Doing Business In Saudi Arabia Case Study

The cultural aspect of doing business in Saudi Arabia is an important one.

Saudi Arabia and all its’ laws, culture and beliefs are underpinned by Islam. For Westerners doing business in Saudi Arabia, there are many differences that you should be aware of to operate in Saudi effectively. To navigate doing business in this country, it is beneficial to understand the culture to avoid offending your host and to enjoy your time in the country. Below are aspects culture to consider when doing business in Saudi Arabia.

Days and Time

The weekend in Saudi Arabia is Friday and Saturday. Friday is the holy day and the day when Muslims attend the mosque meaning most offices are closed on Fridays. Muslims pray 5 times a day and although Westerners are not expected to participate, it means that business proceedings and other meetings will be stopped for prayer.

During the month of Ramadan, business slows down. During this time, Muslims fast from food, beverage and smoking from dawn to dusk. During this time no one is seen eating, drinking or smoking in public or in the presence of those fasting. Offices generally close earlier in the day during Ramadan.

Dress Etiquette

In Saudi, the men traditionally wear the thobe and shemagh, and women generally wear an abaya and headscarf. For Western men, wearing a business suit and tie is appropriate attire for meetings. Western women are required to wear an abaya. Wear clothing underneath the abaya that is long sleeved, and loose fitting pants or skirt that reaches the ankles, as you may be invited to remove your abaya during a meeting. Women are required to carry a headscarf at all times, in case you need to cover your hair. The concept of modesty applies to both men and women in Saudi.

Communication

Saudi Arabia has a high context culture, meaning that the communication is understood by more than just words spoken, but by body language, voice tone, facial expressions, body gestures and eye movement. This is why Saudis prefer to do business face-to-face and build relationships. When communicating, ensure that you are genuine and present, as unlike the Western world, Saudis prefer to know the person they are doing business with and be wary of your gestures and body language you may be projecting.

Business Meetings

It is essential to set an appointment with the other party for a business meeting. Saudis prefer to do business with people they have built a relationship with, therefore most meetings will be preceded with small talk about health, family and leisure. Often, people will interrupt the meeting to talk to the other party, be patient if this occurs, and wait for the new party to leave before commencing the previous conversation.

Pace and Trust

Business in Saudi moves at a much slower pace than in other areas of the world. In general, it can take up to twice the amount of time to settle and agree on a contract in Saudi than in USA. There is less rigidity in schedule and a more laid back sense of time in Saudi culture, in comparison to Western culture. Expect to not talk about business at your first business meeting, as Saudis prefer to do business with people they know, like and trust. Saudis will spend a lot of time getting to know you and your party; safe conversations topics are family, health, leisure, hobbies, and travel. Refrain from directly asking about female relatives, but you may ask about the family in general.

Greetings

Saudis greet very differently from Westerners. Saudi men will shake hands and give each other a kiss on the cheek. Women will generally hug and kiss other women. Women and men do not publicly greet each other if they are from outside of their family.

If you are a Western businessman, greeting men, a handshake will suffice, however, if you have built a relationship with them, don’t be surprised if they kiss you on the cheek. If you are greeting women, do not shake hands or physically greet, simply greet them verbally. If you are a Western female, do not shake hands with a man, respond to the greeting they give you, but you are free to shake hands or hug a woman.

It is important to note, that you should always use your right hand, when greeting and eating, as the left hand is considered unclean.

Business Cards

Business cards are given to everyone you meet. Ensure that your business cards are printed with one side in English and the other in Arabic, as not all Saudis are confident with their English. When you accept a business card from someone, study it before putting it away or on the table in front of you.

Negotiating Etiquette

When doing negotiations in Saudi Arabia, it is important to remain respectful. For successful negotiations, it is vital to remain patient and not pressure your counterpart. Pressuring is viewed as disrespectful and embarrassing as you may have put them in an uncomfortable position. Allow them to make their own decision and embrace compromise and patience.

