Saudi Arabia - Research Paper Example

Saudi Arabia: a Case Study Report Contents 0 Introduction 2.0 Saudi Arabia: general overview of culture 3.0 Management in Saudi Arabia: communicative perspective 3.1 Hofstede’s model 3.2 Trompenaars’ model 4.0 Positive and negative stereotypes of Saudi Arabia 5.0 Business in Saudi Arabia: cultural perspective 6.0 Do’s and don’ts in business with Saudis: SWOT analysis Conclusion 1.0 Introduction Modern world is a place of numerous perspectives in different spheres. There is a specific tendency of hybridity and globalization. Many countries are covered by a specific ‘cultural fabric’ (Idris, 2007, p. 36). Saudi Arabia belongs to the number of countries, where cultural background plays a crucial role in all spheres of human life. This country gains profits form oil production though it belongs to developing countries. It is evident that there are many obstacles and misunderstandings between Saudi Arabia and Western world. In order to become a successful international competitor, Saudis have to be more open and ready for changes (Idris, 2007, p. 37). Western businessmen shouldn’t neglect cultural peculiarities of this country. Vice versa, it is a hard work to establish long-term trustful relationship with Saudi Arabia, full of respect and mutual understanding. From the very beginning, business paradigms of Western and Eastern worlds are different. Thus there is a need to facilitate challenges and work for international organizational performance improvement. Saudi Arabia needs investments and Western world is looking for profits increase. Moreover, Saudi Arabia is dependent on foreign labor. Consequently, a complicated nature of relations between these two different worlds should be of primary concern for modern scientists and researchers in order to turn Saudi Arabia from developing to developed country and open new horizons of international partnership. 2.0 Saudi Arabia: general overview of culture Saudi Arabia has always been considered a reserved country though interest of international society to this country is heated by goods and human resources exchange. On the background of global economy Saudi Arabia has to act in the international arena in compliance with the needs of international society. Language barrier of Saudi Arabia where Arabic is wide-spread is not considered to be an irresistible obstacle while English is wide-spread in this country. Urdu, Farsi and Turkish are other languages which can be met in Saudi Arabia. On the one hand “potential business partners should be aware of the multilingual nature of Saudi Arabia” (Abbas, 1995). On the other hand Arabic language is a sacred language of Qur’an and Arab literature. Saudi culture is of Islamic nature, the Prophet Muhammad is the leading figure for Saudis and his actions are of primary concern for Saudis. It is necessary to realize that Saudis have to pray 5 times a day and respect their traditions. Weekends are different in Saudi Arabia, it is Thursday and Friday. Ramadan is a holy month for Muslims. Muslims don’t smoke cigarettes and don’t drink. Their views are strictly regulated by Qur’an. During Ramadan even shops are closed very often not as usual. Moreover, Saudis are not only strictly regulated by religious norms, but also by family values and social values. A principle of seniority and serious attitude to family are influential factors in businesses. It is a wide-spread tendency that employees are hired with regard to recommendations of trusted friends or families. Therefore in accordance with these conditions, foreign business partners should develop their business plans and strategies. 3.0 Management in Saudi Arabia: communicative perspective Consequently, management in Saudi Arabia is influenced by cultural peculiarities which are unusual to Western world. Therefore management in this country is named “culturally-oriented” business (Abbas, 1995, p. 7). If to consider the fact that modern businesses have to change in accordance with the global conditions, then Saudi Arabia have to introduce some innovations. Cultural peculiarities of Saudi Arabia have not been properly studied yet. Modern researches have to study cultural peculiarities of Saudi Arabia from religious and cultural perspectives. Nevertheless there are clearly defined peculiarities of Saudis culture. For example, there are well-known features of Saudi Arabia, such as: economic independence desire; political pluralism acceptation etc (Idris, 2007, p. 38). Medieval influence is closely interwoven with modern peculiarities of business in Saudi Arabia. Patience and loyalty are two main influential features wide-spread in this country. Consequently, it is generally known that conservative nature of business