Publication Manufacture Small Business Future in Saudi Arabia

Subject: Company Analysis
Pages: 8
Words: 2237
Reading time:
9 min
Study level: PhD

Background

Saudi Arabia is located in the Middle East and it is one of the largest producers of oil in the world. It is also one of the richest countries in the world due to its proceeds from oil production. Saudi Arabia has a relatively small population which makes it sustain itself sufficiently. The majority of the population usually lives in groups around specific town centers. Up until the discovery of oil, before the Second World War, the country was largely ignored by other nations. Despite the small population, Saudi Arabia is one of the busiest centers of business in the globe with majority of products being sourced from there. It is the discovery of oil that led to the modernization and development of the region. The exploitation of oil by the Western countries was able to provide the technical and human know-how that contributed to the building of infrastructure in the country (Hajjar & Presley 1992, p.23).

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Small businesses form an important component of all developing nations because they serve as a source of employment for a majority of individuals. Small businesses account for about 90% of profit-generating institutions that contribute to the GDP of most developing nations. 60-80% of individuals in developing nations source their incomes from small businesses (Hajjar & Presley 1992, p.8). One of the greatest advantages of small businesses is that they are flexible and they can therefore be able to rapidly make changes in their structure to suit their current market and make profits with changes in the markets. Setting up a small business is relatively cheap and the initial requirements could be minimal as well compared to a big business.

Question of concern

What are the real challenges and available opportunities for small businesses in publication manufacture in Saudi Arabia?

Objectives:

  1. To scrutinize the business environment in Saudi Arabia
  2. To show the potential of high income from small businesses in Saudi Arabia.
  3. To further look into the nature of businessmen in Saudi Arabia.
  4. To evaluate the role of small businesses in the growth and development of the country.
  5. To explore the factors that motivates individuals to venture into small businesses such as publication manufacture in Saudi Arabia.
  6. To identify opportunities for growth of small businesses in Saudi Arabia.
  7. To identify challenges that might hinder or slow down the growth of small businesses in Saudi Arabia.
  8. To highlight some ventures which were initiated as small businesses and are now successful empires.

Literature Review

Carrying out business in Saudi Arabia has been quoted as being one of the most promising ventures in the world. This is because of the facilities that the country holds. Publication manufacture in Saudi Arabia would be a promising business venture because this area has not been fully explored. Most successful big organizations started out small with an initial good innovation that eventually grew into a big business (Cordesman 2009 p.77).

Most small businesses are usually specialized and this allows such businesses to be effective in what they do because they concentrate in one area for example processing, production or selling final products. Small business cannot be underestimated in the growth of economies in either developed or developing nations in the world. Most small businesses are initiated because many individuals cannot be able to raise large amounts of capital which they can use to develop their businesses instantly. Unfortunately, most individuals have good business ideas, but they have no finances to set up their business ideas in the short term or in the long run (Wilson 2004 p.55).

Financial capital is one of the greatest resources in the setting up, development or rejuvenation of a small business and unfortunately, these factors are usually not available for most businesses. This dissertation intends to look at the opportunities and challenges that face small businesses in Saudi Arabia especially publication manufacture businesses (International Business Publications 2010).

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Opportunities for small businesses in Saudi Arabia

Small and medium-sized businesses form the major source of income for Saudi Arabia’s economy. The businesses vary in the areas that they specialize in from service, fast-moving consumer goods and technological products among many others. Most investors in the private sector invest their funds in the small business ventures because of the high amount of capital required, minimal risk and the opportunity of growth of the businesses (Oxford Business Group 2009).

Challenges facing small businesses in Saudi Arabia

Despite the promising possibilities of carrying out business in Saudi Arabia, most of these businesses do not have access to funds to expand their businesses. These businesses also lack the necessary support that they require to develop their businesses from relevant organizations. According to Business.com website, the government does not organize entrepreneurial exhibitions to nurture business ideas into real ventures.

The business environment in Saudi Arabia has also been criticized as being unfriendly to small businesses as the government is imposing too many restrictions on the small businesses. Saudi Arabia also lacks an organization that can offer the statistics that small businesses in the country need in order to forecast trends that would help their businesses grow and develop in the right direction with maximum profits. There are limited numbers of research study cases that have been carried out in the area of small businesses that can assist businesses with small ventures to improve their businesses (Shoult 2006, p.10).

Financial institutions in the country have also been criticized as placing too many prohibitions for the small businesses by demanding too many requirements for the small business organizations to fulfill before they can be considered for credit options.

Possible solutions to challenges faced in the Middle East

The Saudi Arabian government should offer intervention measures by first involving the private sector in the evaluation of the problems that are faced by small businesses in the country and ways in which the problems can be mitigated. Stakeholders of the small business organizations include financial institutions like commercial banks, other service providers like phone service providers, security organizations and trade regulation organizations in the world (Ramady 2010 p.44).

Government Tender and procurement law plays a central law in controlling businesses in Saudi Arabia. This implies that any business deals between the small business and their suppliers have to be made with duly registered companies operating within the Kingdom. Apart from this restriction, Saudi Arabia Business Laws require that products made within the country are given priority compared to products from foreign countries. Apart from the internal policies of the country, there are other rules governing products made within GCC.

There are other advantages that enable operations of a business in Saudi Arabia favorable. Saudi is a member of World Trade Organizations and other regional business organizations that agree with free trade agreements like the GCC. They have regional policies that govern businesses within GCC countries giving a wide scope of doing business. The custom law gives room for taxation of imported goods to an extend of five percent on goods that are not found locally and twelve percent on goods that can be produced locally. This can give a clear guideline on what to expect in the publication manufacture business. Majority of the raw materials would be imported because materials cannot be found locally. There is also a considerable exemption on taxes on the imported materials due to unavailability of materials in Saudi Arabia.

