University Report: Industry and Environmental Analysis of Kuwait

This report provides an industry and environmental analysis of Kuwait, focusing on the impact of digital business and the challenges and opportunities for SMEs. The report begins by applying Porter's Five Forces framework to assess the competitive landscape, examining the influence of the internet on industry dynamics, including new entrants, the threat of substitutes, bargaining power of buyers and suppliers, and rivalry among competitors. The analysis then shifts to the context of Kuwait, highlighting the absence of a dedicated SME development strategy and the fragmented nature of support policies. It discusses the limitations in resources, particularly training and information services, and the need for improved entrepreneurial motivation and awareness. The report emphasizes the importance of fostering a favorable climate for entrepreneurship, including enhanced educational opportunities and support services, to address low entrepreneurship levels and high youth unemployment in Kuwait. The conclusion stresses the objective of creating a more conducive environment for the acceleration of start-up businesses.

Running head: INDUSTRY AND ENVIRONMENTAL ANALYSIS OF KUWAIT
Industry and Environmental Analysis of Kuwait
Name of Student:
Name of University:
Author’s Note:

1INDUSTRY AND ENVIRONMENTAL ANALYSIS OF KUWAIT
Part 1:
The Internet is responsible for the creation of several new industries like online auctions
as well as the digital marketplace. The greatest and most noteworthy effect of the internet lies in
its capacity to cause the reconfiguration of the existing industries which had been controlled by
high costs for the communication, gathering of information, or the accomplishment of
transactions. There have been certain trends regarding the influence of the internet on each of the
five forces, shaping the structure of an industry. Michael Porter stated that “in any particular
industry, whether it is domestic or international or produces a product or a service, the rules of
competition are embodied in five competitive forces: the entry of new competitors, the threat of
substitutes, the bargaining power of suppliers and rivalry among existing competitors.”
“The entry of new competitors”:
Digital business is undoubtedly responsible for the type of the competition in the market.
It is not just the conventional industry competitors which need to be considered but importance
also needs to be given to the “new entrants outside the industry” who are capable of new and
digitally based models and proposals for the required values. It has been seen that technological
start-ups as well as huge companies have envisioned and also created a new business model from
the base stage which has been powered by a innovative platform ecosystem for business of a
digital nature. The leveraging of familiar and also social, mobile, cloud technologies as well as
analytics are not enough. Valuable inputs are being made in terms of intelligent automation, The
Internet of Things and also the topic of cyber security. This is basically done to additional
improve “value proposition” of their appropriate platform (Gackenbach 2011).

2INDUSTRY AND ENVIRONMENTAL ANALYSIS OF KUWAIT
The new entrants to the business and the existing digital situation can move in easily in
Case the traditional barriers to entry are lowered. A digitally based business model needs much
less amount of capital and has the possibility of bringing the large economies of scale as suitable
examples.
“The threat of substitutes”:
Threat of products and services are some of the top factors which are necessary and are to
be considered under the substitutes of the digital industry. The digital business can happen in
either a purely digital substitute or a substitute which of hybrid nature. There are extremes to this
particular situation. Either the services are wrapped around a physical product or some other sort
of extreme which has several examples. The industrial internet is another extreme in the
particular line which can cause any sort of threat. Household automation and personal fitness
products also comprise an extreme.
The threat of substitutes is considered to be high in major cases in view of the many
existent industries which is due to the reason that the switching costs are small and buyer
prosperity to the substitutes is also high. The inclination to switch from the traditional model is
high due to the “consumer wait times” for the taxis and the lack of visibility or so on. The long
term stream of revenue is considered with reference to the digital services and sale of specific
products.
“The bargaining power of buyers”:
The most important of the five forces influencing the industry competitors is actually the
“bargaining power of the buyers”. It is the strongest of the five forces because the largest and
most impactful driver of the digital business arises as a result of requirements and the potential of

3INDUSTRY AND ENVIRONMENTAL ANALYSIS OF KUWAIT
the consumers and the customers themselves. The bargaining power in this particular case shows
a set of new expectations for the customers and the customer experience of a digital nature and it
necessitates the recurrent innovation of the corporate nature and business models procedures,
operations and the services of the scenario. At present the customers have much more power of
bargaining which is due to the ready access to the internet and the information, ideas from social
sources, the low costs of switching and the digital channels, sensitivity of price, access to the
substitute products and services along with the greater ease with which they are used a also the
convenience and also the increased competitiveness of the industry as a result of the other
impacting forces (Dewan, Ganley and Kraemer 2010).
The bargaining power of suppliers:
Suppliers have the authority of either slowing down or accelerating the implementation of
a digitally based business or how it influences the entire circumstances The people pursuing the
digital models themselves for example the utilization of the APIs in order to streamline their
ability to create new partnerships and the management of the existing ones in help in the
acceleration of their chosen models themselves. Examples which can be considered in this
particular regard are the digital and sharing economy in which the suppliers and the other
constituents work in order to make sure that the “business model” and the innovations in the
process still adhere to those rules which have been established, concerning the privacy, security
and the safety. This is a optimistic and required development as it can help in keeping new
models honest along with the bargaining power of the buyers (Palacios-Marqués, Soto-Acosta
and Merigó 2015).

