Case Study: Doing business in Saudi Arabia
Address in detail the business climate in Saudi Arabia, is it an easy place to conduct business, or not?
Saudi Arabia is a Kingdom which is the largest market in the Arabian Gulf region according to the case study. Before the law of 2000, foreign businesses were not able to own the full ownership in case they wanted to start a business in the kingdom. But after the changes to the corporate laws in 2000, they can now own their businesses 100%. Saudi Arabia primarily depends on oil that is available in the kingdom in large quantities to run their country, but since the prices of oil are decreasing in the international market, Saudi Arabia. The political position in the Gulf region may not be stable, but the situation in Saudi Arabia for different types of businesses in encouraging (Rice, 2004). It is welcoming condition for investors. Saudi Arabia is trying to divert its reliance on oil to other sources of income on national level.
Address in detail some of the cultural influences that impact business relationships within Saudi Arabia
Saudi Arabia is a conservative society. Family values are meant a lot to the majority of the Saudi nationals. Families may live in joint family systems. Extended families are also considered part of immediate families. This culture is also depicted in the business relations of the country. Most of the businesses are family owned with most of the board members from the same families. Therefore, doing business in Saudi Arabia may require a special consideration of the culture and social norms of the country. Trust means a lot in such societies. Winning the trust of the local peoples while engaging in business activities is an important factor in successful business relations.
The country has an acceptance of online means of communications. For example, according to Al-Somali, Gholami, & Clegg (2009), there is an increasing acceptance of online banking in the Saudi culture. Therefore, while trying to start a business in Saudi Arabia, new forms of communication can be utilized.
Discuss the political, leadership and economic systems of Saudi Arabia.
The political structure of Saudi Arabia is a dictatorial one where a family has been occupying the leadership of the country for over 5 decades. The king of the country is always from the same family. The legal system is primarily based on Islamic Sharia Law (Vogel, 2000). So if there are any crimes conducted by any one, it is expected that they will be dealt with in accordance with the sharia law of the country.
The economic system has evolved over the time. It is based on principles that are in accordance with the global economy. Saudi Arabia has been dealing with world countries in oil business for the last many decades. This business relations with the outside world had made the internal economic system of the country modernized. Especially there is an increased influence of the American economic system due to the stronger business and political ties of the two countries. Saudi Arabia shares the same region with UAE which is a modern state. Many Saudi people travel back and forth between the two countries on daily basis. An economic system influence of the UAE can also be observed in Saudi economic system
What are some of the companies, and countries, that are doing business within the country?
Many countries of the world do business inside Saudi Arabia due to the potential they see in Saudi Arabia. For example UK has stronger ties with Saudi Arabia which include strong business ties as well.
America is also one of the largest investor in Saudi Arabia. They have strong political and economic ties with the kingdom. Retaining strong relations with Saudi Arabia has always been a priority of almost all US presidents.
There are many multinational companies doing business in Saudi Arabia. For example American International Group, First Union Bank, General Dynamics, Proctor and Gamble, Harris Corporation, and Holiday Inn are some of the international companies doing business inside Kingdom of Saudi Arabia since a considerable period of time and profiting from the purchasing power of the oil rich country.
Does corruption play a part in the international business environment within the country? If so how?
Though Saudi Arabia is a strict country that prides itself in being a disciplined society, there are unfortunately many issues faced by international companies in the country. Among them is corruption that exists in the business and political environment of the country. Due to the country being a dictatorship, there are chances of some selected people abusing the power they have in different ways. For example, outside companies may be asked for bribes against different business related licenses. Middle men are required to do business in the country. These middle men have to be a Saudi citizen. Therefore, outside companies may be dealing in terms put forward by these middle men.