Introduction
The Middle East is considered as one of the challenging business environment for many multinational companies that operate in the region. Although the location of Middle East in the global market is deemed as strategic and presents many investment and trade opportunities, the governments of the nations within the regions are struggling to reduce their reliance on the revenues from the oil. The region can offer attractive opportunities for the firms with the rights products and the appropriate entry strategy despite its slow growth and political instability. Notably, international corporations willing to enter the market should recognize the cultural differences and religious affiliation in the region to make informed investment decisions. Just like the European Union and the North American Free Trade Agreement, the Middle East has established the Gulf Cooperation Council with the intent to facilitate economic growth and integration. In this essay, a detailed analysis of the Middle East business environment is provided. Furthermore, it provides some strategic considerations for the international firms with the interest in the Middle East region.
The Middle East Business Environment
The evaluation of the Middle East business environment can help provide some insight on the lucrativeness of the region to attract investment and the effective entry strategies for the multinational corporations. The Middle East region business environment can both be lucrative and unprofitable to firms depending on the business sector or industry of interest. The oil industry plays an important role in the Middle East business environment as it primarily attracts huge direct foreign investments (International Trade Center, 2018). Although the region has enormous oil reserves, its macroeconomic environment has not been performing well. For example, some countries such as Iraq which is a leading oil exporting country recorded a deficit growth rate of approximately 20 % during 2016 (The World Bank Group, 2016).
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The member countries within the region established the Gulf Cooperation Council (GCC) in the 1980s to help facilitate and improve the foreign investments and economic integration. The Gulf Cooperation Council has six member countries that are all monarchies and include Qatar, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates (UAE) ( Drzeniek-Hanous & Dusek, 2013) . Although the primary objective of the Gulf Cooperation Council was to spur economic growth, the gross domestic growth in the region for three consecutive years starting from 2013 to 2015 remained below 3 % ( Legrenzi, 2016) . This might be attributed to the frequent conflicts in many of the countries in the region and the low prices of oil.
The Gulf Cooperation Council countries are independently using the structural reform programs such as privatization of the state-owned businesses, reducing barriers to the foreign direct investment and the diversification to reduce the reliance on oil revenues ( Lages et al., 2015) . The governments of the countries in the region have enacted new legislation aimed at privatization of the state-owned corporations in order to attract foreign direct investments.
Interestingly, the Middle East has some of the leading and advanced cities in the world such as Dubai in the United Arab Emirates (The Business Year, 2018). This is despite its low economic growth and low inflow from the foreign direct investments. In addition, the United Arab Emirates is ranked the 24 th based on t6he global competitiveness index (WEF, 2013). The high ranking of the United Arab Emirates in terms of the Global Competitiveness Index which is second only to the advanced economies is attributed to its huge oil resources and reserves.
Strategic Consideration for firms in the Middle East
Making investment decision required that business and individuals understand the business environment that prevails in a region. It is important for companies to develop strategic objectives when attempting to enter and operates in new markets or regions. Given the business environment that prevails in the Middle East, it is appropriate for firms to make some strategic considerations when entering such markets. This can ensure that the firms become successful and survive in the region.
One major strategic consideration for the firms interested in entering the region is the religious affiliation. In the majority of the Muslims countries in the world, there is a significant religious stereotype that firms should observe when entering the markets. Notably, the Middle East region is a pure Muslim community and the managers of the firms should consider the stereotypes that help towards the Islamic religion in foreign states such as the United States ( Jalali, 2012) . The multinational firms interested in entering the Middle East market should recognize the attitude, beliefs and perception of stakeholders in one region of the globe can have a significant impact on the firm. There should be a comprehensive cost and benefits analysis to help the firm makes appropriate decisions of whether they should enter the region or not.
As an example, the multinational companies entering the Middle East companies should embrace the concept of the Islamic banking (Islamic Banking and Finance, 2018). Since the customers and employees in the region are mostly Muslims, it is important that organizations consider following some of the Islamic practices and beliefs. Murabahah which is an Islamic banking is popular among many companies in the country. The organization that fails to incorporate the concept of Islamic banking is likely to fail in the market.
The second strategic consideration for the companies that attempts to enter the Middle East market is the gender inequality in the Muslims countries. Gender inequality is a reality in the Islamic society and thus firms should take appropriate strategy not to violate such stereotypes. The organizational culture, beliefs, values and practices should be designed in a way that agrees with the culture in the domestic market ( Kalyoncu et al., 2012) . For instance, an organization should change its recruitment and hiring strategy to match the cultural needs of the customers, employees and other stakeholders in the host market. This can include when hiring employees, an organization might find it appropriate to consider hiring more men to female due to the inequality in gender. Also, it proves important for an organization to consider hiring local employees as opposed to foreign to ensure that they adapt to the local culture and ensure success in the market.
Evidently, the Kingdom of Saudi Arabia provides a perfect example of the issue and implication of gender inequality. Initially, women were not allowed to work together with men in the Kingdom of Saudi Arabia (Mill, 2008). This implies that an organization that enters such a market should consider hiring one particular gender group as opposed to hiring both gender groups to work in the same company setting. It can be ineffective to establish an office with both male and female workforce in such a society even if the foreign workers. Having a workforce from both gender groups in an office can lead to a conflict of interest and affect the performance of the company in the business environment.
There are several legal considerations for the firms interested in entering the Middle East regions. For example, in Saudi Arabia there exist a set of the complicated procedures that firms are required to follow in order to operate in the territory. The main law that governs the operation of companies in Saudi Arabia is the Sharia law. Sharia law is designed based on the Islamic religion and beliefs ( Rosman et al., 2014) . The firms that fail to follow these laws can be subjected to heavy fines and penalties or even forced to close their businesses (Hamilton & Webster, 2015). The management of the companies operating in the country is required to consider the differences in the legal legislation and procedures. In some cases, it might be appropriate for the managers and other employees to get necessary training on the legal procedures that exist in the Middle East countries to ensure that they do not violate the specific laws and legislation that apply in the region where the business operates.
Conclusion
Based on the analysis of the business environment in the Middle East, it is noted that the region can be a source to both opportunity and threat to businesses that are willing to enter the market. The Middle East market has experienced low economic growth despite its endowment with huge oil reserves. The majority of the countries within the region are experiencing political instability and this can explain its low economic growth since such a volatile business environment discourages foreign direct investment. As a result, the region offers significant challenges to many multinational corporations. However, the establishment of the Gulf Cooperation Council is seen as an effort geared toward improving the level of economic growth and facilitating economic integration. Although the Gulf Cooperation has made a significant effort towards achieving the economic prosperity in the region, little progress has been made in terms of growth in gross domestic products in member countries. Notably, it is important for companies that are willing to enter and do business in the region to make some strategic consideration. The new entrants should adhere to the local culture to ensure that they become successful and survive in the region.
References
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