Case Analysis Saudi Arabia

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Case Analysis: Saudi Arabia

1. Definition of the problem/decision
The problem in this case is about the Saudi Arabian government, which offers a possible business plan to the American company Skyblue. Skyblue is a commercial aircraft manufacturer based in Kansas, USA. Because of its great reputation of high-quality and state-of-the-art technology, the royal Saudi Arabian family announced the minister to talk with the executive vice president of Skyblue, Robert Auger. The minister told him that the government wants to buy 10 aircrafts over the next two years and even though, there are other competitors for this project, Skyblue is the favored manufacturer from the royal family. The problem shows up, when the minister tells Robert that the royal family is suffering from a stock market loss and that three of the competitive firms have each given $100,000 to help. Moreover, the minister mentions that if Robert will do so as well, it will serve him in the decision making process. Before giving the minister an answer, Robert wants to wait for a message of the headquarters and during the mean time he meets up with a Saudi Arabian friend who is an insider in the Saudi government. The friend tells him that he has not heard about any stock market losses and neither of the pool of money being put together for members of the decision-making committee. What should Skyblue do? Whom can Robert trust? Is this how business works in Saudi Arabia? Is it legal for Skyblue to give the money to the committee in order to get the assignment?

The main problem for Robert is to find out how business works in Saudi Arabia. He wants the project but at the same time he does not want to hurt the company by acting illegal.

2. Relevant cultural aspects
Saudi Arabia is a large Middle Eastern country with a coast on the Persian golf and one on the Red Sea. Moreover, one of its neighbor countries is the Iraq and rumors of terrorist financing activities made Saudi Arabia become a focus in the war against terrorism. In addition, in 2003-2004 Saudi Arabia itself got hurt by terrorist attacks. This leads to the conclusion, that business in Saudi Arabia can be dangerous do to terrorist/anti-terrorist actions. Though, one of the biggest dangers in Saudi Arabia is corruption which can be found in every part; police, government, military, business, etc.. Transparency International ranked Saudi Arabia on place 79 out of 180.
Furthermore, Saudi Arabia 22 million people who are nearly all Arab Muslims. This is stressed by the fact that the two holiest cities of Islam, Mecca and Medina, are located within Saudi Arabia. Just like in most of the countries located at the Gulf, the Islam influences business. If one establishes a deal, it is due to the will of God, if it fails it was not meant to be. Moreover, prayers punctuate the business day and in meetings a lot of references to God and Mohammed will be made. Of big importance in the Islam are family relationships, loyalty and the need to show respect to older people. When doing business there and thinking about gifts one should always keep in mind the things forbidden in the Islam: alcohol, pork, knives, pigskin, perfumes with alcohol, any images with nude women. Moreover, women visiting Saudi Arabia have to behave very conservative and should wear an appropriate dress and usually also a headscarf in order to show the appropriate respect.

Concerning the Saudi economy, the country is the largest exporter of oil in the world. Even though, most of the population is poor farmers, the country is very rich and has no public debt.

Another important fact is that the Saudi government is a monarchy. The king who has ministers who give him advices makes all important decisions. Though, no political parties exist in the country.

Family is very important in Saudi Arabia and usually business is developed around family and all key employees are from the family or extended family. Though, women are not...
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