A Global Investment Is A Difficult Task Marketing Essay

Published: 2021-08-10 06:30:10
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A global investment is a difficult task which needs the illustration of varies method of prospective chance in diverse stats. It also requires significant examination and research of the achievement and breakdown probability. This assignment focuses on the importance of implementing a diversity of management techniques' tools and considers on presenting and investigating the consequences of these techniques to recommend DPD IT solution whether to go throw the Saudi Arabian market or not. It provides suggestion and saves time and money by guaranteeing that the market is appropriate for the firm. This might be notice to those who are scheduling to enter Saudi Arabia's market and start new business enterprise to achieve wonderful investments. In addition, it may be a sufficient establish for human who have a weakness of collecting data about the actual situation and the related risks in that place.
Table of Contents
Introduction
As a consultant for DBD company who focus on presenting some advice about the potential opportunity to go through a new market which will take Saudi Arabia as a suitable location to operate the business project. Saudi Arabia has tremendous advantage that leads every business to invest the money of all fields such as (energy, economy, and technology, social and political). All these areas might affect the communication sector positively or negatively depends on how these factors are within the business. Tow companies form Telecommunications sector in Saudi Arabia has been chosen which are Zain and Mobily. The business case study has indicated that Mobily has common its reputation and diligence in developing the telecommunication sector rather than Zain. However Zain still a successful firm in the same sector but with a lack of financial problem and customer dissatisfaction. The total revenue of Mobily company is more than 3 billion SR (Mohammad Omran ) while the total revenue in Zain is 1.665 billion SR( business.com). the consultant for DBD firms has the right to either to go throw Saudi telecommunication sectors or not. This report will present an overview why operating business in Saudi Arabia including Saudi Arabia population and economic situation. Secondly, a case study provide an overview of Mobily and Zain companies with focusing on SWOT analysis of the two firms and the opportunity of entry the marketing using the theory of five portal forces including some information about funding. After that, an important point which is the future outlook for DBD Company whether helpful to combined a venture with a global partner by comparing and contrasting between two different firm i telecommunication sectors which are Mobily and Zain to enter the market. Finally, end up with some recommendation and suggestion of improvement the company which has been selected by DBD in order to operate successfully.
A business case for a company to enter a new market needs an analysis of the viability of an idea. The idea of any new project needs to be evaluated in terms of the probability of success or failure as well as in terms of the internal and external risks. Moreover, the evaluation of these factors could highlight areas which may lead to the failure of the business project, and that would, as a result, lead to a reduction in its profit or failure to reaching the final envisioned outcome.
The purpose of this project is to consider whether it would be beneficial for DBD Company to establish a joint venture with an international partner by comparing and contrasting two attempts of SME companies’ entries into an international market; ETIHAD ETISALAT COMPANY (MOBILY) successfully entered an international market whereas ZAIN was not as successful. In addition, further studies will focus on the types of management tools that could be appropriate for DBD in order to achieve a successful entry.
Why Saudi Arabia
2.2.1 Overview
There are few states to be able to propose secure supplies of inexpensive energy, a geographical starting point to a huge market and a customers’ requirement to achieve a suitable solution for new adventure enterprise or investment. The research has indicated that Saudi Arabia is one of the best 20 destinations for overseas direct investment in the globe. Moreover, Saudi Arabia known as one of the most enterprising nations in the Middle East, Saudi’s huge natural energy integration with the long-term image and strategic planning to make today’s stable, robust economy. Now days, Saudi is seeking to great future with an ambitious program of increased growth and improvement that will place it strongly as a novel international force. Saudi has planned itself three strategic goals:
to be the international assets of power. Up and downstream petrochemicals, minerals, power and water are all fundamental to the Saudi and global economy.
to take action as a transport and logistical hub between east and west. KSA’s roads and air links make a potential customer base of over 250 million.
to transform its experience-based industries, for example, healthcare, life science, education and IT. These sectors are all crucial drivers of long-term, constantly change.
