Business Strategies in Kuwait: Porter Diamond Model, FDI, and Policies

This report delves into the business-level strategies employed in Kuwait, particularly within the context of the oil-dependent economy. It utilizes Porter's Diamond Model to analyze factors influencing Foreign Direct Investment (FDI) attraction and retention, considering factor conditions, demand conditions, supporting industries, and strategy, structure, and rivalry. The report examines the strengths of Kuwait's market, including its strategic location and stable regime, while also addressing challenges such as infrastructure and political risks. Furthermore, it proposes policies that the Kuwaiti government should adopt to enhance its industries' capacity for innovation and upgrading. These include fostering collaboration, investing in digital technologies, improving immigration policies, developing economic infrastructure, and investing in labor training and development. The report concludes that by implementing these strategies, Kuwait can strengthen its competitive position in the global market and maximize its economic returns.

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Business level strategies

Business level strategies
Table of Contents
Introduction.................................................................................................................................................3
Porter diamond model and FDI...................................................................................................................3
Policies that government should adopt to enhance and improve the capacity of its industries to innovate
and upgrade.................................................................................................................................................5
Conclusion...................................................................................................................................................7
References...................................................................................................................................................8
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Introduction
Porter diamond model is a significant framework to attract and retain FDI and handle and
overcome the competitors in the global market. The paper outlines how Kuwait government
should exercise policies to enhance and augment the capacity and efficiency of the industries.
Porter diamond model and FDI
Kuwait’s economy is developed and built entirely on oil production and profitability from the
investment of its oil profits overseas. The strong economy and excellent oil production help in
making the country a very wealthy and dynamic and permits the government to render various
advantages to its citizens. The organizations who invest in the country benefit from 100%
foreign ownership, exemption from tax, ten years tax breaks and custom duties on imports
needed for the purpose of direct investment (Porter, 2011). The strengths of Kuwait market
include the strategic location, stable regime, moderate business costs, and friendly living
environment for foreigners (Kuwait.2018). It is measured that investment is done by the
companies in foreign countries to develop and build a strong goodwill and position in the
international market. Kuwait is always opened to foreign direct investment and further it is
opening to foreign capital (Riquelme, 2013). There are various factors affect the FDI in Kuwait
that put direct impact on the success and growth of the industry. The various factors include
infrastructure, transportation, political risks, challenges and globalization. To overcome on these
issues and challenges, the country needs to use advanced and innovative technologies and
resources in the competitive market. It will further help the country to improve and enhance the
profitability and returns. It is elucidated that foreign direct investment helps in providing ample
of local economic benefits in multiple locations. It shall be analyzed that Kuwait country has
imported tariff that shall be paid for products and services (Exportiamo, 2018). Export and
import businesses may struggle to keep the products and services at suitable prices for the
customers because of these taxes. Through FDI, it can be possible to eliminate and reduce
various unnecessary tariff and policies. Thus, price competition can be maintained in the
international market. FDI is a significant element to increase and improve the GDP and growth
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rate of the country. It also helps in improving human resources and generates various
employment opportunities for people in the country (Vittana, 2018).
Kuwait is a major and unique oil supplier and a member of the OPEC consortium. Oil entails
half of Kuwait GDP, around 95% of exports and around 90% of government revenue and
returns. Kuwait holds around seven percent of international oil reserves and has a recent
production capability of about 3.150 million barrels per day (Export, 2017). The porter diamond
model that helps in attracting and retaining FDI and gaining competitive benefits has been shown
below.
Factor condition: This is a unique and fundamental situation of a country relating to the various
factors such as infrastructure, labor, knowledge, experience and human resources. These factors
are significant to create an international competitive position in the global market. To attain
competitive benefits and outcomes, knowledge and human resources are being used by the oil
industry in the country. Along with this, collaboration, communication, and training programs
also help in improving and enhancing the position and goodwill of the industry in the global
market. It is further observed that Kuwait uses advanced technology, resources and distribution
channels to make a strong and effective brand image in all over the world (Zhang and London,
2013).
Demand condition: It has been observed from the overwhelming research that demand
condition is one of the vital components of porter diamond model that plays a major role in
Kuwait. It is stated that demand and needs shall be identified and measured to implement
business functions effectively and efficiently. A marketing research and survey is done to
identify and analyze the demand and needs of the home market. This research further helps the
country to create new and innovative opportunities and to reduce the barriers and shortcomings
while reducing cost of the products. The effective and stable economies of scale further help to
minimize the efforts, maximize outcomes and gain effectiveness and efficiency in the production
process and methods. Moreover, it will help to increase and attract FDI in Kuwait effectively.
Supporting and related industries: Kuwait is a biggest and growing supplier of oil industry
and it also possesses a strong position in the global market. But the success and growth of a
market depends on the highly region and vendors. Beside the supplier or vendors, the
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competitive companies are also significant and unique for the industry that needs to be
considered while operating business in Kuwait. If a company attains progress and success this
could be beneficial for supporting or related companies. They can benefit from each other
