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Following are some of the reasons because of which Saudi Arabia remains strategically important for
MNE¶s in the world:
Œ? ºil reserves of Saudi Arabia are largest in the world with an estimate of around 230 billion
barrels. This is about one fifth of total estimated gas reserves in the world. It produces 9.7
million barrels per day in 2009.

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Œ? Saudi Arabia is adapting to the world ideas for business and has supported foreign investments
on its soil. People here are slowly adopting new ideas.
Œ? M P of Saudi Arabia is estimated to be around 619 billion and its per capita income is around
$20,300. This presents a great opportunity for the MNE¶s to try and cash in on this rich middle
class.
Œ? Saudi Arabia is important has historic importance. Religious cities of Mecca and Medina which
are considered to be most sacred religious pilgrimages for the Muslims around the world are

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located in Saudi Arabia. This provides a huge opportunity for tourism which could be cashed by
MNE¶s.
Œ? Saudi Arabia is planning to spend hugely for improvement of its infrastructure. Hence many
MNE¶s want to cash in this projects.
Œ? Saudi Arabia will be launching six "Economic Cities" (e.g. King Abdullah Economic City)
which are planned to be completed by 2020. This creates an opportunity for the MNE¶s to cash
in.

Saudi Arabia is the largest Arab country of the Middle East. It is bordered by Jordan and Iraq
on the north and northeast, Kuwait, Qatar and the United Arab Emirates on the east, ºman
on the southeast, and Yemen on the south. The Persian Mulf lies to the northeast and the Red
Sea to its west. . It is surrounded by the predominantly Islamic nations which have a huge
influence on Saudi Arabia¶s culture. It is an Islamic country and is governed by Sharia law
and considers Quran as their constitution. Presence of Mecca and Medina imparts importance
to Saudi Arabia in Islam and hence in Islamic countries. It has an absolute Islamic monarchy.
Currently Abdullah is the king of Saudi Arabia.

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Some of the cultural traits of Saudi Arabia are as follows:

Œ? Timing hours of work of MNE¶s and other businesses are adjusted according to period. For
example, in Ramadan, business is normally done in the evening.

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Œ? Pork products and alcohol are prohibited in Saudi Arabia. In case if authorities find out any such
things, MNE¶s stand to lose their working licenses. Individual breaking of these rules are subject
to very harsh punishments.
Œ? Conservative regarding Women Rights: Though educated woman consist of the majority of the
literate population of Saudi Arabia they constitute only 7% of the total work force. Rule
regarding what women can and cannot do is very rigid. Especially where males are present. They
are not allowed to drive, work as flight attendant, etc.
Œ? Saudi Arabian dress strictly follows the principles of hijab.
Œ? Punishments like beheading or cutting of hands often are done in public and people are forced to
watch them so they know the consequences of breaking the rules. Homos sexual are beheaded
here.
Œ? Saudi Arabian people are not very punctual and meetings often start late with respect to
scheduled time. They indulge a lot in idle chitchat. European and US people find this insulting
and wastage of time.
Œ? Aoans given in Saudi Arabia are interest free as it is considered un-Islamic to charge interest.
Œ? Most Saudis wear long white thobes. You would be expected to wear a suit.
Œ? Issuing insurance until recently was not allowed.
Œ? As is seen in their naming conventions, Saudis are cognizant of their heritage, their clan, and
their extended family, as well as their nuclear family.
Œ? Enjoying movies and music in public is not allowed. It is just recently that they have started
screening movies publicly.
Œ? Mifts are a very important part of Saudi culture. Saying no to the gift would mean insulting them.
Also when any eatables or drinks are offered by them, it is considered rude to refuse it. Care
needs to be taken to convey this message in order to avoid misunderstanding.

Rules are more flexible for foreigners and foreign companies: for instance Saudis are more lenient
toward visiting female executives than they are toward Saudi women. Whereas they don¶t allow
Saudi women to work as flight attendants on Saudi Arabian Airlines, they permit women from other
Arab countries to do so. Cities like Jeddah which are situated near ports have more contact with
outer world and are less conservative as compared to cities situated in the interiors. ress code in
Jeddah is more relaxed as compared to other parts of Saudi. Hence cities near ports are initially
targeted by MNE¶s. Then as people adapted to such new ideas/belief/lifestyle, they plan to move
towards interiors.

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The difficulties faced by the MNE¶s for market research in Saudi Arabia are as follows:

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Œ? Can¶t rely on family-focused interviews because of customs limiting male and female
interactions.
Œ? Home is considered as private and questioning about it is considered rude and invasive.
Œ? Similar kind of dressing makes it tough for the marketing teams to identify the economic status
of the people.

Following solutions are implied by market research firms to counter above problems.

