INVESTIGATION OF THE EXIT STRATEGIES OF INTERNATIONAL BRANDS FROM RUSSIAN MARKET BASED ON CONSUMERS' BRAND PERCEPTION
|
ЗАЯВЛЕНИЕ О САМОСТОЯТЕЛЬНОМ ХАРАКТЕРЕ ВЫПОЛНЕНИЯ
ВЫПУСКНОЙ КВАЛИФИКАЦИОННОЙ РАБОТЫ 2
STATEMENT ABOUT THE INDEPENDENT CHARACTER OF THE MASTER THESIS 3
Аннотация 4
ABSTRACT 5
INTRODUCTION 7
CHAPTER 1. EXIT STRATEGIES OF INTERNATIONAL BRANDS. 9
1.1. Reasons for exit the international market 9
1.2. Exit Strategi es 11
1.3. Classification of exit strategies from the Russian market 15
1.4. Brand Capital 21
1.5. Brand Loyalty 23
1.6. Conclusions for chapter 1 27
CHAPTER 2. DEVELOPMENT OF THE RESEARCH DESIGN AND COLLECTION OF THE
DATA 30
2.1. Statement of the research question 30
2.2. Research Model and Hypothesis 31
2.3. Methods and research design 33
2.4. Sample and data collection 39
2.5. Conclusions for chapter 2 41
CHAPTER 3. MODEL ANALYSIS AND DISCUSSION 42
3.1. Analysis of results of empirical testing of the model 42
3.2. Analysis of the investigation results 48
3.3. Theoretical and practical implications 50
3.3.1. Theoretical Implications 50
3.3.2. Practical Implications 50
3.4. Limitations and future research directions 51
3.4.1. Limitations 51
3.4.2. Future research directions 51
3.5. Conclusions for chapter 3 52
CONCLUSION 54
REFERENCES 56
APPENDIX 1 . THE QUESTIONNAIRE 61
ВЫПУСКНОЙ КВАЛИФИКАЦИОННОЙ РАБОТЫ 2
STATEMENT ABOUT THE INDEPENDENT CHARACTER OF THE MASTER THESIS 3
Аннотация 4
ABSTRACT 5
INTRODUCTION 7
CHAPTER 1. EXIT STRATEGIES OF INTERNATIONAL BRANDS. 9
1.1. Reasons for exit the international market 9
1.2. Exit Strategi es 11
1.3. Classification of exit strategies from the Russian market 15
1.4. Brand Capital 21
1.5. Brand Loyalty 23
1.6. Conclusions for chapter 1 27
CHAPTER 2. DEVELOPMENT OF THE RESEARCH DESIGN AND COLLECTION OF THE
DATA 30
2.1. Statement of the research question 30
2.2. Research Model and Hypothesis 31
2.3. Methods and research design 33
2.4. Sample and data collection 39
2.5. Conclusions for chapter 2 41
CHAPTER 3. MODEL ANALYSIS AND DISCUSSION 42
3.1. Analysis of results of empirical testing of the model 42
3.2. Analysis of the investigation results 48
3.3. Theoretical and practical implications 50
3.3.1. Theoretical Implications 50
3.3.2. Practical Implications 50
3.4. Limitations and future research directions 51
3.4.1. Limitations 51
3.4.2. Future research directions 51
3.5. Conclusions for chapter 3 52
CONCLUSION 54
REFERENCES 56
APPENDIX 1 . THE QUESTIONNAIRE 61
In the aftermath of the conflict between Russia and Ukraine on February 24, 2022, several international brands made the decision to either partially suspend their operations or completely withdraw from the Russian market. Each decision was taken independently by the companies and was based on various factors such as environmental, social or governance (Basnet, Blomkvist, & Galariotis, 2022). The Russian market is studied in the context of international business and is attractive to international companies because of its large and developing market, economy, strategic location and many other factors.
A large number of companies have stopped their operation on the Russian market because of the risk of sanctions. Sanctions are a common instrument of government policy (Meyer, Fang, Panibratov, Peng, & Gaur, 2022). Since the start of the conflict between Russia and Ukraine, geopolitical tensions have steadily escalated, resulting in a growing number of countries intervening and imposing restrictions on the activities of international businesses in Russia. These restrictions have created challenges and complexities for worldwide companies in Russia. (Meyer & Li, 2022).
