B301: Business-Level and Generic Strategy in the Kuwait Market

This essay examines the business-level and generic strategies employed in Kuwait, considering the nation's economic landscape shaped by its significant oil reserves and semi-democratic political system. It discusses policies aimed at protecting local companies, the impact of foreign direct investment (FDI), tax benefits, import processes, and labor policies. The essay also analyzes strategies that can enhance the capacity of Kuwaiti firms in the global market, focusing on demand conditions, supporting industries, factor conditions, and firm strategy and structure. It highlights the challenges faced by small businesses due to the dominance of large foreign companies and proposes measures to foster a more sustainable and competitive environment for native enterprises. The role of joint ventures, open-door policies, and strategic adaptations are also explored in the context of Kuwait's unique economic circumstances.

Running head: BUSINESS-LEVEL AND GENERIC STRATEGY
BUSINESS LEVEL AND GENERIC STRATEGY
Name of the Student
Name of the University
Author Note

1BUSINESS LEVEL AND GENERIC STRATEGY
Table of Contents
Policies to protect and support the local companies in Kuwait.......................................................2
Foreign Direct Investment policies..............................................................................................2
The Tax benefits and import process...........................................................................................3
Labour policies and practices......................................................................................................3
Association with joint ventures and partnership..........................................................................4
Open door policy.........................................................................................................................4
Strategies that enhance the capacity of firms in the global market.................................................5
Demand Condition.......................................................................................................................5
Supporting industries...................................................................................................................5
Factor condition...........................................................................................................................6
Firm strategy and structure..........................................................................................................6
References........................................................................................................................................7

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Policies to protect and support the local companies in Kuwait
Kuwait is a country in Western Asia, at the edge of Eastern Arabia and the economic
change in this country noticed after 1938 when oil reserves were discovered. Kuwait has the
semi-democratic political system, thus government intervention is not monitoring all over the
nation. The country has the high-income economy and has world sixth largest oil reserves.
Kuwaiti Dinar is the highest value currency and that is the reason big companies are grabbing
and holding their big shares and that creates the problem for the small companies to exit their
business and for sustainability. $300 billion total GDP is founded in 2018 index along with the
fourth best per capita income $69,567 (En.portal.santandertrade.com 2018). Through oil
accounts, 95% of GDP has gained by the country and that fluctuate highs and lows in the volatile
market and that is the reason economic condition depends on that. However, the development of
oil and petroleum market in this nation is consistent in every aspect and that provide support to
the nation's economy.
Foreign Direct Investment policies
The rate of increase in economy is the most promising aspect of the country and small
countries will increase their range of business through this but the introduction of major direct
investment is obstructing the process. The nation allows 100% foreign investment from different
sectors in business. The series of law has been introduced by the government of Kuwait in 2015
and that is the reason public-private partnership has made the structure that provides enough
support to the small business areas (En.portal.santandertrade.com 2018). The taxation law for
foreign companies had taken back in 2008 and international oil companies made their mark over
the nation. The implementation of FDI law and decline the oil revenue and need to diversify the

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economy was not so achieving. They also knew the fact that development of the nation and both
direct and indirect investment in any section was related to oil and petroleum process.
In 2014, the foreign direct investment flow is US$ 950 million and after two years the
numbers are back up to US$ 274 million, this is a huge success for the small companies to
maintain their business (Osiyevskyy and Dewald 2015). On the other hand, the government has
faced a bit of difficulty as they had not get a good amount of tariff from those companies The
percentage of FDI stock has increased up to 9.6% to 13.1% from 2014 to 2016. The banking
system of Kuwait is very strong and that is the reason they need to support the small companies
and government has to impose more tax for foreign companies. On the other hand, 100% foreign
ownership and welcome them in an open way is not the right way to strengthen the small
business, so consideration over this is also needed.
The Tax benefits and import process
There is no value added tax in Kuwait and incorporate case, 15% of the flat rate is
imposed for all companies. In case of foreign companies also the situation is the same, however,
the rate needs to be increased. The tax year of the nation starts from January 1st and ends 31st
December. Social security tax, National labour support tax, Zakat all these corporate tax need to
be imposed over the foreign investment companies, whereas in case of small companies of
Kuwait, these taxes need to be relaxed (Parnell et al. 2012). Total share profit of taxes is 13%
and the number of paying taxes per year is 12%. The equal treatment provided by foreign
companies and native companies, but that need to be stopped. The government has to free some
bondage from small native companies so that they can do their own business in a sustainable
way.

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Labour policies and practices
Total activity rate in Kuwait in 2017 is 69.01% in which men activity is 53.76% and
female activity percentage is 47.32%. The active workforce in Kuwait is important for their own
economy and they need to build the economy to provide support to the small companies (Barrie
2012). The legal working condition for employees in a weekly condition is 8 hours per day, sum
to 48 hours per week. The cost of labour is also important in that matter and private sector
workers got KWD 65 per month and in the case of domestic workers, KWD 45 per month is the
salary. The Ministry of labour and social affair in Kuwait set their labour policies and that
provide the confined situation for the small business process (Lechner and Gudmundsson 2014).
In case of joint ventures minimum, 5 partners are needed with the capital amount of KWD
250,000 in case of close shareholding company. In case of limited liability, 51% capital must be
upholder by Kuwait.
Association with joint ventures and partnership
The association with other companies’ foreign companies have started their ventures in
some cases and this is the reason they have strengthened their position in their field. The full
fledge investment needs to be stopped in that aspects and so that big companies have to tie up
with any of the native companies and that will enhance the business opportunities as well (Munar
2012). In case of the general partnership, the process of the extent of personal wealth is the
crucial factor and in case of limited partnership separate legal entity is separate in that case.
Open door policy
The policy is very important for the nation to penetrate other global businesses through
the open door process. The process is used for the other companies to stand their business in
Kuwait. If the government of Kuwait implement the open door policy, then global business will

