Management environment of Kuwait - Assignment Example

Management environment of Kuwait Management environment of Kuwait Question: Evaluation of two analytical tools, then choosing the most appropriate, examine at least one key factor affecting the management environment of a country. Introduction Management environment is how the management programs of an organization are organized in a systematic and comprehensive manner (Ibp Usa, 2008). It includes the structure of the organization, the resources, and the planning for developing, implementation and maintenance of a better maintenance policy for well-being of the organization in question. The management environment is aimed at ensuring a smooth running of planning, organizing, leading, and controlling in the organization. It is upon the management to see to it that the organization reaches its goals and objectives, to ensure that it maintains a competitive advantage. It is important for organizations to join collaborations and keep good relationships with other countries. Most of organizations in Kuwait are complex and it is upon the managers to manage and reduce complexity to structure organizations. SWOT analysis It is an acronym for strengths, weaknesses, opportunities, and threats (Kip Becker, 2013). The strengths and weaknesses are internal factors while opportunities and threats are external factors. It is an important tool to audit and analyze the strategic position of the business and its overall environment. It is aimed at identifying the best strategies capable of aligning the organizational resources and capabilities to the environmental requirements of the firm’s operation. It is aimed at evaluating the internal potential and limitations and the probable opportunities and threats that originates from the external environment. It is able to view all the positive and the negative factors both inside and outside the firm that affect the success of the organization. Studying the environment is capable of forecasting the changing trends and helps in the decision making of the organization. PESTEL analysis It is a concept that is evident in the marketing principles (Jennex, 2007). It enables companies to enable the tracking of the environment in which they are operating in or are planning to venture in. It is an acronym for political, economic, social, technological, legal and environmental factors often use it. It ensures that the business environment is viewed from various angles that one needs to keep track while contemplating on the idea or plan in question. It is crucial for an industry since it defines what the company should do and accounts for the goals and strategies of the organization. Advantages of SWOT analysis i. Provides information that enables strategic planning ii. It enables the organization to build on its strengths iii. It enables the organization to know its weaknesses and work on them iv. It ensures that the organization is able to overcome its threats v. It enables the organization to identify its core competencies vi. Ensures that the objectives of strategic planning are set vii. It enables the firm to understand its past, present and future to ensure that future plans of enhancing the firm’s success are set Disadvantages of SWOT analysis a) Increase in prices b) Lack of skilled labor in the organization c) Poor relations in the industries d) Faulty products that results from poor control of quality Advantages of PESTEL analysis i. It provides an easy and simple framework for the analysis of the organization ii. It incorporates the use of cross functional skills and expertise iii. Helps an organization to reduce the effects of potential threats iv. Helps in the development of an organization’s strategic thinking v. Comes with a mechanism that aids an organization in coming up and exploiting new opportunities vi. It enables an organization in assessing the implications of venturing into new markets Disadvantages of the PESTEL analysis a) It is possible for users to oversimplify the information used in making important decisions in the organizations b) It is important for the process to be conducted regularly to be effective something that most organizations fail to do (Ali, 2009) c) Organizations are likely to limit the individuals involved due to considerations of time and cost d) Assumptions act as the basis for most of the data making the decisions made subjective The best tool to use in examining a key factor of Kuwait’s management environment is SWOT analysis tool. The reason is that SWOT tool will be in a position to reveal the weaknesses of the management environment, the strengths, threats and the opportunities of the management environment of the country (Zietlow & Seidner, 2007). In so doing, the organizations in that country will be in a position to understand what to do to attain their set goals and objectives. It is able to reveal what opportunities that the organizations in that country ought to exploit to gain and maintain a competitive advantage. Unlike the pestle analysis, the data that is gained through SWOT analysis is not based on assumptions thus most of the data gained is not subjective. One factor affecting the management environment of Kuwait is the high level of inflation in the country. After the gulf war, the country had a massive debt that almost doubled the GDP. However, after 20 years of the country experiencing positive balance of payments, the country suffered public debts that equaled to 6.8% of its GDP (Gilman, Passfield, & Nakamura, 2010). Currently, the country owes approximated $10bn, which can be equally distributed by $2600 in the country’s population. Back in 2012, the Kuwaiti treasure decreased the yield of its bonds of one year until 1.25%, which is a relatively low credit rate. The relatively low credit rate and the relatively high level of inflation affect the management environment of the country. The reason is that with such a low credit rate, it is quite difficult for organizations to get loans from banks in the event that they required a boost in their capital requirements. Moreover, with high levels of inflation, the economy could deteriorate meaning that even business for organizations in the country could also decline. It is up to the management to ensure that they attracts and retains more customers to boost their competitive advantage. With the relatively high inflation, most organizations in the country will try their best to come up with the best strategies to attract and retain as many customers as possible. Thus, it is up to the management to ensure that they heed into this. SWOT ANALYSIS Strengths Good credit rating Common use of the English language Developed levels of trade infrastructure Warm environment of tax Good relations with surrounding neighbors Huge amounts of oil deposits Young active population in the country Opportunities Financial boost from the government capable of promoting business activity Population growth Government action towards attraction of the FDI Monetary union with GCC thus promoting a strong currency for the country Weaknesses Dependency on importation Industries depend on oil thus are lowly diversified Moderately high level of inflation Drastic social stratification in the country Need for a local agent for the businesses to thrive in the area Inability for a foreigner to own land in the area Threats High levels of islamist empowerment Iran alert High levels of corruption Competition from the grey markets Despite there being a difference between the Arab and western cultures, trade and business are two most important aspects of the two cultures (Newton, 2011). It is up to the management environment of these two cultures to ensure that trade and business of their