BACKGROUND

The demand oI managing global operation environment among business is changing rapidly. The
business is moving towards the global competition around the world. This matter is challenging
every business to be competitive in the Ioreign and global market. And with the emergence oI
competitive battles among a Iew large Iirms with comparable resources and skills in global-scale
eIIiciency and nationally responsive strategies, the ability to learn and transIer knowledge and
expertise became more important in building durable competitive advantage (Bartlett and
Ghoshal, 1987: 7).
Because oI the diIIerences in environmental Iorces, some ways oI doing business must be
adapted to local conditions or changed completely. Cultural Iorces points out that the variety oI
attitudes and value among cultures aIIects managers oI all the business Iunctions. There are some
countless deIinitions oI culture, most anthropologists view culture as the sum total oI belieIs,
rules, techniques, institutions, and artiIacts that characterize human population.
When people working in societies and cultures diIIerent Irom their own, the problems we
encounter in dealing with a single set oI cultures are multiplied by the number oI cultural sets
they Iind in each oI their Ioreign markets. They have to be aware oI cultural diIIerences
elsewhere.
How do international businesspeople learn to live with other cultures? Ball et. al (2008: 160)
stated that the Iirst step is to realize there are cultures diIIerent Irom their own. Then they must
go on to learn the characteristics oI those cultures so that they may adapt to them. There are
some business Iunctions that can be aIIected by cultural Iorces such as marketing, production,
Iinance, and also human resources management. The national culture is also a key determinant
Ior the human resources management.
One oI the Iast moving international consumer goods companies is Unilever. On the one hand,
Unilever has seriously considered behavioural resources Ior winning in the global markets and
developed a competency model, the Leadership Ior Growth ProIile` (LGP) as a part oI human
resource Iactor, which has been implemented world-wide. On the other hand, Unilever
emphasizes its willingness to operate most eIIectively in local markets as a multi-local
multinational company. That is why they aim to outline the role oI cultural diIIerences in the
process oI building organizational environment in other country.
Unilever has operated in Russia since 1992 and has 7 manuIacturing and production sites:
Moscow (spreads and creme bonjour), St. Petersburg (home care, personal care and tea), Tula
(dressings, savory, Iood ingredients) and ice cream production plants in Tula, Novosibirsk and
Omsk and more than 160 representative oIIices across the country. Unilever has invested close to
USD 1 billion in its business in Russia and now employs more than 6,500 people across the
country.
Based on this background, this paper will Iocus on the Unilever`s developments in the culture-
speciIic Russian environment. It also will discuss how unilever can adapt to diIIerent culture
especially in Russia in terms oI organizational behaviour.

COMPANY PROFILE
This company background is retrieved Irom the oIIicial website oI Unilever
(www.unilever.com). Although Unilever wasn't Iormed until 1930, the companies that joined
Iorces to create the business we know today were already well established beIore the start oI the
20th century. In 1930s Unilever's Iirst decade is no easy ride: it starts with the Great Depression
and ends with the Second World War. But while the business rationalises operations, it also
continues to diversiIy. And nowadays, they Iocus on the needs oI 21st century consumers with
its Vitality mission. In 2009, Unilever announces its new corporate vision working to create a
better Iuture every day with brands that help people look good, Ieel good and get more out oI
liIe.
Unilever have 400 brands spanning 14 categories oI home, personal care and Ioods products.
Their Iavorites product in the world including Lipton, Knorr, Dove and Omo, to trusted local
brands such as Blue Band and Suave. Today Unilever employs 163 000 people, sells products
in 170 countries worldwide, and supports the jobs oI many thousands oI distributors, contractors
and suppliers. On any given day, two billion people use their products. In 2009 their worldwide
turnover was t39.8 billion.
Unilever is really concern in their continous development. Consumer research plays a vital role
in their brands' development. They're constantly developing new products and developing tried
and tested brands to meet changing tastes, liIestyles and expectations. They have strong roots in
local markets thus they respond to consumers at a local level.
Their products are sold in over 170 countries around the world. In many countries they
manuIacture the products that they sell, while they also export products to countries where they
do not have manuIacturing operations. They are the global market leader in all the Food
categories in which they operate : Savoury, Spreads, Dressings, Tea and Ice Cream. They are
also global market leader in Mass Skin Care and Deodorants, and have very strong positions in
other Home and Personal Care categories. They have 264 manuIacturing sites worldwide, all oI
which strive Ior improved perIormance on saIety, eIIiciency, quality and environmental impacts,
working to global Unilever standards and management systems. Around 50 oI the raw
materials that they use Ior their products come Irom agriculture and Iorestry. They buy
approximately 12 oI the world`s black tea, 6 oI its tomatoes and 3 oI its palm oil.
Vision
The Iour pillars oI their vision set out the long term direction Ior the company where they want
to go and how they are going to get there:
O They work to create a better Iuture every day
O They help people Ieel good, look good and get more out oI liIe with brands and services
that are good Ior them and good Ior others.
O They will inspire people to take small everyday actions that can add up to a big diIIerence
Ior the world.
O They will develop new ways oI doing business with the aim oI doubling the size oI their
company while reducing their environmental impact.
orking with others
They want to work with suppliers who have values similar to their own and work to the same
standards they do. Their Business partner code, aligned to their own Code oI business principles,
comprises ten principles covering business integrity and responsibilities relating to employees,
consumers and the environment.
Balancing profit with responsible corporate behaviour
In the late 19th century the businesses that would later become Unilever were among the most
philanthropic oI their time. They set up projects to improve the lot oI their workers and created
products with a positive social impact, making hygiene and personal care commonplace and
improving nutrition through adding vitamins to Ioods that were already daily staples.
Today, Unilever still believes that success means acting with 'the highest standards oI corporate
behaviour towards their employees, consumers and the societies and world in which they live'.
Over the years they've launched or participated in an ever-growing range oI initiatives to source
sustainable supplies oI raw materials, protect environments, support local communities and much
more.