doing is typical to Saudi Arabia. The principle of seniority is another crucial issue for Saudis. Respectful attitude to elder people, family respect and consequently obedience to senior managers are crucial moments for Saudis. In Saudi organizations there is a strict hierarchy. “In their daily lives and in business Saudis respect elder people, thus line managers are obedient to senior managers” (Negandhi, 1983). A principle of strict delegation of authorities is of primary concern for Saudis. Thus decision making is in the sphere of senior managers’ responsibility, while line managers next to employees do not have influence in the process of decision making. A low-risk context of business doing in Saudi Arabia should create a relevant mood among business partners. High level respect to senior manager and acceptance of line managers and employees functions should be followed by foreign business partners. As far as we can see, nonverbal peculiarities of Saudi Arabia business conduct are crucial for managers from this country. Respectfully, punctuality is another important principle for Saudis. Thus nonverbal communication principles are evident in Saudi Arabia and there is a great need to comply with numerous peculiarities which are not relevant to Western world. The attention of managers in Saudi Arabia is usually concentrated on punctuality. In order to give an unprejudiced assessment of Saudis’ business practices there is a need to apply approaches developed by Hofstede and Trompenaars. In accordance with these scientists, who developed criteria for foreign business doing, there are certain points which have to be discussed in terms of every country. 3.1 Hofstede’s model For example, with regard to Hofstede’s scale, there are certain determinant indices: “Power Distance Index (PDI) describing organizational power distribution principles; Individualism (IDV), identifying ratio of an individual to the whole collective; the Masculinity index (MAS) distinguishing gender roles’ distribution; Uncertainty Avoidance Index (UAI) describing country’s/organization’s relation to uncertainty and ambiguity; Long-Term Orientation (LTO) index defining principles of goal-orientation relevant to a certain country” (Hofstede, 2001). In relation to Saudi Arabia, PDI signifies that authorities’ delegation and principles of seniority are one of the most essential in Saudi Arabia (Hofstede, 1991; 2001). IDV shows individualistic trends of Saudi Arabia. MAS witnesses that male activities prevail over female ones in social context. UAI shows that Saudi Arabia is a country of low risk thus there is no readiness to change in this country. LTO signifies that Saudi Arabia is a short-term goals country. 3.2 Trompenaars’ model Trompenaars (2004) developed a model basing on comparing/contrasting approaches to culture of a certain country. Trompenaars makes an analysis of different cultural issues of any organization influenced by country’s cultural background. If we project these criteria on Saudi Arabia, we’ll find out that this country has diffuse relationship. Moreover, in case of problem solving process, Saudi Arabia is slow and low risk-taking country. Ascribed status of business partners is of great concern for Saudis. Authority delegation has a strong hierarchy in Saudi Arabia which can be explained by a strong principle of seniority. 4.0 Positive and negative stereotypes of Saudi Arabia As Saudi Arabia is a high-context culture, it is necessary for business partners to pay attention to verbal and nonverbal communication norms. Body language and eye contact are as important as direct words. It is well-known that appropriate intonation, making pauses in speech are vital for Saudis. There is a strong historical background of such kind of peculiarities. For example, in the period of country’s establishment Saudi nation went through thick and thin. Tribes’ controversies and mixture of various cultures making external influence on Saudis make a cultural context of Saudi Arabia rather complicated (Saudi Arabia Online). The late King Abdul Aziz AL-Saud unified this state and starting from 1932 monarchy and Islamic law are two stable pillars of the country’s politics (Saudi Arabia Online). Oil found in the Kingdom in 50s turned this country into the most powerful petroleum exporter in the world. Consequently, an interest of the global society to this country became huge and doing business in this country became an issue of the highest interest for all nations (Alanazi et al., 2003, p. 375). In order to reach success in doing business with Saudis it is crucial to know the peculiarities of the state’s cultural and historical context. On the stage of business planning with Saudis, it is relevant to business