The decision of international brands to withdraw from the Russian market has hit all sectors and brought consequences for both companies and buyers and the market as a whole. The conditions that have developed in the Russian market have created an unprecedented context for the study of this issue. Scholars from various regions of the world are currently investigating this phenomenon, seeking to identify the underlying causes and contributing factors that have led to the withdrawal of international brands from the Russian market. In the study of Sonnenfeld, Tian, Zaslavsky, Bhansali and Vakil (2022) they identified and classified 5 different exit strategies from the Russian market followed by international brands (withdrawal, suspension, scaling back, buying time and digging in). Many companies have already exited the market, in very different ways, while others have not yet made a decision and are looking at the experiences of their competitors.
The objective of my research is to investigate various exit strategies from the Russian market and their impact on consumer perception of international brands. This is an important question because the decision to choose different exit strategies from the Russian market was made and implemented by many companies in 2022, and now we have the opportunity to analyze how the perception of these brands has changed among people after brands' exit from the Russian market. My research will help other international companies that have suspended their operations make the most favorable decision regarding their exit strategy, and it will also allow them to understand how challenging it will be for companies intending to return to the market, even under a different name. If consumers have negatively perceived the brand's exit, it will be extremely difficult for it to re-enter the market because the consumers' attitude has changed, and they will not wish to further engage with that brand.
To achieve this aim, I set several tasks:
1. Perform a comprehensive analysis of international brands' strategies for exiting the Russian market, aiming to identify and expand upon the existing set of strategies employed.
2. Examine various strategies for exiting the Russian market that are perceived most positively by consumers.
3. Examine a range of case studies involving companies that have already implemented an exit strategy from the Russian market. This will provide valuable insights into the challenges and opportunities associated with such strategies.
4. Conduct a thorough investigation and analysis of the Russian market, in order to gain a comprehensive understanding of its unique characteristics and dynamics.
5. Assess the impact of these changes on consumers, examining shifts in their buying habits and analyzing the factors that have influenced their decision-making.
In this study, my obj ective is to expand upon the existing set of strategies for the withdrawal of international brands from the Russian market, drawing insights from a variety of case studies involving companies that have already successfully planned and implemented their own exit strategies. By analyzing these cases, I aim to identify all the exit strategies that can be added to the existing set. By taking a multifaceted approach to my analysis, I aim to provide a comprehensive evaluation of each strategy's strengths and weaknesses, as well as its potential implications for market, consumers, and companies.
There are varying classifications of exit strategies from different sources, and currently, there is no universal concept for classifying all possible entry strategies for companies operating in the Russian market. Therefore, this paper suggests an expansion of the existing list of exit strategies and a more systematic approach to categorizing the primary strategies used by global brands to exit the Russian market. To accomplish this, the study will analyze and evaluate the existing strategies and the factors that influenced companies' decisions to withdraw from the Russian market.
A large number of companies have stopped their operation on the Russian market because of the risk of sanctions. Sanctions are a common instrument of government policy (Meyer, Fang, Panibratov, Peng, & Gaur, 2022). Since the start of the conflict between Russia and Ukraine, geopolitical tensions have steadily escalated, resulting in a growing number of countries intervening and imposing restrictions on the activities of international businesses in Russia. These restrictions have created challenges and complexities for worldwide companies in Russia. (Meyer & Li, 2022).
The decision of international brands to withdraw from the Russian market has hit all sectors and brought consequences for both companies and buyers and the market as a whole. The conditions that have developed in the Russian market have created an unprecedented context for the study of this issue. Scholars from various regions of the world are currently investigating this phenomenon, seeking to identify the underlying causes and contributing factors that have led to the withdrawal of international brands from the Russian market. In the study of Sonnenfeld, Tian, Zaslavsky, Bhansali and Vakil (2022) they identified and classified 5 different exit strategies from the Russian market followed by international brands (withdrawal, suspension, scaling back, buying time and digging in). Many companies have already exited the market, in very different ways, while others have not yet made a decision and are looking at the experiences of their competitors.
