· In the structure of imports of goods prevails industrial products (75.3%), and the main trading partner, EU (42.6%).

Having examined not only general volumes of losses for the EU that can reach more than 7 billion US dollars due to the exit from Russian market, but also the losses by country and product-wise in more detail, the following conclusions can be made. The most sensitive countries to th sanctions appeared to be Poland, Lithuania, finland, Estonia and Denmark. It is important to notice that most of the countries that are leading in these losses are those who border with Russian federation: Latvia, Lithuania, Estonia and Finland. These countries had been involved in the active trade processes with Russia and the Customs Union. In terms of particular products sanctions affected to a large extent such countries as Cyprus, Greece, Hungary, Ireland and Czech Republic. In other countries Russia was involved in trade less significantly. (Shirkunov, 2014).

The taxation policy and customs and tariff regulation is still one o the most important instruments that are used by the government to influence the economic situation. In the conditions of sanctions the economic measures will be mostly aimed at attracting the capital to the Russian economy. In connection with this various tax reliefs for the investors depending on the significance of the industry and the economic area of their activity are being developed.

The customs and tariff regulation nowadays is determined by the sanction policies implemented on Russia that requires undertaking certain counter-measures in the field of restricting the foreign trade and efforts aimed at enhancing the protection of the economic security of the country.

Because of the intense activities of the European Union in creating the agreements on association with countries of Eastern Europe (Ukraine, Moldova, Georgia and potentially other countries) a solid effort in decreasing the negative influence of these agreements should be taken. These measures can even include the cancellation of reliefs and preferences for these countries. Simultaneously, the further expansion of the Customs Union is being planned. Since January 1^st 2015 the Eurasian Economic Community (EAEC) is in power. This is the association based on the Customs Union and the common economic area of Russia, Belarus and Kazakhstan. Uzbekistan, Tajikistan and Kirgizstan joined the community recently. Armenia has also claimed its intentions of joining the EAEC. According to several information sources, some other countries are particularly interested in joining the union, for example India, and Turkey before the Syrian conflict (Gryaznova and Markina, 2012).

By means of import replacement it is offered to increase the customs duty rates on goods, competitive analogues of which are already produced in Russian Federation.

The support for the small and medium-sized entrepreneurship in the conditions of economic sanctions is crucially important since SMEs predominates a number of production industries such as food and textile production, agriculture, etc., but at the same time appears to be the most vulnerable and sensitive to even the minor changes in the economy. For small and medium-sized enterprises at the entry there are the preferable tax periods, and other reliefs. The government subsidizes the production modernization and the purchase of the equipment needed in the manufacturing process.

There is a conclusion that can be done having analyzed the previously discussed topic. Now since already a considerable amount of time the negative impact of the sanctions from the European Union and the United States can be seen along with influence of the Russian counter-measures, and these effects will be in power for considerable amount of time in perspective. Additionally, this situation should be inevitably used at its maximum in order to restructure and reorganize Russian economy and recover the industries that have been significantly harmed after the fall of the Soviet Union. Today Russian industrial and agricultural enterprises have gained an opportunity of expansion on the new markets. The main objective necessary to reach in order to use them is multi-aspect modernization of the production and management using the existing resources.

The economy of Russia since this moment should bear a serious structural change. For making it beneficial for every side involved it is necessary to establish a hard joined effort of government and business, however the results of it will be seen only in the long-term perspective.

1.3 Strategies of Russian globally-trading companies to resist the negative impacts of sanctions

Irwin (2015) has examined behavior of multinational companies under the influence of international sanctions. The studies have revealed that there is a significant contrast between the overall outlook of firms and their actions. The considerable majority of companies have rather cold attitude to Russia, due to both structural and cyclical factors. Companies that view the market negatively are six times more than those who view it positively. Even so, it has been found that twice as many organizations are committed to the Russian market and extending their presence there as those that are decreasing it, moreover there is an even bigger group of firms that are either remaining still or not reporting any changes.

It has been detected that while a large majority of foreign companies share a negative outlook for the Russian market, there is much greater variation in what the same firms are actually doing in Russia. In particular, several firms are still expanding their operations, even as others step back. Moreover, we find examples of firms increasing their commitment to the market even though their assessment of the outlook is bleak.

