Business and Management Environment in Saudi Arabia: Challenges and Opportunities for Multinational Corporations

277 Pages·2009·2.26 MB·English

by  Ali

Business and Management
Environment in
Saudi Arabia
Routledge Studies in International
Business and the World Economy
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Business and Management
Environment in
Saudi Arabia
Challenges and Opportunities for
Multinational Corporations
Abbas J. Ali
New York London
First published 2009
by Routledge
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Simultaneously published in the UK
by Routledge
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Library of Congress Cataloging in Publication Data
Ali, Abbas.
Business and management environment in Saudi Arabia : challenges and
opportunities for multinational corporations / by Abbas J. Ali.
p. cm.—(Routledge studies in international business and the world economy ; 48)
Includes bibliographical references and index.
1. International business enterprises—Saudi Arabia—Management. 2. Saudi
Arabia—Economic conditions. 3. Corporate culture—Saudi Arabia.
4. Organizational behavior—Saudi Arabia. 5. Economic development—Saudi
Arabia. I. Title.
HD62.4.A39 2009
658'.04909538—dc22
2008031593
ISBN 0-203-88351-9 Master e-book ISBN
ISBN10: 0–7890–3472–7 (hbk)
ISBN 10: 0–2038–8351–9 (ebk)
ISBN13: 978–0-7890–3472–4 (hbk)
ISBN 13: 978–0-2038–8351–8 (ebk)
Contents
Preface vii
1 Socio-Political Environment 1
2 The State and Prospect of the Economy 16
3 Regional Markets and Business Environment 35
4 The Manager Role 50
5 Managerial Work Values and Beliefs 69
6 The Meaning and Centrality of Work 92
7 Group Dynamics and Work Relations 104
8 Communications and Negotiations 128
9 Human Resource Management and the Labor Market 142
10 Decision-Making Styles and Attitudes toward Risk 162
11 Organizational Change and Development 174
12 Organizational Form and Design 195
13 MNCs and Development 214
14 Globalization and Business Prospects 227
References 243
Index 255

Preface
The signifi cant role that the Kingdom of Saudi Arabia plays in the global
economy and in political affairs is evident in the worldwide concern over oil
prices and political stability in the Middle East. The Kingdom is endowed
with one-fi fth of the world’s proven oil reserves. In terms of production
costs, the Kingdom is considered one of the lowest producers of oil; and
because of its aggressive investment in the energy sector, the Kingdom has
strengthened its role in the world economy and has maintained a noticeable
presence on the global economic stage. Politically, since the early 1970s
the Kingdom has used its oil revenue and its close connection to the United
States to transform itself into a powerful restraining force in Middle East
politics. That is, economically and politically, many countries and the
majority of the world’s population are affected by initiatives and actions
taken by the Kingdom.
In fact, the Kingdom has become the United State’s most trusted ally,
after Israel, in the Middle East. In this newly found capacity, the Kingdom
performs three roles: defender and justifi er of U.S. economic interests in the
region, it enables forces to translate U.S. Middle East foreign policy into
a reality and acts as a restraining factor in Middle East Politics. In play-
ing these three roles, the ruling al Saud family understands that its grip on
power is characteristically linked to the approval of the powerful Wahhabi
religious establishment and the support of the United States. Therefore,
the Kingdom’s ruling family has carefully sought to faithfully serve U.S.
interests in the region while closely consulting with the religious authority
on matters related to domestic and Islamic affairs. Accordingly, the regime
has engaged in four interrelated strategies. Economically, it has adopted a
system which optimally serves U.S. interests while strengthening the role of
the ruling family: Sheiko-Capitalism. In terms of oil strategies, for exam-
ple, the Kingdom has always sought to keep its oil production capacity in
line with the interests of the industrial world and to use oil revenues to co-
opt opposition. In terms of foreign policy, the Kingdom faithfully performs
the role of executor of U.S. Middle East policy and, behind the scenes, uses
all its energy to paralyze any move on the Arab street to confront such
policy. Third, domestically the regime effectively pursues economic policies