Government Initiatives To Foster Competitive Advantage In The Corporate Market Of Kuwait: A Study Essay.

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Overview of Kuwait Business Market

Kuwait is identified as one of the promising business market in association with the development in the economic situation. It is due to the oil industry, one of the major export industry in Kuwait. However, there are moderate rate of inflation and the political chaos create several obstacles for the development of a better business opportunities (Santandertrade.com 2019). The government regulations and initiatives play a significant in the process of influencing the business market as well as facilitate better business environment within the country (Porter 1990). In this regard, this report aims to evaluate the government initiatives to foster a competitive advantage in the Kuwait corporate market. Moreover, different strategies are also illustrated through the discussion in order to enable effective business framework.

The diamond of national advantage model propounded by Porter is an effective tool to get the competitive advantage situation within the Kuwaiti business environment.

As far as the business situation in Kuwait is concerned, it can be stated that the Kuwaiti market has been expanded firmly and besides the oil industry building and construction industries are also coming to the forefront as important business opportunities. As a matter of fact, the government already invests more than USD 100 billion for the national development plan (Heritage.org 2019). The commercial service industry is also witnessing a sharp growth in the electricity and sustainable projects as well. In this regard, a proposed investment of $10 billion is allocated for the electricity and environment clean-up projects (tradingeconomics.com 2019). In addition to this, there are also the traditional sectors like automotive, oil and gas, IT and telecommunication industries are doing business intensely. The working condition in Kuwait is also highly lucrative due to the absence of any personal taxation. According to the report of Biygautane, Gerber and Hodge (2017) it can be argued that salary in Kuwait is similar to the European countries. The amount of salary is so high in the country that has a resemblance with the high life style in the Kuwaiti labour market. 6 to 7 hours of everyday working hour has been allocated for the employees to serve and as the country is an Islamic country therefore during the Ramadan month the working hours are reduced and altered. Five day working facilities for the workers are prevalent in Kuwait that provides better working environment to work in Kuwait.

The Kuwaiti market is one of the freest economy based with a freedom score of 60.8. In association to this, it is also important for the Kuwaiti economy to pledge for the private sectors besides the public industries in order to bolster the economy profoundly. However, there are lack of initiatives to diversify the economy is identified one of the most significant factors in order to deal with the high competitiveness in the international market. In this regard, there is a huge domestic demand on the infrastructure projects and the tourism industries as well. For an instance, in 2017 the government invests more than $400 million in the construction projects (Abdullah, Naser and Saeid 2014). Besides this, banking, property, security and environmental management have a great opportunity to get flourished in other industries that was primarily depended on the oil sector predominantly. However, the gradual and rapid fluctuation in the global oil and gas market also affected the Kuwaiti market. As a result of that it was essential for the local investors and corporate business organisations to shift their gaze to alternative sectors. One of the major driving factors in the process is identified as the incorporation of the tourism and hospitality industry as a silver lining sector recently. As per the research of Jin and Jung (2016) it can be stated that the existing healthcare facility in Kuwait is not so good but has promising opportunity to expand profitably. Besides this, other sectors like the engineering and technology industry is also growing steadily in Kuwait.

Diamond of National Advantage Model for Kuwait

Due to lack of infrastructure and more dependency on the oil sector, the supply industry in Kuwait faces severe problem in expanding its business orientation steadfastly. Moreover, most of the supply products are imported from the different countries. Main important products are identified as the capital equipment, processed foods, manufacturing equipment and the consumer goods (Spar 2001). Besides this, the top importing countries are China, US, Japan and Germany. As a result of that it becomes a significant impact on the existing business environment in Kuwait. Moreover, it can be stated that there are not enough infrastructure for the country to produce those items rather than importing. However, the important sectors like Oil, banking and construction sectors are highly influenced by the strengths of the suppliers. There are huge implication and influence of the suppliers over the leading sectors (oxfordbusinessgroup.com 2018). The high opportunity of earing profitability in a robust manner and the confidence to cope with the fluctuation in the market is also considered to be an important feature of the suppliers. Therefore, it is possible to make an effective and significant relation between the core company and the supplier in the Kuwaiti market. Despite all those efforts it is essential to encourage the domestic suppliers in order to boost the economy significantly depending on less import of supply of raw materials.

Traditionally the economy of Kuwait was circulated around the oil and gas sector. As a result of that no such competitiveness had been seen in the market. However, with the change in the situation, the Kuwaiti government also started developing the business market effectively. Based on the report of Dzenopoljac et al. (2018) it can be stated that Kuwait ranks 54^th in the global competitive ranking out of 140 countries. The average of competitiveness ranking of Kuwait was 38.33 from 2007. However, the financial year of 2017 witnessed a drastic elevation in the process with a score of 56 (Heritage.org 2019). Based on such facts, it can be derived that more emphasising on the human capital, human capital, resilience and innovation help Kuwait to set up a highly competitive market in recent times that is coupled with the macroeconomic stability, skills, market size and the business dynamism (Michael 2014). In the process, there are plenty of growing business sectors that are aspired to lead the economic growth of the country. In course of the process, the government also puts emphasis on the sustainable development to place the Kuwaiti business market one of the attractive market with a dynamic future opportunities.