Irwin identifies that behaviors vary across sectors, in ways that both reflect how the shocks effecting on Russia impact those sectors in different ways, but also how the policy environment varies across sectors; supportive in some, but also negative in many others. Healthcare appears to be the most optimistic sector, while financial and energy firms are the most pessimistic.

Several firms are likely to be at a fork in the road in their Russian strategy, with the path they take dependant on both the external environment and internal policy choices of the government.

For many firms this is a balancing act between immediate risk and the uncertain future opportunities that can be exploited I they maintain their market presence and the environment improves. Striking that balance and making the right strategic choices will require a very careful reading of both the internal policy environment and the external factors influencing Russia in several months ahead in order to regain the lost profits and the stabile position on the market. In the graph Z below, the changes in revenues of the multinationals in different sectors are displayed.

These statistics prove that the industrial sector is the one to suffer the most among all other areas.

Karpia (2015) claims that the depreciation of the ruble is the main factor standing behind the negative developments in this sphere. While it benefits those sectors that are dependent on import of goods and technologies to a small extent and which reap currency gains from exports, such as the energy, chemical and metallurgic industries, it generates losses in the import-dependent areas of the economy, which sell mainly in the domestic market (such as the machine-building industry). The high-technology sectors are the most affected among all, which may solidify Russia's dysfunctional resource-based current economic model.

Rising inflation has been driving up most elements of the cost of doing business, and the decreasing the domestic demand for goods and services has been suppressing revenues.

Speaking about the bank industry, in mid-January 2015 Fitch lowered the long-term ratings of 30 large Russian banks by one notch, cutting the ratings of Rosselkhozbank and Gazprombank to speculative grade (BB+).

Favorable to the chosen model of the enterprise investigated here, Karpia identified that the small and medium-sized enterprises are the cornerstone of Russia's long-term development. They are expected to have to pay for saving the large state-owned and private companies while at the same time facing difficulties in securing access to credit (it is more likely that the Russian banks will prefer to save the giants that have links to the state first, including the exporting companies who report revenues in foreign currency).

This seems to promise the SMEs a struggle that requires really complex and smart approach to strategy planning as the threats appear no longer so much from the side of equal competitors but from natural market giants that are in the preferable position for the government and the financial sector.

Gurkov et al. (2010) offer the following line of to stick to in order to adapt to the conditions of the economic crisis's emergency. In this case, the main task is the preservation of assets and the creation of conditions for sustainable economic turnover. Preservation of assets is possible through debt refinancing and restructuring of the company (the provision of new legal entities, not indebted). With regard to the sustainability of economic turnover, the basic condition for achieving it reduces the unit costs (the revision of the supply structure and the number of suppliers, savings on maintenance, reducing administrative costs). Reduced production and marketing costs is especially important because the conservation objectives of sustainable turnover force the firm to maintain a minimum balance in the market of "administrative resources" and the labor market. In turn, the reduction of costs creates an opportunity to reduce the perceived price (by Pre-representation of discounts, credits, deferrals of payments) and restoring the level of sales.

The same authors are also in favor of using the advantages that appear on the background of the crisis. It is related to understanding the crisis as a unique opportunity for the growth of competitiveness in the conditions of weakening competitors. This, in turn, relies on the development of all types of assets (asset relationships and technological assets). Under this alternative, the company has to achieve lower prices with an increase in perceived quality. Growth of the quality is only possible with the growth of the company competences (systems, know-how and relationships). Unfortunately, in times of crisis competence growth is practically impossible to achieve without increasing costs. Companies “can only hope that with the development of competences, quality growth with declining prices and, accordingly, the company sales growth will be able to reach a new level of efficiency of the use of technology and to achieve optimum utilization of capacity, respectively, break the trend growth unit costs” (Ibid.).

There is also one factor that surprisingly stays still to a certain extent. Klinova and Sidorova (2014) investigated several cases of the phenomena accuring during the period of sanctions. They found that despite the sanctions, the Advisory Council on Foreign Investments under the Russian government continues to approve the transactions to buy shares in Russian companies by foreign investors. A Dutch company Abbott was allowed to buy Russian pharmaceutical enterprise Veropharm. Blitz , a German company bought shares in Heat Exchangers (HX) Holding, owned by GEA Mashimpeks (Heat transfer and energy-saving equipment for nuclear power plants).



