The Advantages and Disadvantages of Starting Up New Business in Saudi Arabia - Essay Example

What are the advantages and disadvantages of starting up new business in Saudi Arabia? s Submitted by s: IntroductionThe World Bank rates Saudi Arabia as the easiest place to conduct business in the entire MENA region and compared to the rest of the Arab Nations, the Kingdom is the easiest place in regards to property registration, getting credit and starting a business (Knoop, 2013, p. 192). The investment set up in the kingdom symbolizes the liberal private enterprise policies, with its foreign investment legislation allowing a hundred percent foreign ownership of projects as well as real estate. Additionally, the Kingdom is a renowned leader in the key determinants of global competitiveness and has been recognized for extremely low taxes along with exceptional incentives. The Kingdom is ranked number five in the globe in terms of fiscal freedom with highly secure earnings that have resulted from its stable currency. Further, the economy of the Kingdom is remarkably open to trade and boasts of the lowest mean weighted tariff in the whole MENA area. In order to boost trade further, port handling fees were reduced by the government by half in early 2008. Problem statement/background When conducting business with the Arabs, it is likely to meet hard but polite bargaining from people who are experts at it, therefore, one has to be very confident in regards to the contents of contractual agreements (Elashmawi, 2001, p. 180). In the event that there are gaps, the Arabs are good at finding and exploiting them, however, in most of the cases, the Arab businesspersons meet their obligations completely and the experience of doing business with them can be enjoyable and approachable, with the creation of long-lasting trust. Parenthetically, it is rare to find Arabs saying a direct no and this requires that one pays attention and observes in a careful manner (Cullen & Parboteeah, 2014, p. 561). The possible gains of opening and operating a business are numerous but the endeavour is not for the fair hearted. One needs to remember that he or she is not a citizen of the Kingdom and when it reaches a time that he or she has to leave and sell the accumulated interests, the individual may not have the same amount of time as his or her partner. Purpose of the research The key purpose of this study is to amass information concerning the advantages and disadvantages of starting a new business in Saudi Arabia. The study’s objective will also entail proving a detailed review of the activities and requirements that should be met before one starts a new business in Saudi Arabia. The study will dwell especially in the following sub-objectives: 1. To develop an exhaustive review of the advantages and disadvantages of opening a new business in Saudi Arabia; 2. To review the activities and requirements that have to be met and the manner in which they affect opening of new businesses in the Kingdom. The results of this study will be of importance to companies and individuals who are considering venturing into the Saudi Arabia market, as they will understand the environment through weighing the advantages and disadvantages of opening new businesses. Literature review The economy of Saudi Arabia is based on oil with obvious governmental control over the key economic operations (Quist & Drake, 2005, p. 13). The Kingdom possesses more than twenty percent of all the petroleum reserves of the globe, which is its largest export, making it play a predominant role in OPEC. Its petroleum market is constituted by an estimated seventy-five percent of budget revenues, forty-five percent GDP and ninety percent of earnings from exports. The cultural and business set up of Saudi Arabia is mainly conservative, and perceptive readiness as well as basic knowledge of the culture of the Kingdom can make the difference between successful deals and unsuccessful negotiations. On the other hand, it is imperative to keep in mind that most of Saudi executives as well as government officials have an awareness of international customs and cultures. This allows them to be comfortable with the approach of the west to doing business as long as mutual respect exists. For example, the emphasis directed at relations, body language as well as appropriate attire is all basic aspects of the Saudi etiquette. Nevertheless, businesses continue to experience challenges in regards to contracts and labour issues as far as the regulatory system of the nation is concerned. Among the economies that are factor driven in the MENA region, Saudi Arabia is associated with the lowest rate of total entrepreneurial activity with almost five percent of the entire population being involved in starting new businesses or owning young businesses that have operated for not more than three and a half years (Noland & Pack, 2007, p. 243). Research design The research design can be considered as the blueprint that guides the study since it develops