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Kuwait's Economy: A Brief Overview

1. Given the nature of competitive rivalry and the competitive forces prevailing in the market place, critically discuss the resources and competitive capabilities that a company needs to have to be competitively successful?

2. Based on Question 1 above, suggest and critically discuss means by which a company can create sustainable competitive advantage.

1.Kuwait is a Middle Eastern country which shares its borders with countries like Iraq and Saudi Arabia. The major natural resource that helps in money generation in the country is oil. The country received its freedom in the year 2011 from the external forces. Kuwait is also considered to be the only in the entire world which does not have any supply from the natural water. The business organizations which are planning to start their operations in the country need to consider various external factors that can affect the revenues and profitability. The country has faced huge political disturbances in the year 2011 when it was under the government of Iraq. The liberalized economy has been created in the country in the year 2011 (Biygautane, Hodge and Gerber 2018).

The vibrancy of the economy is lower as compared to its neighbouring countries. The economy of Kuwait was based on the exports of pearls and hides in the 1940s. The government thereby needs to make more efforts to diversify the economy so that rational decisions can be made by the organizations which operate in the country. The economy of Kuwait is going through rough phase in the recent times which has led to the lack of foreign direct investment in the country. The surplus GDP of the country has reduced in the recent years which is expected to improve and further grow in the coming years. Kuwait has many expatriates from different countries who are present in the country to improve their standard of living. Kuwait is known to attract labour from all over the world (Adegbite et al. 2018).


The local citizens of Kuwait face some major social issues due to the entry of immense amount of people from the other countries of the world. This has further created pressure on the government of Kuwait to maintain these workers in an effective manner. The technological investments that are made by the organizations in Kuwait are supported by the Central Bank of Kuwait. The oil mining based projects are thereby supported in an effective manner by the government of the country itself without taking any aid from the foreign countries (Abdulla, Naser and Saeid 2014). The oil mining and other major industries have also affected the environmental situation in Kuwait. The pollution levels have been increased due to the high levels of oil spills in the process of oil export. The most important law that has been enforced in the country is based on the policy of not collecting any taxes on incomes of people. The other laws related to the operations of an organization in Kuwait are however quite strict in nature which need to be followed by the domestic and international organizations as well (Adegbite et al. 2018).

Factors Affecting Business Operations in Kuwait

The performance of Kuwaiti economy has been quite good in the current years. This improvement has mainly taken place after the year 2011 when the government had taken some important steps to develop a free economy. The organizations which wish to start their operations in the country thereby need to take into consideration the different issues that have already occurred in Kuwait previously. The development of the Kuwaiti economy has taken place in the recent time after 2011. The companies that operate in the country mainly tend to expand their business opportunities for gaining more profits (Davcik and Sharma 2016).


The economy of Kuwait is in the process of diversification and this further leads to the increase of business opportunities for the organizations which wish to start their operations in this country. The company needs to possess high levels of financial resources and capabilities which can help them in setting up the business based operations. The privatisation law that has been implemented by the Kuwaiti government is an opportunity for the organizations to enter the market and create a profitable position as well. The companies need to formulate policies in such a manner which will help them to operate in Kuwait in an easier manner. The capital that is possessed by the companies need to be high as it will help in the recruitment process (Albrecht et al. 2015).

The organizations can include expatriates who can increase the innovation levels. The operations of the companies can also be improved with the help of people who belong to different parts of the world. The reforms that have been made in the labour laws of the country can be helpful for the employees to enhance their career growth. The organizations can also create competitive advantage with the help of different and diverse types of products and services. The differentiation of services and products can be an important part of the competitive advantage that can be gained by the companies. The tax based laws in the country can be helpful for the revenues and profitability of the companies. The organizations can thereby gain huge revenues due to the absence of income taxes. The major capabilities that the organizations need to be successful in the competitive market are based on the strategies that are formed by them (Sikora et al. 2016).


The strategies of the companies can be an important part of the success in comparison with the other domestic and international organizations which already have their operations. The capabilities of the companies also include the brand names that have gained by them in the market in an effective manner. The core competencies that are important for operating in the country are based on the strengths and weaknesses that have been gained by them. The companies also need to focus on the regeneration of resources and further building the competencies (Ahmad, Bosua and Scheepers 2014). This internal resources of the organization can be updated according to the changes that have taken place in the external environment. The human resources of the company are another major factor that can help in the successful operations in Kuwait. The emerging market of the country can be helpful in creating a competitive position for the company in its industry of operations. Kuwait has thereby become a welcoming and diverse economy which has helped in the formation of the competitive advantages of the company which operates in the country (Denrell and Powell 2016).

