Introduction
Saudi Arabia is a deeply religious, culturally conservative and geographically located in the desert nation. The country is one of the most influential players in the Middle East as well as in the Arab world. Saudi Arabia has a population of about 32.5 million people where 90% of the populations are Arabs and 10% are Afro-Asian (Ibrahim et al, 610). The country capital city is Riyadh. The country national language is the Arabic and dominant religion is Muslim. The country boasts as the father of the Islam since the Islam was born in Saudi Arabia and it harbors most treasured mosques in the Islam world. The country lies on the geographical land of 2.24 million square kilometers. The country is governed by monarchy system of government. Saudi Arabia is second largest oil reserves and the country economy depends on the oil production. The country currency is known as Saudi Riyal. The government controls the oil firms in Saudi Arabia. Also, Saudi Arabia is one of the world oil exporter’s countries in the global. Thus, the country does not only have an influence on the Middle East but also in the world (Ibrahim et al, 613). Therefore, this paper focuses on examining social customs and business practices of Saudi Arabia business firms and results of these practices. First, understanding what it means to conduct a business in Saudi Arabia. Second, what are factors that make a business successful within Saudi Arabia? The factors to discuss include political influence and connections, social customs context, petrochemical associated wealth, tourism and hospitality industries, social business, construction and climate control businesses.
Saudi Arabia Economic Background and Business Environment
Saudi Arabia is one of the largest economies in the Middle East. The country is home to one of the largest manufacturing company in the world. SABIC manufacturing country is world fourth largest diversified manufacturing company (Habbash et al, 353). The company specializes in the manufacturing of petrochemical products such as chemicals and intermediates, industrial polymers, fertilizers, and metals. Another industry that has been the business success in Saudi Arabia is the oil industry. The Saudi Arabian Oil Company is a national petroleum and natural gas firm. The country oil and manufacturing industries have been biggest contributors to GDP of the country for many years. The country dependence on oil and manufacturing industries is changing. The biggest industries in the country oil-related businesses such as crude oil productions and refining, chemicals related businesses such production of fertilizers, plastics, sodium hydroxide etc as well as constructions materials industries such production of ship and aircraft metals (Habbash, et al, 360).
Therefore, the country manufacturing businesses have major influences on the country’s economy; however, this dependence on this industry is changing. The country food industry is now playing an important role in the country’s economy. The success of AL Baik fast food Chain Company in Saudi Arabia shows how the country economy is changing. Al Baik is food chain Company that sells roasted chicken. Therefore, the company is the biggest market for the chickens in the country. The growth of this company has shown that the country economy has opened up for other business rather than the normal petrochemical industry. Al Baik started the small business but has expanded all over the Saudi Arabia country. Similarly, Saudi Ground Services Company has contributed to the economy growth and diversification of the Saudi Arabia economy (Habbash et al, 373). The company offers handling services to the country’s commercial airports. The company services include passenger services and among other related flight services. The company provides services to both local and foreign flights. These companies create employment for the Saudi Arabia people which then contribute to the economic growth. Also, the tourism and hospitality industries have been key to the economic growth of the country. Thus, all businesses and industries have contributed to economic growth in one way or the other. Therefore, the Saudi Arabia business environment has opened up for other businesses. These companies are changing the notion that the country depends on petrochemical industries. However, there are business practices and social customs that are associated with successful business in Saudi Arabia.
