FDI and Porter Diamond Model for Kuwait's Oil Industry

Running head: Marketing strategy
Marketing strategy
2018

Marketing strategy
The main purpose of this essay is to outline the role of FDI and porter diamond model that help
in achieving goals and objectives and to stay in the competitive market.
FDI and porter diamond model: It is examined that Kuwait will find themselves in a tiny gulf
state for doing business. Kuwait is one of the biggest and richest countries across the world that
has a very unique and open economy and well educated labor force made up predominately of
foreign markets. A research is conducted by World Bank that Kuwait was scored 102 out of 190
nations (Expatarrivals, 2018). The nation is doing well and unique in the field of paying taxes
and enforcing contracts but fell short in trading around boarders and initiating the business.
Foreign direct investment may be defined as direct investment equity flows in an economy. It is
a sum of reinvestment of earning, equity capital and other capital. Kuwait has been a nation
which is opened to foreign investment and is also opening to foreign capital. In early 2003, a
new law for FDI came into force. It permitted 100% foreign ownership in multiple industries
(CEIC, 2018). It is stated that Kuwait continues to promote and improve the foreign direct
investment with the initiation of the FDI. With the reduction in oil revenue and the need to
expand its economy, the government of the Kuwait seeks increased foreign investments as it
plans to expand and explore its oil dependent economy and various steps have been taken to
achieve the goals and objectives (Ramady, 2014). The current policy of the country to encourage
FDI focuses on a number of foreign ownership including software development, insurance, air,
land, information technology, tourism, hotel, urban development, entertainment and investment
management. The central bank of Kuwait offers foreign direct investment in local currency. In
this way, the country has been able to attract and retain foreign direct investment (CEIC, 2018).
Various components such as challenges, infrastructure, transportation, legal factors and
globalization may affect the growth of FDI in Kuwait. The country needs to focus on the
innovative and advanced technologies to eradicate and minimize all these issues and challenges.
This will help the Kuwait to boost and enhance the revenue and return in the competitive market
(Behbehani and Hallaq, 2013).
It has been found from the various studies that Kuwait is one of the biggest and well known oil
suppliers and further it is a member of the OPEC consortium. The country has a current
production capacity of approx 3.15 million barrels per day. Current oil and refinery projects
include the “clean fuels project” which would expand and upgrade the Mina Abdulla and Mina
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Marketing strategy
Al-Ahmadi refinery complexes. It is noted that U.S oil corporations, suppliers and manufacturers
of oil field equipment have already experienced receptivity in the market (Export, 2018). The
porter diamond model for Kuwait that helps in attracting and retaining the FDI is discussed
below.
Factor condition: It is one of the significant factors of porter diamond model. It includes various
factors like experience, physical resources, human resources, workforce, infrastructure and
financial resources. All these elements help in attaining competitive benefits by attracting
various companies in the market. The oil industry in Kuwait uses all these factors to stand out
over the rivals in the global market. In addition, various training and development programs are
being held to promote and enhance the image of oil industry in the country. It states that
advanced technology, human resources, knowledge, experience and distribution channels are
used by Kuwait to develop and improve the financial position across the world. It will help the
oil industry to compete or fight with competitors globally (Schiele, 2008).
Demand condition: One of the vital factors of porter diamond model is demand condition. The
demands and requirements of the customers are measured to increase sale and revenue of oil
industry in the country. To evaluate and identify the needs, requirements and demands of the
customers, a depth marketing research is conducted by the industry in Kuwait. The stable and
strong economies of scale help the country to eradicate and reduce the extra cost of the goods
and services. The strong economies of scale and resource help to improve and attract the FDI in
Kuwait (Luo, Sun and Wang, 2011).
Related and supporting industries: Kuwait is one of the leading and largest suppliers of oil
industry. Thus, it is able to maintain strong and biggest position and image in the international
market. The country has signed on various agreements to promote oil and refinery industry. The
demand for drilling equipment and services would be strong and unique due to Kuwait’s
objective of increasing its oil and gas production capacity over the next ten years by improving
and building heavy offshore and heavy oil fields. Various oil companies in Kuwait provide
support to attract and retain FDI in the country. The success and growth of oil industry also
support the other supported and related companies in the country. Oil and gas industry in Kuwait
also promote and improve the plenty of business activities and operations like manufacturing,
transportation and financial services (Ozgen, 2011).
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