Most Saudi businessmen have studied abroad and are familiar with Western culture. They are usually comfortable with Western business etiquette, however, learning their customs will be appreciated by your hosts.

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Case Study: Doing business in Saudi Arabia

Address in detail the business climate in Saudi Arabia, is it an easy place to conduct business, or not?

Saudi Arabia is a Kingdom which is the largest market in the Arabian Gulf region according to the case study. Before the law of 2000, foreign businesses were not able to own the full ownership in case they wanted to start a business in the kingdom. But after the changes to the corporate laws in 2000, they can now own their businesses 100%. Saudi Arabia primarily depends on oil that is available in the kingdom in large quantities to run their country, but since the prices of oil are decreasing in the international market, Saudi Arabia.  The political position in the Gulf region may not be stable, but the situation in Saudi Arabia for different types of businesses in encouraging (Rice, 2004). It is welcoming condition for investors. Saudi Arabia is trying to divert its reliance on oil to other sources of income on national level.

Address in detail some of the cultural influences that impact business relationships within Saudi Arabia

Saudi Arabia is a conservative society. Family values are meant a lot to the majority of the Saudi nationals. Families may live in joint family systems. Extended families are also considered part of immediate families. This culture is also depicted in the business relations of the country. Most of the businesses are family owned with most of the board members from the same families. Therefore, doing business in Saudi Arabia may require a special consideration of the culture and social norms of the country. Trust means a lot in such societies. Winning the trust of the local peoples while engaging in business activities is an important factor in successful business relations.

The country has an acceptance of online means of communications. For example, according to Al-Somali, Gholami, & Clegg (2009), there is an increasing acceptance of online banking in the Saudi culture. Therefore, while trying to start a business in Saudi Arabia, new forms of communication can be utilized.

Discuss the political, leadership and economic systems of Saudi Arabia.

The political structure of Saudi Arabia is a dictatorial one where a family has been occupying the leadership of the country for over 5 decades. The king of the country is always from the same family. The legal system is primarily based on Islamic Sharia Law (Vogel, 2000). So if there are any crimes conducted by any one, it is expected that they will be dealt with in accordance with the sharia law of the country.

The economic system has evolved over the time. It is based on principles that are in accordance with the global economy. Saudi Arabia has been dealing with world countries in oil business for the last many decades. This business relations with the outside world had made the internal economic system of the country modernized. Especially there is an increased influence of the American economic system due to the stronger business and political ties of the two countries. Saudi Arabia shares the same region with UAE which is a modern state. Many Saudi people travel back and forth between the two countries on daily basis. An economic system influence of the UAE can also be observed in Saudi economic system

What are some of the companies, and countries, that are doing business within the country?

Many countries of the world do business inside Saudi Arabia due to the potential they see in Saudi Arabia. For example UK has stronger ties with Saudi Arabia which include strong business ties as well.

America is also one of the largest investor in Saudi Arabia. They have strong political and economic ties with the kingdom. Retaining strong relations with Saudi Arabia has always been a priority of almost all US presidents.

There are many multinational companies doing business in Saudi Arabia. For example American International Group, First Union Bank, General Dynamics, Proctor and Gamble, Harris Corporation, and Holiday Inn are some of the international companies doing business inside Kingdom of Saudi Arabia since a considerable period of time and profiting from the purchasing power of the oil rich country.

Does corruption play a part in the international business environment within the country? If so how?

Though Saudi Arabia is a strict country that prides itself in being a disciplined society, there are unfortunately many issues faced by international companies in the country. Among them is corruption that exists in the business and political environment of the country. Due to the country being a dictatorship, there are chances of some selected people abusing the power they have in different ways. For example, outside companies may be asked for bribes against different business related licenses. Middle men are required to do business in the country. These middle men have to be a Saudi citizen. Therefore, outside companies may be dealing in terms put forward by these middle men.

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