PEST Analysis
The PEST analysis is used in this report to evaluate the political, economic, social and technological aspects of the macroeconomic environment in the targeted market, Russia. This study helps to frame the basis for the decision-making about a possible market entry. Thus, it is of vital importance to scrutinize the macroeconomic environment as part of the market research.
Political and Legal Aspects
According to the Russian 1993 Constitution, Russia is a democratic federative state with a republican form of government grounded in the rule of law (pwc, 2012). After the fall of the Soviet Union in 1991, Russia has gradually opened up and after a seven-year transitional period with numerous market reforms, political stability
Concerning religion, estimates from 2006 suggest that 15-20% of the population are Russian Orthodox, 10-15% are Muslim, and 2% - other Christian, yet large parts of the population are non-believers, a likely legacy from the Soviet era (CIA The World Factbook, 2012).
The United Nations Development Program (UNDP) ranks Russia 66th with regards to overall human development, making Russia part of the high human development quartile. However, one major challenge within Russia is the huge gender gap concerning life expectancy. Average life expectancy is 66.2 years, yet it is only 59.8 years for men, while boosting 73.1 for women (United Nations Development Program (UNDP), 2011; Datamonitor, 2011).
Russia is estimated to be one of the fastest-growing countries concerning proportion of population to be considered middle class. (Financial Times - Chart of the week: tracking the rising EM middle classes, 2012). The related increase in disposable income can be illustrated by the tripling in middle class spending between 2000 and 2010. However, the widening income inequality may pose a challenge for long-term success (Datamonitor, 2011).
In general, Russia’s current strengths concerning social development are the high level of social governmental spending and the