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Strategic assessment of residential and real Estate industry in Saudi Arabia

STRATEGIC ASSESSMENT OF RESIDENTIAL AND REAL ESTATE INDUSTRY IN SAUDI ARABIA

USING PESTEL AND SWOT MODELS

Mohiuddin Asad
B.Com, MBA(UK), ACCA, CMA, CIA, CFE, FFA, CCSA

Mohiuddin Asad

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Electronic copy available at: http://ssrn.com/abstract=1987530

Strategic assessment of residential and real Estate industry in Saudi Arabia

Introduction
In the following article, the author has carried out a strategic assessment of residential and real estate construction industry in Saudi Arabia. Beginning with explaining the concept of strategy in different schools of thought, he has used PESTEL and SWOT models to perform his assessment. The author has first scanned the external macro environment of the residential and real estate construction industry in Saudi Arabia using the relevant PESTEL factors and then highlighted the strengths and weaknesses of major firms in the said industry with the help of SWOT model.

Mohiuddin Asad

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Electronic copy available at: http://ssrn.com/abstract=1987530

Strategic assessment of residential and real Estate industry in Saudi Arabia

SRATEGY IN DIFFERENT SCHOOLS
Whittington (2001) categorized strategy in four basic generic approaches namely, Classical, Evolutionary, Processual and Systemic. According to classical approach, strategy is a logical process of calculation and analysis, intended to maximise long term benefits. For classicists, profitability is the ultimate objective of business, and rational planning is the means to achieve it. As per Alfred Sloan: “the strategic aim of a business is to earn a return on capital, and if in any particular case the return in the long run is not satisfactory , the deficiency should be corrected or the activity abandoned” (Sloan, 1963) For evolutionists, strategy in the classical sense of rational deliberate future planning is often irrelevant. In evolutionary approach, competition is not overcome by detached calculation and analysis but by constant struggle for survival (Cuizon, 2009). Processual approach is similar to evolutionary approach in the sense that it doubts the value of rational long term planning but it does not leave the profit-maximizing outcomes to the market since market is full of mess and confusion (Cuizon, 2009). For processualists, strategy is an emergent process of learning and adaptation (Whittington, 2001). Systemic approach has a relativist position. It believes that a firm can plan and act effectively. It is much less pessimistic than Processual approach about people’s capacity to carry out rational plans of action and much more optimistic than evolutional approach about its ability to define strategy regardless of market forces (Whittington, 2001). Systemic theorists view strategy under social context and argue that strategy should therefore be undertaken with sociological sensitivity. In contrast to Whittington’s Mohiuddin Asad 3

Strategic assessment of residential and real Estate industry in Saudi Arabia (2001) four approaches, Mintzberg (1990) classified strategy into ten schools of thought. The schools are categorized as either prescriptive or descriptive. Prescriptive schools deal in how strategies should be formulated (Mintzberg, 1990) whereas descriptive schools focus on how strategy arises and emerges (Mintzberg, Ahlstrand and Lampel, 1998).

Mohiuddin Asad

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Strategic assessment of residential and real Estate industry in Saudi Arabia

PESTEL ANALYSIS
Saudi Arabia is rich and stable and enjoys good relations with neighbours and international world. There is no threat of war, invasion or political instability and as such general political environment is considered healthy and favourable for construction as well as for all other businesses. Even the current flair of political uprising in the region does not threaten Saudi Arabian government as the well being of its people have well been taken care...
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