Railway Wagon Market Analysis and New Multi-Purpose Wagon Solution for Freight Transports - Finnish Manufacturing Perspective

Rautateillä käytettävät tavaravaunut ovat vanhenemassa hyvin nopeasti; tämä koskee niin Venäjää, Suomea, Ruotsia kuin laajemminkin Eurooppaa. Venäjällä ja Euroopassa on käytössä runsaasti vaunuja, jotka ovat jo ylittäneet niille suositeltavan käyttöiän. Silti niitä käytetään kuljetuksissa, kun näitä korvaavia uusia vaunuja ei ole tarpeeksi saatavilla. Uusimmat vaunut ovat yleensä vaunuja vuokraavien yritysten tai uusien rautatieoperaattorien hankkimia - tämä koskee erityisesti Venäjää, jossa vaunuvuokraus on noussut erittäin suosituksi vaihtoehdoksi. Ennusteissa kerrotaan vaunupulan kasvavan ainakin vuoteen 2010 saakka. Jos rautateiden suosio rahtikuljetusmuotona kasvaa, niin voimistuva vaunukysyntä jatkuu huomattavan paljon pidemmän aikaa. Euroopan ja Venäjän vaunukannan tilanne näkyy myös sitä palvelevan konepajateollisuuden ongelmina - yleisesti ottaen alan eurooppalaiset yritykset ovat heikosti kannattavia ja niiden liikevaihto ei juuri kasva, venäläiset ja ukrainalaiset yritykset ovat olleet samassa tilanteessa, joskin aivan viime vuosina tilanne on osassa kääntynyt paremmaksi. Kun näiden maanosien yritysten liikevaihtoa, voittoa ja omistaja-arvoa verrataan yhdysvaltalaisiin kilpailijoihin, huomataan että jälkimmäisten suoriutuminen on huomattavan paljon parempaa, ja näillä yrityksillä on myös kyky maksaa osinkoja omistajilleen. Tutkimuksen tarkoituksena oli kehittää uuden tyyppinen kuljetusvaunu Suomen, Venäjän sekä mahdollisesti myös Kiinan väliseen liikenteeseen. Vaunutyypin tarkoituksena olisi kyetä toimimaan monikäyttöisenä, niin raaka-aineiden kuin konttienkin kuljetuksessa, tasapainottaen kuljetusmuotojen aiheuttamaa kuljetuspaino-ongelmaa. Kehitystyön pohjana käytimme yli 1000 venäläisen vaunutyypin tietokantaa, josta valitsimme Data Envelopment Analysis -menetelmällä soveliaimmat vaunut kontinkuljetukseen (lähemmin tarkastelimme n. 40 vaunutyyppiä), jättäen mahdollisimman vähän tyhjää tilaa junaan, mutta silti kyeten kantamaan valitun konttilastin. Kun kantokykyongelmia venäläisissä vaunuissa ei useinkaan ole, on vertailu tehtävissä tavarajunan pituuden ja kokonaispainon perusteella. Simuloituamme yhdistettyihin kuljetuksiin soveliasta vaunutyyppiä käytännössä löytyvässä kuljetusverkostossa (esim. raakapuuta Suomeen tai Kiinaan ja kontteja takaisin Venäjän suuntaan), huomasimme lyhemmän vaunupituuden sisältävän kustannusetua, erityisesti raakaainekuljetuksissa, mutta myös rajanylityspaikkojen mahdollisesti vähentyessä. Lyhempi vaunutyyppi on myös joustavampi erilaisten konttipituuksien suhteen (40 jalan kontin käyttö on yleistynyt viime vuosina). Työn lopuksi ehdotamme uuden vaunutyypin tuotantotavaksi verkostomaista lähestymistapaa, jossa osa vaunusta tehtäisiin Suomessa ja osa Venäjällä ja/tai Ukrainassa. Vaunutyypin tulisi olla rekisteröity Venäjälle, sillä silloin sitä voi käyttää Suomen ja Venäjän, kuten myös soveltuvin osin Venäjän ja Kiinan välisessä liikenteessä.

Use of innovative High Voltage components in GOST standard market

In Russian there are more than twenty thousand primary substations 35/110 kV and 10/110 kV. According to the Government Plan of Power Industry Development until 2020 year more than hundred new substations will e installed every year and even more renewed. The goal of this Thesis is to find out in this business environment what are the technology opportunities of prefabricated substation modules in new substation or in modernization of old substations in Russia.