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It is important for small business organizations to succeed so that the country can compete at international level favorably. Governments of countries that have business organizations that want to venture in the international market support these businesses through reduced taxes or other such measures that are related to this approach. Such governments recognize that it is important to have a presence in the international market (Frey 2002, p.88).

However, individuals who have good business ideas and are able to find ways to finance their ideas usually have an advantage in the long run because of the minimal risks associated with their businesses in the short run. Some of the requirements that individuals must fulfill if they want to start up small businesses in Saudi Arabia include; registry at the Ministry of Commerce and Industry which includes the payment of a registration fee (Intuit Small Business 2010).

The process usually takes up to a total minimum of 5 days. The Office of the Ministry of Commerce is located in Riyadh, one of the biggest and developed cities in the Middle East. The office at Riyadh is the location where individuals can get the offices for; Companies department, Commercial Registration Department, Notary Public Office, Department of Zakat, Income Tax, General organization of General Insurance, Chamber of Commerce, Publication office and Private Bank (Al-Ghazali, & Sadi 2010 p.39).

The advantage of these offices is that they are conveniently located in one area. Before one is legally allowed to operate a small business, one is also required to open up a bank account with a reputable legally-established bank. The last legal requirement to be fulfilled is the signing of the articles of association at the Unified Center. The opening of a bank account and signing of the articles of association for a business is not charged, but the registration of a business at the Ministry of Commerce and Industry requires individuals to pay a fee (Abdulfattah & Mayer 2000, p.111).

Opportunities for Growth for the Small Business

The advantage of a small business is that it would require a substantially reduced amount of capital especially when compared to the starting up of larger businesses.

Methodology

The major objective of this part of the proposal is to show the methods that will be used to collect data for the study. Primary and secondary research methods will be used in this research study. The primary research for this particular study will include the use of questionnaires and interviews. The questionnaires for the study will be designed in such a manner to ensure that the participants answer the research questions for the study (Mort 2003, p.69).

The questionnaires will be sent out to businessmen and women in various parts of the country. A bias will be made to businessmen and women who are in the publication manufacture in Saudi Arabia. In order to gauge the market for the publication manufacture business in the country, questionnaires will be sent out to public institutions like schools, hospitals and other health organizations and commercial organizations.

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Oral and telephone interviews will also be carried out with financial institutions personnel after seeking the approval of the relevant management. Business people who have established themselves in the industry will also be interviewed to find out about the growth and development of the industry, opportunities and challenges that have been observed over the years. I intend to target individuals who have been in the industry for the longest time so as to get a clear picture of the growth and to use this information to accurately forecast the growth of the industry.

Secondary research for the study will be obtained from information gathered from magazines, books, the internet, journals, news, newspapers, blogs, conference proceedings and any other credible useful materials that will be obtained in the course of the study.

Limitations and Opportunities

This section gives a brief look into the various opportunities and limitations that are expected to be encountered during the course of the study. Some of the challenges that might be faced during the course of the study are expected when using the primary research methods of the study. Not all the individuals that are interviewed are expected to be truthful in the answers that they give in the questionnaires and some of the answers that are given in the questionnaires are expected to be vague (Business, 2010).

In carrying out the interviews, some challenges are expected because it might not be that easy to get hold of individuals to interview them for the study. Due to the strict nature of the Muslim religion, it might also be difficult for interviewers to get access to intended individuals for the study. A major challenge that might be encountered is the lack of insufficient material to research into the information that is required to carry out the study. The material that exists which is related to the study might also be outdated and prove to be of minimal help to the research study.

The research study will be of utmost importance to me because of my interest in this area of study of publication manufacture. I think that it is a profitable field of business which has been ignored and if properly exploited, it might prove to be of maximum benefits to many individuals in and around the country and also to the benefit of the country. Although many individuals in Saudi Arabia are not focused on their education or literal material, the world is changing and usually, people have to adapt with the change that comes with time (Powell, 1993 p.16).

Due to this factor, I think that many individuals will have to source publication material in order to get the literal material that they require. The available information that I will have collected from my study will therefore prove invaluable to individuals that might want to venture into this area of business or be of assistance to individuals and who are already in the business and might intend to expand their businesses and therefore, require some reliable information so that they can explore the options that are available to them.

Reference List

Abdulfattah, S., Mayer, T. R., 2000. Saudi Arabian Industrial Investment. USA: Greenwood Publishing Company.

Al-Ghazali, M. & Sadi, M., 2010. ‘Doing business with impudence: A focus on women entrepreneurship in Saudi Arabia.’ African Journal of Business management. 4(1) pp. 01-011. Web.

Business.com, 2010.

Cordesman, A.H., 2009. Center for Strategic & International Studies. California: ABC- CLIO.

Frey, R.S., 2002. Successful Proposal Strategies for Small Businesses. Massachusetts: Artech House Inc.

Hajjar, B. & Presley, J.R., 1992. Middle Eastern Studies. London. Frank Cass.

International Business Publications, 2009. Saudi Arabia Investment & Business Guide. USA International Business Publications.

Intuit Small Business, 2010.

Mort, D., 2003. Understanding Statistics & Market Research Data. London. Routeledge.

Oxford Business Group, 2009. The Report: Saudi Arabia. London. Routeledge.

Powell, G., 1993. Women & Men in Management, 2nd Edition. SAGE Publications: London.

Ramady, M. A., 2010. The Saudi Arabian Economy: Policies, Achievements & Challenges. London: GMB Publishing Company.

Shoult, A., 2006. Doing Business with Saudi Arabia. New York. Springer.

Wilson, R., 2004. Economic Development in Saudi Arabia. London. Routeledge.