International Business Strategic Plan for Qatar - Term Paper Example

Strategic Memo Ascent Solar Inc. Country: Qatar Submitted by: XXXXXXXX Number: XXXXXXX XXXXXX XXXXXXX XXXXXX University of XXXXXXX Strategic Memo To: Farhad Moghadam, Ph.D., President & Chief Executive Officer From: [Your Name, Director of International Business Development] CC: Gary Gatchell, Chief Financial Officer & Corporate Secretary, Ashutosh Misra, Senior Vice President, Corporate Development, Rafael E. Gutierrez - Senior Vice President, Sales & Marketing Date: 30/08/2016 Re: International Business Strategic Plan for Qatar 1. Purpose of the Memo Qatar is a growing market and Ascent Solar Inc. has a high number of opportunities for expansion into this market. The purpose of this memorandum is to develop and analyze the feasibility of the entry into these markets and to put forth the possible solutions for Ascent Solar Inc. to enter into the Qatar markets. The memo discusses a few options that are available for Ascent Solar Inc. and these will prove to provide a clear strategy for entry into these markets. The document provides a clear and detailed list of possible joint ventures for the company and also details the various elements like the Political, Economic, Social, Technological, Environmental and Legal environment have been discussed to point out the various issues that the company can face with an entry into the market. Recommendations and possible solutions for each element have also been explained. Other elements like the exchange rates, cross nation cooperation, the exchange capital markets as well as global corporate leadership issues have also been included. The overall benefits of entering into the Qatar markets have also been discussed. 2. Country at a Glance Qatar is a country with a wide range of people and very diverse population. The country has a number of different languages that people use. The official language here however is Arabic. The economy of Qatar has shown excellent growth and performance and even in the year 2009, where the rest of world faced a major decline in the economies, Qatar has been able to keep its economic level and performance. The country’s GDP growth rate has been almost 8.7% for the year 2008 – 2009. The country’s GDP value has risen to a high of $102 billion in 2008, compared to a previous year of 71 billion (US Commercial Service, 2009). The country is one of the world’s major exporters of energy and has been able to diversify and move into the industrial sector as well. Qatar entertains high levels of foreign investments and the country has hence seen major growth over the past years due to the strong oil and natural gas industries. Qatar also clearly enjoys high levels of trade balance surpluses and the country’s inflation rates has been low due to the care and caution for all monetary and exchange rate policies. The country still recruits large scale investments from foreigners and these investments are mainly for the development and improvements of the petrochemical projects alongside the tourism and construction industry as well (US Commercial Service, 2009). The country holds a vast range of opportunities for all companies and this is mainly due to the availability of cheap energy, labour, and also the low cost of living. The location of the country also plays a major role in the success and high interest in terms of the foreign investments (Export Gov, 2010). More details of the country and the aspects that affect our company have been discussed in the following sections. 3. General Considerations 3.1 Cultural Framework: Before moving into the country, it is essential that a clear note is made of the culture of the country and the people. This is important to us as it will help create and develop the business accordingly and will also permit us to make the transition smoother. A few important elements to be learnt about the country include: Religion: The main religion in the country is Islam. Ethnic Groups: The break u of the ethnic groups are as follows: “Qatari (Arab) 20%; Other Arab 20%; Indian 20%; Filipino 10%; Nepali 13%; Pakistani 7%; Sri Lankan 5%; Other 5%” (US Department of State, 2010). Work Force: The work force of the country as of 2006 totalled to almost 508,000. The following is the break up for the same: Private Sector 61.2% Government – 5.6% Mixed Sector – 28.5% Social Structure: The country’s people are majorly part of the migratory tribes that came into the country in the 18th century. The Qatari population are mainly Sunni Muslims and Islam is the official religion. Education is compulsory and in a number of places is even provided free of cost for children between the ages of 6-16. The country also has a high literacy rate as well. Women and Work: The Islamic religion has a major impact on the Qatari women and to a great extent women are limited to being home makers. The religion is strict and Qatari women also need permission of their husbands to obtain a driving license. Diversity and Discrimination: The Shia Muslims and the non Muslims face a lot of discrimination in the country. The education and employment are faced with highest level of discrimination and are also often mistreated (Encyclopedia of the Nations, 2010). 3.1.1 Issues: The major issues that our company might face here in this case are the strict nature of the religion in the country. Also, it is essential to note that gaining the trust in a culture which is so strong and closely linked can be quite difficult and can also affect the overall working of the company and impact the operations. 3.1.2 Possible Recommendations: It is essential to note that moving into a new country especially where the culture is completely different from our culture. We recommend that there is a cross cultural training session that is held to ensure that employees are not in any way offended and there is a mutual understanding among the people. It will be good to provide both sets of people, i.e. employees from our office as well as the local employees of Qatar with a taste of the two cultures. Cross training and a cooperative effort of the employees will ensure a better understanding among the employees and will also help build a stronger culture within the company. 