BUSS 1007 GCC Economic Environment, Middle East College, Oman

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Learning outcomes to be achieved by this assessment:

1. To analyze the dynamic nature of development of the region in general and the Sultanate of Oman in particular by comprehending the history, policies and the nature of business and economic environment.

2. To analyze the characteristics of the GCC framework, policies and regional/national characteristics and describe the strengths and weaknesses of the region.

3. To comprehend the functioning of regional integration and analyze the implication of agreements on businesses.

Tasks:

1) Choose a well-known company in Oman that trades globally and do a research on how well it has performed in the last 5 years and how it has been influenced by social, economic and technological aspects of business environment. (Note: You are required to give brief profile of the company highlighting its global trading activities)

2) In a tabular form, compare the business environment of GCC member countries. Highlight their strengths and weaknesses as they participate in the GCC trade agreement.

3) You are appointed as CEO of a company in hotel industry In Oman with plan to expand in another GCC country. Among the GCC countries, which one will you consider best for expansion. a) Bahrain; b) Kuwait; c) Qatar; d) Saudi Arabia; e) UAE. Write an 8 liner paragraph to justify your argument.

Solution

Introduction

Main goal of the report

Dodge Car Company (DCC) is an American brand automobile manufacturer, mainly dealing with a mid-priced vehicle. The performance of the Dodge automobile in Omar is satisfactory in past five years (Annual report – FCA Group, 2017). The objective of this report is to analyze the business environment in accordance with the GCC framework. Using these analytical frameworks and collected information, the plan of subsequent extension of business for Dodge Company into Saudi Arabia will be analyzed.

Methodology and data used for research

This report is a form of secondary research, in which the synthesis of information is based on collected literature (peer-reviewed sources). In particular, annual report, business document, as well as the official website of the company will be used for the collection of information. Additionally, the business environment related information will be collected for peer-reviewed sources (Weber et al., 2017). The search for relevant information will be based on using keywords such as, but not limited to, “GCC business environment”, “Dodge automobile in Oman”, “foreign investment in GCC”, factors affecting business in GCC”. In order to avoid biases and outdated information, literature from the last five years will be selected. The filtering of literature will be based on the reading of the abstract section. Finally, useful literature will be compared and contrasted for synthesizing this report.

Outline of the report

The relevance of Dodge automobile company, to the present report, is linked to the analysis of the business environment in the Oman and expansion of business into GCC geography. In the present section, the discussion will be based on the business expansion plan, where Dodge Company is planning to penetrate into another GCC Nation - Saudi Arabia. The discussion also include the plan for business expansion, considering example of hotel industry, justification for the choice, and analysis of the local business environment today international trade frameworks.

Overview of the company

Dodge Company is known to be a supplier of pickups, Vans, sport utility vehicles, and high-performance vehicles in the international market. The business area of this company includes Asia, Australia, Canada, Europe, Argentina, and Mexico. The company is also known for its strong strategy point by offering customer requirement with minimal price options. As a result of this, they are able to penetrate and survive in the majority of developing as well as developed nations.

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How Dog Car Company performed in the last 5 years

The uniqueness of Oman's geographical factor which includes dessert and sea on both side increases public interest in infrastructure development and investment. As a result of this, there is an increase in the demand for light commercial vehicles in the market (Sodangi, 2018). The scenes of Dodge Company automotive in Oman from the last 10 years (after the financial crisis in 2009) have been increased by 200%. ‏Further the government's investment in vehicle parties has been increased which account for 15.2% purchase from Dodge company. The top rivalry companies in the market include Toyota, where is Dodge have a competitive advantage over Ford, Hyundai and other domestic companies (Annual report – FCA Group, 2017). According to the international trade Centre report, 2019, the automotive imports by source account for 19.9% from the USA in the last five years, among which 8% sales figure is credited to Dodge Company.

Aspects of the business environment

Social factor

Oman emphasizes on education and technological setups, which in turn supports the globalization. The social custom of Oman supports foreign investment in relation to the development of the nation as well as growth in per capita income.

Economical factor

The GDP of the nation is 72.64 billion USD, and light vehicle transport supports the GDP growth, which is evident from the increase of 1623 from 1482 OMR billion since 2016. These financial statistics suggest that the growth of the automotive company in Oman have an opportunity for further growth in the near future. However, the shrinking positioning of Oman Central Bank with respect to foreign assets is a major concern for the expansion of business in Oman (Coccia, 2017).

Technological factor

The nation supports cultural responsibility and implementation of new technologies into the business sector (Mateev&Poutziouris, 2019). The major opportunity of this nation as it all exporter is that the focus is on digital expansion and acceptance of big data analytics within the business perspective.
Comparison of the business environment of GCC member countries

The positioning of the company in the GCC trade agreement

Strength

The key strengths of company are that they are being supported by financial support from the oil and refinery industry within Middle East market. The key strengths of companies in these locationinclude their affordable prices as well as extended warranty and service contract, which tends to attract and retain loyal customers (Kim&Narasimhan, 2019). Furthermore, in GCC, due to its strong capability of partnership and supply chain with local companies. Consideration of VAT, digital perspectives, and awareness of customers, the attractiveness is managed by the companies, using the effective strategic framework.

