Benefits of PPP Model for MNCs in GCC

The assignment discusses how PPP models can help MNCs understand operations management in GCC countries. It also explores the advantages of Foreign Direct Investment (FDI) and the potential for job growth in GCC due to increased FDIs.

International Business

Table of Contents
MAIN BODY...................................................................................................................................1
REFERENCES................................................................................................................................3

MAIN BODY
PPP or Public private partnership is a model that is used for funding public infrastructure projects and
has both short and long-term management plans that is beneficial for business organisations that want to
growth and develop themselves. This model is useful for projects that are large in scale and require labour that
are highly professional or skilled. There are various models in PPP that can be used by MNCs, when and if
they want to make foreign direct investments in the GGC (Wang and Wang, 2017). These include design-
Build, in which private partners come together to create designs that can be built so that they are able to meet
the expectations of public partners, while deciding on a fixed price. This has many risks but can be beneficial
for MNCs. Another model of PPP is design-build-finance-operate, in which private partners create designs,
plan finances and build or construct new infrastructure while conducting operations and maintaining it. Once
their contract is completed, they hand it over to public partners who continue to operate the business that has
been set up. These models are methods through which MNCs can set foot into GCC, and it can prove to be
extremely beneficial as there are 2 sectors involved (Hodge, Greve and Boardman, 2017). The private sector
can use PPP models and build designs through new innovations, while public sector can help them in running
these businesses in a successful manner and for a long duration of time. This offers MNCs a good opportunity
to regulate themselves within the GCC.
There are various types of Foreign Direct Investment that can be applied by Multi National
Companies as they help these organisations attain ownership of certain assets so that they are able to control
production, distribution and other business activities, while staying in a different country. There are mainly 3
types of FDIs, which include direction, target and motive (Conconi, Sapir and Zanardi, 2016). With the help of
PPP model, companies can assess how they would like to invest in different countries, so that they are able to
earn maximum profits. While investing in GCC can prove to be very beneficial as there are many opportunities
present for growth and development. The inward and outward FDIs can help in gaining tax breaks, low interest
lows and subsidies with long term benefits. Outward FDIs use local capital to invest in foreign resources and
this is generally aided by the government. However, this can be restricted through tax incentives. PPP can use
mergers and acquisitions as a method of making investments so that there are less frameworks that have to be
processed and it is much easier. GGC region is in the list of top economies and it has been continuously
growing in the recent years. There are many opportunities that can help in developing these countries even
more and MNCs provide more employment for people from all across the countries (Mastromarco and Simar,
2015). This can be successfully done with the help of PPP, as their models can significantly help MNCs to
understand how they can run operations in a successful manner, for the long run.
Therefore, bringing MNCs through PPP model and Foreign Direct Investment into the GCC can prove
to be successful or beneficial as there are certain foreign and trade policies that are in favour of MNCs. There
are various opportunities open for PPPs, as they have a wide range of products to offer and are able to build
relationships through different channels. Management from different countries have more effective approaches
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towards reskilling local partners. This helps in monitoring and developing skills and competencies of
employees in GCC (Indraganti and Boussaa, 2018). MNCs give a chance to create better demands, so that they
are able to plan distribution methods and make proper logistics management. This can significantly aid them in
development of strategies for growth as well as methods through which they can succeed in tough
competitions. GCC is a cost sensitive market and their main priority is customers. They work in an efficient
manner, which enables them to have high levels of production while saving the environment. There will be
high rates of job growth in GCC, due to the increase in FDIs and this can help in overall economic growth as
well (How Multinationals can grow in the Middle East and Africa, 2017). They will also be able to make
improvements in risk and operational management. This will helps them in making good use of such
opportunities and increase profitability within MNCs that operate in these countries. The VAT system that has
been introduced in GCC is considered to be beneficial for FDIs of MNCs, as it has a systematic and smart
strategy.
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REFERENCES
Books and Journals
Conconi, P., Sapir, A. and Zanardi, M., 2016. The internationalization process of firms: From
exports to FDI. Journal of International Economics. 99. pp.16-30.
Hodge, G., Greve, C. and Boardman, A., 2017. Public‐Private Partnerships: The Way They Were
and What They Can Become. Australian Journal of Public Administration. 76(3). pp.273-
282.
Indraganti, M. and Boussaa, D., 2018. An adaptive relationship of thermal comfort for the Gulf
Cooperation Council (GCC) Countries: The case of offices in Qatar. Energy and
Buildings. 159. pp.201-212.
Mastromarco, C. and Simar, L., 2015. Effect of FDI and time on catching up: New insights from
a conditional nonparametric frontier analysis. Journal of Applied Econometrics. 30(5).
pp.826-847.
Wang, J. and Wang, W.B., 2017. A Comparison of British and Russian PPP Model: Based on
KPI Method. Fu Dan Xue Bao. She Hui Ke Xue Ban. (4). p.125.
Online
How Multinationals can grow in the Middle East and Africa. 2017. [Online]. Available through:
< https://hbr.org/2017/04/how-multinationals-can-grow-in-the-middle-east-and-africa >
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