The Marketing System in Qatar - Research Proposal Example

Project proposal Table of Content Serial Number and Topic Heading Page Number 0 Introduction 02 2.0 Overview 03 3.0 IKEA 03 4.0 IKEA in Qatar 07 5.0 Conclusion 09 6.0 Reference 10 1.0 Introduction The Middle East has been an oasis for global business. Except for the early oil, this region now boasts of many other trading industries. Imports are an essential part of the life of the nationals in these parts, and this is evident in the numerous international stores that have set up their trading base here. With hardly any other industry available in the gulf region, most products are imported to sustain the life of flora and fauna. Due to this, the government has encouraged foreign investors to establish their business presence here. Doing business in the gulf is profitable. There is no tax and this generates a lot of revenue for the business houses. While this is a positive move by the governments, there is plenty of stakes for the natives. In order to generate income for their own people, the government of Qatar has remained realistic to the happenings. Like most Arab nations, the Government of Qatar too encourages foreign investment, particularly in joint ventures with Qatari partners. Wholly foreign-owned firms are permitted to operate in Qatar, provided they have a local agent or a sponsor. Foreign-owned firms and the foreign-owned portions of joint ventures are subject to corporate income tax, ranging from 5 percent to 35 percent of net profits. Qatari and GCC nationals and business concerns are exempted from the income tax provisions. Foreign investors are not allowed to expand their investment beyond limits set forth in the law. An Emiri decree, however, can allow the expansion of a foreign investment in Qatar (ipr, 1999). 2.0 Overview Qatar is part of OPEC nations in the Middle East. The nation is home to millions of expatriates who come from as far as Indonesia in search of work. The Asian community presence is conspicuous with Indians, Pakistanis, Bangladeshis, Pilipino, and Sri Lankans making up the majority. The 80s and 90s saw an influx of migrants because of the growth of industries here. Many multinationals, especially British and American oil companies set up huge infrastructures which required both skilled and unskilled labour to run them. With the influx of people, other industries began to move in. Today, Qatar is a thriving economy and must thank the millions of migrant workers here for this. Multinational companies that seek to establish business here can do so with the participation of local Qatari partners. This ensures that a part of the gains from business remain within the country, and both the government and the local partners benefit. In such a scenario, would the entry of IKEA, result in a success for the company, and if so, how would the marketing planners define their strategy 3.0 IKEA IKEA, the leaders in economical and fashionable furnishing company that styles on European flavour, began its long journey since its inception. IKEA works with the concept of offering a wide range of well designed, functional home furnishing products at prices so low, that even the most lower strata of society would be able to take home a product of international quality. IKEA believes in quality and affordability, a hall mark of true marketing genius. Rather than selling expensive home furnishings focused on the elite of society, the company makes it possible to serve the many by providing low-priced products that contribute to helping more people live a better life. Franchise opportunities are available in unrepresented areas and IKEA believes in equal opportunity for all its associates. IKEA works with the idea of understanding and servicing areas with the help of their local associates. This is a key to their success as well. Once the local taste and demand is identified, it becomes easy to attract business. This way, the company manages to save on R&D and spend more time in innovation. Franchisee is an area that IKEA looks at with choice. They expect their franchisee to be well versed with the local market and also make suggestions on designs. IKEA makes it a point to see that no two franchisees are in one area. Franchises are granted only to organisations and/or individuals that can secure a strong market position and market penetration in their given territory. 4.0 Literature Review IKEA success has been their single devotion to cheap and quality furniture for all. With this in mind, IKEA has the best possible option of entering the Qatar market. With its majority of people being expatriates, the idea of cheap and stylish furnishing couldn't have come at a much better time. IKEA also maintains a conscious effort to protect the environment and this is a reason why they use their own wood to make furniture. This cuts costs and minimises environmental damage. With most expats looking to save as much as possible during their work life in Qatar, they definitely wouldn't want to invest in expensive furnishing. This gives IKEA greater business scope. The Qatari government's law on tax on income is minimised by IKEA ideology of partnership. Qatar's strength is derived from its oil and gas revenues which have made it one of the wealthiest countries in the world in terms