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Saudi Arabia - Pestle Analysis - Research Paper Example

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This paper is a Pestel analysis of the macro-environment of the country. The target audience of the paper are businesses which are looking at entering the Saudi Arabian market. Tools such as Google, Google Books, Google Scholar have been used to complete this paper…
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Saudi Arabia - Pestle Analysis
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Saudi Arabia - Pestle Analysis

Download file to see previous pages... Political Factors After the recent uprisings in the Middle East, regime stability in the region is under serious threat. Even though there are no serious threats in the near future, Saudi Arabia’s long-term stability has been questioned. The country is facing a dual problem of responding to the pressures of a reform and also having to counter extremist violence in the region. Saudi Arabia has developed a strong Islamic self-identity. Numerous Islamist groups have known to have made the country their home and also they are being funded by affluent Saudis (BBC, 2012). Since recent extremist attacks, political reform has garnered great support. Even though there were elections held in 2005, democracy was not exercised to the fullest as political parties were banned and women were not allowed to vote. Protesters opposing in public call for the risk of arrests and it is from outside the country that the opposition functions. If there would be an uprising similar to the ones in the region, then that would mean disaster for political stability (BBC, 2012). In the near future, political stability is not threatened and the government has taken various steps to ensure citizens are happy. Government spending and wages have increased greatly in the last couple of years. Also, Saudi Arabia is the largest oil exporter in the world, its internal stability is of prime importance to international powers and hence international is expected to take all measures to ensure stability in the country (Zand, 2011). As mentioned, many reforms have been announced on all fronts by the government with a vision to strike balance between modernization and Islamic wisdom (Shaheen, 2010). Freedom of speech has come of age in the recent years, even though there are constraints. The Kingdom’s policies encourage foreign investment and active participation of foreign companies. There are no restrictions on the movement of capital in and out of the country. Foreign investments enjoy the same benefits (such as tax exemptions, customs duties, etc) as that of national capital as long as they are in accordance with the Foreign Capital Investment Code. A drawback here is that investment should be economic development projects and should accompany technical knowledge (Saudia-Online, 2010). Overall, the country is politically stable and is attractive in business terms but businesses must closely keep an eye on the movements that can influence long-term political stability. Economic Factors The current business cycle stage of Saudi Arabia is that of a retrenchment and restructuring cycle similar to the one witnessed in between 1996 to 2002. In the earlier phase, major restructuring and reforms took place. The major focus of the government was to ensure that key driver of growth was the private sector. ...Download file to see next pagesRead More
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