Saudi Arabia is hoping and arranging for different areas of future which is more comprehensive, expansive, sustainable and combined on both social and economic sector. All of these examples will be improved via Saudi’s experience financing, assessing to establish a nation of constant development. A massive amount of money has been spent by kingdom of Saudi Arabia to add value proposition to global business. The government of Saudi has planned goals of varies faceted reform strategy that lead Saudi Arabia to be one of the suitable position in the global to operate business.
At the same time, Saudi Arabia is spending tens of billions of dollars to start four economic towns in diverse place of the nation to support economic improvement. Enterprise between private and public sector will makes Saudi Arabia the great investment chance for overseas firms.
In addition, Saudi Arabia is seventh freest work market in the international observe to the World Economic Forum, and it is one of the world’s best increasing states which per capital income is forecast it to grow from $20,700 in 2007 to $33,500 by 2020. However, Saudi Arabia is records fourth in the international for economic freedom and it are the seventh most pleasing tax system and ease of paying taxes in the world. Also, it’s score the thirteenth by all of 181 states for the total ease of operating business internationally and the first for ease of scoring assets and it’s the largest recipient of global straight Investment in the Arabian area.
http://www.sagia.gov.sa/PageFiles/59/doing_business_chart.jpg
Saudi Arabia score it is economic freedom as 64.1% which end result to make its economy the 65th freest in the 2010 Index.
Saudi Arabia is grade 8th out of 17 stats in the Middle East/North Africa area
The overall regulatory environment for business formation has improved into novel expert and well-organized the tax government is competitive, and the totall tax burden is close to the ground and the affect of the new international financial crisis on the banking areas has been comparatively modest. ( 2010 Index of Economic Freedom).
2.2.2 Telecommunications in Saudi
KSA attempts to provide the opportunity for ICT investment program to create high competitive business in area.
With over 27 million consumers and a number of international ventures, Saudi Arabia is the biggest ICT market significantly in the Middle East. for instance, the Saudi Arabian telecommunications and information technology industry have initiated more than 55% and 51% of the total Middle East markets, respectively.
So far, while several of the world’s ICT markets are growing, the Saudi Arabian market leftovers considerably under-developed by international standards. ICT paying out has developed at more than 10% per year since 2001 to make US$7.3 billion in 2006. However, the scope of the Saudi Arabian ICT market offers outstanding operational level, in addition there are more than 350 million Arabic-speakers in the region and Saudi people is young and growing quickly which add more value for the telecommunication market in region and will create attractive investment opportunities for the private sector via Saudi government which has been supporting on a twenty-year ICT plan. Arabization the software could lead to increase supply of skilled software engineers coming accessible due to public and private training projects.
 
KSA’s unusual access to energy creates it a striking place for a variety of actions across the ICT value chain. For instance, ICT-enabled services suppliers will be able to influence Saudi Arabia’s unusual access to low-cost power and state-of-the-art communications infrastructure to professionally service international consumers. Tools and component production are also highly energy-intensive and request important use of oil derivatives for example plastics and chemicals.
Apart of that, intellectual property rights (IPR) laws provided by the Ministry of Commerce and the Communications and Information Technology Commission (CITC) protect software designer and other like. This can be seen as an incentive for international businesses seek to inter the communication sector.
