1.1 Part A2
1.6 Critical and Current Issues5
2. Part B7
2.2 Health Industry8
2.4 Porters’ Five Forces10
3. Part C11
3.1 Business Culture11
3.2 Consumer Culture12
Appendix 1: General information on Saudi Arabia19
Appendix 2: PEST Analysis20
Appendix 3 – Primary research, questions and answers26
Saudi Arabia is an Islamic state based on principles prescribed by the Qur'an (Islam's Holy Book) and the Shari'ah (Islamic law). It is located in southwest Asia, at the crossroads of Europe, Asia and Africa (See Appendix 1 – General facts on Saudi Arabia).
1.1 Part A
After conducting primary and secondary research it was found that Saudi Arabia, like all countries are affected by political and social issues (see Appendix 2 for a detailed PEST analysis on Saudi).
* Employment Law * Environmental Policy * Funding and Investments * Tax * Monarchy| * Interest Rates * Fiscal Policy * Disposable income * Unemployment * Inflation low * Free market * Oligopoly/consumer and luxury goods| Social| Technological|
* Religion * Immigration-high no of expats * Health * Living standards- high * The role of women * Education| * Large reserve of petrochemicals * Information technology- high demand, yet no local production * Technology Legislation * Innovation potential high- well educated work, investment opportunities.|
Saudi Arabia is a monarchy based on Islam. The Saudi Labour Law is the primary source of employment law used in the kingdom. A comprehensive Saudi Arabian national environmental legislation was created in 2001. The kingdoms public investment fund was created in 1971, updated in 2008, and now manages (and fully owns) a new sovereign fund. Income tax in the Kingdom was abolished in 1975, however all Saudi citizens and companies must pay Zakat (a religious tax of 2.5% on annual profits or incomes).
The Standard Interest rate in Saudi Arabia reached an all-time high of 7% in May 2000; it currently sits at 2%. Saudi Arabia provided support to the global economy in 2011 by raising oil production to help stabilise global oil markets. In 2011 overall GDP growth reached 7.1% and the non-oil economy grew by 8%, the highest since 1981. Disposable incomes are relatively high in the kingdom. The Unemployment rate stands at 10.5% however the labour force participation rate is only 36%. Women make up over 80% of unemployment beneficiaries. Expatriates tend to fill higher-paying technical roles for which many Saudis lack the expertise. The inflation rate in Saudi Arabia was 3.8% in August 2012. Saudi Arabia’s annual inflation eased to 4.9% in June its lowest level since September last year, despite a big rise in housing prices. Free market competition in Saudi Arabia is rooted in tradition, although it does not extend to sectors in which the government holds a monopoly, such as oil production and the petrochemical industry.
As Saudi Arabia is the birthplace of Islam, religion plays a major role in Saudi culture. Saudi Arabia’s total work force consists of 80% (app 6 million) non nationals who are predominantly employed in the service industry. Health expenditure in Saudi stands at 5% of GDP and the country has an obesity level of 35.6%. The life expectancy stands at 74.34 years. The standard of living would be regarded as high in this high context culture. Work and social life are strictly divided by sex. Outside the family circle the sexes do not mix at all. All women, regardless of age, are required to have a male guardian and most Saudi women cover...