Studies Eastern European Markets
Eastern European Markets
March 2007

Petja Rinne
SCENARIOS FOR THE RUSSIAN FOOD MARKET FROM THE POINT VIEW OF FINNISH COMPANIES
LAPPEENRANTA UNIVERSITY OF TECHNOLOGY
Northern Dimension Research Centre
Publication 38

Download the publication in PDF format.


Summary

When planning operations and investments for the future foreign market, scenarios are a useful tool. With the help of scenarios, companies may piece together what the driving forces in the market in the future are and what factors should be taken into consideration. The purpose of scenarios is to produce knowledge about the future by presenting alternative descriptions about future occurrences and important factors that are related to them. Scenarios are not forecasts, and their likelihoods for coming true are not the actual subjects of scenario planning.

Scenarios are based on knowledge and information from the past and present. In planning scenarios for the Russian food market in the year 2015 from the viewpoint of Finnish companies, data and knowledge was gathered up by a PESTE analysis. This method can be used to recognise political, economic, social and ecological factors affecting the market. In planning scenarios for the Russian market, political and economic factors were emphasised, and 11 factors were chosen to describe the created scenarios. In each scenario different factors may have different values. Due to that, the FAR (field anomaly relaxation) method was used to construct scenarios systematically so that irrationalities could be avoided in the scenario descriptions.

In planning the scenarios, two driving dimensions for describing the state and development of the future market environment were defined: the level of agricultural production and the development of the market. In this context the underdeveloped market means that the retail market is far from its saturation point and there may appear shortages in raw material supply due to import barriers and ineffective local agricultural production, which causes expenses for local food producers.

When the market is underdeveloped, it reflects that the economic development in Russia has in general not been strong enough due to barriers to the free market. A developed market in turn refers to an open market environment that is close to the EU standards. By using these two dimensions, the following scenarios were defined: Open market, Business as usual, Agricultural superpower and Market expansion.

In each scenario possible strengths, weaknesses, opportunities and threats of doing business were defined. The future market trends and weak signals of market development could be found by comparing the features of the scenarios and finding similarities in them. In the scenarios, certain aspects appeared that can be important to take into consideration when planning business for the Russian food market. The following issues came up more than once in studying the scenarios: the purchasing power increases in Russia, long distances in Russia are challenging distribution chains, the retail sector moves toward the saturation point, acquisitions are common in the retail sector, contract manufacturingthe quality of customer services and customers’ bonus systems competitive advantage. Also, the importance of marketing, knowing and innovativeness in food processing were emphasised.

Download the publication in PDF format.


More information:
Lappeenranta University of Technology
Northern Dimension Research Centre
Telephone: +358-5-621 11
Telefax: +358-5-621 2644
www.lut.fi/nordi

Compiler Trade Web Site: Studies:
Lappeenranta University of Technology/Index
Studies on emerging markets/Index
Special Reports
Tutkimukjsia/Hakemisto

 TERMS & CONDITIONS / KÄYTTÖOIKEUDET. © Oy Compiler Ab. All rights reserved.