Commonwealth of Independent States (CIS)

History

• The Commonwealth of Independent States is a regional organization whose participating countries are former Soviet Republics, formed during the breakup of the Soviet Union.

• As a successor entity to the USSR, CIS was founded on 8 December, 1991 by the Republic of Belarus, the Russian Federation, and Ukraine on the dissolution of the Soviet Union.

CIS Nations

Member States• Armenia• Azerbaijan• Belarus• Kazakhstan• Kyrgyzstan• Moldova• Russia• Tajikistan• Uzbekistan• Turkmenistan and Ukraine both technically participate in the CIS, but neither are

official members of the organization. • The main power behind CIS is Russia, the wealthiest and largest country in the

Commonwealth.

Purpose: to coordinate its members' policies regarding their economies, foreign relations, defense, immigration policies, environmental policies, and enforcing of the law.

• The power this organization has over its member states is minimal, as one of the founding principals of the CIS is that all member states are considered their own sovereign entities.

Structure: The supreme body is the Commonwealth Heads of State Council, which deliberates and decides on matters relating to the activities of the states and their common interests.

• The highest singular position in the CIS is the executive secretary, which is currently held by Sergei Lebedev.

Advantages and Disadvantages• Mutual protection and economic stability are provided to the members

within the CIS, and • They are also guaranteed their rights as sovereign states.

On the negative side, • The states are all tied to each other, so if one state suddenly has something

terrible happen to it, the entirety of the CIS will be dragged down

Effects on Local Diversity: • Local diversity is mainly challenged by Russia. • Russia is the most powerful state within the commonwealth, so its policies

and cultural traits are bound to spread throughout the rest of the organization.

• Russia has already pushed for the official language of all states in the commonwealth to change to Russian, though only four states in the commonwealth have Russian as their official language.

ETHNOCULTURAL DIVERSITY AND A SHARED HISTORICAL SPACE

• Occupies most of the territory that once constituted the Union of Soviet Socialist Republics ( USSR)

• It encapsulates a large landmass from the Pacific to the doorsteps of Europe, the Arctic Circle, and the deserts of Central Asia.

• Encompasses 12 time zones, 350 million (approx.) and more than 100 distinct ethnic groups 

• Russia is currently a major energy supplier to many CIS states, giving it considerable political muscle in the region. 

Free trade area (CISFTA)

• In October 2011, the free trade agreement was signed by eight of the eleven CIS states; Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, and Ukraine at a meeting in St. Petersburg

• Agreement will eliminate export and import duties on a number of goods but also contains a number of exemptions that will ultimately be phased out. However, corruption and bureaucracy are serious problems for trade in CIS countries.

Associated organizations

Associated organizationsEurasian Economic Community (EurAsEC or EAEC)• EAEC was formally created when the treaty was finally ratified by all

five member states in May 2001• EurAsEC is working on establishing a common energy market and

exploring the more efficient use of water in central Asia.

Common Economic Space• Russia, Ukraine, Belarus, and Kazakhstan agreed to form Common

Economic Space after a meeting in the Moscow suburb of Novo-Ogarevo on 23 February 2003.

• It would involve a supranational commission on trade and tariffs that would be based in Kiev, headed by a representative of Kazakhstan, and would not be subordinate to the governments of the four nations

Associated organizationsCollective Security Treaty Organization

 (CSTO)

•  CSTO came into effect on 20 April 1994.

• It was set to last for a 5-year period unless extended

• The charter reaffirmed the desire of all participating states to abstain from the use or threat of force.

• Signatories would not be able to join other military alliances or other groups of states, while aggression against one signatory would be perceived as an aggression against all. 

Russian language status• Russia has been urging that the Russian

language receives official status in all of the CIS member states.

• Russian is an official language in only four of these states: Russia, Belarus, Kazakhstan, and Kyrgyzstan. 

India & CIS Nations Trade Relations• The main items being exported from India are tea, woolen goods,

cosmetics, ready made garments, leather goods, chemicals, jute manufacture, cotton yarns, machine tools, machinery, pharmaceuticals, plastic products, rice, electronic goods, instruments, and chemicals.

India CIS Trade Relations – Armenia• Indian exports to Armenia in 2009 were worth US$ 5.6 million

• India mainly exported car batteries, chemical goods, pharmaceuticals, and electrical equipments.

• Whereas it imported books, textiles, non- ferrous metals, and raw rubber. The low volume of trade is probably due to Armenia's low accessibility. 