Industries Impacting Kuwait’s Corporate Market

The current business market condition of Kuwait leads to the take initiatives from the government with proper economic strategies that can provide more effective outcome for the future growth of the Kuwaiti business sectors. Therefore, the Foreign Direct Investment (FDDI) framework with the new marketing strategies can deliver a better understanding of the entire process of developing the market.

As per the research of Papadopoulos, Hamzaoui-Essoussi and El Banna (2916) it can be stated that the practice of multi-domestic strategy is considered to be an effective market entry initiative that both the international and the domestic companies can procure. In this regard, government should procure proper measure for the new business initiatives. The Kuwaiti government also takes such steps in order to encourage new business procedure in terms of levying 15% corporate tax on the foreign organisation with the purpose to boost up the domestic business measures more effectively.

Global marketing strategy is associated with the process of making better initiatives for the overseas business organisation to enter into the new markets. There are several determinants in this regard that are responsible to deliver better business environment (Hitt, Li and Xu 2016). For an instance, the employment expenses are always considered to be of grave concern for foreign companies. In response to this, the Kuwaiti government facilitates the same standard and pay scale for the employees as they can get in the European market. It helps the foreign companies to evaluate the expenses and formulate strategies same as their native countries.

Transnational strategy is always identified as an important aspect for the organisations in order to develop the international market efficaciously. For the Kuwaiti market the issue of lack of infrastructure can be resolved through attracting foreign organisations to introduce a joint venture practice in Kuwait (Dzenopoljac et al. 2018). The small and medium scale industries will also get benefits from this trans-national approach. In fact, the government also liberalise the Kuwaiti market so that it will attract the foreign business houses to invest and develop a trans-national strategy. It will help the existing economy of Kuwait to revive itself and compete in the international market positively.

Moreover, through localisation it becomes an effective strategy to export products and maximise profits in the form of foreign currency. As a result of that it will also provide the domestic companies of Kuwait to build up a foreign image and appreciation that in return help to refurbish the domestic business market efficiently (Hitt, Li and Xu 2016).

From the above discussion, it can be stated that the Kuwaiti business market witnesses a mixed situation where the large business establishments are successfully increase their profits. However, for the small and medium scale industries it becomes a problem to cope with the international competition. As a result of that the government initiatives and strategies can add more proficiency in the Kuwaiti business environment and help to set up the Kuwaiti market internationally sound.

Reference

Abdullah, A.M., Naser, K. and Saeid, M., 2014. Factors Impact Business Graduates Employability: Evidence from Academicians and Employers in Kuwait. International Journal of Academic Research in Economics and Management Sciences, 3(4).

Biygautane, M., Gerber, P. and Hodge, G., 2017. The evolution of administrative systems in Kuwait, Saudi Arabia, and Qatar: the challenge of implementing market based reforms. Digest of Middle East Studies, 26(1), pp.97-126.

Dzenopoljac, V., Alasadi, R., Zaim, H. and Bontis, N., 2018. Impact of knowledge management processes on business performance: Evidence from Kuwait. Knowledge and Process Management, 25(2), pp.77-87.

Heritage.org 2019. Kuwait Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. [online] Heritage.org. Available at: https://www.heritage.org/index/country/kuwait [Accessed 7 Mar. 2019].

Hitt, M.A., Li, D. and Xu, K., 2016. International strategy: From local to global and beyond. Journal of World Business, 51(1), pp.58-73.

Jin, B. and Jung, S., 2016. Toward a deeper understanding of the roles of personal and business networks and market knowledge in SMEs’ international performance. Journal of Small Business and Enterprise Development, 23(3), pp.812-830.

Michael, S.C., 2014. Can franchising be an economic development strategy? An empirical investigation. Small business economics, 42(3), pp.611-620.

oxfordbusinessgroup.com 2018. Kuwait takes steps to encourage industrial growth and export competitiveness. [online] Oxford Business Group. Available at: https://oxfordbusinessgroup.com/news/kuwait-takes-steps-encourage-industrial-growth-and-export-competitiveness [Accessed 7 Mar. 2019].

Papadopoulos, N., Hamzaoui-Essoussi, L. and El Banna, A., 2016. Nation branding for foreign direct investment: an Integrative review and directions for research and strategy. Journal of Product & Brand Management, 25(7), pp.615-628.

Porter, M. 1990. The Competitive Advantage of Nations. [online] hbr.org. Available at: https://hbr.org/1990/03/the-competitive-advantage-of-nations [Accessed 7 Mar. 2019].

Santandertrade.com 2019. Business environment in Kuwait. [online] En.portal.santandertrade.com. Available at: https://en.portal.santandertrade.com/establish-overseas/kuwait/business-environment [Accessed 7 Mar. 2019].

Spar, D.L 2001, Chapter8: Rugman, A.M. and Brewer, T.L., Oxford Hand Book of International Business, Oxford University Press.

tradingeconomics.com 2019. Kuwait Competitiveness Rank. [online] Tradingeconomics.com. Available at: https://tradingeconomics.com/kuwait/competitiveness-rank [Accessed 7 Mar. 2019].