Lenta Case Study

Done By

Athulya M MBA19013

Gowthamraj RMBA19026

Mukhil B MBA19042

Udbale Rahul MBA19076

Vivek Singh MBA19083

Vighnesh.S MBA19064
RUSSIAN BUSINESS ENVIRONMENT-
POLITICAL AND MACROECONOMIC ISSUES
� Till 2000 faced a huge inflation-2400% in 1992

� Govt. default in its debts- Lose of ruble to 50%

� Only 13% of GDP to SMEs while it is 50% in US.
� High growth is attributed to High Oil Prices.
� Economic success concentrated only in large cities:
� Moscow – 350% more than national’s Average
� St.Petersburg- 40% more than national’s Average
Retail Environment

� Strict Labour laws

� Soviet Union Influences.
� Lack of work ethics- Made labours lazy to work hard.
� Major Difference between Russia and Western Countries.
� Govt’s bad view of the Business Culture.
� Govt is greater barrier for entry.
Lenta and It’s Suppliers.

� Lenta was founded in the year 1992 as a wholesale candy shop.

� Developed into Cash and Carry store- then evolved as a whole sale shop –Grocery and
Selected non food items.
� In 2005 it has 9 stores in St. Petersburg.
� Low price, 24 hrs open and quick serving time.
� No wholesaler in between.
� Direct to store deliveries- no distribution warehouse.
� Imported products account for 10%
Inventory Systems

� SAP is implemented

� Easy to monitor the movement of products and implemented this technique to avoid Stock
outs and excess inventory levels.

� Point of sale technology – read barcodes.

Government Relations

� Government is not involved in the business environment.

� No Proper frame work was framed to monitor the business.

� Govt. performs differently on different regions

� Taxation rate is not unique.

Challenges

� Have to hire 500 people.

� 20 for Managerial role- But no properly trained managers are there.
� Customer service was not given due importance in soviet union – Proper training of the
employees are essential as 90% success depends on their attitude towards the customers.
� Poor Employee Retention-Lost 15 Mangers (3 to Direct Competitors).
� Implementing the profit sharing plan
� Govt. intrusion in constructing new job- Permit issues.
� Opening the new shop.
Strategies

� Should focus on expanding in the St. Petersburg- Get good financial strength.
� By doing so it can make use of the untapped market resources.
� And since it doesn’t involve wholesalers it is easy to have the profit margin.
� HR department should be expanded, so that the workers can be hired and trained
effectivcely.
� The workers should be trained in accordance with goal of Lenta and the culture should be
followed uniquely.
� Should have god relationship with Government.
Thank You