Country Notebook

The Country Notebook—A Guide for Developing a Marketing Plan

The Country Notebook Outline (Click here for more information about the Country Notebook.)

• I. Cultural Analysis 

• II. Economic Analysis

• III. Market Audit and Competitive Market Analysis 

• IV. Preliminary Marketing Plan

I. Cultural Analysis writing guide

Guideline

I. Introduction writing guide

Originally conceived by Malaysia's Prime Minister of the day, Dato Seri Dr Mahathir Mohamad, PROTON Bhd was incorporated on 7th May 1983 with the aim of building a national car. Two years later, On 9th July 1985 the Proton Saga (later known in the UK as the MPI) was officially launched. It was Malaysia's first domestically produced car and is still sold in Malaysia and other countries today.

The company has come a long way since 1983; PROTON was publicly listed on the Kuala Lumpur Stock Exchange in 1992, and today, Proton cars are exported to more than 50 countries worldwide. Key export markets include Australia, Singapore, the Far East and the UK; where during 2009 it celebrates 20 years in the market place.

II. Brief discussion of the country’s relevant history writing guide

Saudi Arabia goes back it’s the earliest civilization of the Arabian Peninsula. Throughout history, Peninsula used to have a critical location as it is one of the oldest ancient trade centers and the birthplace of Islam. King Abdul Aziz Al-Saud established the modern kingdom of Saudi Arabia in 1932 and since then its transformation has been astonishing. In few decodes, the kingdom has turned itself from a desert nation to a modern sophisticated state and a major player on the international stage.

1

Located between the two great centers of civilization, the Nile River Valley, and Mesopotamia. The Arabian Peninsula was the crossroads of the ancient world. Saudi Arabia had many stages that it's passed through with different kings carrying different vision but the latest was king Abdullah. His international diplomacy effects Saudi Arabia’s leadership role in defense of Arab and Islamic issues and for the achievement of the world peace, stability and security. Peace in the Middle East and the Plight of the Palestinians are of particular concern to king Abdullah. His proposal for a comprehensive Arab-Israeli Peace, presented at the Beirut Arab Summit in 2002, has been adopted by the league of Arab States and is known as the Arab Peace Initiative.

As mentioned earlier, through passing through several major phases but it's reached a general complete phase of stability and astonishing development.

III. Geographical setting:

Saudi Arabia, with an area of about 865,000 square miles, occupies the bulk of the Arabian Peninsula. It is roughly one-third the site of the continental United States, and the same size as all of Western Europe. Saudi Arabia lies at the crossroads of three continents: Europe, Asia and Africa. It extends from the Red Sea on the west of the Arabian Gulf in the east. To the north it's Borders on Jordan, Iraq, and Kuwait and to the south, on Yemen and the Sultanate of Oman. To the east lie the United Arab Emirates, Qatar, and the island state of Bahrain.

Saudi Arabia’s terrain is varied but on the whole fairly barren and harsh, with salt flats, gravel plains, and sand dunes but few lakes or permanent streams. In the south is the Rub Al-khali, the largest sand desert in the world. In the southwest, the mountain ranges of Asia Province rise to over 9,000 feet.

From tune through August, midday temperatures in the desert can soar to 50c (122F). Humidity in the coastal regions may approach 100 percent at times. In contrast, weather in other areas of the country may be mild throughout the year. Winter temperatures in the northern and central regions may drop to below freezing. The shamal, sand-laden winds from the northern deserts, is most frequent in early summer and can blow for days at 25-30 miles an hour. Rainfall ranges from none at all from up to 10 years in the Rub Al-khali, to 20 inches a year in the mountain of Asia Province.

The Country’s topography ranges from wide plain to deserts, valleys, mountains and plateaus. The main features:-

The Empty Quarter (Al-Rub Al_khali) desert. The Eastern plateaus and plains. The Northern Mountains and plateaus. The “Najd” plateaus of the central Region. The western highlands. The “Tihama” plains in the southwest. Wide spread mountain and desert valley.

2

IV. Social institutions

The family was the most important social institution in Saudi Arabia. For Saudis generally, the family was the primary basis of identity and status for the individual and the immediate focus of individual loyalty, just as it was among those who recognized a tribal affiliation. Families formed alignments with other families sharing common interests and life styles, and individual tended to socialize within the circle of these family alliances. Usually, a family business was open to participation by sons, uncles, and male cousins, and functioned as the social welfare safety net for all members of the extended family.