Feasibility Study and Market Review of Small Scale Bioenergy Heating Plants in North-West Russia

The paper is focused on feasibility study and market review of small scale bioenergy heating plants in the Russian North-West region. The main focus is effective and competitive usage of low-grade wood for heating purposes in the region. As example of economical feasibility estimation it was chosen the project of reconstruction of small scale boiler plant in Leningrad region that Brofta Oy is planning to implement the nearest time. It includes calculation the payback time with and without interest, the estimation of probable investments, the evaluation of possible risks and research on the potential of small scale heating plants projects. Calculations show that the profitability of this kind of projects is high, but payback time is not very short, because of high level of initial investments. Though, the development of small scale bioenergy heating plants in the region is considered to be the best way to solve the problems of heat supply in small settlements using own biomass resources.

Research of wood fuel market in North-West of Russia

The main purposes of this study are analyzing of forest sector of North-West and research of potentials of wood fuel market in this region. Research is focused on definition of the most perspective areas for export of wood fuel: logging residues, industrial wood processing residues, pellets and briquettes. Russian wood energy industry is very young in comparison with European countries. Nowadays there are no support and serious attention from the government to this sector. Hence almost all wood fuel market is oriented to the Western Europe. Export of wood fuel is dominated over the internal consumption. Pellet production in North –West is rapidly growing. Despite internal market has been developed the lion's share of pellets goes to export. Part of industrial wood processing residues is used by producers for their own goals, part goes to the export and rest of them is not used at all. Logging residues as raw materials for fuel have great potentials; most of them are left in a forest. Special techniques for their processing are too expensive for Russian entrepreneur. Some parts of North –West, which are situated close to the border with European countries, are potential for export. Political, economical and logistical challenges are complicated facilities for foreign customer to purchase wood fuel in remote parts of North-West. However some decisions for solving this problem exist and Russian manufactures are still interested in export of their products.

Development of Russian Ports in The Gulf of Finland

Russia has been one of the fastest developing economic areas in the world. Based on the GDP, the Russian economy grew evenly since the crisis in 1998 up till 2008. The growth in the gross domestic product has annually been some 5–10%. In 2007, the growth reached 8.1%, which is the highest figure after the 10% growth in 2000. Due to the growth of the economy and wage levels, purchasing power and consumption have been strongly increasing. The growing consumption has especially increased the imports of durables, such as passenger cars, domestic appliances and electronics. The Russian ports and infrastructure have not been able to satisfy the growing needs of exports and imports, which is why quite a large share of Russian foreign trade is going through third countries as transit transports. Finnish ports play a major role in transit transports to and from Russia. About 15% of the total value of Russian imports was transported through Finland in 2008. The economic recession that started in autumn 2008 and continues to date has had an impact on the economic development of Russia. The export income has decreased, mainly due to the reduced world market prices of energy products (oil and gas) and raw minerals. Investments have been postponed, getting credit is more difficult than before, and the ruble has weakened in relation to the euro and the dollar. The imports are decreasing remarkably, and are not forecast to reach the 2008 volumes even in 2012. The economic crisis is reflected in Finland's transit traffic. The volume of goods transported through Finland to and from Russia has decreased almost in the same proportion as the imports of goods to Russia. The biggest risk threatening the development of the Russian economy over long term is its dependence on export income from oil, gas, metals, minerals and forest products, as well as the trends of the world market prices of these products. Nevertheless, it is expected that the GDP of Russia will start to grow again in the forthcoming years due to the increased demand for energy products and raw minerals in the world. At the same time, it is obvious that the world market prices of these products will go up with the increasing demand. The increased income from exports will lead to a growth of imports, especially those of consumer goods, as the living standard of Russian citizens rises. The forecasts produced by the Russian Government concerning the economic development of Russia up till 2030 also indicate a shift in exported goods from raw materials to processed products, which together with energy products will become the main export goods of Russia. As a consequence, Russia may need export routes through third countries, which can be seen as an opportunity for increased transit transports through the ports of Finland. The ports competing with the ports of Finland for Russian foreign trade traffic are the Russian Baltic Sea ports and the ports of the Baltic countries. The strongest competitors are the Baltic Sea ports handling containers. On the Russian Baltic Sea, these ports include Saint Petersburg, Kaliningrad and, in the near future, the ports of Ust-Luga and possibly Vyborg. There are plans to develop Ust-Luga and Vyborg as modern container ports, which would become serious competitors to the Finnish ports. Russia is aiming to redirect as large a share as possible of foreign trade traffic to its own ports. The ports of Russia and the infrastructure associated with them are under constant development. On the other hand, the logistic capacity of Russia is not able to satisfy the continually growing needs of the Russian foreign trade. The capacity problem is emphasized by a structural incompatibility between the exports and imports in the Russian foreign trade. Russian exports can only use a small part of the containers brought in with imports. Problems are also caused by the difficult ice conditions and narrow waterways leading to the ports. It is predicted that Finland will maintain its position as a transit route for the Russian foreign trade, at least in the near future. The Russian foreign trade is increasing, and Russia will not be able to develop its ports in proportion with the increasing foreign trade. With the development of port capacity, cargo flows through the ports of Russia will grow. Structural changes in transit traffic are already visible. Firms are more and more relocating their production to Russia, for example as regards the assembly of cars and warehousing services. Simultaneously, an increasing part of transit cargoes are sent directly to Russia without unloading and reloading in Finland. New product groups have nevertheless been transported through Finland (textile products and tools), replacing the lost cargos. The global recession that started in autumn 2008 has influenced the volume of Russian imports and, consequently, the transit volumes of Finland, but the recession is not expected to be of long duration, and will thus only have a short-term impact on transit volumes. The Finnish infrastructure and services offered by the logistic chain should also be ready to react to the changes in imported product groups as well as to the change in Russian export products in the future. If the development plans of the Russian economy are realized, export products will be more refined, and the share of energy and raw material products will decrease. The other notable factor to be taken into consideration is the extremely fast-changing business environment in Russia. Operators in the logistic chain should be flexible enough to adapt to all kinds of changes to capitalise on business opportunities offered by the Russian foreign trade for the companies and for the transit volumes of Finnish ports, also in the future.

