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Saudi Arabia

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Laura Bayona

on 2 December 2013

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Transcript of Saudi Arabia

Saudi Arabia - Medical Equipment Inc. - PESTLE Analysis

Alaaeldin Abdelmaguid
Laura Bayona
Mariona Gonzalez
Yves Wichate
The “Constitution” is the Islamic Law (the Quran and the Sunna)
The "civil code"
(Basic Law of Governance)


on the moral code of the Islamic Law (Sharia)
No separation of religion and the state
There is no parallel civil legal code
The King is the Prime Minister and he appoints the legislative body (Majlis-ash-Shura)
High legal uncertainty -> The decisions of the courts have no binding authority with respect to other cases
Lack of transparency in public budgets
Human rights are violated

Internet users: 10% of the total population
Global R&D spending grew by about 5.2% to more than $1.4 trillion in 2012
Spending risen by 21% on education over 2012 and provides $54 billion for public education sector
A USD$100 bn investment is planned for transportation infrastructures
Saudi Arabia has 4 ports


Life expectancy: 73.9 years
Education system has gone through an astonishing transformation
Enrolment ratio > Secondary level (most recent) by country. Saudi Arabia 51.1% below average (59.4%)
Education, primary completion rate (most recent) by country: on average
Foreigners occupy 90-95% of highly qualified jobs
Saudiization and punishments for Western lifestyles
Religious values.
Mix of culture, Indian diaspora.
Islamic values and maintenance of social stability
Women continued to face severe discrimination both in law and in practice

Source: Amnesty International Report 2012

1. Does Grover understand the local culture?
Even if Grover lived in Saudi Arabia, he is Hindu and studied in the U.S. -> May not be familiar with social norms in business

Grover should have known better than to go through all the hierarchical levels in the hospital and approached directly the Purchasing department

Lack of experience when it comes to the business field, as Grover has lived but not worked in Saudi Arabia before

He apparently does not understand how the business culture in Saudi works as mentioned before

3. What should Grover do? Why?
Grover should take Al Humaidi to U.S./France as this could be justified under the company's code of conduct and it is related with the business

Grover should also try to invite Al Humaidi to a social dinner to build long term relationship with him

Long term speaking Grover should have a business culture assessment of Saudi Arabia in order to understand fully how the business works
The case
Medical Equipment INC
Ankur Grover
Saudi Arabia

PESTLE Analysis

Saudi Arabia
Mission: To serve healthcare professionals and their patients in more than 80 countries by providing innovative medical technology products
The Case
- 23-26 million
- 66% Saudi National
- 90% Sunni Muslims
- 10% Shi'a Muslims
- 33% Foreign workers

45 major cities: the largest:
- Riyadh: 3.6 million
- Jeddah: 2.7 millon
- Mecca :1.5 million

83 % live in urban areas
Ankur Grover
25 years old
Nationality: India, Hindu Background
Bachelor's Degree in U.S.
Position: Cardiology Sales Department in Saudi Arabia

Has he understood correctly the Saudi Arabia market?
Health Care Industry
2. Grover considers the option of sending Al Humaidi to a Medical Equipment showroom in France or the U.S.. How does that compare to paying Al Humaidi a bribe?
Grover should get upper management to approve flying Al Humaidi out to see the showrooms. Also, he should ask for more ideas that would help Grover close the sale

By doing that Grover is determining whether flying him would be under the companies code of conduct or not

Finally, this solution is considered to be a bribe and it is an unethical persuasive method as to close the deal flying Al Humaidi to France or the US is not an obligation

Maximum: 48 hours per week and 36 hours during Ramadan
Saudiisation requires that private sectors employ Saudi nationals and that some job positions can only be filled by them
Companies also need a Saudi local in the board

Labour Law
Objective: Selling Cardiology equipment to Wester-Southern region of Saudia Arabia Why?
Medical Equipment Inc.
Monarchy built upon the tenants of islam
Weak opposition
The king must comply with the Sharíah and Sunnah (Sayings and traditions of Muhamed PBUH)
No division of powers
Lack of politics due to very high living standards

WTO member since 2005
One of the biggest members in OPEC
Since the discovery of oil in 1938 has grown to be among the wealthiest nations.
Saudi Fund for future generations
S&P: AA-

Saudi Arabia, 2013 Article IV Consultation
: http://www.imf.org/external/pubs/ft/scr/2013/cr13229.pdf
Saudi Economic Outlook 2013
: http://www.zawya.com/story/Saudi_economic_outlook_2013-ZAWYA20120925065921/
World Bank,
Saudi Arabia: Voice and Accountability: Estimate
: http://www.quandl.com/WORLDBANK-World-Bank/SAU_VA_EST-Saudi-Arabia-Voice-and-Accountability-Estimate
Human Rights Watch: http://www.hrw.org/news/2011/12/30/saudi-arabia-renewed-protests-defy-ban
Diplomacy in Action, Bureau of Democracy, Human Rights and Labour,
Saudi Arabia
: http://www.state.gov/j/drl/rls/hrrpt/2004/41731.htm
Al Jadaan & Parnters, Overview of Saudi Domestic and Foreign Corporate Laws: http://www.aljadaan.com/files/file/Overview_of_the_Saudi_Arabian_Legal_System.pdf
Saudi Arabia General Investment Authority,
: http://www.sagia.gov.sa/Investment-climate/Supporting-Your-Business-/Infrastructure/
The Economist,
Democracy Index 2010
: http://graphics.eiu.com/PDF/Democracy_Index_2010_web.pdf
Royal Embassy of Saudi Arabia (US),
The Basic Law of Governance:
Industrial Clusters,
Setting Up a Business:
Commercial Law
Foreign investment is completely allowed but the Saudi Arabian General Investment Authoriy (SAGIA) has to approve it first
Saudi Arabian Companies Law: the most appropriate corporate form for foreign companies is the LLC
Shares are not public and not permitted to undertake activities such as insurance or banking
Payment dispute -> companies need 635 days (ranks 127 out of 189 according to the variable "Enforcing Contracts", DB 2014)
Insolvency -> Claimants have to wait for 2.8 years and only recover 28.3% (in the OECD: 1.7 years and 70.6%, DB 2014)

Thank you!

Discussion Time
The goal of Medical equipment INC
Make sale to Wilsons account "Prince Khalids Hospital"
Potential sale is worth aprximately 725,000
Grover's Goal
Grover's Sale Approach
Frequent visits
Obtain initial approval from departments
Purchasing "Final Decision"
Case questions
Big retail sector with total expenditure of $68 billion
High increase in young population with high spending power gives Saudi Arabia

High imports of military equipment

Bee'ah organization is promoting best environmental management practices in KSA, also manages the hazardous wastes of Saudi industry





King Abdullah bin Abdulaziz Al Saud
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