The structure of the family in Saudi Arabia was generally compatible with the structure of tribal lineage. Families were patrilineal, the boundaries of family membership being drawn around lines of descent through males. Relations with maternal relatives were important, but family identity was tied to the father, and children were considered to belong to him and not to the mother. At its narrowest, a family might therefore be defined as comprising a man, his children, and his children’s children through patrilineal descent.

Islamic laws of personal status remained in force in Saudi Arabia without modification, and the patrilineal character of the family was compatible with and supported by these Islamic family laws. Marriage is not a sacrament but a civil contract, which has to be signed by witnesses and specifies an amount of money (mehr) to be paid by the husband to the wife. It might further include an agreement for an additional amount to be paid in the event of divorce.

When women get married, they might become incorporated into the household of the husband but not into his family. A woman doesn’t take her husband’s name but keeps the name of her father, because legally women are considered to belong to the family of their birth throughout their lives. Many in Saudi Arabia interpreted the retention of a woman’s maiden name, as well as her retention of control over personal property as allowed under Islamic law, as an indication of women’s essential independence from husband’s control under the Islamic system. Legally a woman’s closest male relative, such as a father or brother, is obliged to support her if she is divorced or widowed.

V. Education:

Education is at the forefront of the Saudi government’s priorities. As the bedrock for the progress of nations, the education sector has witnessed important developments since the founding of the first Ministry of Education in 1953. Thousands of elementary, intermediate and secondary schools have been established, in addition to colleges, higher institutes and seven universities.

The number of students at all levels of education rose from 600,000 in 1969-1970 to some 4 million 1996. The average annual increase during this period was 7.1% for male students and 13% for female students. The number of schools and colleges run by the Ministry of Education (responsible for boys' education) and the General Presidency for Girl’s Education increased from 3,283 in 1969-1970 to 22,000 in 1994-1995. Schools for boys rose from 2,654 in 1969-1970 to 10,558 in 1994-1995, and annual increase of 13.8%. The number of graduates of higher education, male and

3

female, increased from 808 in 1969-1970 to 5,124 in 1970-1980 and to 12,812 in 1984. In 1994-1995 the number of male and female university. Note that the expansion of the university system in Saudi Arabia has enabled the kingdom to limit financial support for study abroad. Literacy rates from (2003-2007) in the youth level (15-24 years) in males was 98%, while the literacy rates from (2003-2007) in the youth level (15-24 years) in females was 96%.

VI. Political system

Saudi Arabia is an absolute monarchy with the King as head of government and state. He also acts as chairman of the Council of Ministers. But his power is restricted by Islamic law: The King does not enact laws; he only issues royal decrees in accord with the shari’a. His most difficult duty is to maintain the consensus among the royal family, the ulama and powerful parts of the society. This means making decisions in an area of conflict between religious and power interests. Moreover, the King needs to renew the agreement with the tribes due to the tribal structure of the Saudi state. Theoretically, the Royal Family could oust the king.

The monarchy remains the key source of power at every level of the Saudi Arabian government, and the King and senior princes have great authority and considerable freedom of action. However, in practice the King’s power is limited and consensual. Below is the stricture of the government:

The Council of MinistersAlmost all major policy decisions require the input of both princes and senior technocrats.

Senior technocrats and leading business families have a considerable amount of influence, both as principal advisors to the king and as operational decision makers.

Ministries and key personnelAmong the twenty-two separate ministries, the key ministries are controlled by senior

members of the Royal Family: Prince Abdullah is First Deputy Prime Minister and head of National Guard. Prince Sultan is Second Deputy Prime Minister and Minister of Defence and Aviation. Prince Saud alFaisal is Foreign Minister, Price Nayef is Minister of the Interior, and Prince Mutib is Minister of Public Works and Housing. These appointments give the senior members of the royal family control over the government, defence, internal security, the budget and oil revenues, and other key areas of patronage.

The Majlis alShura (Consultative Assembly)The Majlis alShura was originally composed of 61 members, including the speaker of the

consultative council. All members are appointed by the Monarch for a four year term. Its responsibilities theoretically included examining plans for economic and social development, questioning Cabinet members, examining annual plans submitted by each ministry, and proposing new laws or amendments.