CASE OVERVIE AND ANALYSIS
Corporate Culture in Russia
Organizational structure oI most enterprises oI Iormer USSR as a rule was based on Iunctional
principle in accordance with the kinds oI work being carried out by diIIerent sub-divisions.
Functional structure suited perIectly to the organizations, when they operated in condition oI
stable centralized economy. Soviet power took much attention to organizational culture at
enterprises, so there were corporate parties and celebrations, demonstrations, meetings, Iirm
uniIorm and symbolic.
However, when panned economy has gone, Iree market in Russia appeared and privatization
took place, Russia market began to change. It became clear, that to stay competitive an enterprise
should have such organizational structure that made possible all the work to be Iocused upon the
particular production and speciIic customer. Such approach makes necessary working out
strategic aims oI the Iirm.
They consider organizational culture as combination oI ideas, views, values shared by all the
members oI the organization that speciIies directions oI behavior and actions oI the people and
that determines how it perceives, thinks about, and reacts to its various environment (Kreitner
and Kinicki, 2010: 64). Ideas, views, values can be absolutely diIIerent, it also depends on the
things at the basis oI the organization: interests oI the whole organization or individual members.
Values or the organization can be expressed to its members through symbolic means oI spiritual
and material environment - style oI behavior and communication, symbolic, traditions, style oI
clothes.
Modern concept oI management considers social responsibility oI management to the Russian
society as a whole and to the people working in the organization to be the key element. Today
attention is given to a person as the key recourse oI the company and to Iorming conditions Ior
developing his or her potential and ability to eIIective work. Corporate culture gives to a Iirm
certain concrete material result. Favorable atmosphere inside oI the Iirm has not only material
but also spiritual side.
The key principle is creating common psychology and common aim oI the people who represent
the staII oI the company. The head oI the company Iorms the basis oI organizational culture; his
ideology, proIessional experience and attitude speciIy atmosphere in the organization.
Individuality oI organizational culture touches such matters as specialization oI a Iirm,
personality oI its leader, individual peculiarity oI each employee, style oI its head and
management (authoritarian, consulting, partner, democratic), problem solving process, spreading
and exchange oI inIormation, character oI contacts between the employees.
There are Iour types oI corporate relations in modern Russia (Imran G. and Zhanna V., 2002):
1. II an organization Iunctions in accordance with system oI rules, procedures and
standards, that guarantee its eIIectiveness, organizational culture is bureaucratic- role
one. There is a strict administrative hierarchy between employees oI such Russian
companies, each person oI which bears certain labor responsibilities. The main source oI
power being not personal traits but position in hierarchical structure. Only the head takes
all decisions. Bureaucratic- role organizational culture can more oIten be seen in large
Russia companies, which work at rather stable market and have stable position.
2. Another type oI organizational culture in Russia is power one that is Iormed most oI all at
the companies where a leader is at the same time manager and owner. Besides
administrative power, he possesses good leader characteristics. There is a group oI top
managers besides such leader and he manages the Iirm with their help. But the last word
is always his. Employees in a company with such type oI culture can be less limited in
their actions than in bureaucratic- role organization, they have more initiative and even
take part in decision making. But they are controlled more strictly. Besides Iormal
bearing responsibilities, people are expected to show personal loyalty to the boss, and this
particular Iact is the crucial. The power organizational structure is preIerable in the
companies at the beginning oI their activity, as it promotes mobility and helps to adopt at
the market easily, however Iirm mobility depends upon personal and proIessional
characteristics oI its head.
3. Some Russia enterprises succeed due to person-oriented organizational culture. Top
proIessionals with high level oI personal responsibility work in such organizations as a
rule. Person-oriented organizational culture gives huge possibilities both Ior meeting
ambitious needs and Ior realization oI personal interests and initiative oI employees. It is
based upon the ability oI employees to come to compromise and their independence Irom
each other. As a rule activity oI employees is not controlled but only co-coordinated by
their supervisors. Subordinates bear much independence and can work in accordance with
a Ilexible schedule. The main criteria oI eIIectiveness in such companies is proIessional
and thorough realization oI responsibilities been taken. At the same time they can see
cooperative Iriendly relationships between employees at companies with person-oriented
organizational culture. Hierarchy oI relationships can characterize this type oI culture: the
head has position oI the Iirst among equals, all the decisions being taken collectively.
Ordinary employees take part in this process personally and are always aware oI the plans
oI the heads. Russian organizations oI this type mostly operate in legal oIIices, consulting
Iirms, architectural bureaus, design studios.
4. The Iouth type oI organizational relations in Russia is problem-oriented culture. It can be
seen in the Iirms that operate to solve speciIic tasks. The structure oI such organizations
is rather vague. However job responsibilities oI each employee are strictly Iormulated
and each person is responsible Ior his particular sphere. The work oI employees is strictly
controlled; sometimes system oI reporting is used. The head oI such organizations acts as
a coordinator, and does not stress his leadership. Like in the Iirms with person-oriented
cultures the decisions are made collectively and all the employees have asses to internal
inIormation. Such culture is eIIective when situation needs oI market are speciIying in
the activity oI organization.
Philosophy oI a Iirm is connected to the philosophy oI leadership, as leader is the person who
possesses the whole specter oI power, creates internal and external image oI enterprises. In
Russia oI reconstruction period image oI a company was Iormed in chaos Iorm as compared with
present day situation when image oI Iirms is being thought over thoroughly. From the very Iirst
step a leader should understand that an ideal image oI the organization is speciIied by its tasks.
The leaders oI an enterprise have not only created a credo oI its organization, but bear
responsibility Ior it, it has not been seen in Russia yet.
It is common to consider personnel Ilow in the company to be the main criteria oI organizational
culture. Many objective and subjective components speciIy atmosphere in the company, but they
can be divided into Iour groups:
O proIessionalism oI each employee and high level oI proIessional interaction in the
organization;
O loyalty to the Iirm (it can be real, pragmatic and Iorced);
O interpersonal relations in the organization;
O material and moral stimulus oI encourragement.
Good psychological climate and Iriendly relationships allow people use each other's potential Ior
achieving personal goals. The more diIIicult the situation is, the more competitive companies
with good corporate culture are, having traditions and people who are ready to support their Iirm
and each other.


