Multinational Business of Kuwait - Case Study Example

? Multinational Business Outline I. Introduction II. Economic Geography of Kuwait III. The country's Dimensions of Distance IV. Analysis of the institutions of the Country-Kuwait V. Kuwait's industrial clusters VI. Analysis of the diffusion of technology in Kuwait VII. Conclusion Multi National Business Kuwait is located in the northeastern side of Saudi Arabia. It focuses on creating a favorable environment for business. This will be achievable through the development of friendly policies that attract investors. The authorities recognize that the nation lies in a vast land whose potentials have not been exploited fully. The nation is located in a geographical area of 6200 square miles. It has no natural water source and has a population of about 1,973,572 people (Ghemawat, 2001). Its economic standing has been progressing well in the recent past despite various environmental and internal challenges that threaten its GDP. Currently, the nation’s income per capita has increased by 1% while the GDGP level has also recorded a growth of 7%. Economic Geography of Kuwait Kuwait is a vast land that has the potential for growth if proper economic modalities are put in place by the authorities. The country’s resource base can sustain its citizens. This is evident in the immense potential in the agricultural sector, business field and its rising labor force (Ghemawat, 2001). The initiation of viable trade, political, social and cultural policies has enabled the country to record significant growth in its per capita income levels and GDP standards. The policies are to eradicate the distance dimensions or factors that influence performance. Kuwait’s economic geography is bound to record an upward growth trend or expansion especially with the mitigation plans that are under formulation to avert the effects of the dimensional factors. The dimensions that include cultural practices, economic implications, social and political issues must be addressed by any economy that seeks to meet its target (Ghemawat, 2001). The country's Dimensions of Distance Economic growth in Kuwait is dependent on the major factors that influence performance and production. The factors that hold the capacity of stalling or propelling economic performance are integral in enhancing per capita income in the country (Khanna & Sinha, 2005). Authorities in Kuwait recognize the need for the development of viable performance measures to trade barriers and unwarranted economic bottlenecks that seek to impede the flow of production. Modalities are being crafted to streamline economic activities that include agriculture and business operations. This is critical because the country’s economy is financed by the agricultural activities and international business. The policies are to help in eradicate trade barriers and other distant factors that affect growth in the nation. The dimensions that include cultural practices, economic implications, social and political issues hold far-reaching effects to the economy. According to Khanna and Sinha (2005), the country’s international business operations have been affected by the cost implications and risks that result from barriers that are created by the distant factors. He stated that the distant factors do not expressly refer to geographical difference but they are the major dimensions that influence economic growth. Economic element is a dimension that affects business operations and various income-generating activities in Kuwait. The nation is described as a small economy with two major GDP financiers that are under exploited. The under exploitation is due to inadequate resource capacity that hinders the adoption of modern technological set ups for production. Although, the nation’s GDP has recorded significant percentage growth, the increase is not adequate to steer the expansion plans that are expected in the agricultural and business sectors (Khanna & Sinha, 2005). This may further harm the nation’s performance if amicable solutions are not realized. According to economists, the nation should develop potential legislation to create a favorable environment for business and investment. They should reduce interest rates for investors and the overall investment requirements. They should also develop viable modalities to reduce the effects of high inflation and flow of investment activities (Porter, 2000). The initiatives are crucial in ensuring that monetary growth and financial vibrancy are achieved through expansion of agricultural practices and international business engagement. Consequently, political dimension is a major factor that influences economic growth and performance. Kuwait enjoys low political conflict that is good for business and execution of economic activities. Various investors have capitalized on this potential by investing in the nation. This has contributed in developing the economy. Indeed, political stability is an integral element that any nation with the desire to expand its economy should pursue. This is to guarantee the investors their safety. This is a major concern because it strengthens the GDP levels (Porter, 2000). Political instability would be detrimental to the countries expansion plan. It would impede formulation of viable business policies. Furthermore, it would scare away investors and affect social cohesion that is a vital element for growth. The instability would immensely affect the international business engagements and growth prospects. Cultural activities are shared norms that individuals in diverse social settings are under expectation to embrace. Culture is a key dimension that holds the capacity of influencing economic growth in a nation. This is evident especially when policy makers formulate operating guidelines that are culture offensive (Porter, 2000). This may prompt inability to acceptance of the policies by individuals that in turn leads to dismal performance. It is proper for policy makers to create performance guidelines that are