4

Politics in Saudi Arabia are heavily influenced by two characteristics – Mecca and petrol.Consequently, there exist a Ministries of Hajj and a Ministry of Petroleum and Mineral resources to manage these vital areas.

Saudi Arabia consisted of fourteen provinces, or amirates, each governed by an amir (governor) appointed by the king. In 1992 these amirates included Al Banah, Al Hudud ash Shamaliyah, Al Jawf, Al Madinah, Al Qasim, Al Qurayyat, Ar Riyadh, Ash Sharqiyah, Asir, Hail, Jizan, Makkah, Najran, and Tabuk. The larger, more populous amirates were subdivided into districts and subdistricts.

VII. Legal system

The current Saudi court system is composed of a Supreme Judicial Council, Courts of Appeals, and First-Instance Courts (General Courts and Summary Courts). Saudi Arabia also has an administrative judicial body known as the Board of Grievances which stands alongside the Courts System and is affiliated directly with the King. The board judicial function is carried out through Board of Appeal Circuits, Circuits of Appeals, and First-Instance Circuits. Each of these judicial bodies has jurisdiction over cases brought before it in accordance with the law. In addition, the Saudi legal system has several administrative committees that adjudicate civil, commercial, administrative and criminal cases. The judicial jurisdiction of each committee is always determined by the decree which constituted it.

Currently, Saudi Arabia has a dual judicial system comprised of the Shari'ah Courts System (al-Mahakim al-Shariy'ah) and an independent administrative judiciary known as the Board of Grievances (Diwan al-Mazalem). In addition to the previous judicial bodies, there are several Administrative Committees that have jurisdiction to hear certain specified cases. Moreover, the Law of the Judiciary permits the establishment of specialized courts by, "Royal Order on the recommendation of the Supreme Judicial Council. There are two specialized courts within the Shari'ah Courts System: the Courts of Guarantee and Marriages, which exercise jurisdiction over civil suits regarding marriage, divorce, as well as child custody, and the Juvenile Court, which hears Juvenile delinquency cases. The competence of the Saudi Judicial Courts System as such was set up by the Law of the Judiciary, adopted in 1975. It was then reconfirmed in 1992 by the Basic Law of Governance. According to the Law of the Judiciary and the Basic Law of Governance, Shari'ah Courts have jurisdiction over all disputes and crimes except those exempted from their jurisdiction by law. Shari'ah Courts hear cases related to personal status, family affairs, civil disputes and most

5

criminal cases. However, different laws and regulations have granted jurisdiction over different claims and crimes to either the Board of Grievances or to Administrative Committees.

Saudi Arabia presents a wide variety of business opportunities for U.S. companies. To be effective and successful, an executive must have a basic knowledge of the business community in Saudi Arabia and the Saudi legal system. The first decision for any business is the type of operation to establish. Because a great deal of business in Saudi Arabia involves government contracting, a foreign company should be aware of the basic rules and practices for this area. Before a business establishes its presence, it should develop a basic understanding of the laws governing its operations. Finally, a business should know how to resolve legal disputes if and when they arise.

How to Operate In Saudi Arabia

A company may do business in Saudi Arabia in a variety of ways. The options range from informal contractual relationships to forming a Saudi Arabian company. Most businesses require some form of license from the Saudi Arabian Government, and some require the investment or employment of Saudi citizens. The optimal form will depend on a variety of factors, including the type of business, the duration of the involvement, and the nature of the transactions.

Direct Exports

The simplest form of doing business in Saudi Arabia is direct export into the country. A company generally may sell its goods directly to Saudi Arabian customers, assuming the goods meet the applicable health and safety standards. Hiring a local agent is not a requirement of doing business. However, most companies have a local presence to sell their goods effectively, and some types of transactions require a local presence.

Commercial Agents

A commercial agent may be more familiar with the local market and may be able to facilitate certain transactions. A company should choose its agent carefully; terminating or changing agents can be a difficult process.

The term "commercial agent" describes a variety of roles and responsibilities. Some commercial agents sell goods; others sell services. Some commercial agents buy goods directly from the manufacturer and resell them; others sell goods for the manufacturer and receive a commission. All are covered by commercial agency law in Saudi Arabia.