Organizational Behavior of UNILEVER in Russia
In the 1991 Unilever entered the Russian market and opened its oIIice in St.Petersburg, later
transIerred to Moscow. Today the company employs more than a thousand people in about 50
cities oI Russia. It manuIactures and sells consumer products to diIIerent markets, such as
shampoos, deodorants, margarine, mayonnaise, products Ior home and personal care, and also
sells its other major products under Unilever brands.
Their interpretation oI leadership competencies in a multinational company combines several
streams oI ideas. Strategy scholars link core competencies to the Iirm`s success and discuss the
impact oI culture on its international strategic behavior. International human resource
management research explores cross-cultural variations in global employment practices and
organizational culture. And those in the Iield oI organizational behavior explore the cultural
convergence and divergence in international organizational practices and expand traditional view
on leadership to situation-contingent and culture-contingent levels oI analysis.
The concept oI culture is so broad that even ethnologists have to break it down into topics to
Iacilitate its study. A listing oI such topics will give us a better understanding oI what culture is
and serve tools to analyze a particular problem Irom the sociocultural view. Ball et. al (2008)
summarized components oI culture as below:
1. Aesthetics
2. Attitudes and belieIs
3. Religion
4. Material culture
5. Language
6. Societal organizations
7. Education
8. Legal characteristics
9. Political structures
Multinational companies, oI course, vary in the eIIectiveness oI their behavioral practices in
Russia. SuccessIul multinationals propose internationally recognized competitive elements:
various "packages" oI motivation programs, broad employee participation in decision-making,
encouragement oI creativity, environments Iavorable to employees' continuous education, in-
corporate training and selI-improvement, and promotion oI shared company values (Fey et al.
2000).
To better understand the environment Ior Unilever`s business developments in Russia we discuss
attributes oI Russian culture and leadership.
Global Leadership and Organizational Behavior EIIectiveness (GLOBE) project conducted in 62
countries