The objective of my research is to investigate various exit strategies from the Russian market and their impact on consumer perception of international brands. This is an important question because the decision to choose different exit strategies from the Russian market was made and implemented by many companies in 2022, and now we have the opportunity to analyze how the perception of these brands has changed among people after brands' exit from the Russian market. My research will help other international companies that have suspended their operations make the most favorable decision regarding their exit strategy, and it will also allow them to understand how challenging it will be for companies intending to return to the market, even under a different name. If consumers have negatively perceived the brand's exit, it will be extremely difficult for it to re-enter the market because the consumers' attitude has changed, and they will not wish to further engage with that brand.
To achieve this aim, I set several tasks:
1. Perform a comprehensive analysis of international brands' strategies for exiting the Russian market, aiming to identify and expand upon the existing set of strategies employed.
2. Examine various strategies for exiting the Russian market that are perceived most positively by consumers.
3. Examine a range of case studies involving companies that have already implemented an exit strategy from the Russian market. This will provide valuable insights into the challenges and opportunities associated with such strategies.
4. Conduct a thorough investigation and analysis of the Russian market, in order to gain a comprehensive understanding of its unique characteristics and dynamics.
5. Assess the impact of these changes on consumers, examining shifts in their buying habits and analyzing the factors that have influenced their decision-making.
In this study, my obj ective is to expand upon the existing set of strategies for the withdrawal of international brands from the Russian market, drawing insights from a variety of case studies involving companies that have already successfully planned and implemented their own exit strategies. By analyzing these cases, I aim to identify all the exit strategies that can be added to the existing set. By taking a multifaceted approach to my analysis, I aim to provide a comprehensive evaluation of each strategy's strengths and weaknesses, as well as its potential implications for market, consumers, and companies.
There are varying classifications of exit strategies from different sources, and currently, there is no universal concept for classifying all possible entry strategies for companies operating in the Russian market. Therefore, this paper suggests an expansion of the existing list of exit strategies and a more systematic approach to categorizing the primary strategies used by global brands to exit the Russian market. To accomplish this, the study will analyze and evaluate the existing strategies and the factors that influenced companies' decisions to withdraw from the Russian market.
The key points of the Master's Thesis can be summarized as follows:
1) The Russian market and its characteristics were studied.
The Russian market offers several advantages that make it attractive to various businesses, including a large audience, a developing economy, and its geographical location. It was important to study the Russian market to understand what companies might lose if they decide to exit the market and how challenging it would be to re-enter.
2) All exit strategies from the Russian market following the events of February 2022 were identified and classified.
Through an extensive literature review, three primary groups of exit strategies (full exit, suspension, continue operations) were identified, further subdivided into nine subgroups (Clean Break, Exit completed with the option to come back, Suspended part of company's business operations on their own, Suspended part of their business operations due to external factors, In the process of making a decision, Scaling back, Nothing to promise, Decided to leave, but not now, Continue operations). This classification framework provides a clear understanding of the diverse approaches companies have taken when exiting the market.
To substantiate these findings, the thesis presented a range of case studies featuring companies that implemented specific exit strategies. The analysis of these cases relied on official documents and statements from CEOs, ensuring the accuracy and reliability of the data. By examining these examples and aligning them with the corresponding strategies, the thesis elucidated the potential consequences for companies across various dimensions, such as financial implications, prospects for re-entry into the market, and shifts in consumer perception.
3) The main factors influencing consumer perception of international brands based on different exit strategies from the Russian market have been identified and systematized.
Previously, there were no studies specifically focused on the topic of consumer perception of international brands based on different exit strategies from the Russian market. Therefore, existing research on brand loyalty and consumer behavior was examined.
The main factors identified include Quality awareness, Brand awareness, Brand loyalty awareness, Brand image, and Brand attitude (brand satisfaction). These factors were chosen to measure the loyalty towards brands that have already exited the Russian market, as well as those that remained or partially ceased their operations. Additionally, new factors were developed, including Attitude towards brand quality (brand satisfaction), The attitude of buyers towards the company after leaving, and Attitude towards the possibility of the company's return to the Russian market. These factors aimed to measure the attitudes towards international brands and their decisions regarding further operations in the Russian market.
4) An original model of consumer perception of international brands based on different exit strategies from the Russian market has been developed, illustrating how brand loyalty changes.