Chapter II. Empirical part

Introduction

In this chapter of the paper the practical part of the investigation is presented. The focus is on investigating the issue on the example of the selected company that represents the chosen model of enterprise: a Russian company of a medium size that is involved in foreign economic activities. The aim of the practical investigation is to offer effective strategies of coping with the negative effects of economic sanctions.

The object of the study is company Mikromontazh LLC (ООО “ НПП “Микромонтаж”) that is located in Nizhny Novgorod . It manufactures and sells the equipment for ambulance cars, hospitals, military departments and astronaut training centers. The range of equipment that the company produces is the following: wheeled carts for patient carriage, stretchers, the supporting equipment for ambulance cars, spare parts and accessories, etc. This company represents a potentially useful object for the investigation of the phenomenon since it is involved in the economic relationships with the foreign companies in countries of Europe, Asia, CIS, the USA and several other countries.

This paper investigates economic sanctions and their consequences. For this reason the examination of the activities of Mikromontazh LLC is able to graphically examine the negative effects of the present economic sanctions and their consequences on the Russian economy in general and their characteristics in particular in the national companies of production industries.

A big advantage of choosing this object for investigation is the influence of the wide range of factors on company's operation. For instance, among partners of the company there are companies of Germany, Italy and Finland, that represent the European area of company's trade. As a consequence of the present economic events, particularly the affected exchange rates of currencies, the trade and partnership with such companies is getting more difficult and the company has to radically change its trade strategy. On the other hand, one of the key partners has been a Turkish company until certain point of time when the direct trade became practically impossible because of the new Russian-Turkish sanction policy.

Moreover, China and countries of CIS represent extremely valuable markets for trade and cooperation in the ongoing economic situation for a number of reasons:

· The currencies that are used in trade operations;

· The tempo and characteristics of the growth of the economies of these countries;

· The particularities of market behavior of partner companies and clients, etc.

The methodology of the investigation includes two interviews with the representatives of the studied company Mikromontazh LLC, the observation of the production and operations organization processes and the meeting with the representatives of a big potential foreign client.

This set of methods gives an opportunity to gain a wide and good quality outlook of the situation and the data needed for building up a potentially effective strategy that will help the company in its adaptation to the existing external factors and building the correct course of development for the future.

The respondents of the interview are the CEO of Mikromontazh LLC Lev Kuzmin and the development manager Anton Suslov. The other stage - a meeting with foreign group representing the potential customer for a company took place on 5^th April 2016. The group consisted of two people. The aim of the visit was to be introduced to certain products that are offered by Mikromontazh, the observation of their production process and holding negotiations where the purchase of a model of stretchers in needed quantity for exploitation testing was made. At the end of this stage it became possible to gain a wide specter of information from different sides of company's interaction with markets in form of data and points of view of several participants of the trade process. This is important in relation to the versatility of the studied problem and necessity of going deeper into the nuances of possible perspectives.

Aim of the research: To analyze the effects of the influence of economic sanctions on the Russian company of a medium size involved in the international trade activities, on the example of Mikromontazh LLC and develop the strategy of adaptation to the consequences of these effects.

Object of the study: Mikromontazh LLC (ООО “НПП “Микромонтаж”).

Scope of the study: Effective strategies of adaptation to the negative influence of the present economic sanctions that impact the activity of the investigated company Mikromontazh LLC.

Methodology:

1. Interview block with the representatives of the studied organization and its clients. Among the respondents there are two people from Mikromontazh (Lev Kuzmin and Antom Suslov) The questions of the interviews can be found in the appendix. The questions are presented in the original language. The formulation of the questions may be different from the actual ones for reasons of convenience and ability of the respondent to answer. Some questions were also asked in changed sequence by means of convenience of the conversation.

2. Observation of the production processes and the key items appearing in the studied trade processes.

3. Attending a meeting with foreign customers as translator (visitors from the Indian delegation). The process included several stages that are described in more detail in the corresponding part of this chapter.

2.1 The description of Mikromontazh LLC as an object of the empirical study

The limited liability company Mikromontazh (Research and production enterprise) is a Russian manufacturer that designs and produces the supply for carrying of the patients for several purposes.

Mikromontazh produces wheeled carts for patient carriage, stretchers, receivers and other equipment for ambulance vehicles such as cars, helicopters and cross-country vehicles.

They are used by medical facilities, emergency rescue service and "Emergency Medicine" rescuers. The four main fields are the ambulance, hospitals, mobile emergency services, as well as the preparation and testing of the crews of the International Space Station (ISS).