partners to be aware of the way business appointments are made. Appointment scheduling is regulated in terms of five daily “prayer times and religious holidays such as Ramadan and Hajj” (Alanazi et al., 2003, p. 376). Delays in appointments may occur while the nature of Saudis is temperate and thus it is better to appoint not exact hours but a part of the day. Basically, Saudis are more tolerant to the concept of time in comparison with Western world representatives. Business partners should arrive on time, but if there is a prayer time then they will have to wait for a while. A strong hierarchy between managers and subordinates is another issue which has to be considered by foreign partners. It is a generally accepted thing to receive specific tasks for subordinates from managers. Moreover, elders are highly respected in this country that’s why it is necessary to show a proper attention to them. For example, it is necessary to shake hands with the eldest person in the meeting room at first (Saudi Arabia Online). Working relations in Saudi Arabia are also strictly regulated and it is of vital importance for Saudis to meet their business partners in person (Alanazi et al., 2003, p. 376). A personal background plays an important role for Saudis as well. Business relationship establishment is an area which is to be well-developed in this country before starting to make business. Therefore it is necessary for business partners to gain trust, develop friendly relationship and respect. Arab people pay a great attention to mutual trust and openness that’s why their business partners should work hard on their positive business image. With this respect an important role plays family relationship and personal connections with Saudis. In case this initial stage is successfully completed, it is possible to go to another stage, a stage of direct business conduct principles. First of all, it is necessary to greet Saudis partners and to say a phrase: “As-salam alaikum” hearing from them “Wa alaikum as-salam” (Yamani, 2000). Furthermore it is necessary to move room anti-clockwise and shake hands with your business partners. Though Muslim men would be confused if a woman suggests shaking hands to them, that’s why it is more relevant to wait when Muslim man shakes hand to a woman first. Moreover, business cards don’t play a crucial role for Saudis but if business partners want to hand their business cards to Muslims in, then it is relevant to print them in English and Arabic. First business meetings are usually long because they are essential for Muslims. During these meetings they form their impression about their business partners and it takes them long to drink tea or coffee and discuss different issues. In order to make relations more stable, Western businessmen may think that it is necessary to give a present, but in reality gift giving is too personal for Saudis. Nevertheless once you are offered to get a present from Saudis it is necessary to accept it; otherwise Saudis would be offended (Yamani, 2000). There are some other points which have to be memorized by business partners. For example, when addressing Saudi Arabian counterpart it is relevant to mention his title (Shaikh (chief), Ustadh (professor) following by his or her first name. Saudis names may be filled with particles strange for foreigners, such as "bin", "ibn" and “bint”. These particles are signs of Saudis genealogy and it is important to mention all of them. Dress code of this country should be obliged as well, because high-context culture makes an emphasis on this: men should wear conservative business units and women long skirts and blouses with long sleeves. Moreover, a close eye glance and close distance to Saudis is another condition of efficient trust relationship establishment. It is also relevant to know what one shouldn’t do during meetings with Arabs. To loud speaking or active animating will characterize you as a vulgar and rude person (Saudi Arabia Online). In any situation it is desirable to show conservative behavior in public. A slow motion of negotiations may irritate foreigners but it is impossible to rush Saudis. What is even more interesting for foreigners is that too active questions asking in Saudi Arabia is appropriate for the person who is the least important during negotiations, so it would be wiser to be patient and to ask the most important questions only. If to take into account the fact that respect, friendship and family relationship play important role for Saudis, then it is necessary to know norms of behavior in daily life. In case Saudis invite their foreign business partners, in the majority of cases they organize entertainment in hotels. Sometimes later Saudis could invite their business partners to their homes. During entertainments, representatives of different sexes are in different rooms. Finally, if Saudis invite their business to their homes it is necessary to know several rules. It is necessary to remove one’s shoes, dress in a conservative manner, drink coffee. Before meal there will be plenty enough time to talk with hosts. Meal is usually served on the floor and it is necessary to eat with the help of right hand. One shouldn’t be scared of if he is served a sheep’s head, for example, because it is considered to be the best piece of meal. There will be plenty of food, because Saudis are used to “shower their guests with abundance” (Alanazi et al., 2003, p. 379). 