Project Total: 15 Marks You are a Managing Director of a Swedish company and con
ID: 384100 • Letter: P
Question
Project Total: 15 Marks You are a Managing Director of a Swedish company and considering an investment in Middle East and management is in the process of evaluating the specific country locations for this investment. The pool of candidate countries has been narrowed to Saudi Arabia, United Arab Emirates and Qatar. Prepare a short report with the help of following points: 1. Compare the Foreign Direct Investment (FDI) environment & regulations of the Countries. [4.0 Marks] 2. Analyze the values of these countries’ currencies. [US, Japan, UK, Swiss & France] [1.5 Marks] 3. Analyze the Political and Economic challenges. [4.0 Marks] 4. Analyze the Legal and Cultural challenges of each country. [4.0 Marks] 5. Explain your chosen Market Entry strategy in each country with reason. [1.5 Marks] Solution Hints: Explore the Trade Regulations, Customs and Standards, Currency Values, Economic & Business Environment, Political Environment, Cultural Analysis, Market opportunity, Market Entry strategy.
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Explanation / Answer
FDI
Worldwide FDI streams rose to $1.24 trillion out of 2010, yet were as yet 15% underneath their pre-emergency normal. This is rather than worldwide mechanical yield and exchange, which were back to pre-emergency levels. The UNCTAD gauges that worldwide FDI will recapture its pre-emergency level in 2011,increasing $1.4– 1.6 trillion, and moving toward its 2007 top in 2013.
The Arab World consider as developing economy. In any case, Saudi Arabia was positioned among the 10 top nations of FDI beneficiary. Along these lines, the idea of changing the FDI to created world isn't any longer solid.
Middle Easterner world nations have seen a noteworthy increment in the level of FDI inflows over the previous decade. FDI inflows to Arab nations from 2006 till 2010 were fluctuating from one year to the next. TheGCC nations are the most noteworthy collector of FDI in the Arab World amid the most recent five years; it expanded from 54% to 60% out of 2006 till 2010. This demonstrated the financial steadiness and advancement of monetary circumstance in the GCC district to affirm that. The FDI and stocks is moved in couple of nations for example around 80% of the FDI in 2010 is moved in six nations: Saudi Arabia 42%, Egypt 10%, Qatar 8%, Lebanon 7%, United Arab Emirates 6% and Libyan Arab Jamahiriya 6%.
Majority of share of remote speculation incline by divisions are moved in Arab nations concentrating for the most part on the land, oil and gas, and inn segments. Notwithstanding the enormous offer of FDI inflows to the GCC district by sources was from non-Arab nations USA first rank took after by United Arab Emirates and Kuwait, individually from Arab nations.
The understanding outcomes demonstrates the business condition and the monetary execution of the Arab World as yet enhancing and the new arrangement and direction that have been actualized in the Arab nations expanded the appeal level of the FDI toward Arab nations. The six of the Arab nations Saudi Arabia, UAE, Qatar, Bahrain, Tunisia and Oman have climbed the scale on the simplicity of working together positioned among the main 50 out of 183 nation. The new arrangement and modification, which has been affirmed from World Bank by the Doing Business reports about the business condition of Arab World, demonstrate that their local laws in these nations focus on outside organizations to expand the interest in Arab world.
Currency value-
The United States is one of the GCC’s biggest trading partners. Crude oil is traded globally in dollars. GCC governments earn and spend in dollars. Most of the estimated 41.5 trillion public sector assets in the Gulf are dollar-denominated, and the booming project market is backed by dollar lending. Pegging local GCC currencies to the dollar has been a long-standing practice. Saudi Arabia and the UAE, for example, have had USD pegs since June 1986 and January 1978, respectively, and, for the most part, dollar pegs have worked well for them as the sole nominal anchor for inflation control.
Qatar- The Qatari riyal is pegged to the US dollar at a fixed exchange rate of $1 USD = 3.64 QR. This rate was enshrined into Qatari law by Royal Decree No.34 of 2001, signed by Hamad bin Khalifa Al Thani, Emir of Qatar, on 9 July 2001.
Saudi Arabia- In June 1986, the riyal was officially pegged to the IMF's special drawing rights (SDRs). In practice, it is fixed at 1 U.S. dollar = 3.75 riyals, which translates to approximately 1 riyal = 0.266667 dollar. This rate was made official on January 1, 2003.
On January 28, 1978, the dirham was officially pegged to the IMF's special drawing rights (SDRs). In practice, it is pegged to the U.S. dollar for most of the time. Since November 1997, the dirham has been pegged to the 1 U.S. dollar = 3.6725 dirhams, which translates to approximately 1 dirham = 0.272294 dollar.
Political and economical challenges-
Saudi Arabia-
United arab emirates-
Entry strategy
The intention in going into organizations ought to be for more enduring reasons than the requirement for neighbourhood information or to fulfil a nearby proprietorship prerequisite. By and by, nearby information and contacts can be developed without surrendering a value stake in the business, by enlisting neighbourhood staff and conceivably using advisors. Tough organizations depend on a genuine packaging of reciprocal abilities that goes past nearby aptitude and contacts. The retail segment is an illustration where numerous tough associations have been built up effectively, as the outside retailer gives the brand, item and retail idea and the nearby administrator secures access to shopping center space, quality staff and proficient operations.
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