A brief history of the company OOO "Mikromontazh" (data from the homepage of the company):

1991 - during the period of Perestroika the Nizhny Novgorod Research Institute of technology and organization of production (NIITOP) allocated team of designers and workers under the direction of Lev Kuzmin. The new company was named Mikromontazh.

1991-1992 - the chosen specialization in the production of microelectronic equipment soon is unclaimed and Mikromontazh masters the trade of computers without losing hope to return to the manufacturing sector.

1992-1993 - Company found a new niche: Repairment of medical equipment in health care facilities.Most of the machinery restored in those years by Mikromontazh is still in function.

1994 - The company organizes its own production for the Gorky Automobile Plant (GAZ) and starts working in the new direction of the equipment for ambulance cars.

1995 - Mikromontazh goes into the serial production. In the year it equipped more than 2 000 cars of "first aid".

2001 - the company starts each year to participate in international exhibitions "Safety" and "Healthcare", which take place in Moscow.

2005 - Mikromontazh begins to work in the field of astronautics. It has designed the “ortho-table” and swivel chair to train astronauts in the Astronaut Training Center named after Gagarin and at Baikonur. The special trolley for transportation of spacesuits has been designed.

2006-2007 - Mikromontazh takes part in the priority national project "Healthcare", in which the equipping of 12 000 cars of ambulance for the whole Russian market took place.

2009 - Company developed and presented a backup set of rescue equipment intended for the evacuation of 20-30 people in an emergency situation. Mikromontazh believes that such cases should be established in all public places, especially in schools, subways, stadiums and so on.

2011 - Mikromontazh developed and produced more than 150 units of the range of medical and special equipment: wheelchairs, carts for equipment and special automobile accessories for the evacuation of astronauts from landing places.

The main objectives of the organization:

* Ensuring the maximum safety to patients of hospital institutions of the Russian Federation;

* Providing maximum convenience for medical staff working in ambulances and hospitals

* Contribution to the development and promotion of the Russian Space and military equipment

The CEO is Lev Kuzmin, Candidate of Technical Sciences, Laureate of the State Prize of the USSR, Academician of the Academy of Medical and Technical Sciences. The company owns three sites, two of which include manufacturing plants and technical development departments, and one is the head office building also locating one of the production floors. The company employs about 200 people. The total number of employees working in production is about 150 people. The company is considered to be an SME according to the staff headcount and turnover, basing on the ranking system of the European Commission (2016).

Method

During the stage of the empirical research in the selected organization the information necessary for a detailed analysis of the studied problems within the company was collected, as well as the general information about the studied market. in the allotted time, two personal interviews with Mikromontazh company representatives were conducted: one with the CEO Lev Kuzmin and one with the development manager Anton Suslov. Selection of respondents was defined by the tasks for the collection of relevant information and, accordingly, the terms of the issues, which are competent to respondents. The Director-General gave an opportunity to get acquainted with the company's strategic position in the market and especially important global external factors (political situation, global competition and others), the intended course of development that is stuck to at the moment. On his turn, development manager disclosed details of cooperation with important partners and clients, characteristics of products, the specifics of the internal organization problems.

In addition to the interview stage, several visits to the company has been carried out to monitor the proceeding of production processes and to get acquainted with the key products. It was necessary to establish links between the description of certain characteristics of the products and components, and their illustrative examples: for example, received information about the difference in quality of the wheels for the wheeled carts purchased from different manufacturers. After receiving a practical insight on ??the system of production and the major units of the trade referred to in this study, it became possible to more clearly estimate the analyzed situations and to establish the necessary links between the narrow but significant details and look at the problems at the macro level.

Content Analysis

Content analysis method is used in this research for determining the relevant content in the gathered via interviews information. The system of content analysis has been made basing on the guidelines designed by Mayring (2000). The transcripts were filtered and reduced to pieces of text only containing the question-related information. Content is the most important piece of data in the method of interview, while the aspects of person's behaviour, context of the interview session and other factors are not a sufficient source.

Content analysis can be applied to wide range of research fields and for this reason appears to be a popular technique. It can analyze any piece of writing or the recorded texts. Content analysis is currently used in many fields, ranging from marketing and media studies, to literature and rhetoric, ethnography and cultural studies, gender and age issues, sociology and political science, psychology and cognitive science, and many other fields of inquiry.