of per capita income. The Government of Qatar has ownership interests in several economic sectors, including oil and gases production, petrochemicals, and the steel and fertilizer industries. The government initiative to promote greater private investment in core industrial projects paved the way for Foreign Ownership of Business and Incentives. Earlier a non-Qatari national, whether natural or juristic, could engage in commercial activities provided the foreign participation in the entity did not exceed 49%. However, in 2000, the Qatari government formulated a new Foreign Investment Law aimed at utilising the State's natural resources. The new law permitted 100% foreign ownership in these sectors, provided they transferred foreign expertise and technology to the Qatari economy. The enactment of the new Foreign Investment Law confirmed the Government's commitment to attracting new investors in the national economy and avail 100% ownership. The law conferred upon foreign investor's privileges, such as: 1. The right to lease land for the project for up to 10 years. 2. The right to import machinery, equipment and some of the primary materials required for the project. 3. The exemption of capital to be invested in the project from income tax for a period not exceeding 10 years. 4. Exemption from import customs duties on the equipment and machinery to be imported for the project. 5. Exemption from import customs duties on the primary raw materials and half-manufactured materials, which are not available in Qatar. 6. Protection from confiscation by the state otherwise than for the public welfare, without discrimination and subject to fare and adequate compensation. 7. The freedom to repatriate the profits of the project and its capital on liquidation; +and the freedom to transfer the ownership in the project. These policies saw immense potential for the growth of the company in Qatar. The company could import the special wood from its estate without having to pay duty, it could employ Qatari citizens in its production plant to be set up in Qatar, and transfer the business to a native Qatari later on. IKEA could reap the benefits fin the 10 years of the lease and then contemplate transferring the business in the name of franchisee later on. It could use the raw materials and local manpower to its advantage and get exemption on income. The company would benefit immensely as the product grows in popularity and to sustain the design and quality, the franchisee would have to import the raw material from IKEA later on. All these are positive developments towards investment in Qatar. There are two distinct possibilities that arise due to the new law: 1. Possibility of selling the unit after a period of 10 years 2. Retain 49% of stakes in the company after 10 years Whatever be the decision of IKEA, it is in a win-win situation. This focus of the paper on Foreign Investment in the Qatari Retail Business will strive to elucidate the following: The new policy of the Qatari government in foreign investment in the international retail sector in Qatar The viability of IKEA entering this untapped market as an equity participant and/or independently. 5.0 Methodology This chapter explains the research aim, the nature of the research and the research method. This is followed by a look at the research methodology, i.e. the data collection method and the data analysis method, utilised in this dissertation. 5.1 Research Aim The aim of this research is to evaluate the issues for foreign investments in Qatar with special emphasis on the International Retail market using IKEA as the case study. 5.2 Nature of the Research This dissertation intends to answer the research questions of whether the European furnishing giant IKEA can make an impression and sustain growth in relevance to the law of the land in Qatar. In order to obtain the answers to this statement, information from various sources can be gathered, including qualitative form (words), or the more conventional quantitative form (numbers). What does qualitative or quantitative mean in the context of this dissertation Qualitative research is the strategy that usually emphasises words rather than numbers in the collection and analysis of data, and it is inductivist, constructionist and interpretivist. However, this form of research becomes complicated in the current context of the research, due to certain limitations. This leaves us with the other option; the method of research through Quantitative form. Quantitative research emphasises on numbers rather than words, meaning that, there are more options available to gather information to compile a comprehensive research. Information from respondents who have the experience and knowledge of retail business in Qatar forms the most important part of this research. In a quantitative study, the test for internal validity is how confident the researcher is that the independent variable is at least partly responsible for the variation found in the dependent variable (Bryman and Bell 2003)1. Though I have decided to go in for quantitative research method to qualitative, I would like to deliver a few notes on what qualitative research is about. In qualitative research strategy, contextual understanding, and data is prime objective to comprehend the market situation. This involves direct questionnaire with respondents in Qatar to draw a conclusion. To do this, I would have to travel to Qatar and spend a sizable amount of time with market influencers. This is quite a heady task and comes across as a non-possibility in the current situation. Qualitative research strategy also enables discussions into areas that are significant for understanding or achieving the research aim. The research findings collected would then be analysed to attain the answers of the research questions. 