Russian Venture Capital Markets

Tämän työn tarkoituksena on arvioida riskipääomasijoittamisen kehitystä ja kasvua Venäjällä, sekä antaa kuva siihen vaikuttavista tekijöistä. Se myös arvioi Venäjän valtion toimintaa niin säätelijänä, kuin myös itsenäisenä sijoittajana. Saavutetut tulokset perustuvat haastatteluihin ja olemassa olevien tilastojen analysointiin. Vuoden 1998 rupla kriisin jälkeen riskipääomasijoittaminen lähti kasvuun joka on jatkunut tasaisella rauhallisella tahdilla. Alueellisista riskipääomarahastoista on siirrytty myös yksityisrahoitteisiin ja yksityishallinnoituihin rahastoihin omine kohde aloineen ja portfolioineen. Silti markkinat ovat säilyneet kyllästymättöminä. Kuluttajavetoiset toimialat ovat keränneet eniten investointeja talouden ja ostovoiman kasvusta johtuen. Alueellisesti Moskova erottuu sijoituskohteena, muiden suurempien kasvukeskusten seuratessa perässä. Venäjällä on vielä paljon heikkouksia jotka vaikuttavat sen houkuttelevuuteen sijoittajan näkökulmasta. Heikot instituutiot ja lainsäädäntö yhdistettynä riskipääomasijoittamisen luonteeseen tekevät Venäjästä arvaamattoman markkina-alueen. Se kuitenkin tarjoaa menestyville sijoittajille korkeat tuotot. Nähtäväksi jää kuinka valtion toiminta vaikuttaa markkinoiden kehitykseen lyhyellä ja pitkällä tähtäimellä, ja kuinka se onnistuu kehittämään Venäjän yleistä kilpailukykyä globaaleilla markkinoilla.

On Doing Successful ICT Business with Russian Manufacturing Enterprises

This Master’s thesis addresses different approaches using which a foreign IT company could enter Russian manufacturing industry with its enterprise information systems and IT services. In order to define the most suitable market entry approach, several aspects related to Russian manufacturing enterprises are studied. These aspects include challenges of doing ICT business with the previously mentioned enterprises, their perception of ICT role and their ICT preferences, as well as their buying behavior related to acquisition of information systems (IS). The study results show that there are several challenges that can be faced by a foreign IT vendor when starting conducting ICT business with Russian manufacturing enterprises. The results also show that Russian manufacturing industry is still rather immature in sense of business process automation, and its IT buying behavior is rather specific and complicated. The results suggest that an efficient way to approach these enterprises is through a network of trusted partners that consists of reliable Russian IS integrators and business consultants having established connections to Russian manufacturing companies and possessing the needed competence.