Findings

Expert 1.

The main partners of "Mikromontazh" are Germany (Stabilus), China (My Life), Italy, Finland, Poland and, until recently, such was Turkey (Dastek).

China supplies trolleys and stretchers made with technology provided by Mikromontazh in outsourcing. They are cheaper, but have a lower quality. There is a number of reasons for cooperation with My Life: Mikromontazh can provide the necessary amount of serial production of large circulation and at prices significantly lower than those that would be offered in case of production in Russia. For example, the cost of a standard multi-level rolling trolley for ambulance vehicles, produced in-house, is about 17 thousand rubles, while the Chinese manufacturer - from 10 to 13 thousand rubles.

From the European partners the company buys components for its products such as gas springs and wheels. Reasons to buy it from completing these manufacturers are the following:

* In Russia, some of these products are not produced at all;

* Russian manufacturers do not offer high-quality products, as well as an adequate range of models;

* European sellers set reasonable prices for the products.

Despite the increased costs for the purchase of components from European companies due to a sharp increase in the dollar exchange rate, Mikromontazh plans to continue to buy most of the products from European manufacturers for the above mentioned reasons.

The increased value of the dollar against the ruble, however, is forcing the company to think about how to start the production of its own components, primarily the wheels. There are a number of problems that complicate this situation:

* Production is of a very complex technology;

* Equipment for the production is expensive;

* Introduction of new units in own production requires large amounts of time, effort, and new personnel resources.

Some components, such as certain models of gas springs, the company cannot produce in-house. Previously, they were purchased mainly in Turkey, but now company has to buy in Italy in connection with the introduction of the Russian-Turkish mutual sanctions on trade and transport.

Such components as the electric suppliers have been ceased to be brought to Russian market, which greatly complicates the purchase. Furthermore, the necessary model went up to 30%. But, despite this, the company will have to buy electric drives from the same manufacturer abroad as there are many requirements for the product, and finding a substitute on the market at the moment is impossible, as its own production is costly.

Another product that plays an important role in the production of the company's products is polyvinyl chloride (PVC). PVC that is produced by domestic companies is strong and flexible enough and has other important physical characteristics, but is a greatly inferior product to foreign competitors in the aesthetic sense. For this reason the company continues to buy PVC produced in Finland and Korea and sold at a price that is1.5 times higher than the Russian PVC.

It is worth mentioning that, in addition to significant disadvantages the current economic situation, for the enterprise Mikromontazh there is one important plus. Since many European accessories have become too expensive, many companies are leaving the Russian market. Start of production of some units at own facilities in order for further sale becomes easier as the market is less saturated with competitors and similar activities can be started "under the slogan of" import substitution.

Most likely, it will be difficult to fully replace European and Turkish parts completely with company's own effort.

Focus on import substitution in the Russian market implies certain nuances related to internal trade. Domestic economic policy has a major impact on companies whose clients largely consist of representatives of the public sector. The main barriers to the efficiency of market mechanisms is corruption.

A good example is the following situation. There is a federal law ( 21.07.2005 N 94-ФЗ) "On placing orders for goods, works and services for state and municipal needs" requiring state and local government agencies to place orders on the basis of contest in 100 per cent of cases.

Customers, for example, the Ministry of Health of the Russian Federation, are the judges of the contest. During such a "selection" of sellers on the market there are many intermediaries whose purpose is to maximize the huge profits, while in many cases they do not have the necessary clue about the real needs of the sector and the market as a whole. Such intermediaries manipulate suppliers, "squeeze" the discounts from them, profitably negotiate with foreign suppliers. There is an underground pricing, in which mediators profit by approximately 50 per cent of the cost of production. Enterprise Mikromontazh, for instance, establishes the margin of only 15 per cent.

On 22^nd March 2013 State Duma adopts Federal Law N 44-ФЗ "About contract system in the procurement of goods, works and services for state and municipal needs". This law could partially resolve the problem, allowing the transactions within the amount of 100 thousand rubles to be proceeded without competition, on the basis of the contract between the supplier and the customer. This model is based largely on the laws of the free market for at least part of the transactions allows trade in patient carriage equipment in the conditions of more fair competition.

Nowadays Russian ambulance suffers a real collapse, indirectly caused by the current economic sanctions against Russia. This problem is related to the compliance status of the objective standards set for the ambulances.

