Socio-Economic Analysis for DIBI MILANO Company Harvard Case Solution & Analysis

Socio-Economic Analysis for DIBI MILANO Company Case Solution

Consumption Pattern of the People of Russia

Russian Market is considered as the 6th largest Beauty Market and it can be seen from the quantitative analysis that the market is on the rise. Demand for the beauty products is on the rise, which mainly includes skin care products, hair removal products, color cosmetics as well as other fragrances. According to various researches, it can be seen that beauty care industries is one the best performing category in Russia since 2014 and the year’s annual turnover is approximately totaled to $14.6 billion. (Exhibitions, 2016).

However, due to some financial issues in the overall market, Russia suffered a decline in its revenues in the year 2015 on its beauty products with the exception of some baby and childcare products; it recovered from this decline in the early 2016. Consumers for the beauty products reduced their consumption, which caused the overall prices of the products to go down in order to remain existent in the market. (Passport, 2016).

It can be seen that the consumers are now being rational with regards to usage of certain products in Russia, due to several educational programs. Because of this issue, many suppliers started switching towards the more natural products, which use non-damaging ingredients in order to re-boost their sales revenues from the associated products. However, certain other issues are hampering the growth of such products in the Russian Market, which first and foremost include the economic uncertainty in the country and the growing inflation in the industry, these factors are basically reducing the purchasing power of the consumers.

All these issues are critical and challenging for the growth of the products and consumption pattern in the Russian Market.

Openness to Foreign Trade

From the historical trend, Russian Market is quite open for a Foreign Trade, but due to its heterogeneous nature, among its different regions, a huge variety could be seen because of the endowment from natural resources. In addition to this, the company is facing challenges in easily trading with the rest of the world, which includes its huge dependency on the price of oil and gas, since it is a major source of export for the country. Moreover, a slight shift in the prices could significantly create issues as a result of dealing internationally.

Moreover, country’s overall participation in the CIS countries is very limited, which altogether yields opportunities as well as threats for Russian Trade. The policy makers of the country are required to make efforts to diversify its exports and further increase its geographical boundary by using innovative technologies. (Russian Foreign Trade as an Issue for National Policy Makers). However, it can be seen that the proposed company could gain significantly, as BRIC countries are considered as world’s major investors, even during the period of financial crisis in 2009.

From the foreign direct investment perspective, among the BRIC countries, Russia stands at last. (Ilya Bolotov, 2013). It can be seen that the Russia policies for doing business have significantly improved and the country is expected to stand at the 20th position by 2018 as per the World Bank rankings. The real challenge for foreign investors to easily trade in the Russian Market is in the difficulty to understand the country’s culture as well as its language.

Moreover, it can be seen that the government of Russia has comparatively a larger number of government officials than any other country and due to this there would be huge corruption in the overall country, which results in lack of respect for rules and regulations proposed in the industry. The major partner of Russia includes the Germany and Italy, which conclude the fact that the current company could be vitally benefitted from entering the Russian Market. (Overseas)..................

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