The study argues that an individual can remain loyal to a brand only if they continue to engage with the brand by making purchases and being satisfied with the quality of their purchases.
5) The identified exit strategies from the Russian market were analyzed through surveys, and the strategies that are most positively perceived by consumers were determined.
The research findings highlight that the best strategy for attracting consumers is for companies to maintain their presence in the Russian market, even disregarding the potential risk of sanctions. Customers value stability, and if they have developed loyalty towards a particular brand, it becomes challenging for them to change their purchasing habits.
Furthermore, when evaluating the criterion of buyers' attitudes towards companies after their withdrawal, respondents showed positive assessments for those companies that made the decision to remain in the Russian market. These companies retained customer purchases, contributing to brand loyalty and fostering a favorable brand perception.
Upon analyzing companies that decided to exit or partially withdraw from the market, it becomes evident that for many consumers, the company's decision does not significantly impact their loyalty. Instead, their loyalty remains intact due to the consistent delivery of high-quality products. Consequently, if these companies choose to return, it is likely that consumers who previously demonstrated loyalty will gladly resume their purchases.
1) The Russian market and its characteristics were studied.
The Russian market offers several advantages that make it attractive to various businesses, including a large audience, a developing economy, and its geographical location. It was important to study the Russian market to understand what companies might lose if they decide to exit the market and how challenging it would be to re-enter.
2) All exit strategies from the Russian market following the events of February 2022 were identified and classified.
Through an extensive literature review, three primary groups of exit strategies (full exit, suspension, continue operations) were identified, further subdivided into nine subgroups (Clean Break, Exit completed with the option to come back, Suspended part of company's business operations on their own, Suspended part of their business operations due to external factors, In the process of making a decision, Scaling back, Nothing to promise, Decided to leave, but not now, Continue operations). This classification framework provides a clear understanding of the diverse approaches companies have taken when exiting the market.
To substantiate these findings, the thesis presented a range of case studies featuring companies that implemented specific exit strategies. The analysis of these cases relied on official documents and statements from CEOs, ensuring the accuracy and reliability of the data. By examining these examples and aligning them with the corresponding strategies, the thesis elucidated the potential consequences for companies across various dimensions, such as financial implications, prospects for re-entry into the market, and shifts in consumer perception.
3) The main factors influencing consumer perception of international brands based on different exit strategies from the Russian market have been identified and systematized.
Previously, there were no studies specifically focused on the topic of consumer perception of international brands based on different exit strategies from the Russian market. Therefore, existing research on brand loyalty and consumer behavior was examined.
The main factors identified include Quality awareness, Brand awareness, Brand loyalty awareness, Brand image, and Brand attitude (brand satisfaction). These factors were chosen to measure the loyalty towards brands that have already exited the Russian market, as well as those that remained or partially ceased their operations. Additionally, new factors were developed, including Attitude towards brand quality (brand satisfaction), The attitude of buyers towards the company after leaving, and Attitude towards the possibility of the company's return to the Russian market. These factors aimed to measure the attitudes towards international brands and their decisions regarding further operations in the Russian market.
4) An original model of consumer perception of international brands based on different exit strategies from the Russian market has been developed, illustrating how brand loyalty changes.
The study argues that an individual can remain loyal to a brand only if they continue to engage with the brand by making purchases and being satisfied with the quality of their purchases.
5) The identified exit strategies from the Russian market were analyzed through surveys, and the strategies that are most positively perceived by consumers were determined.
The research findings highlight that the best strategy for attracting consumers is for companies to maintain their presence in the Russian market, even disregarding the potential risk of sanctions. Customers value stability, and if they have developed loyalty towards a particular brand, it becomes challenging for them to change their purchasing habits.
Furthermore, when evaluating the criterion of buyers' attitudes towards companies after their withdrawal, respondents showed positive assessments for those companies that made the decision to remain in the Russian market. These companies retained customer purchases, contributing to brand loyalty and fostering a favorable brand perception.
Upon analyzing companies that decided to exit or partially withdraw from the market, it becomes evident that for many consumers, the company's decision does not significantly impact their loyalty. Instead, their loyalty remains intact due to the consistent delivery of high-quality products. Consequently, if these companies choose to return, it is likely that consumers who previously demonstrated loyalty will gladly resume their purchases.