In accordance with these standards, the amount of equipped and ready for operation vehicles must be a number equal to 10% of the population. With a population equal to 143.5 million people the total number of ambulances should be approximately 14350 units. In accordance with Russian legislation, the emergency vehicle has to be removed from use after 5 years since it has been produced and equipped with new equipment.

However, due to the difficult economic situation, the state does not have enough funds to maintain the fleet of ambulances: among other items in the budget the education and health care costs have been reduced. As a result, today the number of ambulances is only around 6000 that more than half the size of the established norms required to be fulfilled in order to maintain a sufficient level of service for public hospitals patients. Moreover, about half of them have already exceeded their entitled service period, however they are still not removed.

Russian Prime Minister Dmitry Medvedev has moved funding responsibilities for ambulance to the regional level, explaining that the decision by lack of funds in the federal budget.

Such circumstances have a negative impact on the companies operating in the medical transport sector: a sharp reduction in the budget for the production of cars and staffing leads to a corresponding drop in demand for their products. Mikromontazh complained that paying attention to the problem is inevitable and addressed the question to the Russian president Vladimir Putin, the minister of health Skvortsova and the Nizhny Novgorod region governor Valery Shantsev. Responses were followed only by the governor, the region has been provided with a certain amount of money to maintain the condition of the regional emergency cars. However it is not enough to align it with all the rules and the question still remains open.

The next important external factor that is worth paying attention to when talking about the problem under study is the creation of the Eurasian Economic Community (EAEC). The creation of such a common economic area opens a large trade prospects abroad. One of the reasons is that the participating countries as well as Russia, are affected by changes in exchange rates. And at the moment it is more profitable to buy products in Russia due to the devaluation of the ruble.

In Russia, Mikromontazh holds the leading position on the domestic market in its core sphere of production, which means good opportunities for the emergence of new markets for products. Countries such as Uzbekistan, Kazakhstan, Tajikistan and Kyrgyzstan, and Armenia that is also planning to join the organization, is a whole new market with significant potential. Despite the fact that it is not a big potential demand in the beginning, in the future may sales on these markets can grow up to 30% of products sold. Thus, addressing the EAEC countries market allows the company to beneficially prepare for new export.

Speaking about the overall picture of the company's future Mikromontazh in the form in which it appears today, the company should probably not seek the way to return the lost opportunities and tune in to a whole new course and seek completely new development perspectives. The main questions that are landmarks such activities are:

· What to produce on the basis of available resources and technologies?

· How to change the production technology to provide high-quality development of the company at minimum cost?

· How to use the policy of import substitution in a beneficial way?

Expert 2.

The second expert who is the development manager of Mikromontazh has revealed the details of the several topics. First of all, the description of the key partner of the company was given.

It is necessary to mention that certain components, such as gas springs and wheels are bought by Mikromontazh from various suppliers. This is due to the fact that in different circumstances, the choosing different providers is the most rational strategy:

· Firstly, the providers offer a different range of models and accessories, the need for which varies in different periods of time.

· Secondly, there are periodically changing product requirements because of the peculiarities of the healthcare sector.

· Thirdly, it is important that suppliers are also changing their technology, as well as the pricing policy, which, even if to a smaller extent, but also has a certain influence on the choice.

Speaking about the emerging, but still being in the uncertainty, potential trade relations, the two countries stand out. These are India and Serbia. Both countries are potential markets for products, but negotiations with both countries have lasted for quite a long time and constantly changing economic conditions slow down the decision-making process.

Regarding the Indian consumers, it is possible to name a number of advantages that attract this market to buy products made in Russia. It should be started with the fact that India's economy, despite the relatively rapid growth, has small capital and rather limited opportunities. It does not allow Indian medical institutions to buy equipment products at massive quantities.

For example, companies from the US are leaders of the world market, as their production is too expensive and economically the relationships are at the level too insufficient to provide the special preferable conditions of trade. The second potential supplier for India is China.

Chinese products are comparatively cheap and have relatively low yet satisfactory quality, but there is one important barrier. Trade between the two countries is very complicated in several sectors for political reasons caused by the conflict of interests, and on the public sector level the Indian side is absolutely not ready to cooperate with Chinese manufacturers.

