Question Answers: Doing business in Saudi Arabia

1. Address in detail the business climate in Saudi Arabia, is it an easy place to conduct business, or not?

Due to the political and social conservative system of the country, I would not say that it is an easy place to do business in. having said that, I do think that there are many opportunities in the country that can help investors from outside world to engage in business in the country. Doing business in a country is not always dependent on the internal social political situation. I mean it might not be the country that has the control of which businesses should be operating in the country. For example in Saudi Arabia, the majority of people enjoy a sound economic and financial status but there is a low rate of professional educated people. Irrespective of putting billions into forming a western style education system, Saudi Arabia has not been able to produce a generation of professional doctors, engineers and business managers yet (Krieger, 2007). Therefore, there is a high room for outside business in the country’s education, health, industrial and many more sectors.

Saudi Arabia is building Industrial cities. For this reason, they have to welcome investors and skilled people from all over the world. Especially there is a high demand for construction experts and financial experts. Therefore, I think, Saudi Arabia may not be an easy place to do business in on paper, it definitely is a place work doing business in.

2. Address in detail some of the cultural influences that impact business relationships within Saudi Arabia

Saud Arabia has been implementing new technologies as part of its business to enhance their business capabilities. The culture of Saudi Arabia, is a traditional one, therefore, the introduction of technologies do face a resistance on some levels in the country (Bjerke & Al-Meer, 1993), but this has been changing over the last two decades. Many Saudis are traveling to other countries for visit and educational purposes. These people do get influenced by the cultures and business models in the countries they visit for different reasons. They also learn new ways of communication and a different style of personal and business relations. When these people come back to their country, they become a part of different business or they already a part. They try to implement the best practices they have learnt in the foreign countries in their domestic business situations. There are of course difficulties in implementing abrupt changes that may be against the cultural norms of the country, but they do take place and contribute to the changing business relations in the country.

3. Discuss the political, leadership and economic systems of Saudi Arabia.

Saudi Arabia does not have political parties. There is also a ban on political activities in the country. The country is a Kingdom not a democracy. Therefore, when people visit the country from democratic countries, they might find it different if not strange. There is a limited political leadership in the country. Mostly the people belonging to the Royal family can be involved in political activities but they have to have permission from the higher ups in the Royal family.

Saudi Arabia has an oil based economic system. Most of the economic activities are in control of a strong centralized government. Engaging in business activities in Saudi Arabia may require the permission from many government agencies and institutions.

The leadership style at public and private organizations is mostly authoritarian where a person or a few high ups have the full power to make decisions.  The delegation of power is too low in the country’s political and economic systems.

4. What are some of the companies, and countries, that are doing business within the country?

Different countries and companies do business in Saudi Arabia. For example the biggest outside investor in the country is America while UK is on the second number in investing in Saudi Arabia. In 2012, the UK exports to Saudi Arabia increased by 6% (Advisor, 2013). Apart from these two countries, India and China have also shown interest in investing in Saudi Arabia. UAE states have also been investing in construction projects in Saudi Arabia since decades.

There are many international companies which are engaged in business activities in Saud Arabia. For Example The Bank of New Yoork, Ford Motors, AT&T are some of the American companies with investment in Saudi Arabia.

There are many Canadian companies with their presence in Saudi Arabia. According to The Canadian Trade Commissioner Service, there are many Canadian companies investing in Education, Infrastructure and Life Science industries (Commissioner, 2017).

5. Does corruption play a part in the international business environment within the country? If so how?

Saudi Arabia could be a tricky country to do business in. The government does it’s best to stop corruption from taking place, but just like any other country of the world, there might not be success at each and every occasion in eradicating corruption. There are a few families in the country controlling the economic and political arena for decades. Therefore, there could be some resistance found in the country due to an abuse of power by these people who may not be welcoming to outsiders and sharing their business opportunities. This resistance may be, sometimes visible in the form of asking for huge bribes.