3.2 Political Environment: The political condition of the country is one held by the AlThani Family and the family has been in power since independence in 1971. In terms of the political environment the country is evolving and is now moving more towards a more democratic and formal institution rather than the traditional society. Also, it is essential to note as explained by the US department of States, “In current practice, the Amirs role is influenced by continuing traditions of consultation, rule by consensus, and the citizens right to appeal personally to the Amir. The Amir, while directly accountable to no one, cannot violate the Sharia (Islamic law) and, in practice, must consider the opinions of leading families and the religious establishment” (US Department of State, 2010). 3.2.1 Issues: There is a high chance that the representative of the country might not accept to the foreign direct investments and might also want the country to grow with its own people and own significant authorities. This can impact the business to a great extent and can also cost our company a lot of money if any issue should arise. Also, the changes in any political environment can mean changes to the workforce as well. Hence this needs to be considered and can prove to be quite expensive our company. 3.2.2 Recommendations: To ensure that our move is right and is correctly timed, it will be necessary to stay in constant touch with the US embassy in the country and also the US Import and Exports office of Qatar. Also hiring a consultant, both legal as well as business will help study the stability of the political scene of the country. 3.3 Economical Environment: The economic environment plays a major role in this case. It is essential to note the economic environment of the country and to gain a better perspective if this investment is a good option for our company. Economic System: The market currently is one where there is use of knowledge based working. This simply means that the country works based on knowledge and used knowledge to the benefit of its overall performance. Economic Freedom: The economic freedom score of Qatar rates at almost 69.0 which makes the country stand at the 39th position in the world. This will prove to be very beneficial for us as it will allow our company better opportunities and will also help in the growth of our company. The image below provides a clearly view of the economic freedom rating for the country Economic Freedom of Qatar (Wall Street Journal, 2010) Human Development Index: The country has a Human development index of 0.91 which shows that the country has a high level of population which can read and write. This will prove to be very beneficial for our company and is an excellent option for the skilled labour for our company as well. The table below provides a clear view of the country’s details. All the below mentioned details will prove to be helpful to our company and will have an impact on the overall working as well. Qatar’s Human Development Index (UNDP, 2009) Purchasing Power Parity: Qatar ranks on the third position in terms of the PPP and this will prove to be very beneficial for our company as it will permit lowering the costs due to the high purchasing power. Unemployment Rate: With an unemployment rate of 0.5% there will be skilled people looking for work. This will prove to be very helpful for our company as we will have a wider range and choice to choose from. 3.3.1 Issues: The economic freedom of the country is seeing a decline in the level of freedom for the business and monetary freedom. This can be an issue if the level keeps reducing as we will be answerable to the government for the expenses and the outflow of money. 3.3.2 Recommendations: A good option here would be to revaluate the country and the performance for a period of at least two to three years. This will allow us to check for the stability of the economy and make the right decision based on the economic performance. 4. Exchange Rates and Controls The country’s currency is very stable and the country imposes no foreign exchange controls. Below are the exchange rates for the country as of 31st July 2010, and a brief trend of the exchange rates. 1.00 USD = 3.63960 QAR 1.00 Euro = 4.74620 QAR 1.00 GBP = 5.70931 QAR (XE Currency Convertor, 2010) The graph below shows the stable nature of the country’s currency. The graph provided below is based on the United States Dollar conversion to the Qatar Riyals. USD to QAR Conversion Trend (XE Currency Convertor, 2010) Qatar economy is very favourable to the United States exports and the country has well developed and well capitalised financial institutions which provide excellent financial backing to companies operating within the country. The most notable bank of the country is Qatar National Bank. The country also allows up to 100% foreign ownership in many industries including agriculture, health, power, education and also in other projects which include research and development for the use of natural resources. 4.1 Issues Faced: The growing issue for all companies is that there is lack of clarity in terms of the qualification criteria for firms in the country. Also there is a lack of good communication within the country. The other issues that have been faced by the US firms in the country include the need for tender bonds. The most essential and troublesome obstacle for all companies is the fact that the joint ventures can only be made with the Qatari partners and the foreign ownership cannot exceed 49% of the total joint venture (Export Gov, 2010). 