5.3 Research Method This dissertation intends to find out how marketers conduct research into consumer decision making process. The investigation looks at the viability and feasibility attributes of conducting such a research. The pertinent sources of information that should be utilised to answer the problem addressed are the retail industry. In order to study the issues of foreign investment in the international retail business in Qatar, I have decided to focus my attention on IKEA. IKEA is an ideal example for this research and can be used for the focus group. IKEA has a wide range of products that are accepted worldwide. They have established brand resonance. With many such home furnishing companies making their presence felt in Qatar and competing for a larger market share, it is obvious that IKEA will have to understand and study the implications of entering the retail business there. The idea of this exercise is to find out an unbiased outcome on the positive or negative influence the law has on foreign investment in retail business. Questions such as why a company chose Qatar as their business presence in the Middle East can be used as the yardstick to conduct the research. Emphasis on the positives and negatives of investing in Qatar can be emphasised to reach a definite conclusion. Questions such as, what made the major players choose Qatar How were they influenced into taking such a decision to invest here Were there any hidden agenda for their decision to invest here, and/or were social influence involved Or was it the volume of business expectations that brought these world leaders into investing in Qatar To derive suitable answers to these questions and more, I plan to use the quantitative method of referring, websites, government papers, law manuals, books, newsletters and online reports to compile a comprehensive paper. This is the most viable solution to conclude this research. In such research exercise, despite limitations, all available information gathered through the above resources can help bring about a logical meaning to the research proper. Government papers, country-specific and industry-specific write-ups and reviews through online search, company and product websites, magazines and periodicals will be of great help. Similarly, news letters and books can also be referred to study the impact of the new policy on foreign investment in the retail business in Qatar. 5.4. Methods of Analysis The approach adopted for a particular research should be related to the level of structure and the requirements of the research. There are ways for differentiating one analysis approach to another, such as by considering its structure (Long or Short), whether it is interpretivist or procedural. Inductive strategy, where results are built up on relevant cases, is associated with less structures and an interpretivist approach (This method is not employed here because of its limitations). This dissertation involves extensive data collection from respondents which is not possible in the current situation, which can then be summarised in order to complete the analysis. Qualitative data can be difficult to analyse, and must be handled systematically. Data gathered, can be categorised and structured, to conclude the researcher's opinion. This dissertation will not employ this research method for want of suitable conditions and expected limitations. 5.0 Conclusion Qatar is an exciting destination for the business houses that seek to enjoy the new law on foreign investment in this country. Incentives and tax discounts are all positive moves to attract foreign investors into Qatar. The setting up of a manufacturing plant with/without local partnership is a most viable proposition to IKEA. IKEA maintains quality and design of furniture and home furnishing through the use of special wood grown in its estate in Sweden. These products are environmental friendly and have no consequence on local environment. IKEA through its partnership allows full responsibility of marketing to its associate. The showroom must be exclusive and follow all other showroom norms of IKEA. Qatar is indeed a positive move to establish a stronghold in the OPEC region. With the millions of expatriates working there, the idea of cheap yet internationally standard products will be most attractive. This will help the company in sales considerably. Also the fact that most people working have enough earnings to provide for a standard home furnishing is also very encouraging. 6.0 Reference 1.0 IKEA, www.ikea.com 2.0 Investment Promotion Department, State of Qatar, www.investinqatar.com.qa 3.0 ipr, Info-Prod Research (Middle East) Ltd, Qatar, Investment issues, www.infoprod.co.il 4.0 Bryman, A and Bell, E (2003) Business Research Methods, Oxford University Press Read More