But Russian manufacturers, where the leading one is particularly Mikromontazh, offer quality that is much higher than, for example, in China and affordable pricing for Indian demand. But there is one significant obstacle for Mikromontazh that yet does not really allow the company to start selling products in India: customers do not accept the Russian certification, since at by the moment they have already switched to the European standards.

Regarding Serbia, the outlook at the moment is much more vague. Potential buyers during the period of negotiations on commercial proposals began to show less interest in Mikromontazh products. Probably, it is possible to explain by the global economic conflict between Russia and Europe that makes any new foreign economic relationships risky and unpredictable for companies. In addition, Serbian buyers currently prefer Turkish products, primarily for financial reasons, despite the relatively low level of quality.

To complete the picture, is to address the issue of internal problems that Mikromontazh is currently facing. In general, it is difficult to say that the changed economic conditions significantly influenced this aspect. However, there are a number of issues that need to be resolved, and related, one way or another, to the changes in the company that are necessary to implement in order to adapt to new economic conditions.

The most significant of the existing internal problems in the company are the following:

Mikromontazh spends a lot on measurements involved in retrofitting and repair of production facilities and other processes needed to change the structure of production.

The costs of promoting new models of products (for example, equipment for aircraft, suspended rescue platform, etc.) are very high, while the company has to focus on adapting to the crisis conditions of the economy, including the financial aspect at a first place.

Currently Mikromontazh is forced to maintain a lot of bureaucratic procedures related to the registration of new products, the control of safety standards, certification and patents. These procedures always have a high priority, but require a lot of time and effort.

Companies also need to renew the old standards of production for existing products, according to the changing requirements set by customers.

Such changes in the requirements also force to carry out structural changes in many products that include products that are already in operation as well. The second is done normally in place of item's dislocation by qualified personnel, which, of course, also adds certain significant costs.

There is also a need to expand the staff of the company: particularly the increase in the number of staff of the design bureau is a vital step. Since the moment of appearance of this necessity Mikromontazh has hired a suitable designer, but still seeks one to three people more. Regarding the professional qualification, the company is not experiencing an emergency need for more skilled designers, it is important to only increase their number in order to provide the satisfactory pace of development. However, the lack of qualification of the workers of the production site has became evident, namely turners and millers.

Business meeting

This part of the study includes describing the practice as a translator during the potential foreign customer visit in Mikromontazh in 5^th April 2016. The customer was represented by Indian military airforce officials that came for the purpose of observing the production floors and having a presentation of key products offered by the company that may concern their purchasing interest. The particular agenda of the meeting was the purchase of certain number of basic helicopter-carried stretchers for emergency service. Certain attraction was caused by the suitable price policy of Mikromontazh and the offered models of products that match the current needs of the Indian aircraft. However, the visit had rather an exploratory purpose without involving a big purchase contract further. Several items were sold for testing and it is still unclear whether the partnership should be expected to continue. This part appeared to be practically useful for this study since in the interviews that were held previously with the company experts it was revealed that India is a new market with a high potential due to certain number of reasons, yet not the one the company has launched it sales on. This stage gave the opportunity to gather the details necessary to examine this possible way of development by personal communication with representatives of the potential clients.

The overall meeting day consisted of four parts:

Visiting the main factory where key domestic products are manufactured and outsourced supplies from China are tested maintained and stored.

Observing the stock and display of special items for aircraft and astronaut training and some other categories, that is located at the disposition of the head office.

Conducting the meeting in the conference room of the head office that included presentation and negotiations over the purchase.

The final part - short city tour in the means of hospitality.

During the first stage the task was to follow the group of company management and the client representative through the production plant in a form of guided tour. The role played was organizing the process according to the interests expressed by the customer and the management and supporting the communication, mainly by translating the speeches of each side between Russian and English languages.

The main interest of the customer was the product range for military aircraft and the adequacy of the items for the corresponding aircraft models. The group was following through all possible options however the attention was focused on 2-3 basic items.

In the second area the group was shown several other model groups including civil and military emergency items and astronaut training equipment. The visitors preferred to stick to the initial plan, mainly discussing the emergency helicopter equipment. Besides the models under the main agenda, several other products caused obvious attraction.