Case Studies
3.1 Overview
This section has been designed to evaluate and analyse a full image to DDB firm to illustrate the recent position in Saudi Arabia. The case study has shown that the tow firms which have been selected from telecommunication sectors is focusing on the most successful (MOBILY) and less successful (ZAIN). A brief explanation of how the tow company operating in Saudi are provided below. 3.2 Mobily
Mobily has noticed on January 2010 that Saudi Arabia increasing rapidly in telecommunication operator will present 400,000 SAR a gift to 10 victors who wander on its network while visiting to Saudi Arabia. Mobily is in confident contract with many operators in the globe. So the customer will sense at residence wherever they go. It guarantee their abroad customer who they used abroad that they can still use voices calls, internet connection, video calls, and MMS with exclusive price. Mobily has built a strong connection with Etisalat of UAE for procurement of resource. This connection might be significant for presenting one of the best plan networks in the world. The revenue of mobily company Q2 2010 recorded as 3,972 million showing an increase of 24% over the same quarter last year. Mobily's chairman, ENG. Abdulaziz Alsaghyir mention that the increase of our Q2 revenue is due to the growth in broadband revenues and creating a centre of attention more post-paid consumer, in addition, mobily has approved its strategy for five year time know as GED planning for expansion, differentiation to supply combined telecom services constructed about fixed and mobile broadband technologies. 3.3 ZAIN
Zain Saudi Arabia has planned a reformation of its capital via decreasing of capital to include all or element of amass fatalities, to be followed by a grow in firm assets at afollowing step, Kuna has reported. The firm had called an extraordinary universal assembly to vote on a board suggestion to convey capital down from SR14bn to SR7.33 and to bring the firm's shares losing from 1.4 billion to 732,843,885. This would be after attainment agreement on the capital decreasing from all troubled authorities and parties with interests. Zain Saudi mention it will completely lend a hand with Etisalat in carrying out all the essential actions of the due diligence, while at the same time certifying the protection of the company and shareholder interests.( http://www.ameinfo.com/248495.html)
Saudi Arabia’s latest mobile phone operative Zain Saudi Arabia is focusing on a capital decreasing to include some or all of its amass losses which attain $1.6 billion by end-March, it said.
"The board of manager's met ... to argue the planed restructuring of the firm's capital through dropping the firm’s capital to cover all or some of the firm’s accumulated losses, for this to be followed by a capital increase," Zain Saudi has mention it's paid a heavy $6 billion for the permission and has borrowed a huge amount of money to avoid collapse. Zain Saudi needs to establish with a fresh attack. The capital decreasing will automatically increase the share price after the reverse divide Without it, the capital rise would recommend the new shares at a price higher. Zain Saudi has said it forecasted a 25 per cent increase in consumer and concentrate on broadband services to bring revenue growth of at least 80 per cent this year, which would assist it rank optimistic essential earnings before interest, taxes, depreciation and amortisation. – TradeArabia News Service
http://www.tradearabia.com/news/CM_181899.html the market’s price,"
.5 Five porter’s forces
The telecommunication scoter in Saudi Arabia was a monopoly in till 2004, with just STC presents its services. However, the GSM industry view has changed with the entry of Etihad Etisalat Company (Mobily) in 2005 and Zain in 2008 and so has the fixed-line sector with the issuance of operating licenses to Batelco, PCCW and Verizon Communications. Three firms which is still controlled on the GSM sector, also the competition has raised due to quietly higher price flexibility of the sector.
In terms of five porter’s forces, all firms ought to assess its strategy of whether to go into a new market or not and decide to what scope that business is helpful. A argument of the forces is provided below.
Threat of Substitutes
Telecommunication sector has some keys factors to success for price’s service as mobile, fixed line and internet. However, should be careful about its products’ quality and delivery time to avoid consumer income which makes price wars and innovative product features. Any way the information technology industry is one of those sectors which SAGIA opens for international investment.
Power of supplies:
The suppliers for the telecommunication services business is Infrastructure providers. Some Suppliers can damage the success of any business if that business does not have multi suppliers who provide the raw materials with exclusive price and perfect time. Moreover, suppliers could raise technical innovation by decrease the bargaining power of supplier. Moreover, a few suppliers might convert to competitor firms, which could have a big influnce on the essential firm if it does not have any backup suppliers
Barrier to enter:
it should make contracts and agreements with many companies to reduce its overhead and to provide special service that attract more customers. Moreover, it should have a large enough budget to enable it to purchase new materials and to keep its position in the market if any delay from consumer payments occurs. In addition, it should establish a variety of relationships with huge companies and government sectors to help create new distribution channels
Power of buyers:
In 2004, Saudi Arabia government established new regulations to develop and monitor information technology services by converting government documents to electronic form. This movement will cause an increase in the demand for information technology services by the various companies in the Saudi Arabian market, which will in turn provide DBD with a large number of opportunities to provide those services. Therefore, DBD will be required to meet its customers’ needs of high standard services at reasonable prices, this will benefit DBD should price wars occur in the information technology services sector. Moreover, DBD should strive to meet its contracts and should avoid delays in its services to avoid losing its position in the information technology market.