countries of their countries thrive for the well-being of their respective cultures. The main strength of Kuwait’s management environment is the stable political condition of the country. The country has excellent relations with foreign neighbors as well as other countries around the globe including China and the USA. This is then strengthened by a huge wealth that originates from oil and a growing economy from the developing trade ties and the existing trade infrastructure (Plunkett, 2013). As a result, the management is able to ensure a smooth flow of it organize, leads, controls, and plan most of the organizational resources in the country to tap into the strengths established. However, the country is faced with fights for an increased FDI flow thus discouraging the number of investors willing to invest in the country. The investors may also be afraid to keep their assets in the country due to the dramatic occurrences that the country is facing in political, economic, and social matters. Such events are likely to affect the non-diversified economy of the country thus resulting into a high dependency on international supply of most of their international supply of products including food. It is upon the management of the country to prevent this by ensuring that they advocate for their investors’ safety in the country. If investors happened to fail to invest in the organizations in the country, then the management would have a difficult time trying to keep their organizations in order. Most of the organizations require investments either form their countries or from other foreign countries. The management environment of the country is faced with cultural and legislative obstacles that hinder the establishment of a commercial activity in the country. The high level of corruption in the country and its culture requires the availability of good personal relationships for the establishment of any business activity. It becomes difficult to build up on the connections in the country since foreigners are treated as the lowest floor of the social pyramid (Hutt & Speh, 2013). There is also the problem of how to find a good local agent who is not capable of stealing one’s business idea. These are some of the challenges that the management faces in the country. They have to go against all odds to ensure that they ensure customer’s satisfaction to improve on their competitive advantage. The management in the country is faced with the initiative to promote foreigners in the country to diversify the economy of the country. The country is aimed at bringing fresh views from the east and the west. These desires are directed by a warm provision of tax and monetary boost that is targeted towards development of infrastructure by various international companies. Thus, it is upon the management environment of the country to tap into this to ensure that the number of investors getting into their country to improve on trade is increased. Considering the relatively high level of inflation in the country, it is upon the management environment of the country to ensure that they tap into the available customer base. It is upon them to ensure that they get as many investors as possible to avoid the organizations becoming bankrupt. Conclusion Kuwait is faced with complexity in terms of their organizations. It is upon the management environment of the country to tap into these complexities to ensure the well-being of their organization. Considering that the country is faced with relatively high levels of inflation, it is upon the management environment of the country to do something about it. According to the SWOT analysis, the management environment of the country is faced with various strengths, weaknesses, opportunities, and threats. It is upon the management of the country to ensure that their organizations tap into their strengths and their opportunities while at the same time reducing the impacts of their weaknesses and threats. Most of the opportunities recognize that the country has a good tax environment and relation with neighbors. It is upon the management environment to ensure that their organizations tap into this to ensure that they attract as many investors as possible to their organizations to prevent the countries from bankruptcy in the event that the inflation rises beyond the current levels. Though few investors are willing to invest in organizations that they can experience losses rather than profits, it is upon the management environments to convince them otherwise. Moreover, it is important for them to ensure that they ensure customers satisfactions is high to ensure that they attract as many customers as possible to maintain their competitive advantage. They should come up with strategies that are able to tap into the preferences of their customers thus ensuring that despite the high levels of inflation, they are able to attract a considerable number of customers. Moreover, it is upon the management environment to ensure that they create awareness of their organizations to as many of their targeted population as possible considering the rising population each day. Appendix SWOT analysis is an acronym for strengths, weaknesses, opportunities, and threats. It is important to show the strengths, weaknesses, opportunities, and threats of an organization. In this case, the point of consideration is the management environment of Kuwait. Due to the complexity of organizations in Kuwait, it is important for the management to understand the strengths, weaknesses, opportunities, and threats facing the management environment of their countries to come up with the best strategies to maintain a competitive advantage. PESTEL analysis is an acronym for political, economic, social, technological, environmental, and legal factors. It ensures that the business environment is viewed from various angles that one needs to keep track while contemplating on the idea or plan in question. It is crucial for an industry since it defines what the company should do and accounts for the goals and strategies of the organization. However, the data is collected through assumptions thus resulting into subjective data. That is why the tool used in this scenario is the SWOT analysis, which enables the management environment to maximize on their strengths and opportunities while reducing the impacts of their weaknesses and threats. It is important for the management organizations to understand the business environment of their country to ensure that they maximize on their profits. It is important for them to establish the best tool to use to determine the market situation of their country. In so doing, they are able to come up with the best strategic decisions that affect their organizations positively. References Ali, A. (2009). Islamic Perspectives on Management and Organization. New York: Edward Elgar Publishing. Gilman, E., Passfield, K., & Nakamura, K. (2010). Performance assessment of bycatch and discards governance. Chichester : IUCN. Hutt, M. D., & Speh, T. W. (2013). Business marketing management. Australia ; Mason, OH: South-Western, Cengage Learning. Ibp Usa, U. I. (2008). Kuwait Starting Business (Incorporating). Business & Economics , 300. Jennex, M. E. (2007). Knowledge management in modern organizations. Hershey, PA: Idea Group Pub. Kip Becker, H. E.-S. (2013). Management and International Business Issues in Jordan. Business & Economics , 216. Newton, R. (2011). The management book. Harlow: Financial Times Prentice Hall. Plunkett, W. R. (2013). Management : meeting and exceeding customer expectations. Mason, OH: South-Western Pub. Zietlow, J. T., & Seidner, A. G. (2007). Cash & investment management for nonprofit organizations. Hoboken, NJ : Wiley. Read More