B301b - Assessing Kuwait's Business Environment with Porter's Model

This assignment is a case study analyzing Kuwait's national competitive advantage using Porter's Diamond Model. It identifies challenges in factor conditions, supporting industries, demand conditions, and firm structure/rivalry within Kuwait's business environment. The analysis reveals that closures and sales reflect unfavorable market conditions, hindering foreign investment. The study suggests strategies for Kuwait's government to improve the situation, including offering export incentives, strengthening domestic industries, and increasing consumer purchasing power through employment opportunities and fiscal policies. These recommendations aim to enhance Kuwait's competitiveness and regain its lost economic advantages, enabling it to compete effectively in the global market.

Running head: NATIONAL COMPETITIVE ADVANTAGE
National competitive advantage
Name of the student
Name of the university
Author note

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Introduction
National competitive advantages play an important role in the current era of globalization
in attracting foreign investments along with enhancing the economy. This is due to the reason
that in the current business state of affairs, every country are competing in the global market to
offer more value propositions for the incoming investments. However, on the other hand, it
should also be noted that there are number of factors should be considered in gaining the
favorable advantages in the competition (Riasi 2015). The intensity and impact of these factors is
different in different countries and accordingly they should be managed. In this case, Porter
diamond model of national advantage is one of most popular and effective model to determine
the effectiveness of these factors from the perspective of a particular country. This model defined
about these factors and how the coordination among these factors will be beneficial for the
country (Chung 2016).
This essay will discuss about the business situations of Kuwait as discussed in the given
case scenario through the porter diamond model of national advantage. In addition, the impact of
these factors on Kuwait will also be identified. This essay will also discuss about the probable
strategies that can be initiated by the government of Kuwait in improving the situation.
Porter diamond model of national advantage (case analysis)
According to the given scenario, the sign boards of closure and sale denotes the poor and
unfavorable business and market condition of Kuwait. This situation is not only affecting the
business condition of Kuwait but also it is affecting the potentiality of the country in attracting
investments. As per the diamond model, the first element is the factor condition. This refers to
the availability of the resources and favorable business environment in the country. This includes

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the easy availability of human resources, financial resources, technologies, and infrastructure and
climate conditions (Zhang and London 2013). Hence, these are the factors that will have direct
impact on the business operations. However, the sign boards of the business entities in Kuwait
are denoting that the country lacks in resources or the favorable condition. This is due to the
reason that, due to the lack of adequate resources in the country, it is becoming difficult for the
entities to operate. For instance, if required human resources and financial access are not getting
by the factories, then they will be forced to close their operations, which are stated in the case.
On the other hand, if the entities are not gaining the positive business environment in doing
business in Kuwait, then also they will close their operations. In terms of impact of this case,
Kuwait will face hindrances in attracting investments due to the reason that foreign investors will
not invest in the country with having unfavorable business conditions and lack of resources. This
will affect the competitiveness of Kuwait (Fainshmidt, Smith and Judge 2016). For example, any
thermal power corporation operating in Kuwait will have the requirement for coal reserves
present in the country. However, if that is not available, then the cost of importing coal will not
be viable to operate in the country.
The second element of the diamond model states about the presence of supporting
industries in the country. This is due to the reason that business operations especially the large
scale business entities such as automobile are having the needs for supporting industries, which
will act as the suppliers. However, the situation in Kuwait denotes that the country is lacking in
supporting industries also (Han et al. 2015). This is due to the fact that in the case it is stated that
many companies are closed and relocated in other countries. This denotes that the support
needed for the survival of the business was not received in Kuwait. This can also be another
reason for the closure of factories. This factor will also affect the competitive edge of Kuwait