The last part involved the presentation and the negotiations at the conference room in the head office. The group was given more detailed description of items of their particular interest and was consulted in terms of exploitation instructions. Moreover, a crucial point was standards and licensing. This was previously mentioned in a chapter devoted to perspective markets: Indian clients follow the European standards that are different to those accepted in Russia and this may become a major concern in future trade. However the agreement was made on purchase of 11 basic helicopter stretchers. These items will be subject to testing before the dialogue continues.

Recommendations

1. The launch of the range of components produced in-house. This step, of course, requires the investment of many resources. This can already be seen in the initial stage of the study. However, even with a rational approach and detailed market research, Mikromontazh be able to provide at least part of the production of components used. Even with very limited batches in the initial period, there is a logical segmented model of the production recommended: the division of the product range into "Premium" and "Economy" line in the design of products that use parts of the European and domestic production, respectively.

1. "Premium", where the product will be assembled with imported parts, and therefore will differ higher price and quality. Such products can be sold to customers, focused on the more expensive and high-quality products, mainly in B2B segment.

2. "Economy", where the components of own production will be used in the assembly. In this case, the product price will be lower and the company will be able to sell to their customers interested in large quantities. These are representatives of the public sector: Ministry of Emergency Situations, hospitals and ambulance.

An additional advantage of this approach is the main advantages of segmentation such as more structured market penetration, coverage of several of its segments.

2. Import substitution and increased influence in the EAEC area. Taking into account the fact that following this course essentially involves turning the circumstances into the advantage, this strategy is the most rational of all possible prospects facing the company for the foreseeable future in terms of market orientation. The main leverage which the company must use is that Western competitors quit the Russian market and the markets Eurasian Economic Community countries due to lower purchasing power of the representatives of the local demand. Moreover, the fact that Mikromontazh is Russia's largest manufacturer in the industry, protection from the local competition is guaranteed. In this case, establishment of own production of components that are able to substitute the European ones will also open and access to a market of these very components. The formation of a common trade area among member countries of the Eurasian Economic Community opens up a new wide economic geography for thecompany, which, according to the CEO, is able to meet the demand for 30% of the company's products. Currency risks also places without practical, as these markets are also affected by the recent global economic trends.

3. The Indian direction. As stated earlier, such a client as India in many senses is satisfied by the conditions offered now Mikromontazh. First, purchase of the equipment in China is not an appropriate approach for Indian government agencies for political reasons, while Western products are so expensive that the country cannot afford large-scale purchase of such equipment. Russia represented by Mikromontazh remains one of the most attractive vendors offering a sufficient level of quality of products at affordable price and with logistically favorable geographical position.

The only one existing, but still serious, obstacle is the certification of manufactured goods, which does not match the one that India accepts at the moment. This fact pushes the sales outlook for the Indian market in the more distant future, but it is seen as a clear guideline on the time when Mikromontazh is able to provide itself with the necessary resources and to overcome the above mentioned barrier. The finishing phase of the study confirmed the interest of the Indian side in cooperation and literally allowed to witness the first step of entering the promising market. Further development depends on the satisfaction of the customer with purchased product and resolution of the certification issue for models that represent particular interest of the customer.



Appendix

Interview questions for expert 1 (presented in original language).

1. Насколько сократились объемы экспорта и импорта компании за период действия экономических санкций в РФ?

2. Связано ли это в большей степени с подсанкционными единицами, странами, участвующими в настоящей экономической “войне”, либо с общим состоянием экономики страны и ухудшившегося состояния дел компании?

3. Какие области деятельности, элементы продукции потерпели наибольшие проблемы?

4. Какие решения необходимо было принять в целях борьбы с негативными последствиями экономической ситуации на начальной стадии?

5. Насколько ситуация отразилась на работниках компании?

6. Существуют ли различные точки зрения в руководстве на тему того, как выстраивать стратегию сопротивления?

Interview questions for expert 2 (presented in original language).

1. Некоторые эксперты считают, что экономика уже достигла дна и в этом году стоит ожидать постепенного улучшения.

2. Есть ли какое-либо положительное движение в компании, выраженное в показателях, новых контрактах и пр., которое подтверждало бы этот прогноз?

3. Существуют ли сейчас в целом предпосылки к постепенному восстановлению?

4. Было ли переориентировано сотрудничество с другими организациями и странами географически? Каковы могут быть причины?

5. Сохранились ли деловые отношения с партнерами из стран-участников конфликтов?

6. Каких ресурсов, по вашему мнению, не хватает компании для более эффективного выхода из кризиса



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