knowhow and improve and promote each other by offering supplementary products. It is studied
that oil and petroleum industry help the country to enhance and promote other business activities
such as financial, transportation and manufacturing services. In this way, it also help to
improving and promoting FDI towards the Kuwait (Porter, 2011).
Strategy, structure and rivalry: This factor is essential to identify and analyze the way and
platform in which the company is managed and handled. Furthermore, it focuses on the
situations in a country that identify and analyze where a firm would be established. The cultural
attributes, and regions may differ from one country to other and components such as working
morale, management and interactions between the organizations are formed differently in various
countries. Kuwait is strong exporter of oil and petroleum thus it helps in creating ample of job
opportunities for people in the country (Chung, 2016).
It has been stated that Kuwait needs to focus on the policies, standards, norms, approaches to
attract FDI successfully along with this, advanced technology and natural resources need to be
considered to acquire and improve the FDI in the country. International agreement and
partnership shall be done for determining effective FDI. Trade policies and tax policies need to
be improved to attract and enhance FDI in the country. It will further help Kuwait to be a leader
in oil and petroleum industry (Porter, 2011).
Policies that government should adopt to enhance and improve the capacity of its
industries to innovate and upgrade
The following policies shall be considered by the country to improve and boost capacity of its
industries to innovative and upgrade:
 It is stated that government of the country need to be focused on the collaboration and
partnership policy to boost and improve the capacity of the industries in the international
market. For this purpose, the government should update the dynamic and effective
projects to ensure that Kuwait fulfill its vision and mission. Beside this, the government
should implement innovative strategies and activities to promote and enhance the oil and
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petroleum industry in the country. For this purpose, innovative ideas and opinion shall be
given by the government to various industries to grow and expand their business
internationally (Al-Sabah, 2017).
 It is further observed that Kuwait must also focus on the digital and advanced
technologies to bring and develop new level of efficiency and effectiveness in the global
market (Fesharaki and Isaak, 2016). Various inventions shall be done by the government
to improve and enhance the capacity of industries in the country. Exchange rate plays
major role in every country thus the government shall focus on the exchange rate and
recession to build a dynamic and effective brand image and goodwill in all over the world
(Crystal, 2016).
 The government should make unique and effective policies and strategies related
immigration reform that help the country to generate tremendous opportunities for the
people. The multilateral trade agreement shall be done by the government to promote
industries towards the attainment of objectives and goals. Kuwait is one of the vibrant
and vital democracies in the Gulf cooperation council region. The policies, strategies and
approaches that are not clear and effective must be eliminated and minimized by the
government to minimize and prevent the conflicts, issues and shortcomings
(CWCKuwait, 2018).
 Kuwait government should introduce a high quality and effective economic infrastructure
by accepting or adopting various rules and regulations that a play a significant role in
supporting a competitive economy and promoting investors to run their business there. It
will help to attract and retain various industries for doing business in the country. It shall
be noted that Kuwait government must invest amount in public sector infrastructure and
maintaining economic operations and activities by setting a partnership between public
and private sector (Export, 2018). The infrastructure and technology shall be updated
and improved by the country to overcome the competitors and to earn more revenue
internationally. It is evaluated that government should also focus on the labors to promote
business internationally. Most of the industries require higher skilled and talented labor,
thus huge investment on training and development shall be done by the government to
train and educate the labor in the competitive market. The government must focus on the
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Business level strategies
tax policies, size of the economy and FDI for improving and enhancing the situations of
industries in the country (Export, 2018).
Conclusion
From the above discussion it is analyzed that porter national diamond model helps in overcoming
the rivalries and maximizing the revenue and returns internationally. It showcases from the
above analysis that Kuwait government must focus on the policies and strategies to boost and
enhance the capabilities of various industries.
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References
Al-Sabah, Y.S.F., 2017. The oil economy of Kuwait. Routledge.
Chung, T.W., 2016. A Study on Logistics Cluster Competitiveness among Asia Main Countries
using the Porter's Diamond Model. The Asian Journal of Shipping and Logistics, 32(4), pp.257-
264.
Crystal, J., 2016. Kuwait: The transformation of an oil state. Routledge.
CWCKuwait.2018. Kuwait oil & gas summit[Online]. Available from
http://www.cwckuwait.com/ [Accessed as on 30th October 2018].
Export.2017. Kuwait oil and gas[Online]. Available from https://www.export.gov/article?
id=Kuwait-Oil-and-Gas [Accessed as on 30th October 2018].
Export.2018. Kuwait-9.2 labor policies and practices [Online]. Available from
https://www.export.gov/article?id=Kuwait-Labor-Policies-Practices [Accessed as on 30th
October 2018].
Exportiamo.2018. Doing business in Kuwait: advantages and disadvantages [Online]. Available
from http://www.exportiamo.it/aree-tematiche/12939/doing-business-in-kuwait-advantages-and-
disadvantages/ [Accessed as on 30th October 2018].
Fesharaki, F. and Isaak, D.T., 2016. OPEC, the Gulf, and the World Petroleum Market
(Routledge Revivals): A Study in Government Policy and Downstream Operations. Routledge.
Kuwait.2018. Doing business in Kuwait [Online]. Available from
http://www.kuwait.doingbusinessguide.co.uk/ [Accessed as on 30th October 2018].
Porter, M.E., 2011. Competitive advantage of nations: creating and sustaining superior
performance (Vol. 2). Simon and Schuster.
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Riquelme, H.E., 2013. In Search Of Entrepreneurial Opportunities—An Integrated
Model. Journal of Enterprising Culture, 21(03), pp.249-274.
Vittana.2018. 12 Foreign direct investment advantages and disadvantages [Online]. Available
from https://vittana.org/12-foreign-direct-investment-advantages-and-disadvantages [Accessed
as on 30th October 2018].
Zhang, P. and London, K., 2013. Towards an internationalized sustainable industrial
competitiveness model. Competitiveness Review: An International Business Journal, 23(2),
pp.95-113.
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