acceptable and economically viable. This explains the reason why authorities in Kuwait should understand the practices of the people and design agricultural or business policies that are acceptable. It is critical to achieve this he failure to recognize cultural dimensions of the locals can stall the expansion expectation of Kuwait economy. Analysis of the institutions of the Country-Kuwait Kuwait is a nation that has lost significantly in the business arena due to the application of stringent business measures in the past. The stringent measures discouraged investors and international business operators from instituting their operations in the country. This exposed the nation to immense business loses despite having the potential for growth in terms of excellent business returns (Porter, 2000). The unfavorable conditions that were driving potential investors away from the nation prompted the need for the authorities to review key legislations that guide investment in the country. The new policies are to open up the business barriers that have been impeding investment activities in the nation. The main intention of the new policies is to open up Kuwait for investors and international business operations. This is to contribute in expanding the economy by enhancing job creation and provision of quality or essential commodities, for example, clothes to the locals. Most institutions in the nation and international corporations are currently gearing up to take up the favorable opportunities that the authorities in the nation are providing. The new guidelines provide a favorable business environment as they seek to reduce the interest rate on business operations, start up legal fees and review tax levies. These measures now depict the nation as an environment that is open for business (Perkins & Neumayer, 2005). This will attract more investors and international business operators to set up their operations in the nation since the cost implications are going to receive drastic reduction. Consequently, the country’s social cohesion and openness of the societal members presents a symbolic element for growth. As indicated, no nation can realize its set national goals without social integration. This is because social coherence enables individuals to work and pursue the economic objectives as teams. Unity is paramount in ensuring improved performance. Kuwait people are depicted as individuals with the distinguished character and strong social values. They are nomads who believe in social coherence with limited discrimination (Perkins & Neumayer, 2005). This element has enabled them to achieve exemplarily in various economic activities that they undertake, for example, agriculture. Their social nature would greatly drive the nation’s expansion plans. It seeks to guarantee investors and international business operators the needed safety or support that is crucial in any business environment. The agricultural sector in the nation is also open for business since performance polices to promote activities in the sector is in place. The sector has been a key pillar that contributes to the nation’s GDP and its expansion would enhance the countries performance and food security. The sector will now be driven innovatively using modern equipments and infrastructural set ups that are effective and efficient (Perkins & Neumayer, 2005). The idea is to expand production in the sector with an aim of generating export earnings from the produce. Indeed, the economic stimulus strategies that are developed in Kuwait presents the nation with a promising future. The strategies and policies that are to open the country for international and local business operations are vital when ensuring growth. The nation is in the right track for economic advancement. Kuwait's industrial clusters It is true that several economies such as Kuwait are facing complications attributable to the financial crunch that influence operations in the industrial sectors. The complications emanate from varied factors that diminish the vibrancy of institutions under various industrial clusters in Kuwait. The economic down turn compels individuals and nations to cut down their expenditure to address the deficits with the intention of propelling growth and enhancing vibrancy within the market. In turn, this has affected the countries industrial performance that holds growth potential with proper support. Authorities in the nation should provide support the industrial sector by availing the requisite support to the country’s key corporations (Perkins & Neumayer, 2005). This should be executed to aid innovation and creativity in production processes with an aim of producing quality items that match consumer’s specification. Agricultural, business and metallic corporations form key industrial clusters in Kuwait. The clusters require immense support for them to become effective and clear. In particular, the people of Kuwait practice agriculture as an economic activity. The agricultural produce is majorly for domestic purposes because it is grown on a small scale based due to various factors (Ghemawat, 2011). The factors include limitation of water, labor, poor climatic conditions, fertile soil and lack of modern farm equipments. The major agricultural produce in the land include cereals, vegetables and fruits that are grown along the oasis. The low growth levels that have been evident in Kuwait are attributable to inferior policies that guide production and execution of industrial activities in the country (Ghemawat, 2011). Authorities should develop counter measures to ensure that the aspired growth levels are achievable. This is vital since the industrial sector has the capacity to enhance the objectives of international business engagements. Kuwait is a nation with great potential of recording exemplary growth through industrial activities. The country has immense untapped resources that should be exploited under modern industrial guidelines. These have the capacity to enhance efficiency and propel the country