B301: Assessing Kuwait's Business Environment with Porter’s Diamond

This essay examines the business market opportunities and conditions in Kuwait through the lens of Porter’s Diamond of National Advantage model. It identifies the business environment in Kuwait, highlighting competitive advantages for local and international organizations. The analysis covers factor conditions, emphasizing the growing tech and e-commerce sectors, and the importance of government policies and industrial relations. It discusses the market demand, the role of the oil and gas sector, and the government's efforts to diversify the economy. The essay also explores the significance of supply industries and the high level of competitiveness in the Kuwaiti market. Furthermore, it proposes strategies for business firms aligned with government policies, including developing infrastructure, providing alternatives to the oil and gas sector, sharing equal opportunities for suppliers and parent companies, and encouraging innovation, to ensure sustainable business environment. The essay concludes by underscoring the importance of government initiatives in safeguarding business practices and ensuring economic progress.

Running Head: DIAMOND NATIONAL ADVANTAGE
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The open economic aspect and the highest valued currency unit in the World make
Kuwait one of the lucrative markets in the world. The leading business sector is the Oil and gas
but the government is also puts emphasis on other business initiatives. As a result of that IT and
construction business are going to the next promising business initiatives within the country.
However, there are several loopholes that create obstacle for future development of the Kuwaiti
industries in an overall scenario. Therefore, this essay intends to look into the business market
opportunities and conditions in Kuwait through the glance of Porter’s Diamond of national
advantage model. Moreover, the discussion extends its focus on relevant strategies and
government policies that will help the country to refurbish its economy.
In this regard, the Diamond of national advantage is trying to identify the business
environment in Kuwait and entitled to highlight the competitive advantages that the local and
international organisations can get while doing business in Kuwait.
As far as the factor conditions are concerned, it can be argued that most of the business
industries in Kuwait are primarily focused on the offline business initiatives. However, with the
opening of the market for global corporate organisations, it becomes essential for the Kuwaiti
industries to implement technology into the business orientation. As a result of that, tech
business and e-commerce practices are growing at a rapid pace in Kuwait. Moreover, it is also
linked with the industrial relation and the skill of labourers. The Kuwaiti business sector follows
a clear preservation of the process of Pluralistic approach. It means the role of government and
the trade unions are also considered to be a major facet for establishing better employee interest
in the industrial market. As a matter of fact, Article 43 of Kuwaiti Constitution provides the
workers the right to strike (En.portal.santandertrade.com 2019). Therefore, it becomes an
important aspect for the business organisations to abide the laws and regulation of the

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government and at the same time shape an effective business environment that will meet the
interest of both industrial firms and employees. However, the high competition in the local
market can discourage the multi-national companies to enter into the Kuwaiti market. In addition
to this, the role of the government is highly significant in order to understand the progress in the
market (Emerging-markets-research.hktdc.com 2019). The Kuwaiti government already invests
huge amount of financial aid to procure a national development plan. Therefore, investing money
in the electricity and automotive, IT and telecommunication is also a part of the government
initiatives besides the flourishing business in Oil and gas.
The market demand in the Kuwaiti market is quite promising for the international
organisations in terms of exporting crude oil from this country. However, this intense
dependency on the oil and gas sector is considered to be a problem for the steady development of
Kuwaiti business market. The government also tries to focus on alternative practices that will
help to develop a healthy business practice. Moreover, it can be stated that Kuwait itself is a rich
country with a high per capita income. The GDP increase rate in the annual years can be
identified with a growth of 4.1 in 2020 where as in 2019 the total GDP is estimated 152.37
billion (En.portal.santandertrade.com 2019). Furthermore, the inflation rate is also identified as a
major factor to identify the demand in the market. In this regard, Kuwait enjoyed an inflation rate
of 0.8 in 2018 (Al-Saidi and Al-Shammari 2015). It means the government sets effective policies
in order to control the inflation rate effectively. Oil and gas is refereed as the major industry in
Kuwait whereas the government is also willing to develop infrastructure in the banking,
property, security and environmental management. In addition to this, the political stability of the
country paves the way for a growing tourism and hospitality industry. It will help the country to
maximise its international customers and business companies to invest extensively.