A foreign company first selects the commercial agent, which may be an individual or a company. Saudi law only allows citizens of Saudi Arabia or wholly-owned Saudi companies to operate as commercial agents. The commercial agent also must have the appropriate license. The U.S. company should then enter into an agency agreement with the Saudi agent. The Saudi Ministry of Commerce must approve the agreement. The Ministry provides a model agency agreement (see Commercial Agency Regulations section in Chapter 4), but most western companies find it necessary to amend and augment the model agreement. A company can negotiate its own agreement, but the Ministry is more likely to approve one that resembles the model agreement.

Any termination or change of a commercial agent must be fair to the old agent. Under some circumstances, the failure to renew an agent may be considered a form of termination. Wrongfully terminating an agent may expose a company to liability and may make it more difficult to obtain government approval of a replacement agency agreement. As a result, the termination section of any agency agreement must be carefully spelled out and should generally provide for fair treatment of all parties upon termination.

6

Franchises

Franchising is becoming an increasingly popular form of doing business in Saudi Arabia. It offers greater flexibility than commercial agency agreements but does not require the resources of a branch office or joint venture. Because the franchise law is relatively new, a foreign company should proceed cautiously before establishing, changing or terminating a franchisee.

To establish a franchise, the foreign franchisor must select a franchisee and register the franchise. The franchisor must be the original franchisor and may not be a third-country subfranchise. The parties may negotiate their own franchise agreement. The government provides a model franchise agreement, but the parties are not required to follow the government’s model. After the parties have signed the agreement, the Ministry of Commerce must approve it. Saudi commercial agency law applies to the franchise agreement.

The franchise law has only been effective since 1992. Because commercial agency law applies to franchises, many of the same concerns may arise regarding the potential wrongful termination of a franchisee. In order to avoid later difficulties, a foreign corporation should consult an attorney familiar with Saudi franchise law before entering into a franchise agreement or terminating a franchisee.

Branch Offices

A branch office involves a more direct presence than a commercial agent. A branch office is largely restricted to an administrative role and may not engage in trading activities. Nevertheless, a branch office can be very useful as a liaison presence for a U.S. company. Relatively easy to establish, branch offices offer the benefits of a physical presence without the more formal requirements of a joint venture company. For a U.S. company to open an independent branch office without a Saudi partner, the parent company must accept full responsibility for all work undertaken by the branch office within the Kingdom.

Joint Ventures

Joint ventures involve larger commitments for foreign companies, but over the long-term, they may qualify for favorable tax treatment or other economic incentives from the Saudi Government.

Joint ventures may take two forms. Under a contractual joint venture, the foreign firm simply signs a contract with a Saudi company. To enter into a contractual joint venture, a foreign company must obtain an operating license from the Saudi Government. Alternatively, the foreign company may create a new limited liability company in Saudi Arabia. Most foreign firms prefer to use this form of joint venture to establish a presence in Saudi Arabia. Unlike a branch office, a joint venture can engage in business activities. To form a limited liability company, it is essential to involve Saudi citizens. While Saudi participation is not a legal requirement, the government strongly favors a company in which Saudi investors participate. In addition, if Saudis own a certain percentage of the company’s capital, the company may qualify for certain tax breaks and other investment incentives.

It is currently anticipated that the Foreign Capital Investment Act, which governs foreign participation in Saudi companies, will be amended to liberalize the rules by which foreigners invest in Saudi companies and ease the administrative process of company formation.

Government Contracting in Saudi Arabia

Contracts with the Saudi Government are generally governed by the Saudi Tender Regulations. To be successful, a foreign business must closely observe the rules both for bidding on and performing government contracts.

7

Service Agents and Bidding for Government Contracts

In most cases, foreign companies will need to retain the services of a service agent in order to bid for a government contract. A service agent is a Saudi citizen or Saudi company that represents the foreign company throughout the bidding and contracting process. Under Saudi law, a service agent may represent up to ten companies. If a foreign company is a prime contractor in a government contract, the subcontractors do not require separate service agents if the prime contractor’s service agent agrees to represent them. The degree of involvement of the service agent can be as prominent or understated as the parties agree. The rules for bidding on government contracts depend on the type of contract. In most cases, a bidder must have a Saudi service agent or must be at least fifty percent Saudi-owned. In a few cases, particularly defense contracts and contracts between the Saudi Government and a foreign government, the use of a service agent is prohibited. In such cases, the foreign company is permitted to perform the work directly, without the presence of an agent. In such instances, the foreign contractor must file a statement with the Ministry of Commerce that the project is for armaments or related services and that it does not, therefore, have a Saudi agent.

