Strategic Planning is a Management Tool

Strategic planning is a management tool used by any kind of organization to help it achieve its goals. It produces fundamental and actions that shape and guides how an organization works. In the article the organizations in questions are the WTO, the Russian Government and Chinese Government. The article gives a review of Russia’s foreign trade policy and trade related issues in its World Trade Organization entry negotiations. The article gives the highlights and comparison of the strategies and various economic policies that has been used by the two countries. It analyses the concern of the two countries in joining the WTO and that of their major trade partner countries.

It is usual for every country to develop its own strategies and policies to govern how it relates with other countries in any given aspect. Any of such negotiations as whether to join an international body or not, though may involve some compromise, must be analyzed in terms of the expected benefits. Different countries have different economic structure, corporate structure and trade policies. And therefore the suggestion that Russia policy makers can learn from China’s entry to the WTO must be considered with caution. It will not be obvious that doing so will also promote Russia’s economic growth and its global economic integration.

Because of difference in the strategies and trade policies, the negotiations to join such organizations as WTO is usually a complex process involving giving and taking. China for example took 15 years which Russia even took a longer period. The long period of negotiation is usually caused by the requirement by the WTO that every new member must first complete bilateral deals with any interested member. Russia’s negotiation took along time because of various concerns which touched on their state policies and administration. Their major concern was that the incoming flood of domestic goods might crash its domestic agriculture, services and industrial sectors. The country also wanted to be convinced that the membership was worth it.

The concerns of Russia were genuine as any other country is unique and would have reservations when it comes to matters of strategic management and change in policies. This was even made so by the fact that even the developed economies like United States seemed to be more concerned about the rules of entry and their own economic interests. Russia therefore had to take its time because such a step as joining the WTO would mean a total transformation of its economic structure. Russia’s economy was not a market economy but was dominated by privatization with informal rules governing the economy. It could therefore not swiftly change into a market economy as demanded by a number of WTO member countries.

However, noting that China also passed through almost the same challenges but later realized a great benefit from its membership to WTO, Russia may want to reconsider its reservations. China considered reforming its economy and trade policies to allow it to be market oriented. It agreed on tariff and non-tariff barrier reductions for hundreds of products and services. The consensus, though put some restrictions on China’s exports, brought about tremendous growth in the Chinese economic and trade structure and legal system. China membership came with remarkable benefits resulting into its rapid economic growth accompanied.

This may be a good lesson for Russia but it must be understood that Russia had some aspects that made it different from China. Unlike China, Russia had for a long time privatized its economy and had to deal with a number of issues before allowing liberalization. This affected Russia’s trade policy which was very uncertain resulting into its history of poor performance in policy implementation. It must also be noted that, unlike China which exports manufactured goods, Russia’s majorly exports natural resources such as minerals and metal products. Russia had to be reserved in reforming its energy sector. Such reformation would increase the operation cost for its local industries making them vulnerable to competition from imported cheap goods. This can not be compared to China’s case as its membership to WTO provided it with easy access to diversified foreign market for its manufactured goods.

Finally, unlike China, Russia had to consider the way it was going to deal with other Soviet Union countries with which its relationship had started deteriorating. Russia had to consider whether to give priority to its regional economic relations over joining WTO.

Conclusion

There is no doubt that WTO membership would not solve all of Russia’s problems. However, the best option would not be for Russia to refuse further reform. As much as there is need for the country to reconsider its strategies and trade policies, the market economy and global integration will certainly give Russia better opportunities for greater success with lower social costs. The indication to this was clear as Russia had begun to realize a healthy foreign reserve and strong momentum of an economic recovery from its involvement in international trade. It is also clear that every organization’s strategies and trade policies must be uniquely designed to serve its mission and purpose.