Œ? Take permissions to interact with the whole family including for woman.
Œ? Try to limit the number of questions so that they are not offensive or considered as rude in any
way.
Œ? Features like beard, accessories which are used by people are considered as indicators of
economic status of people. Accordingly market is gauged for potential customers.
Œ? Aocal people having know-how about the market and the people are consulted and employed for
the same.

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The features of business model of Java Aounge were as follows:

The business was started by 4 persons, an upscale 250 seat establishment. The business model of Java
Aounge was B2C (Business to Customer) but it followed the rules set up by the Saudi government like:

Œ? Entire staff was male.

Œ? uring daytime, men coming without female were made to use a different entrance and sat
upstairs where they could not be seen by the families and female group on the floor. In the
evening time, only families were allowed inside.
Œ? Pork and alcohol were not served. Also live music was prohibited.

The key actions that owners took for their successes were:

Saudi Arabia strived for economic growth and they interact with foreigners for the same. They
needed a place like Java lounge to interact with the foreigners. Saudi wanted a restaurant offering
western amenities, and which adjusted to suit their culture. A huge niche market was available
for the same. The owners of Java Aounge were successful in finding out this huge potential and
starting out a business that fulfilled this needs and hence become successful.

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Political environment in Saudi Arabia:

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Œ? There are no political or national parties in Saudi Arabia. Elections were held for the first time as
recently as in 2005.
Œ? There is absolute monarchy in Saudi Arabia where the king is the absolute head of state and
government. Their current king is Abdul-Aziz Al Saud.
Œ? ecisions are made by the senior princes and final authority lies with the king.
Œ? King¶s powers are governed by Shari¶a law and Saudi traditions.
Œ? Quran is the constitution of Saudi Arabia and it is governed by Islamic Shari¶a law.

Saudi Arabia has a national consultative council which is composed of 150 Saudi citizens. The
council of ministers appointed are responsible for policy formulation and other bureaucratic
activities. This council has limited power and is controlled by the king.

Aegal environment in Saudi Arabia:

Œ? Quran has been accepted as the constitution and are governed by Islamic law.
Œ? Courts follow Sharia law and court exercises it over whole of their population.
Œ? Smaller issues are solved in summary courts. They too are governed by sharia law.
Œ? Women are not allowed to travel without permission of a male.
Œ? Though educated woman consist of the majority of the literate population of Saudi Arabia they
constitute only 7% of the total work force. Rule regarding what women can and cannot do is
very rigid. Especially where males are present. They are not allowed to drive, work as flight
attendant, etc
Œ? Theft is punishable by amputation and murder or homosexuality is punishable by beheading of
the culprit. This beheading or amputation is often done publicly and people are made to watch it
so that they can see the consequences of the illegal activities.
Œ? Aoans are given interest free as it is considered un-Islamic to charge interest. Instead, they can
ask for share in profit or shares, etc.
Œ? There is no formal criminal code. Criminal laws are through kingdoms adherence to Sunni Islam.
Œ? The national legislation comes from Saudi Council of ministers. It should be in adherence to
kingdoms interpretation of Sharia law.
Œ? Religious police named Mutaween are used to enforce Sharia law.
Œ? King acts as highest law and has the power to pardon the crime.

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It is difficult to derive fixed systematic steps to be followed in order to succeed in Saudi. But following
certain guide lines can certainly increase the chances of success. Some of the guidelines are as given
below:

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Œ? Saudi people like to know the people with whom they are going to do business. They take time
in coming in consensus and MNE¶s should not consider such behavior as rude.
Œ? Punctuality is not a norm in Saudi Arabia. Hence it is common for a meeting to start late. This
should not be taken as rude behaviour.
Œ? Saudi people even though rich prefer value for money deals.
Œ? MNE¶s should prefer flexible working hours according to period of the year while operating in
Saudi Arabia. For example, in holy month of Ramadan, working in the evening should be
avoided. Also they need to adopt accordingly if their operations involve interaction with people
over there.
Œ? Saudi people don¶t talk much while they eat. They do have a talk before lunch or dinner but not
during it. They believe in enjoying their lunch without any hindrance. So lunch meetings should
be planned accordingly.
Œ? Care must be taken while assigning jobs which involve women. Women don¶t enjoy same rights
as males in Saudi Arabia.
Œ? Religious sentiments are one of the most important factors which should be given due
importance.
Œ? Saudi people consider home related issues very private. They should not ask private questions
unless granted with permission.
Œ? Religious sentiments regarding food, drinks should be respected.
Œ? Mifts given by Saudi people should not be rejected as they are considered to be rude. Saudis
expect return gifts so MNE¶s counterparts should be ready for the same.

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V? Wikipedia
V? www.arab.de/arabinfo/saudi.htm
V? www.executiveplanet.com/index.php?title=Saudi_Arabia
V? www.economywatch.com/world_economy/saudi_arabia

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