Under its policy of "Saudization," the government strongly favors companies with extensive Saudi participation or investment. Some contracts will require a minimum amount of subcontracting with Saudi companies. The government will give preferential treatment to companies of which a majority is Saudi-owned and companies which use Saudi-manufactured goods and services. Accordingly, a foreign company may improve its position by allying itself closely with Saudi interests when bidding for a government contract.

In June 1999, the Saudi Government decided that contracts signed by Saudi government departments and public corporations with foreign governments, international organizations or companies must include the development of training programs for Saudi nationals. In addition, whenever there is need for foreign experience or consultation, priority should be given to universities and specialized institutes and scientific centers in the Kingdom.

A bidder on a government contract also must provide certain bank guarantees. At the bidding stage, a company must guarantee one percent of the total amount bid. If the government awards the contract to the company, the company must guarantee five percent of the total contract amount.

Getting Paid

A foreign company working under a Saudi Government contract may receive payments in advance, during progress on the project, and upon completion of the project. The Saudi Government often will advance up to ten percent of the contract price if the contractor provides a bank guarantee for the full amount of the advance payment. A company can reduce the guarantee as the project progresses.

Any payment disputes between the contractor and the government will be resolved by the Saudi Board of Grievances.

Business and Law in Saudi Arabia

Once a company has decided on the type of business presence in Saudi Arabia, it must also be aware of a variety of laws that regulate that business, including labor law, tax law, and intellectual property law. Before considering those areas in detail, one must first understand the different types of laws that govern Saudi Arabia.

8

The Law of Saudi Arabia

As in other Islamic nations, the fundamental source of law in Saudi Arabia is the Islamic Law (the Sharia). The Sharia consists of the Holy Koran, the teachings of the Prophet Muhammad (the Sunnah), and the writings of legal scholars.

Several other sources of law elaborate on the Sharia and govern commercial relations. Royal Decrees are adopted by the Saudi Council of Ministers and provide broad rules for a particular area such as taxes or labor relations. Regulations, often issued by government agencies, elaborate on these rules and provide more specific requirements.

Labor Law

Labor relations in Saudi Arabia are heavily controlled by Saudi labor law. Saudi labor law determines whom a company may hire and the terms of the employment. A company should proceed cautiously before terminating or restricting the rights of an employee.

Employment contracts receive special scrutiny in Saudi Arabia. While employers may enter into employment contracts, the terms of the contract must adhere to the Saudi Labor Law. Employers should be careful before terminating an employee. Even if an employment contract provides that an employee may be terminated at will, the company may not terminate an employee unfairly. A wrongfully terminated employee may sue the employer before the Preliminary Committee for the Settlement of Labor Disputes.

Tax Law

As in any business transaction, the tax consequences are important. Unlike the United States, Saudi Arabia does not have a personal income tax. It does, however, have several taxes on business income. Depending on the type of company and its employees, a company may be exempt from certain taxes.

Although Saudi Arabia does not tax personal income, Saudi citizens are subject to a tax, known as Zakat, essentially on the net worth of their assets. Non-Saudi businesses pay taxes based on the income and earnings of their businesses. Certain foreign income may be taxable if it relates to business in Saudi Arabia, for example, if certain operations take place both inside and outside of Saudi Arabia. However, if income is earned abroad and is unrelated to business in Saudi Arabia, then it is not subject to taxation. A company may ask the Department of Zakat and Income Tax, which administers the major tax laws, for rulings on the tax implications of particular transactions.

Certain payments (such as royalty payments) made to foreign entities may be subject to Saudi withholding taxes. The Saudi paying entity must withhold a share of the payment and forward it directly to the government. An entity that fails to withhold required taxes could become liable for the tax.

Certain companies may qualify for relief from taxes on business income. In some cases, a company may qualify for a tax holiday. The tax holiday may relieve the company from paying some taxes for several years. The Saudi Government will grant the tax holiday to a company that employs a certain percentage of Saudi citizens or engages in certain types of industries.

Intellectual Property Law

Intellectual property law encompasses three distinct areas: trademarks, copyrights, and patents. In Saudi Arabia, each area is governed by a different set of rules.