The Requirement for a Successful Business in Saudi Arabia
In order to run a successful business in Saudi Arabia, it is important to understand business environment of the country. Understand the people’s cultural, way of life and the way they deal with their environment is important in running a successful business. Therefore, evaluating the political, social, religious and economic status of Saudi Arabia will help you in running a successful business. The requirements for a successful business include:
Political Connections
A political connection is a concept that describes a person or an entity has the close relationship with the government officials especially those in a position of power. There are arguments that many successful businesses in Saudi Arabia have a relationship with the people in the position of the power. Thus, either the owners of the businesses have a close relationship or an understanding with those governing the country. Therefore, political connections have facilitated the business success in Saudi Arabia. There is a notion that having a close relationship with the people in political power can assist in making your business successful. This notion does not only apply in Saudi Arabia but also to another country in the world. This is because people in political seats are the one responsible for making economic policies. In Saudi Arabia people with political influences and legislative authorities have many times contributed to the success of the businesses they have an interest in either having a relationship with or the owner. Thus, people in political seats in Saudi Arabia offer financial support and provide investment opportunity to the business and companies that they have a personal connection with. The country political and economic history is characterized as a society that supports business development and capitalist agendas. Thus, the county history is that prior to the current government system the influential traders did local business to provide services to society as well as infrastructure constructions of the people of Saudi Arabia. Consequently, the government has assumed the role of these influential traders in Saudi Arabia today’s society. Thus, political leaders’ financial support and offer mentorship to the companies providing community services with aim of developing the country. Therefore, these leaders mentor and sponsor the companies and business they have connections with. Thus, for the company to be successful in Saudi Arabia society, the company must have political connections.
Fit to Social Customs
Fitting in social customs of the Saudi Arabia society influences the success of the business. Saudi Arabia has a population of about 32.5 million people where 90% of the populations are Arabs and 10% are Afro-Asian. The country national language is an Arabic and dominant religion is Muslim. Thus, fitting in the social norms will influence the business performance. Therefore, the businesses and companies that take into consideration Muslim beliefs have a higher probability of succeeding in Saudi Arabia. Saudi Arabia is a deeply religious and culturally conservative society founded on ancient traditional. The country still values traditional in their way of life; hence, the country decision and individual choices are guided by Islam. Therefore, companies and businesses that incorporate Muslim values into their policies and strategies have a highest opportunity to succeed in Saudi Arabia.
Petro-Chemical Wealth
Saudi Arabia is one of the biggest exporters of the oil the world; thus, companies that are in Petrochemical businesses benefit most from the government support. Saudi Arabia economy depends on the oil industries. The country is one of the leading countries with the biggest crude oil reserves. Thus, the country depends mostly on the oil production and sale. However, in recent time the world oil prices have reduced significantly. This has caused a problem the country’s economy. In response to these challenges, the government has resulted in increase taxes on other products to maintain the economy in an in equilibrium. Therefore, the oil production and petrochemical related industries play an important role in the country economy. Hence, the Saudi Arabia government sponsors these companies with cash and mentorships. Thus, the country business practices will allow more business that is related to petrochemical products to succeed compared to other industries. The increase in taxes of other business will affect the business community with interest investing in other fields.
Tourism and Hospitality Business
Tourism and hospitality industry is generating a lot of revenue in Saudi Arabia. The existence of tourism sites in the country has brought a lot of tourist in the country. The existence of pilgrims has brought people from different parts of the world to Saudi Arabia. The country boosts itself as that where Islam was born; thus, people from different parts of the world visit holy city of Mecca and Medina. Approximately about 2.5 million people visit Saudi Arabia, especially during Hajj celebrations. The government has continuously relied on the revenue generated from people visiting as source country’s revenue. Due to many visitors, the government has invested heavily in hotel industries to accommodation available for the visitors. Therefore, the opportunities in this sector are great. The hospitality industries in the country have a massive opportunity for growth. Also, the constructions of hotels present an opportunity to the business community. For instance, in 2010 the government of Saudi Arabia generated about$17.6 billion for tourism and hospitality industries. The country major cities have a large number of hotels that are recognized internationally. These hotels accommodate the visitors and their give to experiences the Saudi Arabia ancient hospitality. Therefore, the hospitality industry is selling point of the country’s tourism. For instance, Jeddah city has lavish hotels that welcome millions of visitors in the country. Today, the numbers of tourist visiting the country have increased, increasing the demand for more hotels (Vahln et al, 65). This has led to the development of infrastructures and hotels in major cities in order to accommodate an increasing number of tourists. The country holds two of the holiest Muslim cities in the world, thus; religious tourism has been the cornerstone of the tourism in the country. These cities include Mecca and Madina where plazas have been constructed around the holy ground to accommodate the pilgrims visiting every year. Hospitality industries have experienced growth due to a number of tourists in the country. Tourism has contributed greatly toward the country economic growth. Due increased number of tourist the government has improved infrastructure around the cities. Also, the construction of the high lavish hotels has taken place due to tourism. Still there a lot of opportunities that this industry still offers (Vahln et al, 60). Thus, the government of Saudi Arabia should consider tourism industry as a way out of diversifying the economy. Therefore, the hospitality and tourism industries have contributed greatly to the economy of Saudi Arabia.