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The rivalry among the existing competitors:
It has been seen that the present competitors are all looking at digital businesses who are
trying to understand the existing disruptions which are occurring and the preparation of their
responses. It is seen that the comparative low cost of the digital business models help in the
reduction of the entry and the exit barriers. The rivalry among the competitors are often in play
and in the recent times the digital business has caused much of a stir which needs to be studied
and understood.
Overall in the preparation of several business initiatives, the five forces framework can be
a suitable way in which the various facts impacting the digital business can be considered. It is
necessary to understand how the factors react. In combination to the usual factors the new
aspects affecting the industry are to be properly studied and understood.
Part 2:
Kuwait does not possess “SME development strategy and programme” and also the
corresponding “institutionalization of support”. The policies as well as the regulations shaping
the particular sector are spread over numerous ministries and agencies. In addition to this the
provision of services is cracked as well as inept. There is the lack of a central body which might
synchronize several support activities. Otherwise in the Gulf region, several countries exist
which have been able to address severe deficiencies in the past time by the establishment of a
centralized body in charge of the promotion of SME’s. SME’s have been found to be suffering
due to the limitations in the available reserves, specifically in the areas of training, business
information and marketing. Training is not given proper importance. It needs to be targeted
properly and information services need to be properly provided. Training needs to be targeted so

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that the information services are not scattered. There is the problem of proper counselling, or
crucial advice which can help the enterprises grow. There needs to be proper awareness
regarding the profit of external assistance by the provision of information on present services as
well as providers (Elali and Al-Yacoub 2016).
Potential entrepreneurs need to be interested and motivated towards their business which
they are desirable of establishing. They need to be aware of available options and the option
which are the most striking to them. Being uncovered to the entrepreneurial roles is a favourable
factor as this helps in gaining suitable knowledge on entrepreneurship. They also need to come
into contact which a range of opportunity factors. These include the access to suitable
information on a variety of business ideas, counselling as well as capitalistic ideas and support.
The aspiring entrepreneurs also need to have technical skills, business and management skills
which can either be gained through education and experience or through the expertise and
experience of other individuals (Al-Najem et al. 2013).
In the absence of proper motivation, notable entrepreneurs will not be able to perform
any action towards the starting of any business. In case they are enthused to take proper action
they need to be exposed to the vast range of opportunities available. Therefore there needs to be
proper awareness of entrepreneurship as an attractive option for employment, also the profile
availability of successful role models and changed attitudes towards the development of
business.
There also need to be enhanced opportunities for learning, in order to help aspiring
people to learn to become successful entrepreneurs. There needs to be the start of a proper
business by the entrepreneurship orientation, education and instruction. In addition to this there

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needs to be proper support services in order to make entrepreneurial learning training available to
all and also the presence of small business counselling opportunities.
At present in Kuwait, the entrepreneurship levels are low while the unemployment of
youth is high. The country is not being able to generate suitable opportunities for start-ups and
therefore there needs to be a proper awareness regarding entrepreneurship. Thus the objective in
the long run is to create a much suitable climate of entrepreneurship that helps in the acceleration
of the rate of start-up business.

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References and Bibliography:
Al-Najem, M., Dhakal, H., Labib, A. and Bennett, N., 2013. Lean readiness level within Kuwaiti
manufacturing industries. International Journal of Lean Six Sigma, 4(3), pp.280-320.
Chang, Y.S., Kim, J.A. and Kim, Y., 2017. Convergence Analysis of the Entrepreneurship Start-
Up Barriers.
DeNardis, L., 2012. Hidden levers of Internet control: An infrastructure-based theory of Internet
governance. Information, Communication & Society, 15(5), pp.720-738.
Dewan, S., Ganley, D. and Kraemer, K.L., 2010. Complementarities in the diffusion of personal
computers and the Internet: Implications for the global digital divide. Information Systems
Research, 21(4), pp.925-940.
Elali, W. and Al-Yacoub, B., 2016. Factors affecting entrepreneurial intentions among
Kuwaitis. World Journal of Entrepreneurship, Management and Sustainable
Development, 12(1), pp.18-34.
Gackenbach, J. ed., 2011. Psychology and the Internet: Intrapersonal, interpersonal, and
transpersonal implications. Academic Press.
Palacios-Marqués, D., Soto-Acosta, P. and Merigó, J.M., 2015. Analyzing the effects of
technological, organizational and competition factors on Web knowledge exchange in
SMEs. Telematics and Informatics, 32(1), pp.23-32.