Saudi Arabia is well placed in the Middle East region. The region has experienced an economic boom over the last decade. This has been due to the discovery of high levels of oil and natural gas in the country (Euromoney 1). These discoveries, coupled by a high population make the market attractive for business investment.
As the growth in population and finance from oil and natural gas exports increases, Saudi Arabia’s population has continued to enjoy a strong purchasing power (CIA 1). Strong consumer purchasing power is one of the fundamental factors which make the Saudi Arabia market more attractive to foreign investors. The market is promising since according to the current statistics the country has a GDP of 6.8 percent (CIA 1).
The level of competition in Saudi Arabia is very high. This offers investors a chance to invest wisely and come up with marketing strategies that offers them a competitive advantage over their competitors. Rapid expansion in the manufacturing industry coupled with an increase in the level of investment from both foreign and domestic investors has increased the level of competition in Saudi Arabia’s market.
A high level of competition makes the market less attractive since new investors will be required to come up with strategies which are above the current production standards. In addition, new investors (entrants) face a threat from already existing competitors and rival companies.
Saudi Arabia shares the same cultural beliefs and practices with Dubai. Therefore, by opening a branch in Saudi Arabia, cultural shock and language barrier that may hinder business success are eliminated. Moreover, sharing of culture reduces psycho-cultural conflicts between different countries (Ross 164). Geographically, Saudi Arabia is centrally placed which makes it easily accessible by any investor in the MENA region.
In addition, its geographical location provides an easy access to export market in various destinations. This makes it more attractive to foreign investors. Manufactured end products can easily be transported to the neighboring countries without any hindrance. The geographic location of Saudi Arabia also opens its market to emerging economies in Asia and Europe.
The level of current and future demand is very high making the region more attractive to investment. For instance, according to Al Adhami (3) the population of Saudi Arabia is expected to be twice the current population by 2050. The double increase in population shall affect the country’s buying power and size perspectives.
This could make Saudi Arabia the largest economic hub of the GCC region and the fastest growing economy owing to the increased buying power. Therefore, the country has a potential for future growth in terms of an increase in market demand. Saudi Arabia is a growing market which makes it even more attractive to investments.
Market viability is an important component which is considered before investing in a new market. According to Thompson (177), a market viability analysis is not limited to the market environment, distribution, competitors and availability of similar products. Saudi Arabia is the largest economy in the region which makes it sustainable to investors and consumers (CIA 1).
In addition, Saudi Arabia is a potential market and its large size makes Saudi business enjoy from large economies of scale. Foreign inventors benefit from well developed value chains and business clusters which makes it a viable market to invest into. Other sectors such as energy and transport are well developed and hence enhance the rate and degree of production.
Works Cited
Al Adhami, Saad n.d., Saudi Arabian Construction Market. Web.
CIA 2012. Saudi Arabia. 2012. 2012. Web.
Euromoney n.d. International banking finance and capital markets news and analysis. Web.
Ross, Marc Howard. “Psychocultural Interpretations and Dramas: Identity Dynamics in Ethnic Conflict.” Political Psychology 22.1 (2001): 157-178. Print.
Thompson, Allan 2005. What are the dimensions of business viability. 2005. Web.