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due to the reason that foreign investors will look out for the proper supporting industries in the
host country prior to investments, which will not received in Kuwait. Hence, the flow of
incoming investments will be restricted (Kharub and Sharma 2016). It should also be noted that
even if Kuwait can provide the adequate resources for the business, still the investment will be
limited due to the reason that entities will face difficulties in sourcing their materials. For
example, if Toyota is having their car manufacturing plant in Kuwait, then they will also require
supporting plants for sourcing their components such as car entertainment systems, security
system and tires. However, if Kuwait does not have this supporting factor, then the cost of
operation of Toyota will get increased and they will eventually leave the country.
The next element of this model is demand condition, which refers to the market situation
of the country. This is the most important factor in doing business in the current time due to the
fact that businesses will be more where the market opportunities will be more. Moreover, the
larger will be the size of the market, the more will be the economies of the scale (Sukmawani et
al. 2014). In the case of Kuwait, the given scenario denotes that market condition in the country
is also not favorable. This is due to the fact that there are shops put up the sign board of closure
and clearance sale. This denotes that they are not getting the expected customers and
potentialities from the market and are forced to clear their remaining stock and close. This factor
will not only affect the incoming foreign investments but also the domestic industries as well
(Riquelme 2013). This is because if the market demand is not there then the potentiality for the
domestic industries will also be affected. Furthermore, the foreign investors will not consider
Kuwait as a viable option for investments because they will not have enough business in the
country. This factor is also enhanced by the faced that Kuwait is a small country in terms of size
as well as population. Thus, the market size is also limited. For example, if Samsung started their

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smartphone manufacturing plant in Kuwait to cater to the local market, the favorable market
demand is also important. However, the if the smartphone market is already saturated in the
country and customers are no longer willing to invest in buying new smartphones, then the
market opportunity for Samsung will be nil and will cause lack of viability for them.
The last factor is structure and rivalry in the country. This refers to the extent to which
the domestic industries are competitive enough and rivalry is existed. In addition, it also refers to
the extent to which the businesses are being managed and organized in the country. The given
case scenario of Kuwait states two probabilities in terms of this factor. One probability is the
presence of intensely competitive business environment and other is the lack of competition in
the market. The first instance will have impact because if the market of Kuwait is highly
competitive, the each of the entities will have fewer space to survive and eventually they will not
able to operate in the saturated market (Kordalska and Olczyk 2016). On the other hand, in terms
of the second instance, lack of competition will also restrict the flow of innovation for the
existing entities and caused ineffectiveness in the market. Each of these two instances will have
negative impact on the competitiveness of Kuwait due to the reason that saturated industry will
not attract new entrants and lack of competition will also not pose enough value propositions
either. If the smartphone market in Kuwait is already overcrowded with number of brands, then
it will be challenging for Samsung to have the untapped market present in the country.
Recommended strategies
The first strategy that can be adopted by the government of Kuwait in dealing with the
stated situation is offering export incentives and other tax benefits to the exporters. This will be
effective because encouraging the exporters will increase the foreign business and this will

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increase the opportunities beyond the domestic market size. The stated issue of limited market
condition can be mitigated if the operating entities can be provided with more profitability in
exporting their goods. In this case, it is also recommended that Kuwait should have free trade
agreement with the leading economies, which will further enable the Kuwaiti institutions to do
business in the foreign countries without added tax and tariffs (Anderson and Yotov 2016). This
will also motivate the foreign investments due to the reason that they will not only target the
domestic market of Kuwait but also can avail the benefits of exporting from the country.
Another potential strategy of the government can be strengthening the domestic
industries over targeting the foreign investments. This is due to the reason that the more effective
and efficient will be the domestic industries, the more they will be able to deal with the
challenges of the foreign organizations and will be able to act as the supporting industries of
them. In addition, this policy of the government can also enhance the effectiveness of the
domestic industries to gain the capability of doing business beyond the national boundary. The
last strategy being recommended is to infuse more funding in the economy in order to increase
the purchasing power of the customers (Teles and Mussolini 2014). This can be done by
increasing the employment opportunities and initiating fiscal policies. The more will be the rate
of employment, the more will be the purchasing capability of the larger sections and with the
help of the fiscal policies, more funding will get flowing in the economy along with the
improvement in the infrastructure. This will ensure that the demand condition in the country got
improved and the business organizations will have the access to improved infrastructure.
Conclusion

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This can be concluded that in terms of the diamond model, there are number of factors
that will have adverse impact on the competitive advantages of Kuwait. These factors are
discussed in this essay. It is identified that the business operations in the country are facing the
challenge from both in terms of market as well as business factors. On the basis of these
challenges, a few strategies and policies are discussed in this essay. This will help Kuwait in
regaining their lost competitiveness.

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Reference
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