Doing business in saudi arabia
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Doing Business In Saudi Arabia. Outline. Country’s Overview Challenges faced by Foreign Direct Investments Hofstede’s cultural dimensions Opportunities Strength of KSA Market Entry Strategies. Country Overview. Full name : Kingdom of Saudi Arabia Population : 28 million (UN, 2011)

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Doing Business In Saudi Arabia

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Doing Business In Saudi Arabia


Outline

  • Country’s Overview

  • Challenges faced by Foreign Direct Investments

  • Hofstede’s cultural dimensions

  • Opportunities

  • Strength of KSA

  • Market Entry Strategies


Country Overview

  • Full name: Kingdom of Saudi Arabia

  • Population: 28 million (UN, 2011)

  • Capital: Riyadh

  • Area: 2.24 million sq km (864,869 sq miles)

  • Major language: Arabic

  • Major religion: Islam

  • Monetary unit: 1 Riyal = 0.26 US Dollar

  • Main exports: Oil, Natural gas, cereals

  • GNI per capita: US $17,820


The Kingdom is divided into four major regions


The Kingdom is divided into four major regions

  • The Western Region ( Hejaz )  which lies along the Red Sea coast

  • The Central Region ( Najd ) the heart of the Kingdom

  • The Eastern Region ( Al Hasa ) the richest of all the regions in petroleum

  • The Southwest Region ( Asir )  in the southern Red Sea-Yemen border area


Challenges Faced by FDI

sociocultural differences:

  • Body language or eye contact

  • Culture heavily influenced by Islam

  • Language

  • Boundaries between genders


Hofstede’s cultural dimensions

http://geert-hofstede.com/saudi-arabia.html


Individualism / collectivism

individualistic = look out for yourself and immediate family (United States)

Collectivist = strong family ties and identity in groups (Saudi Arabia)

  • Saudis must establish strong relationship with outsiders before engaging in business with them.

    Common problem:

  • Take a long time to get to know someone or don't rush the beginning process


Uncertainty Avoidance

  • US does not avoid uncertainty

  • Saudi Arabia avoids uncertainty

  • Saudi Arabians:

  • Keep rules and rigid codes of conduct in place

  • Have desire to stay to the rules

  • Work diligently

    Common problem:

  • Americans suggesting new ideas / methods


Power Distance

  • Middle eastern societies are extremely bureaucratic

  • Decisions are not made as quickly as in western cultures

  • Nonverbal communication

  • Handshake: right hand and wait for host to draw and withdraw hand

  • Men: avoid touching / looking at women

  • Women: Dress conservatively


Masculinity / Femininity

  • Both countries are masculine

  • Working is a key part of a person’s life

  • High performance in work is crucial

  • Motivation to want to be the best in their work

    Common problem:

  • Lack of training on how to not overpower others in a disrespectful manner


Opportunities In Saudi Arabia

  • Stable political system.

  • Islam plays a large role in its citizens’ lives.

  • Cultivating solid business relationships before entering into business dealings is key to your success.

  • Safe and secure family environment.

  • Well-established infrastructure.


Strength of Saudi Arabia

  • Strong banking system. (Stable currency)

  • No minimum capital requirement.

  • No restriction on repatriation of capital.

  • The ability for foreign investors to sponsor foreign employees.


Market Entry Strategies

In-house training:

  • Enables staff to have a prior knowledge of the Middle East and have a better success when entering the new environment

  • Prepares employees to face international business blunders

  • Encourages employees to continue to study various websites, pamphlets, and books that relate to the foreign country.


Video


Work Cited

  • “GeertHofstede Cultural Dimensions”.Clearly Cultural, 21 April 2009. Web. 29 January 2013. <http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/individualism/>.

  • “Training for Overseas Effectiveness.” Central Intelligence Agency. CIA Historical Review Program, 22 Sept. 1993. Web. 24 Feb. 2013. <https://www.cia.gov/library/center-for-the-study-of-intelligence/kent-csi/vol4no4/html/v04i4a07p_0001.htm>.


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