Question

Which of the following statements is true of the challenges faced by organized retailing in Russia?

1) Retailers cannot rely on domestic products as their quality is low.
2) Government impedes foreign investment in retailing.
3) Managerial talent is becoming more difficult to find and retain.
4) Stringent regulations on profit margins discourage capitalism.
5) An unstable political scenario increases the risk associated with direct investments.

Answer 1

In Russia, organized retailing faces challenges such as government regulations, political instability, and a scarcity of managerial talent, which complicates business operation and growth.

Step-by-step explanation:

The challenges faced by organized retailing in Russia include difficulties due to government regulations, an unstable political scenario, and a scarcity of managerial talent. The Russian effort to shift to a market economy has led to economic growth but has also been plagued by corruption and struggles such as the weakening of the ruble, an uneven distribution of income, and heavy reliance on natural resource exports. Despite the attraction of foreign investment during periods of growth, businesses still face an unstable political environment that introduces risk to direct investments and can hamper economic expansion. Moreover, government impediments such as bureaucratic red tape and restrictive regulations can make it challenging for businesses to operate efficiently, possibly explaining why stringent regulations on profit margins, which are not highlighted as a current issue, might discourage entrepreneurial ventures.