Services Businesses
The services businesses include banking, retail, and civil administration among others. The country services businesses have grown tremendously over the years. The services businesses account for about 70% of the labor force of the Saudi Arabia employees. The growth of the economy has led to the demand of employees in telecommunication, health sector, legal and marketing (Kreps et al, 101). However, the services businesses progress has been hindered by the country cultural and societal practices and beliefs. The employees are poorly paid and women are not allowed to work. The country has taken steps to allow women to work in the banking sector and women are allowed to open bank accounts. Therefore, the country has taken tremendous steps to address “she” vice in the society.
Construction Businesses
The government of Saudi Arabia has invested heavily in the improvement of infrastructure. The constructions of modern roads, railways, and airports have increased in recent years. The country is one of the most countries that have high reserve ratio of foreign currencies. Also, the country sovereign debt is good, thus; allowing the country to spend on infrastructure with causing inflations (Bishara, 249). Also, due to growth in the tourism sector, the country is investing heavily in infrastructure to improve on accommodation hotels. Thus constructions companies in the industries have the enormous opportunities. Therefore, the constructions companies have chances to get projects that aim at improving the infrastructure and buildings.
Healthcare Industry
The healthcare in Saudi Arabia consists of the private and public sector. The Saudi Arabia citizens are treated free in government-owned hospitals. The private sector offers health care services through healthcare facilities. The healthcare facilities include hospitals and dispensaries and other healthcare facilities throughout the country. The public health department in the country was established in 1925and helped in establishing free healthcare scheme to the public since then (Bishara, 254). However, due to changing age and increasing population private health sector is growing faster. Therefore, people in the country are relying much on private health sector for their medical guidance. Therefore, the healthcare sector represents an opportunity for the business community. Although people are depending on private sector government still dominates the industry. The country government has given priority to health services. For the last few years, the government has improved the health sector. The government has developed healthcare facilities across the country.
The Saudi Arabia government has a big impact on the healthcare of the country. The country has developed cities that specialize in treatment services. These hospitals are located in different cities of the country. For instance, the biggest medical facility in the country is located in the capital city, Riyadh, known as King Fahad Medical (Freeman et al, 79). The hospital was opened in 2005 and offers treatment for types of diseases. The hospital has different medical personnel that has specialty in their medical field. Therefore, every city in the country has hospitals that can meet the need of its citizens. King of Saudi Arabia is focusing on creating world medical centers in the country will help in meeting needs of improving health services in the country. The medical cities have a similar design with different hospitals in it which has 500 patient beds, a mosque, and hotel (Freeman et al, 75). The country has two medical cities in Riyadh and Mecca. These medical cities have demonstrated the government intentions to expand medical facilities throughout the country.
Consequently, the government of Saudi Arabia is using billions in renovating and upgrading the healthcare facilities in the country. The health facilities with the lower standard are being improved in the country. The country’s health departments have managed to open about 77 hospitals and medical centers for the last half decay. However, the issues of nurses professionalism have risen with the claim that there are involved in malpractices in hospital. The government has failed to address the issue of services businesses. Therefore, the government has planned to develop more medical cities with aim of improving healthcare sector. The Saudi Arabia citizens get medical services for free. Although the government is 100% involved in healthcare there is a private health sector in a country which has helped in improving the country health sector (Gabrielsson et al, 270). The constructions companies will have an opportunity in building medical cities for the government
Climate control Businesses
Saudi Arabia is a country located in the Middle East which has unfavorable weather conditions. The country lies in the desert with hot weather conditions. Thus, working in the country it is a challenge due to harsh weather conditions. Therefore, the weather conditions make impossible for the people to enjoy working in the country (Gabrielsson et al, 270). The country aims to diversify its economy it has to address the high temperatures conditions by creating ventilation and Air conditioning instruments to help in creating a thermal comfort. Therefore, the demand for the goods that helping in creating thermal comforts will increase. Thus, the companies which can create this thermal comfort apparatus such as cooling towers and solar-powered absorption have an opportunity in the Saudi Arabia market
Social Customs and Business Practices in Saudi Arabia
Social customs are cultural or societal ideas that describe a particular behavior associated with a group of people. The social customs include the way people greet one another like bowing or shaking hand. Business practices are the methods or procedures that certain group people follow or done in a business environment. There are social customs and business practices that have made Saudi Arabia businessmen manage to become successful. The customs and practices are believed to be a catalyst for successful business in the country. These social customs and business practices can be noted as factors that can make help business to be successful in Saudi Arabia. Understanding one’s customs and practices help you in improving the interaction with them. Saudi Arabia social customs and business practices are guided by Muslim religious practices.