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get the same business condition and equity for all (Teeratansirikool et al. 2013). The business
expansion in this nation will enhance and that will make technological assistance for the small
companies in this nation. On the other hand, the process is not very fruitful for the others native
companies as their own business market demolished and that will be initiated the change and fall
in business in the aspect of development. This is the reason open door policy is not so beneficial
for the entire business process in Kuwait.
Strategies that enhance the capacity of firms in the global market
In case of enhancing the capacity of the organization, some of the productive changes
need to be done. The aspect of factors condition, supporting industries, demand condition for the
business market is important in this aspect (Hoejmose, Brammer and Millington 2013). The
market competition with other companies is relevant here and shield from big companies or
foreign companies is needed.
Demand Condition
There are some drivers for market demand and the domestic market is the targeted option
for that. The stimulation of innovation, quality and growth of the product is the main issue that
enhances the company's market position as well. The traditional intention for big companies is to
illustrate the market position and take over the small companies or even create the problem for
them and that makes the obstacle for small business (Buller and McEvoy 2012). The business
generic strategy is different for the small business in that case and they need to invent some
process by technological or promotional means so that better evaluation and the sustainable
condition can be created.

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Supporting industries
There are some supporting industries as well as for small industries and these industries
help to provide support and growth. The national competitive support gains from these
supporting industries. They are the semiconductor firms that help big companies as well. In the
case of manufacturing products these kind of factories are very crucial and in case of a domestic
process, government initiation is enormous (Brenes, Montoya and Ciravegna 2014). The
particular industry, in this case, is the cluster of individual support and in the case of textile,
automobiles and chemical firms the process of support is important. The strategies tend to be
important in that matter and nature of business, in that case, is very important as the supporting
companies are also from the same backgrounds as well.
Factor condition
There are some factors endowed into categories in the home and foreign companies. The
nature of business and allocation of tax is different in that case and external backup from
supporting companies are relevant in that case. Highly specified resources and the homegrown
process is important for the sustainability of the business (Salavou 2015). There are some
different nature of business in home factors but the acclamation of business factors for one
sustainable business condition is the real aspect for developing business. Factors like political,
environmental, economic, social all these factors concreted the business along with the quality
labour force and management.
Firm strategy and structure
The firm strategy needs to be competitive and direct. The domestic competition in that
case with foreign companies is direct and impactful. The native companies have to measure their
own role and provide innovation and efficiency in products and that will be impactful for the

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company as well. The direct approach is helpful and the foreign market analogy used by the
company so the effective impact can be created to make a more profitable business for the native
small companies (Lindgren 2012). The stimulation and companies infrastructure needs to be
strong in that manner to make a good position and sustainable confidence in this competitive
business process.

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References
Barrie, S.C., 2012. A research-based approach to generic graduate attributes policy. Higher
Education Research & Development, 31(1), pp.79-92.
Brenes, E.R., Montoya, D. and Ciravegna, L., 2014. Differentiation strategies in emerging
markets: The case of Latin American agribusinesses. Journal of Business Research, 67(5),
pp.847-855.
Buller, P.F. and McEvoy, G.M., 2012. Strategy, human resource management and performance:
Sharpening line of sight. Human resource management review, 22(1), pp.43-56.
En.portal.santandertrade.com 2018 KUWAIT: OPERATING A BUSINESS retrieved from:
https://en.portal.santandertrade.com/establish-overseas/kuwait/operating-a-business-2 [Accessed
on 9th July 2018]
Hoejmose, S., Brammer, S. and Millington, A., 2013. An empirical examination of the
relationship between business strategy and socially responsible supply chain
management. International Journal of Operations & Production Management, 33(5), pp.589-
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Lechner, C. and Gudmundsson, S.V., 2014. Entrepreneurial orientation, firm strategy and small
firm performance. International Small Business Journal, 32(1), pp.36-60.
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business model innovation?. International Journal of business and management, 7(14), p.53.
Munar, A.M., 2012. Social media strategies and destination management. Scandinavian Journal
of Hospitality and Tourism, 12(2), pp.101-120.

9BUSINESS LEVEL AND GENERIC STRATEGY
Osiyevskyy, O. and Dewald, J., 2015. Explorative versus exploitative business model change:
the cognitive antecedents of firm‐level responses to disruptive innovation. Strategic
Entrepreneurship Journal, 9(1), pp.58-78.
Parnell, J.A., Lester, D.L., Long, Z. and Köseoglu, M.A., 2012. How environmental uncertainty
affects the link between business strategy and performance in SMEs: Evidence from China,
Turkey, and the USA. Management Decision, 50(4), pp.546-568.
Salavou, H.E., 2015. Competitive strategies and their shift to the future. European Business
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Teeratansirikool, L., Siengthai, S., Badir, Y. and Charoenngam, C., 2013. Competitive strategies
and firm performance: the mediating role of performance measurement. International Journal of
Productivity and Performance Management, 62(2), pp.168-184.