towards the attainment of the stipulated objectives. Failure to employ modern directives will limit growth and restrain the success of the organization. According to economists, the nation should develop potential legislation to create a favorable environment for business and industrial development. This is to ensure that the industrial sector receives a boost in terms of resources, infrastructure and innovative production plans. They should reduce interest rates for investors and the overall investment requirements. They should also develop viable modalities to reduce the effects of high inflation and flow of investment activities (Porter, 2000). The initiatives are crucial in ensuring that monetary growth and financial vibrancy is achieved through expansion of agricultural practices, industrial actions and international business engagement. The country’s industrial expansion plans are viable and will drive it to greater heights. Therefore, nations that seek to advance their performance by expanding the economy should adopt conventional industrial practices and formulate viable trade policies. This creates a favorable environment that allows potential investors to make sustainable investments. Additionally, it propels coordination amongst the various participants in the international ventures. Analysis of the diffusion of technology in Kuwait In the contemporary world, technology remains a key driver for economic activities. Business operations and activities are being driven by the technologically enabled systems across the world. These focus on attaining synergy and propagating the role of nations in attaining targets. Ghemawat (2011) noted that technology leads to the realization of a global village through network connections. It provides detailed approaches to business management and execution of transactions effectively. Any individuals or nations with expansion plans must adopt technological systems. This enhances business operations by enabling timely communication, delivery of services and response to stakeholder, needs. In Kuwait, performance in the agricultural and business sectors had been dismal since the use of technology was not embraced fully. This exposed the nation to heavy losses in the agricultural and business sectors reducing its viability and ability to make proceeds. The current initiatives will enable the nation to double its ‘performance in the key fields of operation. In particular, businesses are to be e-driven to ensure that the e-commerce objects are achieved fully. The application of the modern techniques will be in the production systems, business processing units, transfer of products or delivery and designing of best practices (Ghemawat, 2011). The elements seek to open up business engagement and increase return on investment in the economy. Consequently, the agricultural sector is set to receive a great revolution due to the introduction of the modern techniques of operation. The sector is to receive plough wing equipments, harvesting machines and automated processing systems. The equipments will enable farmers to expand their activities and produce (Ghemawat, 2011). The distribution of technological projects in Kuwait also plays a fundamental role in the diffusion of technology. It is clear that cooperation amidst the various forces within organizations in Kuwait contribute to the diffusion of technology and acquisition of relevant expertise. It is also noteworthy that economic and knowledge indexes play fundamental roles in the diffusion of technology because they determine the suitability of business processes and their adaptation to specific environments. This entails creating a favorable environment that allows potential investors to make sustainable investments Authorities formulate viable modalities to open up business opportunities and create a favorable environment for economic expansion. Their actions are informed with the present escalating needs of the locals and global hostilities that threaten global economic performance. Diffusion of technology advance their performance by expanding the economy should adopt conventional economic practices and formulate viable trade policies. This entails creating a favorable environment that allows potential investors to make sustainable investments. This is critical because such investments have the capacity to expand the economy by ensuring job creation for the populace, improvement of GDP and enhancement of per capita income levels. Research and development is a fundamental approach that would the diffusion of technology because it addresses emerging concerns and propels the country to attain specific targets. It is clear that failure to acknowledge the role of research in technology is likely to limit the country’s capacity to forge forward and meet the stipulated targets. Conclusion Kuwait is a nation with the potential of recording exemplary growth. The country has immense untapped resources that should be exploited under modern guidelines. Its expansion plans are viable and will drive it to greater heights. Consequently, nations that seek to advance their performance by expanding the economy should adopt conventional economic practices and formulate viable trade policies. References Ghemawat, P. (2001). “Distance Still Matters: The Hard Reality of Global Expansion” Harvard Business Review, September 79, 8, 137-147. Ghemawat, P. (2011). “The Cosmopolitan Corporation” Harvard Business Review. May, 89, 5, 92-99. Khanna, T. Palepu K & Sinha, J. (2005). “Strategies That Fit Emerging Markets” Harvard Business Review, June 83, 6, 63-76. Perkins, R. & Neumayer, E. (2005). “The International Diffusion of New Technologies: A Multi technology Analysis of Latecomer Advantage and Global Economic Integration” Annals of the Association of American Geographers, Vol. 95, No. 4, pp. 789–808. Porter, M. (2000). “Location, Competition, and Economic Development: Local Clusters in a Global Economy. Retrieved From http://edq.sagepub.com/content/14/1/15.abstract Read More