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PESTLE Analysis of Russia

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Russia is one of the largest countries in the world. It’s known for its resiliency, devout connection to the Soviet Union, and an interesting relationship between the current Russian president (Vladimir Putin) and the current United States president (Donald Trump).

But the country is far more than it seems; it struggles to grow when the government holds so much power. It hasn’t stopped the citizens from trying to better their lives by moving into new industries, separating from older ideals, and moving into a tech-focused future.

In this PESTLE analysis of Russia, learn how six primary macro-environmental factors have and continue to influence this country rich in resources, people, and innovation.

Political factors: The Russian political system explained

Two people controlling the country.

Both a president and prime minister govern Russia. Vladimir Putin has held the presidential seat for the last several years, as has prime minister Dmitriy Medvedev. Together, these two essentially control Russia from within parliament walls. Because Russia follows a Civil Law System and is a semi-presidential federation, these two share power over Russia.

Russia’s large government system.

There’s more to the governmental system, however — nearly 30 years ago, Russia began following the constitution law. They also have the Public Authority system, which is mandated by the 85 federation subjects within the Russian Federation. Each of these subjects is equal to one another.

The citizens don’t feel free?

Putin says he and his citizens wouldn’t wish to follow the same political system as the USA. But this might not be true. According to the Humans Rights Watch, Russian citizens don’t feel like they have freedom. Perhaps if they followed a system similar to the United States, they may feel differently.

Showing off influence through weapon production.

Russia uses military technology taken from the USSR. The country also has access to one of the largest amounts of nuclear weapons within the military, air force, navy, and ground force. Not only does Russia produce weapons, but they also ship weapons to over 70 countries. The importing and exporting of weapons contributes largely to Russia’s economy. It also serves to show how influential and powerful Russia is to the rest of the world.

Economic factors: Limited wealth, limited economic streams

Wealth concentrated at the top.

After the Soviet Union collapsed, Russia’s economic strategies needed a change. Instead of continuing with the planned economy, the smarter decision was to move towards a market-based system. Yet, even with this change, the majority of Russia’s wealth is contained by officials. Most of Russia’s major industries — from transport to social media — are controlled by the Russian government.

An economy that’s vulnerable and limited by the mining industry.

Building and selling weaponry aside, Russia’s main production is oil, gas, aluminum, and steel. Although these resources are typically sought after, the prices fluctuate based on supply and demand. This means the majority of Russia’s economy can be strong, but it’s vulnerable to human demand too.

Diversifying economic streams.

Yet, relying so heavily on crude oil puts Russia’s economy at a standstill. The government is aware and means to diversify its economic streams, particularly by focusing on import substitution. In doing so, the country may need to adapt the current taxation system and create new monetary policies — one such policy may involve making the ruble (Russia’s currency) competitive with others.

Sociocultural factors: Spiritual citizens, rich culture, and declining birth rates

Citizens remain spiritual but not religious.

Russia’s population is over 145 million. Within it, you won’t find many religious people, thanks to how strongly the Soviet has ruled citizens. People who are religious are likely to follow Christianity or Islam — right now, these are the two most popular religions in the country. However, the majority of citizens are spiritual but don’t follow a religious path.

Respect is given to the wealthy.

Although an obvious classification structure is nonexistent in Russia, a gap between the rich and the poor still exists. Just like in most societies, the more wealth you have in Russia, the greater the respect you receive. Russians will show off their wealth through frivolous purchases, like expensive cars and luxury clothes.

A diminishing birth rate.

russia-birth-rate

Russia’s birth rate is decreasing — it’s been on the decline since the early 1990s. The death rate is increasing though, most likely due to the poor health care system. Most causes of death are attributed to disease as well as alcohol poisoning.

Endless entertainment and rich culture.

Russia is a land of entertainment. It has a strong connection to music, literature, and famous philosophers like Tchoikosvy and Leo Tolstoy. Then you have Moscow and St. Petersburg, two of the liveliest cities in Russia — the activities there are on par with New York.

Technological factors: Government control reigns supreme over the tech industry

Media content owned by government officials.

The majority of TV channels and stations are owned by the government or people with close ties to government officials. This impacts what citizens can watch freely, and means most content on television is fully decided by the government.

Building high-tech parks and high-tech zones.

Russia is in the perfect position to build a high-tech economy but bureaucracy is stopping every attempt. Progress is slow. This hasn’t stopped people from trying though; over the last few years, high-tech zones and high-tech parks have been built. Within these areas are technology-focused villages and universities, which focus on creating other innovative projects to better the lives of citizens.

A slowly growing IT market.

Unfortunately, the majority of Russia’s IT market relies on the import of software and hardware. The cost of these products affects how many IT projects (if any) can be completed. Still, the government is hoping to see more demand for cloud computing and big data analytics, two industries that could improve the economy.

Legal factors: Wealth breeds corruption

Government corruption and greed.

With the government controlling so many industries as well as media, it’s not too surprising that corruption grows among parliament members. The majority of the country’s wealth is owned by government officials (and friends of these officials) too. Legally, there’s nothing the citizens can do.

Strict rules about working overtime.

Russian citizens follow a workweek similar to workers in the west: 8 hours a day, 40 hours a week. Working overtime is complicated though; employees will need to file a written request and have it approved prior to any overtime or they will face consequences.

Environmental factors: Numerous environmental problems

Despite being a popular tourist destination, Russia suffers from several environmental issues: air pollution, nuclear waste, water pollution, and damage caused by landfills are the typical problems. Citizens are concerned about these environmental issues and the current state of the Russian climate. However, little can be done unless the government is concerned too.

Russia PESTEL analysis: Bottom line

Russia is a complex country; political power reigns supreme and controls multiple industries and factions of the country. The majority of the wealth is held and controlled by either people in power or friends of those in power.

Still, the citizens are trying their best. They aim to build a better society by improving technology in regions, breaking into new industries outside of mining, and enjoy vast amounts of entertainment even in trying times. The country is rich in literature, music, and other sources of entertainment — it’s no wonder the people are so resilient. Still, there’s a long way to go for Russia, while the country is plagued by a multitude of environmental problems as well.

Image by Oleg Shakurov