When entering the abaya fashion business in Saudi Arabia, the following external forces need to be taken into account
Currently, the population of Saudi Arabia equals 27,752,316 people with the growth rate of 1.5%; the number of female citizens above the age of 15 years amounts to 8,985,547 (“Saudi Arabia” par. 3). Given the fact that all this population is Muslim (which is a socio-cultural aspect; hence, the two forces interact), a significant part of this market is potentially the target market.
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The change of the role of the woman is an important aspect: as women begin to lead a more active social life, fashion industry becomes more important for them (“Saudi Arabia” par. 1). Also, the unemployment level (almost 30% due to women unemployment) means that the new business has plenty of human resources to employ.
Saudi Arabia is an oil-exporting country (possessing 16% of the world reserve) with a high level of income, which is favorable for a business. However, the recent decrease in the oil price has caused a budget deficit in 2015 (“Saudi Arabia” par. 5).
According to the UN, the current economic situation in the world is characterized by a slow recovery from the 2008 recession that is made more difficult by the current geopolitical tensions and the plunging oil prices (“World Economic Situation and Prospects 2015” 1-10). Therefore, the economic forces are largely unfavorable at the moment.
The natural forces are concerned with the environment, which includes resources and the possible impact of the business on the surrounding world (Raichaudhuri 25). Saudi Arabia has a specific legislation for environment protection (“General Environmental Law and Rules for Implementation” enacted in 2001), and businesses must adhere to it (par. 1). The economic situation may pose indirect (cost-related) threats, but no resources of the fashion industry appear to be directly affected by the crisis.
The socio-cultural forces are both benevolent and malevolent. The fact that up to 90% of the country’s population is Sunni Muslim determines a high demand for the product (“Saudi Arabia” par. 3).
However, abaya fashion is a controversial issue. Abaya is meant to express modesty while fashion may be considered a phenomenon that opposes modesty, which might impose some limitations on the business (Kreidler 142). It should be pointed out that abaya requirements are interpreted differently in different countries, which means that if the company grows to enter the markets outside Saudi Arabia, new threats and opportunities may be encountered (Kreidler 139).
The fashion industry is not as dependent on technology as, for example, IT, but it becomes more competitive every year. For instance, in 2016, Dolce & Gabbana expressed the desire to launch their collection of abaya fashion (Gani par. 1). Therefore, investment in research and development is a must, but it is an opportunity rather than a threat (Raichaudhuri 25).
Political and Legal
From the point of view of the legal aspect of starting a business, Saudi Arabia is a favorable environment. Khan demonstrates that the country “exhibits a remarkable potential” for economic growth, and its government provides incentives and consistent policies and procedures for new businesses (40-41).
The type of the business may become an issue. The controversy of abaya fashion is not only a moral concern: in Saudi Arabia, the law is based on Holy Qur’an (“Doing Business in Saudi Arabia” par. 3). As a result, for example, fashion shows were banned in 2015 (“The Couture-Buyer beneath the Abaya” par. 1). The fashion industry is not too dependent on fashion shows, but this specific feature of Saudi Arabia legislation needs to be taken into account.
To sum up, the interaction of the forces provides a favorable environment for a new business in Saudi Arabia. Certain issues (abaya fashion) are not exactly threatening, but they need to be taken into account, and they are going to modify the business. The only significant threat is the current economic situation, in particular, the oil prices plunge.
“Doing Business in Saudi Arabia.” IMA. IMA, 2015. Web.
Gani, Aisha. “Dolce & Gabbana Launches Luxury Hijab Collection.” TheGuardian, 2016. Web.
“General Environmental Law and Rules for Implementation.” Presidency of Meteorology and Environment. 2001. Web.
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Khan, Muhammad Rahatullah. “Mapping Entrepreneurship Ecosystem Of Saudi Arabia”. World Journal of Entrepreneurship, Management and Sustainable Development 9.1 (2013): 28-54. Web.
Kreidler, Jan. “Glam Abaya.” Fashion Talks. Ed. Shira Tarrant and Marjorie Jolles. State University of New York Press, 2012. 135-147. Print.
Raichaudhuri, Anjan. Managing New Ventures. New Delhi: PHI Learning, 2010. Print.
“Saudi Arabia.” CIA World Factbook. CIA, 2016. Web.
“The Couture-Buyer beneath the Abaya.” TheEconomist. 13 Jun. 2015. Web.
“World Economic Situation and Prospects 2015.” UN World Economic Situation Report. UN, 2015. Web.