive season. In contrast with India, companies in India have become conscious that such gifts could be construed as a bribe to influence a policy maker, or gain undue competitive advantage. Introducing and explaining your company’s policies early on might help, but be careful not to moralize or appear to imply that local customs are unethical. (Dey, 2015) 3.2.5. Decision making. With high power distance, Russia companies can be very hierarchical, and people expect to work within clearly established lines of authority. Openly disagreeing with or criticizing superiors is unacceptable. Decision makers are usually senior executives who consider the best interest of the group or organization. (Katz, 2013) The role of government officials and bureaucrats, who may have to support and approve company decisions. When making decisions, businesspeople usually consider the specific situation rather than follow universal principles. Personal feelings and experiences may weigh more strongly than empirical evidence and other objective facts do. Russians are often reluctant to take risks. If you expect them to support a risky decision, you may need to find ways for them to become comfortable with it first. (Katz, 2013) 3.3. How to motivate employees. It is considered that employees want ‘to fulfill himself as a creative, unique individual according to his own innate potentialities and within the limits of reality’. That is the reason

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why we need to create ‘a competitive system which gives greater importance to the motivation to achieve positions, whereas a non-competitive gives perhaps greater importance to the motivation to perform duties of the positions’. Bearing in mind the major findings of many personality theorists (e.g. Jung, Alder, Sullivan, Rogers, and Goldstein), one might relate to the motivations inherent in a competitive system to the individual’s need for selfactualization or self-realization, by way of one’s work. (Vasiliy A. ANIKIN, 2013) The second type of motivation, ‘to perform duties of the positions’, could be considered a ‘reproductive’ motivation. This motivational pattern could be both keen and dominant, even when an individual socially expresses his or her wants and wishes to be creative and develop intensively in his or her work. Frankly speaking, any goals that involve the maintenance of one’s status, relations, and environment (by, say, being included in specific work and consumption conditions) might be considered reproductive motivations that are central to non-competitive systems. (Vasiliy A. ANIKIN, 2013) Worker motivation is positively correlated with organizational commitment, where organizational commitment is captured by a series of statements related to the employee’s perception of their workplace and the satisfaction expressed about the workplace and job. Furthermore, worker motivation is positively correlated to the expectation that a desired reward will be received in exchange for doing the job well. Therefore, the improvement of workplace, higher salary and extra employees guarantee policies will be the best way to motivate them. (Linz, 2004) 3.4. Intercultural management in Russia. 3.4.1. Being a manager in Russia. Intercultural adaptability is essential when working in Russia and you need to understand the importance of an open and honest approach. It is important to establish your credentials and authority quickly since Russians respect both status and technical expertise. Although they value firmness and dignity, it is advisable to appear approachable and friendly as well. Management in countries of the former Soviet Union is a complex, constantly evolving stateof-affairs, each country moving towards a market economy (with its accompanying protocols) at a different pace. 3.4.2. The role of a manager. Cross-cultural communication will be more successful if you recognize that although Russians may initially appear stiff and reserved, they often warm up when socializing. Relationships are often developed in after-hours socializing. Most Russians do not trust people who are "all business". Meals and entertainment provide a venue to get to know you as a person. An indication that you have successfully developed a personal relationship is being asked for a favor by that person. (Russia Management Guide) Although courtesy is important in all business relationships, this is especially true in Russia. Businesspeople have long memories for behavior they deem insensitive. Small slights that might be overlooked elsewhere are remembered here. (Russia Management Guide) 3.4.3. Approach to change. Russia has a low tolerance for change and risk. Intercultural sensitivity is important as while in risk-tolerant environments, failure is perceived as a learning process that encourages confidence in future ventures, failure in Russia causes a long-term loss of confidence by the individual as well as by others. (Russia Management Guide) 3.4.4. Approach to time and priorities. Russia is a moderate time culture and traditionally schedules and deadlines are viewed as flexible. However, the expectations of intercultural and global expansion have caused the Russians to adopt relatively strict standards of adhering to schedules. When working with people from Russia, it’s advisable to reinforce the importance of the agreed-upon deadlines and how that may affect the rest of the organization. Successful cross

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cultural management will depend on the individual’s ability to meet deadlines. (Russia Management Guide) 3.5. Leadership issues. In research, many of the Finnish expatriates also stated that there was a lack of trust of management and foreigners in Russia, which causes problems for expatriate leaders there. The research also indicated that the Finnish expatriates found Russian managers to be active in criticizing and role clarification, while not so active in, for example, setting goals, providing vision or keeping employees informed. One of the main leadership problems in Russia, according to Fey (2008), is involving employees in the decision-making process, which is often in managerial terms referred to as empowerment. Moreover, they argue that Russia has traditionally been characterized by very hierarchical, top-down organizations. and that if implemented correctly, empowerment can be a great advantage in Russia. However, they stress that this is a great challenge and that it needs to be taken step-by-step and cannot be done drastically. (Afeworki & Lindh, 2013)

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CONCLUSION Through 3 main parts, we can see the overview of Russia. It’s not only a beautiful country but also has many interesting characteristics in its culture. Russia is collectivism, femininity, long - term, high power distance, high uncertainty avoidance and low indulgence orientation. Thanks to Hofstede’s dimension and Trompenaars’s analysis, Russia’s culture seems to be more simple to understand for enterprises. We can easily connect our previous personal intercultural experiences to them to step the right way in international business. From the perspective of Hofstede and Trompenaar, some dimensions of Vietnam with Russia are the same, but there are also different things between two countries. If you want to do business in Russia, it should be noted. Moreover, we can see that Russian business culture retains many of the characteristics instilled during the Soviet era, most noticeably an autocratic management style that contrasts sharply to the more open and collaborative practices used by American businesses. When doing business in Russia or with Russian business people, enterprises must have suitable behaviours to get sympathy from your counterparts as we mentioned in part 3. It’s one of the keys to success in Russia’s business. Remember ‘When in Rome, do as the Romans do”.

Russia (Source: Would you take your family on holiday to Russia?, 2016)

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Heinze, A. (2014, July 13). Business Meeting Protocol and Etiquette in Russia. Retrieved from https://businessculture.org/blog/2014/07/13/business-meeting-etiquette-in-russia/ Katz, L. (2013). Negotiating international business: The negotiators reference guide to 50 countries around the world (2017 ed.). Charleston (SC): Booksurge. Dey, S. (2015, October 25). The fine line between gift and bribe. Retrieved from https://www.business-standard.com/article/opinion/the-fine-line-between-gift-and-bribe115102500742_1.html Vasiliy A. ANIKIN, V. (2013). The Journal of Comparative Economic Studies. Motivation to Work in Russia: The Case of Protracted Transition from Noncompetitive to Competitive System,8, 35-60. Retrieved from https://economics.hse.ru/data/2014/04/15/1320707932/Anikin_JCES_2013.pdf Linz, S. (2004). Motivating Russian Workers: Analysis of Age and Gender Differences. SSRN Electronic Journal,33(3), 261-289. doi:10.2139/ssrn.313186 Russia Management Guide. (n.d.). Retrieved from https://www.commisceoglobal.com/resources/management-guides/russia-management-guide Afeworki, E., & Lindh, J. (2013). Leadership in Russia[Scholarly project]. In DiVA Portal. Retrieved from http://www.diva-portal.se/smash/get/diva2:631445/FULLTEXT01.pdf

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