5.0 Business in Saudi Arabia: cultural perspective Foreign business partners should know the way culture exerts influence on Saudi organizations. Performance levels of employees are always restricted due to cultural premises of the country under consideration. A principle of seniority, status and position of organization’s participant is often an obstacle of creative thinking development. It was more appropriate for Saudis employees in 80s to hold their positions and not to ascend career ladder (Al-Kibis et al., 2007). Currently, the majority of Saudi employees want to work as managers. A position of low-rank managers can be described in the following way: “The kingdom has become heavily dependent on foreign labor, and this has hindered the development of a skilled workforce to the degree that the private sector is not able to absorb the new Saudi entrants and cannot provide attractive salaries” (Al-Kibsi et al., 2007). Individual’s performance is often underestimated in Saudi Arabia, because the main attention is focused on group work and treatment to employees as the whole. Managers intend to fire inefficient employees and to hire new employees. Not many researches are devoted to the discussion of management and leadership in Saudi Arabia. Tribal traditions are influential factors in this field. Foreign books on management became interesting for Saudi managers starting from 90s. Concepts of management and leadership are formed with regards to Arab world traditions. Currently, foreign literature sources are vividly discussed by Arabian managers. Cultural influence on business world is discussed by Pillai et al. in the "Leadership and Organizational Justice: Similarities and Differences across Cultures". These authors claim that manager “is expected to act as a father figure” (Pillai et al., 1999). A concept ‘father’ was borrowed from family relationships and projected on business field. With this regard, this study indicates that “leaders and managers in the Middle East face difficulties convincing the employees to be part of the solution to management problems”. Yavas (1997) criticizes restriction of freedom of change in business world. On the other hand, in the research conducted by Bhuian et al. (2001) it is signified that Arabs need guidance and it is desirable for government to intervene in business practices. Decision making in business is also influenced by Islam. In accordance with Walker at al. (2003) Saudis have a strong belief that the process of decision making is to be formed under the guidance of God. In the Western culture environment it is supposed to be subjected to control thus business partners may be confused by fatal nature of Saudis decision making principles. For example, Saudis are tolerant to some changes happened accidentally, while in the Western world this kind of excuse in inacceptable. Walker et al. underline that in such a way, Islam’s teachings are often misinterpreted and it is impossible to interpret certain delays in business in such a manner. Vice versa, Islam stimulates people to change their lives for better and not to look for excuses. Business mistakes can’t be justified by fate. It is on behalf of businessmen to clarify all concurrent misunderstandings. In another cross-cultural study conducted by Alanazi and Rodrigues (2003) Saudi culture has a collectivistic nature and the whole nature “is covered by a strong cultural fabric” (p. 376). Consequently, business in Saudi Arabia is under influence of a strong cultural background as well. Sometimes being too patient and slow in business, Saudis may hinder their organizational performance. Thus under conditions of globalization, there is a need to adapt Saudis culture to the needs of the world’s society. As far as we can see, works devoted to the study of relation between culture and business have signified dualistic approaches to cultural peculiarities of this country. On the one hand, principles of seniority lead to a national itch of getting managerial jobs, but at the same time this tendency belittles importance of low-rank jobs in this country. On the other hand, this tendency is widely discussed in the works of modern scientists and Saudi business is being gradually transformed into more flexible and tolerant to external cultural influences. Qualitative improvements in Saudi organizations are mainly focused on status development among workers in order to increase technological development of the country. There is also a tendency of quality assurance and not only a quality control in Saudi organizations. 