Oriflame CIS: The Successful Evolution of a Regional Subsidiary's Mandate

Abstract

Oriflame CIS, a regional subsidiary of a Swedish beauty and cosmetics company operating in the countries of the former Soviet Union, generated 43 percent of global sales and 62.2 percent of operating profits for the parent company in 2014 — despite the fact that markets in Russia and Ukraine were stagnant or declining. Using an attractive remuneration scheme, Oriflame CIS was able to profit from its position as a latecomer to the localization of manufacturing by attracting managers with experience and skills gained from working with the manufacturing arms of other foreign multinationals in Russia. In addition, the firm was also able to enhance links with customers by localizing the process of designing the company’s product catalogues. In significantly expanding its mandate, Oriflame CIS was able to overcome the challenges arising from a volatile market, to increase robustness and to maintain profitability of operations.

Keywords: multinational corporations, Russia, subsidiary mandate, foreign direct investments

JEL Classification: F21, F23, D24