Rivalry of competition:
DBD should be different than its competitors by providing its own brand and logo and should provide a high level of sophistication in its services. Additionally, it should use its experience to create its competition advantage despite the high level of cost and risk involved. A great achievement would be that customers trust DBD enough to request its services by name.
3.6 Exit Strategy
In any joint between two companies or more, each company should consider its exit strategy before entering that venture because several reasons could lead to joint venture failure. There fore, exit strategy should be proposed from day one of jointing since expectations could fall from the first day (Triantis, 1999) As a foreign investor in the Saudi Arabian market, you can establish your own company or joint with a local company and be able to transfer your money without any restrictions. Additionally, you are able to sell your business to any investor taking into account any restrictions present in the joint venture agreement such as a specific period of time elapsing before any sale. As result, several scenarios may have to be taken into consideration to help foresee the future of this corporation. Such scenarios include the length of the joint virtue, its duration and its withdrawal or extension. Those scenarios should be analyzed and appropriate procedures dealing with them should be decided upon. Moreover, the company should contemplate the unsuitability of a joint venture and should thus consider alternative entering strategies.
In addition, SAGIA provides a visitor’s visa for any future investors who would like to start a business in Saudi Arabia to provide an opportunity for such investors to examine the investments’ environment.
3.7 Funding
There are different sources of funding available to both local and international companies in the Saudi Arabian market. Moreover, the interest rate is relatively less than 3% if the funder is one of the 11 Saudi commercial banks, otherwise, there are three government departments responsible for supporting the investors. Those departments are
The Saudi Industrial Development Fund (SIDF)
The Public Investment Fund.
The Real Estate Development Fund. (Why Saudi Arabia-Introduction)
The Way Forward
To be successful in the Saudi Arabian market, DBD has to have strong communications and relations with decision-makers in Saudi government. Moreover, a professional management is said to be a significant factor in achieving the company’s target strategy. In addition, DBD has to spread out in the market and has to provide a range of innovate services (Dougherty, 1990).
As for a specific recommendation for DBD to improve Mobily, , DBD could establish a networking system to improve its supply-chain management. DBD could also improve Mobily’s technique/s in inventory control (Matt E. Thatcher, 2001 ).
In terms of Mobily’s high employee turnover, DBD may improve its training program to share employees’ experience through internal networking among its departments (Matt E. Thatcher, 2001 ).
Additionally, DBD could create a webpage for Mobily to illustrate new products added to the company's range. This will help in spreading the knowledge of new products gained after acquisitions (Elias M. Awad, 2007).
Moreover, DBD may be able to produce a new program or software under that joint venture and could register it under its name. Since Saudi Arabia is member of WOT, DBD will be able to register an intellectual property on that program and will therefore have the full right of its innovation. This right would enable DBD to provide Mobily with a license to use that software, therefore enabling DBD to witness, firsthand, the impact of that software on Mobily and its management. DBD will also be given an opportunity to witness any resistance of procedures’ changes resulted from the implementation of the new software.
As for benchmarking Zain to Mobily’s level, DBD could help in networking Nadec’s departments to improve its distribution levels (Blanchard, 2007). This would also provide a smoother transition for documents between the departments, which would help speed up the bureaucratic processes.
Since DBD will be entering an international market, it should have a leadership level that is strong enough to change the administration’s stance towards the investment in intangible software products (Beach, 2006). That argument could be further strengthened by providing an estimate of the dramatic amount of saved waste if a certain program is implemented.
Recommendations
Organize an initial visit to Saudi Arabia to get acquainted with the investments’ environment, foreign investments' legislation and to meet decision makers in the concerned field.
Establish relations with government decision-makers to improve the company's public image and to provide DBD with opportunistic investments in the government's growing electronic presence.
Have a strong leadership that is able to appropriately prepare DBD for entering new markets and that is also able to address partners' concerns effectively.
Provide innovative services to overcome the high competition in the newly grown field.
Have networking experts on its team to be able to effective build reliable networks to address communication problems.
Have expertise in gradually phasing in new systems to minimize employee resistance which in turn will assist in the company's evolution.
Have web-designers as part of the team to assist in the creation of web-presences for the companies involved which will help those companies spread nationally as well as internationally

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