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Weakness

The prime weakness for the companies in GCC framework is the introduction of bad and sluggish sales scenario due to increased competition. However, if the company manages to offer quality brand and attractive infrastructure despite of competitively cheaper prices, they can achieve a competitive advantage among consumers (Shetty&Luescher, 2018).

Overview from perspectives of CEO: Case from hotel industry (Green Key Hotel)

Plan to expand in another GCC country: Saudi Arabia

Learning and aligning with Saudi Arabia culture is one of the success criteria for any business in this region. Aligning with this ideology, Green Key Hotel is planning to expand the business with program named as New Jihad (GK) Hotel, which will be a strategic alliance branch. Furthermore, the company will be opening Restaurant and mini-cuisine, which will offer services fast-food, home delivery, and ordered dishes according to customer’s requirement. In addition to this, the company will also focus on style and brand image, ‏since this will attract the local customers and will comply with their financial positioning.

Justification

According to the report of Mathew (2017), despite the turbulence in the GCC market, Saudi Arabia has shown an increased and promising sign of growth in the hotel industry. This change is attributed to the varying attitude of young generation, increasing regulatory focuses that encourages to take up foreign technology into the local market, and eco-friendly policies in the hospitality sector. However, it is important to note that the medium to low range pricing of food products and services will not be ‘strength’ criteria for the company to expand business in Saudi Arabia.

In contrary, if the company can foster the demands in terms of strong brand image, elegant design of infrastructure, and high price value, and thus they will be able to attract customers and expand their business periphery (Bhattacharjee, 2017).
Saudi Arabia is a key consumer of high-quality restaurant and hospitality services, which are mainly supplied by foreign companies. According to the recent sales figures in 2016, hospitality industry have shown a marked growth of 13.5% in Saudi Arabia and the sales prediction is likely to expand 18.5 folds in the next 15 years. Other supporting justifications for the business expansion in this nation include (Erdogan& Ibrahim, 2017; El-Dief& El-Dief, 2019):

• Saudi Arabia supports foreign investment in the hospitality sector.

• They are the largest investers and strong market with promising return-of-value within the GCC framework.

• The market is expected to grow by 38% by the end of 2022.

• The government allows tax-free business endeavors if the foreign companies are interested in supporting technology and product development within Saudi Arabia.

• The local government is interested in creating and sustaining employment issues.

• Saudi Arabia has shown recent interest in national economic diversification, which indicates that European nations can expand their market size, by investing in this geographical area.

Aligning business plan with the business environment

The long-term plan of business is to expand within the periphery of Saudi Arabia and retain loyal customers. The strategy opportunities in this reason can be obtained, by offering customary support and growth to GDP of nation, as well as employment opportunities in Saudi Arabia. The medium-term strategy planning includes the realization of vision in the current hospitality market. At present, Saudi Arabia is the costliest marketfor superior hospitality services GCC Nations (Eid& El-Gohary, 2015). This opportunity can be explored by enhancing the sales figure in the Arabia region. As mentioned in the above section, New Jihad (GC) Hotelis planning to small franchise restaurants, such that customers can be made aware of existing services, quality, the competitive advantages, and support the requirementto the customers.

As a result of this, the company can enhance the sales figures and start gaining the trust of customers. This ideology will constitute short-term planning to comply with the new business environment of Saudi Arabia. Importantly, for the local community, brand image and superior hospitality features are of high-interest. In order to create a market reputation, the company can use its sales figures from developed countries for displaying their business success. Furthermore, the popularity of Green Key in UK will be an important opportunity to attract local customers (Suliman, Rao &Elewa, 2019). In order to make a partnership with the government, soon after developing market image the company can training and educational unit for hospitality in the locality. This will not only self-sustainable employment opportunity but will also support technological exchange. Thus, the strategy to retain a competitive advantage in the hospitality industry in Saudi Arabia can be fulfilled.

Conclusion

In summary, the present report analyzes the importance of the business environment, taking a case example of Dodge automotive company. This company have a good track record in Oman, where technology and medium price product have retained their market positioning.

With a combined analysis of the GCC framework, it is learned that Saudi Arabia is one of the potential GCC opportunity where hospitality industry can targeted for the expansion of business avenues. As a part of the business plan to expand in Saudi Arabia, Green Key is aiming to open New Jihad (GK) Hotels and restaurants, involved in the strategic partnership with local government, and implementing design and brand strategy to promote sales. In this consideration, it is learned that such a partnership attitude will also be helpful in achieving the organizational objective for sustainable market expansion in the GCC framework.

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