India CIS trade relations – Georgia• Trade relations were established in the 1992.• Trade turnover between India and Georgia in 2006 was

US$ 20,521,700• Laws on tariffs have been simplified and so far the trend

has been such that India's exports to Georgia have been more than Georgia's exports to India. 

India CIS Trade Relations - Ukraine • Trade relations were established way back in the 1960s• The amount of bilateral trade that took place between

the two countries in 2004 was worth more than $500,000.• Ukraine largely exports energy products, machine building

equipment, and chemicals. It mainly imports pharmaceutical products.

India CIS Trade Relations - Latvia • Import to Latvia amounted to US$ 16,954,219 and the

export stood at US$ 2,554,392 in 2005.

• Latvia exports textiles, base metals, and chemical products to India and imports prepared foodstuff and rubber. 

India CIS Trade Relations - Estonia • Trade relations were established in December, 1991.

• In 2005, the total amount of bilateral trade that took place was €19.6 million

• Estonia mainly exports metal products, paper, and machinery. It imports vegetables, chemical, and textile products. 

India CIS Trade Relations - Lithuania 

• The total bilateral trade between the two countries stands at US$ 47.06

• The major items imported from India include pharmaceuticals, paper, and textiles. Lithuania exports cement, metals, sulphur, and base metals.

Audi

Audi AG (Aktiengesellschaft)

• Industry – Automobile

• Founded – Germany (16 July, 1909) by August Horch

• Global Headquarters – Ingolstadt, Germany

• India Headquarters – Mumbai, Maharashtra

• Owner: Volkswagen group (~99.55 %, since 1966)

• Products – Luxury vehicles, Sports Cars

Indian Luxury Car Market

• Indian luxury car market is growing at the rate of 25% per annum.

• Rise of disposable income & increase of number of affluent middle class people (earning 3-15 lakh/ annum).

Indian Luxury Car Market

• India has 83,000 millionaires and every year 16,000 are adding to it.

• Affluent Indian class has exposure of global luxury lifestyle, they want to flaunt. Audi fits in for that segment of people well.

Strategic focus of companies

A1 – A3

• Mass Market• Maruti, Hyundai, Tata, GM, Honda

A4 – A5

• Executive• Skoda, Toyota, GM, Renault, Honda, VW

A6• Luxury• BMW, Mercedes, Audi

Ultra• Ultra Luxury• Rolls Royce, Lamborghini

Audi focus area

• Differentiation as corporate strategy.

• Global standardization of product.

• Increase brand consciousness, not only awareness

Customer Segment

Customer profiles:• Traditionally wealthy families(Kids educated abroad)• Corporate executives• Medium size enterprise owners• Young professionals, expatriates, politicians and bureaucrats.

Motivating factors:• High quality• Heritage• Longevity• High brand awareness• Propensity to spend

Audi Resources & Core Competencies

•Audi’s strength is style, performance & luxury, Indian people are more influenced by western culture, Audi can leverage same.

•Audi has launched Q5 to cater to the recent growth of luxury SUV segment.

Market Concentration

Market Concentration

• Market concentration is high for star marked models, blue highlights are next largest selling models, concentration is more at entry to luxury segments because growing HNI’s are potential customers

• Future challenge is positioning in micro segments of luxury, Mercedes is more towards ultra luxury.

Marketing Strategy of AUDI India

• Positioning in the luxury but not as broad, but micro segment of luxury entry which will be having highest growth

• Standard product from Audi Portfolio as Indian market standards for luxury will be matching with the global standards.

• Focus on high WOM & Lifestyle events, IMC targeting post purchase influence on customer behavior for high WOM

Marketing Strategy of AUDI India

• Distribution for special zones with high HNI (High net worth individuals) & affluent people.

• Branding for inspirational & aspirational attributes

• Meeting high requirement of capital through sustained market share & service building.

Challenges of channel & Distribution Management

• Low market volume, with too many dealers with high capital cost for their site & inventory, selling too few cars & thus operating with very low operating margins.

• Only an economically viable channel can generate brand loyalty & satisfied customers

• Customer experience at point of purchase pose a major challenge to increase brand experience.

Alternatives for improving channel efficiency

• Common store for VW, Skoda & Audi with distinction; risk of mixing or diluting luxury brands

• Bundling of financing, insurance, & service for margin improvement.

• Centralized logistics for VW, Skoda & Audi.

Thank You !