Growth through internationalization of Russian SMEs in Finland

The study examines Russian SMEs motives, needs, prospects and constrains to enter Finland through Lappeenranta. Russian entrepreneurship is a young phenomenon in Finland. The present research becomes a first guide in understanding of Russian SMEs’ capabilities for establishing their subsidiaries in Finland. The extensive model of different theoretical approaches was created for evaluating Russian SMEs growth and internationalization opportunities. The findings of the research indicated that Russian growing companies chose the internationalization to continue their development. Many Finland’ positive conditions were evaluated as important for the Russian entrepreneurship. Finland was the first European country of the expansion to the European Union, for the Russian SMEs established the subsidiaries in Lappeenranta. Their motives for entering Finland were usually based on market and resource views. Generally, the Russian SMEs establish a new company in Finland only when they have sufficient capabilities and resources for internationalization. Entering Finland the Russian firms make better the allocation of their natural, financial and human resources.

Innovation and Internationalisation in Russian Companies: Challenges and Opportunities for Open Innovation and Cooperation

Increasing globalisation and intensified cross-border cooperation, together with significant technological breakthroughs, create a fascinating gap for the research of the relationship between internationalisation and innovation on national, regional and company levels in Russia. The intensified international trade between countries and regions benefited from favourable institutional conditions, and facilitated the technology transfer and the development of innovations on the national level. This study approaches the same question from the company perspective; if certain companies are more innovative than other domestic companies, will they start internationalisation more easily or get involved in cooperation with international stakeholders? When companies operate in international markets, how do they obtain knowledge? Moreover, would this new knowledge from the foreign market help then to increase innovativeness, competitiveness and develop operations in domestic/local and foreign markets? Considering the role of foreign direct investments (FDI), the research in hand tries to find out the role of companies with FDI on the other players on the home market. Do foreigners bring new technology, innovation to the country? Is there spillover effect observed and how local companies can benefit from them? This dissertation studies the internationalisation and innovation in Russian companies, both from the outward internationalisation and inward internationalisation perspectives. Russian companies developed quickly during the transition period, after the dissolution of the Soviet Union. The common background of these companies, the effects of the change of ownership, and some managerial difficulties make them more sensitive to competitions issues, and in this context, the opportunities brought by the developing innovations are seen in companies and on the governmental level.

Mutual Fund Performance and the Market Timing Ability - Finnish Evidence

The purpose of this thesis is to examine the performance of Finnish equity funds and their market timing ability. Fund performance is evaluated by using annual returns and various risk-adjusted measures, including Sharpe ratio, DDSR, SKASR, Treynor ratio and Jensen’s alpha, whereas portfolio manager’s timing ability is examined with Treynor-Mazuy model and Henriksson-Merton model. The data is collected from the Finnish fund market during the sample period from January 1997 to February 2010. Results show that Finnish equity funds have been able to outperform the market return on a risk-adjusted basis, but these results are influenced heavily by the exceptionally good performance during the IT-bubble. Market timing models show that fund managers have been, to some degree, able to time the market but not a single fund have been able to possess security selection ability and market timing ability simultaneously.

Strategic alliances as an international entry strategy: Finnish cleantech SMEs and the Indian market

The demand for environmental technologies, also called cleantech, is growing globally but the need is especially high in emerging markets such as India where the rising economy and rapid industrialisation have led to increasing energy needs and environmental degradation. The market is of great potential also for the Finnish cleantech cluster that represents advanced expertise in several fields of environmental technologies. However, most of the Finnish companies in the field are SMEs that face challenges in their internationalisation due to their limited resources. The objective of this study was to estimate, whether strategic alliances could be an efficient entry strategy for Finnish cleantech SMEs entering the Indian market. This was done by studying what are the key factors influencing the international entry mode decision of Finnish cleantech SMEs, what are the major factors affecting the entry of Finnish cleantech SMEs to the Indian market and how do Finnish cleantech SMEs use strategic alliances in their internationalisation process. The study was realised as a qualitative multi-case study through theme interviews of Finnish cleantech SME representatives. The results indicated that Finnish cleantech SMEs prefer to enter international markets through non-equity and collaborative modes of entry. These entry modes are chosen because of the small size and limited resources of companies, but also because they want to protect their innovative technologies from property rights violations. India is an attracting market for Finnish cleantech SMEs mainly because of its size and growth, but insufficient environmental regulation and high import tariffs have hindered entry to the market. Finnish cleantech SMEs commonly use strategic alliances in their internationalisation process but the use is rather one-sided. Most of the formed strategic alliances are low-commitment, international contractual agreement in sales and distribution. Alliance partner selection receives less attention. In the future, providing Finnish cleantech SMEs with international experience and training could help in diversifying the use of strategic alliances and increase their benefits to SME internationalisation.

