FDI & Business Level Strategies: Porter's Model Application in Kuwait

This report examines the business level strategies employed in Kuwait, focusing on the application of Porter's Diamond Model to understand the competitive landscape, particularly within the automobile industry. It highlights Kuwait's position as a significant importer of automobiles and explores how the country attracts and retains foreign direct investment (FDI). The analysis covers factor conditions, demand conditions, firm structure, and related industries, evaluating Kuwait's strengths and weaknesses in the global market. The report also suggests government policies to enhance the industry's capacity, including a policy network approach, investment in research and development, and the adoption of advanced technologies. The conclusion emphasizes the role of Porter's Diamond Model in gaining competitive advantages and the importance of innovative policies for sustained success in the global market.

Running head: Business level strategies
Business level strategies

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Table of Contents
Introduction.................................................................................................................................................3
Porter diamond model of Kuwait.................................................................................................................3
Policies that government should adopt to enhance the capacity of the industry...........................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................8
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Introduction
The automobile industry is one of the leading and growing brands in today’s globalization world.
Kuwait is a most effective and dynamic importer of New American automobiles and is the eighth
biggest U.S export market for automobiles globally. The paper discusses how Kuwait uses porter
diamond model to attract and retain foreign direct investment in the country.
Porter diamond model of Kuwait
With U.S automobile exports to Kuwait valued at $716 million in 2017, this is the biggest sector
for U.S exporters in the consumer market. Every year Kuwait imports an average of 100,000 new
vehicles (Export, 2018). Kuwait is an effective and excellent market for high end luxury and
vintage automobiles. Kuwait is a dynamic market for large sized SUVs with heavy duty shock
absorbers, cooling, transmission, tires and air conditioning systems that meet extreme
temperatures. Luxury automobile manufacturers would also find Kuwait to be an effective and
excellent market. Render Kuwait’s leading and innovative position in supply chain and logistics
services to Afghanistan and Iraq. It is evident that the companies can get ample of benefits while
implementing and initiating the business activities and operations in Kuwait. There are strategic
benefits and cost benefits in doing business in the country. Kuwait organizations often display an
international outlook and a willingness to invest long-term in viable goods and services. The
country has further become the place for expansion and development of new products, services,
and concepts. There are various companies that invest money in foreign countries to attain
competitive benefits globally ( Dögl and Holtbrügge, 2010).
Foreign direct investment is an investment in the form of a monitoring and controlling ownership
in a business in one country by a company based in another country. It is distinguished from a
significant foreign portfolio investment by a notion of direct control. Apart from this,
globalization puts a direct impact on the various organizations thus, foreign direct investment is
becoming essential for each and every company to survive and grow the business functions
internationally. FDI is further used to stimulate the target country’s economic expansion,
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development, creating a more favorable working environment along with this; it also provides
various benefits to the local industry and investors. Moreover, foreign direct investment also
creates new employment, as investors develop and improves new companies towards the country
to generate new opportunities. This leads to a maximum in income and more purchasing power
to the people, which in turn leads to an economic boost. It is recommended that the companies
should focus on the foreign direct investment to grab the entire target market and to boost
profitability in the competitive market. By attracting and retaining foreign direct investment, the
companies can take tax benefits and they increase and enhance the revenue and returns in the
international market (Balkyte and Tvaronavičiene, 2010). The government can focus on the
strategy formulation elements that are conducive and effective for attracting and retaining
foreign direct investment. In order to attain this goal, the government may engage in several
marketing activities and operations to take benefits of foreign direct investment in Kuwait as a
means of initiating various pressure levels. Finally, meetings of the managers and investment
companies could facilitate the involvement of a third actor. The unique and effective investment
climate is generated by the countries for attracting and retaining the FDI. Reforms and policies
play a significant and unique role in this regard (Balkyte and Tvaronavičiene, 2010).
Porter diamond model: This model is significant and effective to understand and analyze the
competitive position in the global market. It is noted that the porter diamond model renders an
analytical structure and tool with multi measurements for industry and national competitiveness
(Zhang & London, 2013). The porter diamond model for the Kuwait automobile industry has
been drawn below.
Factor conditions: It shall be noted that the factor of manufacturing or production includes the
natural resources, technology, and labor. The automobile industry uses a strong and skilled
workforce to conduct business activities and functions successfully in Kuwait. Apart from this,
effective research and development team and advanced technology will further help the
companies to compete with rivals in the competitive market (Smit, 2010). Moreover, the country
possesses a strong and dynamic transport structure in the country to earn more revenue and
returns globally. With skilled and talented workforce, research and technology, the country has
been able to attain competitive advantages in the international market. The main motive behind
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this is to attract and retain major organizations for making an investment in the country. It will
help in increasing and improving FDI in the nation ( Harding, 2017).
Demand condition: Demand condition refers to the size and nature of the local demand for an
industry’s goods and services. It is investigated that high demand and needs for consumer
electrics from the nation and internationally as well (Berger, 2008). The demand condition helps
in taking innovative and effective decisions to contribute to the success and growth of the
automobile industry. If the demand and needs of the automobile product is high and strong in the