displays current proIile oI the Russian business culture. When compared to other
countries on GLOBE cultural dimensions, Russia has extreme scores: very low in Uncertainty
Avoidance, Future Orientation, PerIormance Orientation, and Humane Orientation, very high on
Power Distance.
Based on research result by Maarten-van Beek and Grachev, one oI such areas was high scores
on Collectivism. The country HR Director positively assessed the ability oI Russian managers
and employees to work in teams and to Iollow group norms, to create space to share
achievements widely, and to integrate eIIorts and to build organizational commitment. Unilever
has developed a sophisticated system to exploit this Iactor and motivate the high loyalty oI its
Russian managers, sometimes pushing them to sacriIice individual interests. Environment with
high Collectivism helps Unilever to combine innovative eIIorts within the company and target
speciIic groups in the market. The respondent, however, indicated an unusually high inIluence
oI trendsetters within collectivist environment.
The expatriate HR Director pointed on Russian cultural disadvantages. One such area was low
score on Uncertainty Avoidance. Unilever tried to correct the inIluence oI this Iactor by
providing clear corporate guidelines, and by avoiding bureaucratic practices. Low score on
Assertiveness was also considered as signiIicant negative Iactor. The respondent explained this
score reIerring to conIormism and lack oI leadership initiative. He also mentioned that assertive
expatriates have stronger voice in the Russian subsidiary. To balance the negative impact oI this


Iactor, Unilever designed speciIic programs encouraging initiative and Iocused on selecting
assertive Russian managers Ior quick promotion.
Based on the research result, Unilever`s serious consideration oI low Future Orientation and high
Power Distance, and their impact on company policies. Per interviewee, low Future Orientation
was considered as negative Iactor, but it provided advantage to Unilever. The company was
trying to be more Iuture-oriented and to make this orientation an advantage over less Iuture-
oriented competitors.
This survey leads to a set oI recommendations Ior leadership development in a global company
that is sensitive to local culture It may help to improve leadership development programs,
processes, and tools. In addition, this may make a contribution to the Iield oI cross-cultural
leadership by adjusting competencies that lead to business success to particular societal culture.

CONCLUSION
Cultural Iorces is important to be considered in building business acroos country.Especially in
human resources Iunction, culture brought by the corporate has to be aligned with the culture oI
country where we build the business. DiIIerent cutures deIine diIIerent organizational structure
and employee behavior. In this paper, we discuss about Unilever that is dealing with Russian
culture in the human resource Iield. We could summarize the most critical attributes oI Russian
culture that managers oI multinational companies should take into consideration. The Iuture
avenues Ior research include statistical analysis oI quantitative data and the development oI a
comparative Iramework that should help diIIerentiating leadership development policies in
international subsidiaries oI a multinational company.





REFERENCES
Ball, Don A., Wendell H. McCulloch, Jr., J. Michael Geringer, Michael S. Minor, Jeanne M.
McNett. 2008. nternational Business. New York: McGraw-Hill Companies.
Bartlett, Christopher A. and Sumantra Ghosbal, (1987), 'Managing across Borders: New
Strategic Requirements, Sloan Management Review, pg. 7-17.
Fey, C.; Bjorkman, I.; & Pavlovskaya, A. (2000), 'The EIIect oI Human Resource Management
Practices on Firm PerIormance in Russia, nternational Journal of Human Resource
Management, 1-18.
Imran G., Akperov and Maslikova Zhanna V., (2002), 'Peculiarities oI Forming Organizational
Culture in Russia, Published. Collected research articles, Bulletin of Russian
Communication Association "THEORY OF COMMUNCATON AND APPLED
COMMUNCATON", ssue 1 / Edited by N Ro:ina, Rostov-on-Don. nstitute of
Management, Business and Law Publishing, 2002. - 168 p. P. 5-8
Kreitner, Robert and Kinicki Angelo. 2010. Organi:ational Behavior, ed. 9. New York:
McGraw-Hill Companies.
Van Beek, Marteen and Grachev, Mikhail V. Dare to Embrace DiIIerences: Leadership
Competencies Ior Unilever.
www.unilever.com








%OPICAL PAPER
GENERAL BUSINESS ENVIRONMEN%
(Cu|tura| Lnv|ronment)
COMPE%ING IN RUSSIAN MARKE% I% %E RIG% UMAN RESOURCES
S%RA%EGY OF UNILEVER
Lecturer
rof Dr D[oko Suryo MA

repared 8y
Ift| Wu|ansar|
10/310069/Lk/13242
8aLch 33 lnLernaLlonal Class

MA5TER OF MANAGEMENT PROGRAM
FACULTY OF ECONOMIC5 AND BU5INE55
GADJAH MADA UNIVER5ITY
YOGYAKARTA
2011