Suggestions for Business Strategies in Kuwait

2.The organizations can make many strategic moves for the purpose of creating competitive advantage which can be sustainable in nature. The main aim in this case is to form a difference which can be important for the customers. The strategy of leadership can be created by the development of effective leadership in the different factors like, quality, cost, customer experience and innovation. The information and knowledge based strategies of the company need to be modified which can help in the formation of sustainable competitive advantage. The lowering of costs based on the operations of the company and the prices that are offered to the customers can also prove to be an important factor for creating competitive advantage. The organization thereby needs to make different competitive moves so that the costs can be reduced (Saeidi et al. 2015).

The collaboration with the suppliers who produce the raw materials to the company are quite important for the creation of an advantage in the industry. Innovation is another strategy that can help the company to become competitive in the market. The products and services that are offered to the consumers can help the company to create an advantage over the competitors in Kuwait. The innovative features are able to provide highest levels of advantage as the competitors are not always able to provide the substitutes to consumers. Another strategy that can be significant by the company to create competitive advantage is the partnership (Wagner III and Hollenbeck 2014).


The partners in the country can assist the company to innovate the operations and the products as well. The operations of the company need to be merged with the partners so that the supply chain can become effective as well. The efficient supply chain can be helpful in creating barriers for the entry of new organizations in the industry. The experience that is provided by the company to the customers is important in creating an important position and brand value in the industry. The loyalty of customers acts as a sustainable competitive advantage for the organization in the industry in which it operates (Kaleka and Morgan 2017). The company thereby needs to invest huge amounts in the customer based research, the quality of the customer experience, sales channels. The customer based information also needs to be of high levels so that it can be used by the company to create the services and products that are desired by them. The company thereby needs to create competitive advantage in the industry so that the customers are attracted towards its products and services. The competition that is provided by the other organizations in the industry can be faced by the company in an efficient and effective manner. The organization can also become the market leader with the help of sustainability in the various strategies and steps that are taken by the management (Jones, Harrison and Felps 2018)

References

Abdulla, A.M., Naser, K. and Saeid, M., 2014. Employability factors of business graduates in Kuwait: Evidence from an emerging country. International Journal of Business and Management, 9(10), p.49.

Adegbite, O.E., Simintiras, A.C., Dwivedi, Y.K. and Ifie, K., 2018. The organisation business environment. In Organisational Adaptations (pp. 11-26). Springer, Cham.

Ahmad, A., Bosua, R. and Scheepers, R., 2014. Protecting organizational competitive advantage: A knowledge leakage perspective. Computers & Security, 42, pp.27-39.

Albrecht, S.L., Bakker, A.B., Gruman, J.A., Macey, W.H. and Saks, A.M., 2015. Employee engagement, human resource management practices and competitive advantage: An integrated approach. Journal of Organizational Effectiveness: People and Performance, 2(1), pp.7-35.

Biygautane, M., Hodge, G. and Gerber, P., 2018. The Prospect of Infrastructure Public?Private Partnerships in Kuwait, Saudi Arabia, and Qatar: Transforming Challenges into Opportunities. Thunderbird International Business Review, 60(3), pp.329-346.

Davcik, N.S. and Sharma, P., 2016. Marketing resources, performance, and competitive advantage: A review and future research directions. Journal of Business Research, 69(12), pp.5547-5552.

Denrell, J. and Powell, T.C., 2016. Dynamic capability as a theory of competitive advantage: contributions and scope conditions.

Jones, T.M., Harrison, J.S. and Felps, W., 2018. How applying instrumental stakeholder theory can provide sustainable competitive advantage. Academy of Management Review, (ja).

Kaleka, A. and Morgan, N.A., 2017. Which Competitive Advantage (s)? Competitive Advantage–Market Performance Relationships in International Markets. Journal of International Marketing, 25(4), pp.25-49.

Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of business research, 68(2), pp.341-350.

Sikora, D.M., Thompson, K.W., Russell, Z.A. and Ferris, G.R., 2016. Reimagining overqualified human resources to promote organizational effectiveness and competitive advantage. Journal of Organizational Effectiveness: People and Performance, 3(1), pp.23-42.

Wagner III, J.A. and Hollenbeck, J.R., 2014. Organizational behavior: Securing competitive advantage. Routledge.

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