6.0 Do’s and don’ts in business with Saudis: SWOT ANALYSIS For business partners’ convenience, it is relevant to conduct SWOT analysis of the way Saudis do their business. Strength: rational approach to business; informed decision-making; well-regulated business strategies and policies. Weaknesses: time is required for establishment of business relationship and respect; limited number of decision making process participants Opportunities: Successful partnership because of properly considered decision-making process; Threats: underdeveloped employees’ and low-rank managers’ initiatives and creative thinking; lack of knowledge in the area of cultural context can hinder business. As far as we can see, Saudis conduct their business rationally and are not in a hurry. Decision making and managerial policies are stable issues for their business and there is no need to reshape this vision. Nevertheless, business partners may try to suggest some improvements in case they are well-informed about cultural background of this country and may be able to prove that their suggestion would be beneficial to their common business with Saudis. Conclusion Having analyzed cultural context of business in Saudi Arabia, it is clear that there is a need for change. It is necessary for Westerners to be aware of cultural peculiarities of this country, as well as Saudis should take into considerations peculiarities of western business strategies. In order to develop successful relationship between Saudi and western business partners, it is necessary to refer to numerous studies, researches and recommendations on peculiarities of business doing in the Arab world. Analysis presented in this research, which is based on Hofstede’s and Trompenaars’ cross-cultural models, SWOT analysis data and literature overview provides foreign businessmen with relevant theoretical and practical knowledge about the way to conduct business with Saudis. Tolerance, patience, respect to Saudi culture are necessary features for foreigners. In case these features are neglected, there is no chance to find business partners among Saudis. Works cited 1. Abbas J. Ali., 1995. Cultural Discontinuity and Arab Management Thought. International Studies of Management & Organization, 25 (3), p. 7+. 2. Alanazi, F., and Rodrigues, A., 2003. Power bases and attribution in three cultures. The Journal of Social Psychology, 143(3), pp. 375-395. 3. Al-Kibsi, G, Benkert, C., and Schubert, J., 2007. Getting labor policy to work in the Gulf. The Mckinsey Quarterly, 19 (29), p. 1+. 4. Bhuian, S., Abdulmuhmin, A., and Kim, D., 2001. Business education and its influence on attitudes to business, consumerism, and government Saudi Arabia. Journal of Education for Business, 76(4), pp. 226-230. 5. Hofstede, Geert, 2001. Cultures Consequences: comparing values, behaviors, institutions, and organizations across nations. 2nd ed. Thousand Oaks, CA: SAGE Publications. 6. Idris, A. M., 2007. Cultural Barriers to Improved Organizational Performance in Saudi Arabia. SAM Advanced Management Journal, 72 (2), p. 36+. 7. Negandhi, A., 1983. Cross-Cultural Management Research: Trends and Future Directions. Journal of International Business Studies, 14, pp.17-28. 8. Pillai, R., Scandura, T., and Williams, E., 1999. Leadership and organizational justice: Similarities and differences. Journal of International Business Studies, 30(4), pp. 763-779. 9. Saudi Arabia management. [Online] Available at: http://www.kwintessential.co.uk/intercultural/management/saudiarabia.html [Accessed 09 January 2011]. 10. Trompenaars, F., 2004. Business across Cultures (Culture for Business Series). Sage Publications. 11. Walker, D., Walker, T., and Schmitz, J., 2003. Doing business internationally. New York: McGraw-Hill. 12. Yamani, M., 2000. Changed identities: The challenge of the new generation in Saudi Arabia. London: Royal Institute of International Affairs. 13. Yavas, U., 1997. Management know-how transfer to Saudi Arabia: A survey of Saudi managers. Industrial Management & Data Systems, 280-286. [Online] Available at: http://dsslab.mis.ccu.edu.tw/KM/ pdf/R24_Management%20Know-How%20Transfer%20to%20Saudi%20Arabia--A%20Survey%20 of%20Saudi%20Managers.pdf [Accessed 09 January 2011]. Read More