a definition of the study in regards to description, correlation as well as review and meta-analysis (Sahu, 2013, p. 25). Thus, the research design in this section id developed with the aim of addressing the questions that came up in the problem statement. This study will use a quantitative design to create a better and detailed understanding of the advantages and disadvantages that are associated with opening new businesses in Saudi Arabia. The choice of quantitative research was informed by the fact that this approach collects data from a standpoint that will allow the researcher quantify and measure the data gathered (Belk, Fischer, & Kozinets, 2013, p. 3). Structured questionnaires will be used to gather the relevant data through closed ended questions so that the responses can give precise reflections of the actual advantages and disadvantages of starting new businesses in Saudi Arabia. The survey tool will be administered to the management of businesses that have recently started in Saudi Arabia and are not older than one year. A list of the businesses that fit this criterion will be acquired before a representative sample of fifty is chosen for the purposes of the research. This number will be most appropriate in the provision of adequate and required information that concerns the advantages and disadvantage of starting a new business in Saudi Arabia. Sample design The population considered for this research will be the businesses that have been started recently and are not more than one year old. Since the whole population of businesses that fit this criterion cannot be surveyed as a consequence of the extremely large number as well as logistical issues in accessing all of them, a sample will be chosen to represent the population. The representative sample will provide the needed generalizations of the rest of the population. The sampling frame of the population will be randomly arranged so that ordered criteria may be used to choose the sample for the research. Data collection, processing and analysis Subsequent to the collection of the research data, processing and analysis will be done based on the outlines identified during the development of the research plan. The consenting respondents will be fill questionnaires, which will be sent to them through e-mail and sent back after they have been filled. The filled questionnaires will go through verification to confirm whether they were filled appropriately, and further analysed to spot emerging trends. Additionally, the questionnaires will go through coding to create a limited number of categories that will simplify analysis through reduction into homogenous groups that will make the identification of meaningful linkages simpler. Budget telephone costs 400 for calling the respondents picked for the research internet costs 200 for sending emails with the questionnaires to the respondents picked for the research research expenses 80 copying costs, printing of pre-test surveys, notepads, pens miscellaneous 100 any additional expenses e incurred in the process of the study total 780 Timeline May 8th- 17th: Needs assessment to gather particular information about the business environment in Saudi Arabia and requirements for starting a business May 20th: Come up with a plan and criteria for the study to be undertaken founded on the scope of the research to take place June 1st: Come up with the survey tool that will be used in the collection of data during the research June 3rd- 10th: Obtain the contact information for the businesses to be part of the study and establish contact the managers of the businesses chosen as components of the sample population so that consent forms can be sent to them. Develop a mailing list of the businesses, which will have consented to participating in the research June 20th: Sending the questionnaire to the respondents to be filled and returned June 30th: Compilation of the questionnaires sent back by the respondents and contacting the respondents who have not yet sent theirs make sure they return the duly filled questionnaires July 4th -9th: Process and analyse data collected through the questionnaires Bibliography Belk, R. W., Fischer, E., & Kozinets, R. V. 2013, Qualitative consumer et marketing research, Sage, Los Angeles [u.a. Cullen, J. B., & Parboteeah, K. P. 2014, Multinational management: A strategic approach, South-Western Cengage Learning, Mason, OH. Elashmawi, F. 2001, Competing globally: Mastering multicultural management and negotiation, Butterworth-Heinemann, Boston. Knoop, T. A. 2013, Global finance in emerging market economies, Routledge, New York. Noland, M., & Pack, H. 2007, The Arab economies in a changing world, Peterson Institute for International Economics, Washington, DC. Quist, B. W., & Drake, D. F. 2005, Winning the war on terror: A triumph of American values, iUniverse, New York. Sahu, P. K. 2013, Research methodology: A guide for researchers in agricultural science, social science and other related fields, Springer, New Delhi. Read More