local market then it can help to attract the majority of customers in the international market.
Kuwait has been able to attract maximum companies to invest in the country due to a strong
infrastructure and economy (Zhao, Zhang & Zuo, 2011).
Firm structure, strategy, and rivalry: It is stated that distribution and promotional activities
are performed by smaller retailers in the country. In addition, the country maintains a strong and
dynamic structure to attract and retain maximum foreign companies for making an investment in
such a country. The automobile companies are growing and increasing in the country thus, it
helps to attract maximum customers in the global market (Ozgen, 2011).
Related and supporting industries: It is studied that strong, advanced and effective R&D is
significant and fundamental to automobile and electronics industry in Kuwait. It is measured that
local supporting industries are more effective and competitive, thus the companies enjoy more
cost-effective and innovative inputs.
In this way, it is evaluated that the porter diamond model helps in struggling and striving with
rivals at the international level. By implementing this model, the automobile industry can take
various advantages or benefits in the foreign market. By implementing or initiating the Porter
diamond model a company may identify and evaluate what elements can build benefits at a
national level. The policies, strategies, and products can be identified and measured through this
strategy (Porter, 2008).
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(Source: http://www.quickmba.com/strategy/global/diamond/)
Policies that government should adopt to enhance the capacity of the industry
The four policies that help in reducing and enhancing the capacity of the automobile industry are
discussed below.
 It shall be portrayed that the government should focus on the policy network approach to
create a dynamic and strong image in the minds of the customers across the globe. Policy
network approach assumes and states that resources, strategies, approaches, objectives,
and values of actors in a specific policy process and approach are highly differentiated.
However, since they exchange a specific policy approach they construct innovative and
open relationship by exchanging own technology and resources to one another. The
policy network approach is a framework that can be used by the government and other
authorities to capture and grow relations amongst the actor in a specific policy process.
By implementing this approach, the government can improve and boost the efficiency
and capacity of the automobile industry in the international market (O'connor, 2017).
 It has been investigated from the various studies that Kuwait has become an economic
power state thus the automobile industry can take ample of advantages with the help of
stable economic conditions. The automobile industry has changed the culture and
lifestyle of the Kuwait tremendously, rendering both the transportation medium and as a
means of communication. Thus, the government should make policies and strategies to
analyze and measure the choices, needs and requirements of the customers in the global
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market to promote FDI in the country. It will further help to stand over the competitors
globally. The government should generate new ideas, strategies, and policies to take
ample of growth opportunities globally. Optimum utilization of resources shall be done to
create a strong and financial position in the global market (O'connor, 2017).
 An overwhelming study is conducted that shows that the Kuwait government should
focus on the research and development team in order to boost and promote FDI in the
country. Changes in infrastructure shall be done by the company to increase the sale of
automobile products and enhance the FDI capacity in the international market. Training
and development sessions and programs shall be held by the government to improve and
enhance the skills, potential, and capacity of the workers internationally. The skilled and
innovative team helps the company to serve better products and services to the customers
across the globe (O'connor, 2017).
 It is measured that the Kuwait government should use advanced technology and resources
to build a strong image in the international market. Innovative technology helps the
automobile industry to distinguish its products from the competitors. There are several
rules, policies, and strategies that unclear and ineffective which may put a direct impact
on the performance, productivity and targets of the industry globally. It is suggested that
if law, policies, and strategies are not clear then the industry cannot uplift profitability
and outputs thus, the company needs to focus on the unclear rules, misconduct and
misbehavior to overcome the competitors globally. All these policies will help the
automobile industry in Kuwait to accomplish goals and enhance the efficiency and results
of FDI (O'connor, 2017).
Conclusion
It is noted that the porter diamond model plays a fundamental role in handling and gaining rival
benefits in the global market. At the end, some innovative policies would be used by the country
to stay in the rivals market globally.
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References
Balkyte, A. and Tvaronavičiene, M., 2010. Perception of competitiveness in the context of
sustainable development: facets of “sustainable competitiveness”. Journal of business economics
and management, 11(2), pp.341-365.
Berger, T., 2008. Concepts of national competitiveness. Journal of international business and
economy, 9(1), pp.91-111.
Dögl, C. and Holtbrügge, D., 2010. Competitive advantage of German renewable energy firms in
Russia-An empirical study based on Porter's diamond. Journal for East European Management
Studies, vol.7 (2). pp.34-58.
Harding, S., 2017. MBA management models. Routledge.
O'connor, J., 2017. The fiscal crisis of the state. Routledge.
Ozgen, E., 2011. Porter's diamond model and opportunity recognition: a cognitive
perspective. Academy of Entrepreneurship Journal, 17(2), p.61.
Porter, M.E., 2008. On competition. Harvard Business Press.
Sharp, E.B., Daley, D.M. and Lynch, M.S., 2011. Understanding local adoption and
implementation of climate change mitigation policy. Urban Affairs Review, 47(3), pp.433-457.
Smit, A.J., 2010. The competitive advantage of nations: is Porter’s Diamond Framework a new
theory that explains the international competitiveness of countries?. Southern African Business
Review, 14(1).
Zhang, P., & London, K. (2013). Towards an internationalized sustainable industrial
competitiveness model. Competitiveness Review: An International Business Journal, 23(2), 95-
113.
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Zhao, Z. Y., Zhang, S. Y., & Zuo, J. (2011). A critical analysis of the photovoltaic power
industry in China–From diamond model to gear model. Renewable and Sustainable Energy
Reviews, 15(9), 4963-4971.
Export.,(2018). Kuwait-Automobile and automotive parts [Online], Retrieved from
https://www.export.gov/article?id=Kuwait-Automobile-and-Automotive-Parts
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