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Rapid urbanisation and the influx of expatriate workforce, a significant development in
the supply industry is also provide strategic and competitive advantage for the business
environment in Kuwait. Supply in the retail industry helps the country to establish a strong base
of suppliers and the trade unions are there to safeguard the interests of the suppliers (Al-Shbail
and Turki 2017). Therefore, close relation between the parent company and the suppliers is one
of the major facets of doing business in Kuwait. As a matter of fact, the power of the suppliers in
the Kuwaiti market has a great role to influence the business orientation of the companies. It is
further associated with the government reductions in expenditure, demography and the expatriate
community. It can be argued that due to immense presence of the oil and gas sector in Kuwait, it
becomes a global market for the leading international organisations. From that point of view, the
oil and gas companies in Kuwait are also labelled as the suppliers. Therefore, Aldehayyat (2015)
opined that Kuwait follows a significantly important role in order to draw an impact on the
international business. Competitiveness in the local suppliers and the cost effectiveness are also
pertinent aspect that provides huge differences in the Kuwaiti business environment.
High competitiveness and business rivalry is a major characteristics of Kuwaiti business
practices. As per the report of Emerging-markets-research.hktdc.com (2019) Kuwait ranks 54th in
the global competitive ranking. Despite of controlling a small country the high global
competitiveness rank proves that there are huge rivalry among the business organisations while
doing business in Kuwait. Most of those competitiveness come from the oil and gas sector with
the intention to control the market effectively. It is associated with the fact that shape up the
existing infrastructure is also provided relevant progress in the development of industries.
Infrastructure in terms of the human capital, resilience and the quality of human resources play

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dominantly and formulate better advantage for the Kuwaiti business market to flourish
significantly (Alzayed and Alraggas 2014).
From this point of view, it is essential to define four main strategies that the business
firms can follow aligned with the government policies so that the organisation can get strategic
advantage in the Kuwaiti market.
Developing infrastructure is considered to be a major strategy for the Kuwaiti
government in order to increase the business environment for the business firms. According to
Sharabati et al. (2016) lack of infrastructure in business is fatal for a nation. The local companies
can survive the poor market condition but it will never be helpful for the foreign multinational
organisation. Lack of infrastructure is also associated with the poor quality of the technological
implementation. As a result of that it becomes a serious threat to the national economic
development. Therefore, the government must develop better infrastructure so that both the
domestic and international organisations can get opportunities.
Providing more alternatives is an essential aspect for the Kuwaiti government to release
the pressure on the oil and gas sector only. An overall development in the business sector should
be the government policy so that it can get dynamic progress in economic development. Doppelt
(2017) advocated that the role of the government should be associated with the practice of
diversify the market. As a result of that an all over development can be seen in the context of
business market in Kuwait. In fact, any issues or fall in a particular sector will never damage the
entire business establishment and the government can put more pressure on other sectors so that
the issue can be mitigated.

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Share equal opportunity for the suppliers and parent companies is also a pertinent aspect
for the government to ensure hospitable business environment within the country. It is important
to note that both the interest groups must get equal opportunities in order to cope with their
specific interests. As a matter of fact, unitary government regulation for the local and
multinational business organisations is also required for avoiding any kind of threats for both the
entities (Elbe and Emmoth 2014). An equal and legitimate business orientation always helps the
organisations to make effective business practice where the collaboration between the foreign
and local business companies can generate effective growth of the Kuwaiti business market.
Encourage innovation is highly essential and relevant in the context of the Kuwaiti
market in order to continue the progress in economy. In this regard, the government policies are
also played pivotal role in order to encourage the business organisations to implement innovation
and step forwards towards establishing sustainable business environment. As a matter of fact,
protecting the future business practice and steady growth in the Kuwaiti market is of grave
concern for the Kuwaiti government and the authority intends to put emphasis on that aspect
effectively.
From the above point of view, it can be stated that the essay rightly understand the
importance of government initiatives in order to safeguard the business practice and ensure
progress in economy extensively. Therefore, this essay at first tries to evaluate the business
environment in Kuwait and then formulates some government strategies in order to preserve the
interests of both the local and international business entrepreneurs. Therefore, it can be
concluded that this essay is highly relevant with the proposed aim and discusses the relevant
features properly.

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Reference
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