Corporate Management in the CIS - PowerPoint PPT Presentation

1 / 20
About This Presentation
Title:

Corporate Management in the CIS

Description:

An attempt to create a western-style business entity but ... Peeter Vahtra & Kari Liuhto (2004) 17. Perestroika. Gorbachev's Basic Theses ... – PowerPoint PPT presentation

Number of Views:23
Avg rating:3.0/5.0
Slides: 21
Provided by: iancra
Category:

less

Transcript and Presenter's Notes

Title: Corporate Management in the CIS


1
Corporate Management in the CIS
  • Week 1
  • The rise of the market economy

2
Claim - 1
  • The Russian corporation is
  • An attempt to create a western-style business
    entity but
  • Distorted by political and bureaucratic pressure

3
Claim - 2
  • Political and bureaucratic pressure represent
  • The remains of a vastly flawed economic system
  • Rational v- Irrational

4
Counter claim
  • The Russian Corporation is
  • A thoroughly rational response to antecedent
    conditions
  • A hybrid form of capitalist enterprise adapted to
    the prevailing economic conditions
  • A case of entrepreneurial Darwinism

5
Last days of Socialism
  • Frequently seen as an attempt to control
    resources to ensure social utility
  • In reality economic plan designed to support
    ruling elite by
  • Emphasis on military resourcing
  • Use of economic control

6
Shortage economy
  • Shortage economy which sought to appropriate
    surplus
  • Soviet enterprises were entirely rational
  • Shortage of supply was mechanism of central
    control
  • The success of the Plan was not measured by
    monetary means but
  • By levels of production

7
The Plan
  • other slide

8
Economic Control
  • Surplus was reallocated
  • Producers had no interest in increasing surplus
  • Neither enterprise nor worker had rights to
    surplus
  • Minimisation of surplus and increase of
    production costs provided buffer

9
Enterprise in name only?
  • Period mid 1970s to late 1980s
  • Emergence on Red Multinational
  • Internationalisation of Soviet Enterprises
  • Distinction between USSR CMEA
  • Signal of Capitalist Development
  • Role in subsequent business development

10
Characteristics of MNEs
  • Multinational Enterprises
  • Defining features
  • Size
  • Technological sophistication
  • Integrated products
  • Market strategy
  • Cost reduction advantages (eg labour)
  • Access to raw materials

11
Effective Parents?
  • Branches of Soviet Multinationals owned by
    Foreign Trade Organisations (FTOs)
  • All foreign trade was nationalised
  • Therefore, foreign trade operations needed
    permission of Ministry of Foreign Trade

12
True MNEs?
  • True MNE is integrated
  • Red MNEs demonstrated
  • Distinct separation between manufacturing and
    distribution operations

13
CMEA The real deal
  • Liberalisation in Poland and Hungary gave
    evidence of true MNEs
  • Red MNEs were devices to attract foreign
    currency
  • Indicative of growing foreign currency crisis in
    USSR

14
Economic Reality - 1
  • Mid 1980s study of Soviet-based enterprises
    operating in West Germany
  • Total 157
  • 82 Trading
  • 26 Service
  • 46 Agencies
  • 3 -- Manufacturing

15
Economic Reality - 2
  • The outward FDI stock of the USSR amounted only
    0.7 billion in 1990
  • The outward FDI stock of the socialist countries
    formed just 0.09 of the worlds total

16
The legacy of the Red MNE
  • Although varying and more demanding
    internationalisation patterns nowadays exist
    among Russian corporations the historical export
    promotion mode seemingly continues to dominate
  • Peeter Vahtra Kari Liuhto (2004)

17
Perestroika
  • Gorbachevs Basic Theses
  • June 1987 plenary session of the Central
    Committee of CPSU
  • Restructuring of Central Planning function
  • Gradual introduction of capitalist principles
  • But without reduction of power of the State

18
Main precursors to Market Economy
  • 1987 Law on State Enterprises
  • Able to determine output based on demand
  • State requirements met first but surplus could be
    sold for profit
  • Self financing from revenues
  • Bankruptcy
  • Gosplan's responsibilities were to supply general
    guidelines and national investment priorities
  • Not to formulate detailed production plans

19
Main precursors to Market Economy
  • 1987 Law on Individual Labour Activity
  • Freedom of labour to set up sole traderships
  • 1988 Laws on Co-operatives
  • Freedom for entrepreneurs to operate
    collectively for profit
  • Private ownership limited applicability in
    services and manufacturing

20
Main precursors to Market Economy
  • 1989 Law on Leaseholds
  • Start of permission to own property
  • 1990 Law on Property
  • 1991 Law on Privatisation
  • Abolition of Gosbank monopoly
  • Creation of commercial banks operating for
    profit
Write a Comment
User Comments (0)
About PowerShow.com