Thus religion pervades business environment as well as the cultural environment in Saudi Arabia. Social customs emphasis on a communication style that does not offend anyone and the business individual always prefer face to face communications. Also, meeting organization and greeting is part of social customs of Saudi Arabians. Moreover, in socially and business contexts is a good custom to give a gift. These emphases of social customs are great in the social context of the Saudi Arabians and help in creating a conducive social environment for conducting business (Azmat et al, 265). The country business dealings always happen at much lower pace with emphases on good relationships, interactions, good motive and connections that respect local culture. Thus, the attire to wear when attending the business meeting is always crucial business practice in Saudi Arabia. Therefore, the country’s religion plays an important role in setting the way people conduct their business. An example of social custom of the Saudi Arabian people is the way they do their greeting and meetings. In Saudi men shakes hand while good friends shake and hand and kiss on each cheek. Also, it a custom to pro-long a handshake in Saudi setup than in western setup.
Conclusion
Saudi Arabia is one of the most influential countries in the Middle East. Saudi Arabia is a deeply religious, culturally conservative and is located in the desert environment. The country is a deeply religious, culturally conservative and geographically located in the desert nation. Saudi Arabia is second largest oil reserves and the country economy depends on the oil production. The discussion has helped to understand what it means to conduct a business in Saudi Arabia. Second, what are factors that make a business successful within Saudi Arabia? Has helps understand the business environment of Saudi Arabia as well as the business opportunities in the country. The Saudi Arabia economy has depended on petrochemical related products. But the discussion has explored other opportunities in the country economy (Azmat et al, 2610. The success in food industry and services provision industries have laid the ground for the economy not to depend on the petrochemical industry. The business success in the country depends on political influence and connections. Therefore, political connections have facilitated the business success in Saudi Arabia. Also, fitting social customs the businesses and companies that take into consideration Muslim beliefs have a higher probability of succeeding in Saudi Arabia. Moreover, petrochemical associated wealth plays an important role in shaping the country economy. Tourism is generating a lot of revenue in the country. The growth of hotel industries has boosted the country’s economy. Due increased number of tourist the government has improved infrastructure around the cities. Also, the construction of the high lavish hotels has taken place due to tourism. Still there a lot of opportunities that this industry still offers. Thus, the government of Saudi Arabia should consider tourism industry as a way out of diversifying the economy. Therefore, the hospitality and tourism industries have contributed greatly to the economy of Saudi Arabia. Thus constructions companies in the industries have the enormous opportunities. Therefore, the constructions companies have chances to get projects that aim at improving the infrastructure and buildings. Also, constructions of medical facilities are helping the country to grow socially and economically (Billah, 5). Thus health nation is a productive nation.
Religion pervades the way business and cultural environment are set up in Saudi Arabia. Social customs are cultural or societal ideas that describe a particular behavior associated with a group of people. The social customs include the way people greet one another like bowing or shaking hand. Business practices are the methods or procedures that certain group people follow or done in a business environment. There are social customs and business practices that have made Saudi Arabia businessmen manage to become successful. The customs and practices are believed to be a catalyst for successful business in the country (Billah, 5). These social customs and business practices can be noted as factors that can make help business to be successful in Saudi Arabia. Understanding one’s customs and practices help you in improving the interaction with them. Saudi Arabia social customs and business practices are guided by Muslim religious practices.
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