Observations of Industry Momentum Effect in European Equity Indices

This thesis examines the existence and nature of momentum effect in European equity indices. A set of predefined indicators is used to compose momentum portfolios and different holding periods are used to test the strategies over variable time periods as well as under different economical conditions. The data consists of daily closing prices of STOXX Europe 600 index and its 18 super sector indices. Over the study period we follow the performances of a long position in the Winner portfolio, a position in the market neutral zero-cost portfolio and also a position in the risk-controlled zero-cost portfolio. The investment ratio of the risk-controlled zero-cost portfolio is negatively correlated with the realized market volatility. The results show that momentum effect is present in European industries and is most prominent in the short-term. Indicators that are based on short-term performance tend predict the over- and underperformers for the 1-month holding period more reliably than any other indicator/holding period combination. The examination of the strategies under different economical conditions shows that the market neutral approach can create significant returns in times of recession but in times of economic boom the long position in Winner portfolio outperforms the market neutral portfolio by an extensive margin.

Performance of active portfolio management and the effect of stock market trend

Purpose of the study is to evaluate performance of active portfolio management and the effect of stock market trend on the performance. Theory of efficient markets states that market prices reflect all available information and that all investors share a common view of future price developments. This view gives little room for the success of active management, but the theory has been disputed – at least the level of efficiency. Behavioral finance has developed theories that identify irrational behavior patterns of investors. For example, investment decisions are not made independent of past market developments. These findings give reason to believe that also the performance of active portfolio management may depend on market developments. Performance of 16 Finnish equity funds is evaluated during the period of 2005 to 2011. In addition two sub periods are constructed, a bull market period and a bear market period. The sub periods are created by joining together the two bull market phases and the two bear market phases of the whole period. This allows for the comparison of the two different market states. Performance of the funds is measured with risk-adjusted performance by Modigliani and Modigliani (1997), abnormal return over the CAPM by Jensen (1968), and market timing by Henriksson and Merton (1981). The results suggested that in average the funds are not able to outperform the market portfolio. However, the underperformance was found to be lower than the management fees in average which suggests that portfolio managers are able to do successful investment decisions to some extent. The study revealed substantial dependence on the market trend for all of the measures. The risk-adjusted performance measure suggested that in bear markets active portfolio managers in average are able to beat the market portfolio but not in bull markets. Jensen´s alpha and the market timing model also showed striking differences between the two market states. The results of these two measures were, however, somewhat problematic and reliable conclusions about the performance could not be drawn.

Launching the product innovation to a market: case study from a dairy industry

In the environment of ever-changing needs of customers, technologies and competitors, the survival of the company depends on how well it researches, develops and implements new products to the market. The need for development of new products relates to many factors: globalization, international competition which is now underway on a global scale, scientific advances and development of production, changes in consumer preferences and consumer behavior. In this study the focus is on the company form a dairy products industry. This study is aimed to defining the role of product innovation launch strategy in an overall enterprise strategy, and to select the optimal combination of its marketing tools. The main purpose of this study is to determine place and the role of innovative marketing based in the innovation process, and to determine launch and positioning strategies in the general concept of an innovative product. The object of the study is the Russian enterprise, which is aimed to achieve a competitive advantage through the continuous production of new products, upgrade existing ones and improve innovation management practices. Research showed that the differentiation strategy is suitable for launching the dairy industry product innovation to a market.

Russia, China, India Foresight for Small and Medium size Enterprises in Uusimaa : Changes forecast in the Russian, Chinese and Indian operating environments from the viewpoint of small and middle-sized enterprises in Uusimaa

The report describes those factors of the future that are related to the growth and needs of Russia, China, and India and that may provide significant internationalisation potential for Uusimaa companies. The report examines the emerging trends and market-entry challenges for each country separately. Additionally, it evaluates the training needs of Uusimaa companies in terms of the current offerings available for education on topics related to Russia, China, and India. The report was created via the Delphi method: experts were interviewed, and both Trendwiki material and the latest literature were used to create a summary of experts’ views, statements, and reasons behind recent developments. This summary of views was sent back to the experts with the objective of reaching consensus synthesising the differing views or, at least, of providing argumentation for the various alternative lines of development. In addition to a number of outside experts and business leaders, all heads of Finpro’s Finland Trade Centers participated in the initial interviews. The summary was commented upon by all Finpro consultants and analysts for Russia, China, and India, with each focusing on his or her own area of expertise. The literature used consisted of reports, listed for each country, and an extensive selection of the most recent newspaper articles. The report was created in January-April 2010. On 22 April 2010 its results were reviewed at the final report presentation in cooperation with the Uusimaa ELY Centre.