4.2 Recommendations: As a recommendation we have come to a conclusion that it would be most effective for our company to hire a consultant and a lawyer in the country to be able to learn all the laws and regulations of the country. Also, we could find a Qatari counterpart that is effective and is trusted and work out a good solution based on trust and cooperation between our company and theirs. 5. Labour, Relations and Supply The labour in the country is cheap and is easily available. Also as discussed above the level of literacy is high within the country. The median age of the population is 31.7 years and thereby making a high percentage of the population in the working age group. The country has been known for the employment opportunities and it is essential to note that Qatar has an unemployment rate of 0.5% as of 2009 (Index Mundi, 2009). This is clearly one of the lowest and shows the effective working of the people within the country. 5.1Issues: The main issue that will be faced here is the discrimination and the level of possible protest for the difference in terms of the culture and the overall working style. There can also be a few issues in terms of the workforce and the acceptance of women as a part of the work force. 5.2 Recommendations: To ensure that there is no discrepancy or discrimination of any form within the company, there will be serious steps taken to ensure that all employees of our company are aware of the working style and culture in the country. Also, the same will be done as a part of the orientation for the employees who join our company. The culture of the company as well as the working style will be clearly explained. Extra efforts will be taken to ensure that there is no discrimination from the side of our company and there an ice breaker session will also be held to ensure that all employees are comfortable with each other. 6. Ecological Environment Qatar has been noted to be focusing highly on the ecological environment and has been trying to ensure that all attempts are made to keep up the natural resources of the country. As explained in the report by the General Secretariat for Development Planning, “Environmental degradation can be reduced through investment in advanced technologies designed to minimize the damage caused by economic projects. It can also be reduced by avoiding rapid and unplanned growth” (Investing Qatar, 2010), the report further explains, “Qatar has already committed to enforcing international standards for environmental protection when designing and implementing its industrial projects. The country must also commit to making its future path of development compatible with the requirements of protecting and conserving the environment” (Investing Qatar, 2010). The county is clearly focusing on increasing and improving the overall environment and working on reducing the damage to the environment to the maximum extent. 6.1 Issues Faced: The possible issues that can be faced are the need to change the machineries and the processes based on the law and regulations in the country. This can include higher levels of investments and can need us to pay more to help the country with the environmental issues. 6.2 Recommendations: Our company is very focused on the environment and also on ensuring that the best use of natural resources is made and the environment is sustained. To do so, we can start from the beginning of being socially responsible and focus on more green methods and processes. This will help us not only contribute to the country’s efforts of improving the environment but will also allow a better working condition for us as well. 7. Concluding Recommendations Based on this extensive research conducted by the team, it is clear that Qatar is an excellent option for us to invest into as the country has a high level of opportunities for the improvement and growth of our company. The most effective part of investing in the country is the fact that the country also focuses on the environment and is working towards better utilisation of the natural resources and minimum damage to the environment similar to our company. Based on the research this investment option is an excellent one and will prove to be very beneficial for us in the long run. It would be useful to wait a year or two and the revaluate the country again to ensure that the investment is beneficial for us. The only drawback of entering into this country is the lack of being able to own the company completely and the need for a joint venture. However this will also prove to be very beneficial for the company and will lead to us Ascent Solar Inc. Building a more Global and international presence and will also create more opportunities for us in other markets within Asia. In conclusion, this is a very beneficial investment in the long run. References Encyclopedia of the Nations. (2010). Qatar - Social development. Retrieved July 31, 2010, from http://www.nationsencyclopedia.com/Asia-and-Oceania/Qatar-SOCIAL-DEVELOPMENT.html Export Gov. (2010). Consider Qatar. Retrieved July 31, 2010, from http://www.export.gov/middleeast/country_information/qatar/ConsiderQatarGuide.pdf Index Mundi. (2009). Qatar Unemployment rate. Retrieved July 31, 2010, from http://www.indexmundi.com/qatar/unemployment_rate.html Investing Qatar. (2010). Qatar National Vision 2030. Retrieved July 31, 2010, from http://www.investinqatar.com.qa/about/qatar%20vision UNDP. (2009). Human Development Report 2009. Retrieved July 31, 2010, from Qatar: http://hdrstats.undp.org/en/countries/country_fact_sheets/cty_fs_QAT.html US Commercial Service. (2009). Doing Business in Qatar. United States Department of State. US Department of State. (2010, January 29). Official Name: State of Qatar. Retrieved July 31, 2010, from Background Note: Qatar: http://www.state.gov/r/pa/ei/bgn/5437.htm Wall Street Journal. (2010). 2010 Index of Economic Freedom. Retrieved July 29, 2010, from http://www.heritage.org/Index/country/Qatar Read More