9

Trademarks

The current trademark law has been in effect since 1984. Letters, names, drawings or other distinguishing symbols, including service marks, may be protected under the trademark law. In order to receive trademark protection, the applicant must be a Saudi citizen or legal entity (such as a limited liability company) or must reside in a country that offers the same protection to Saudi Arabians. If the trademark is registered in another country, the company may file a priority claim. Approved trademarks are protected for a ten-year renewable period. While the registration is pending, a foreign company may still obtain some protection for its trademark by entering into licensing arrangements with local merchants.

While the trademark law initially was not rigorously enforced, currently enforcement is becoming more effective. Recently, Saudi courts and government officials have punished or brought charges against local merchants who were violating the trademark law. If a company suspects that its trademark is being violated, it may be able to obtain an "attachment order." The "attachment order" will require an inventory of the alleged violator’s assets and may restrict their use during the proceeding.

Copyrights

Saudi Arabia has had a copyright law since 1989. The length of the copyright protection depends on the type of work; audio works receive shorter terms of protection, about 25 years, while written works may be protected for several decades after the author’s death. Recently, in a move designed to strengthen copyright protection, Saudi Arabia joined the Universal Copyright Convention and the Berne Convention on copyright protection. As a result, foreign-owned copyrights now receive the same protection under Saudi law as Saudi-owned ones.

Like enforcement of the trademark laws, copyright laws have been enforced in recent years as the government has cracked down on copyright violators.

Patents

Saudi Arabia adopted its current patent law in 1989. An inventor may obtain a patent on new products or processes or on improvements to current ones. A patent applicant must have a local agent. Applications are submitted to the King Abdul Aziz City for Science and Technology (KACST). The inventor generally must exploit the patent on a full industrial scale within two years of the grant. Once issued, a patent is effective for fifteen years and may be renewed.

Resolution of Disputes in Saudi Arabia

If a dispute arises, a company may sue — or be sued — in Saudi courts. As a result, it is important for a company to understand, before entering into a transaction, how a dispute will be resolved. This involves three important considerations: whether to use Saudi courts or courts of other countries, the type of Saudi tribunal in which the dispute will be resolved, and the possibility of arbitration.

Saudi Tribunals vs Courts in Other Nations

If a dispute arises between a foreign company and a Saudi party, the foreign company should consider suing the party in Saudi Arabia. In some cases, Saudi law requires the suit to be brought in Saudi Arabia. For example, Saudi law prohibits government agencies from disputing a contract in another country. If the other party’s only assets are in Saudi Arabia, the foreign company must ensure

10

that any judgment will be enforced there. Bringing a suit directly in Saudi Arabia provides the best assurance that a favorable judgment will be enforced.

Before suing a Saudi in another country, a foreign company should learn whether Saudi Arabia has a reciprocal enforcement treaty with that country. If a company sues a Saudi in a non-treaty country and attempts to enforce a judgment in Saudi Arabia, the Board of Grievances would review the judgement to make sure that it does not violate Saudi public policy. No such treaty exists between the United States and Saudi Arabia.

The Saudi Judicial System

In resolving disputes in Saudi Arabia, the foreign company might appear before a variety of tribunals. The Saudi judicial system consists of both general courts and specialized tribunals. The courts and tribunals may consist of a combination of judges and non-judges. Decisions may occur quickly or may take several years. In some cases, decisions may be appealed.

The Sharia courts are the courts of general jurisdiction in the Saudi judicial system. Sharia judges preside over almost any dispute unless Saudi law provides otherwise. Sharia judges apply Islamic Law to decide a case. Sharia courts decide a case usually within a few months. Unlike some other legal systems, such as that of the United States, there is no time limit within which a party must bring a lawsuit. All decisions of Sharia courts may be appealed.

The Board of Grievances has the exclusive power to decide disputes over Saudi Government contracts and may decide some types of commercial disputes. The Board of Grievances often uses outside technical experts to decide cases, which may be helpful for complex cases. Unlike the Sharia and other Saudi courts, the Board of Grievances observes a system of precedent. Decisions of the Board of Grievances may be appealed.

Several other tribunals resolve disputes in specialized areas of Saudi law. The Civil Rights Directorate has primary responsibility for enforcing the judgment of a Saudi Arabian court or tribunal. The Negotiable Instruments Committee decides cases involving bills of exchange, promissory notes, and checks. The SAMA Committee resolves certain disputes between banks and their customers. The Conciliation Committee at the Chamber of Commerce assists in settling problems that arise when a foreign company attempts to change commercial agents. Finally, the Preliminary Committee for the Settlement of Labor Disputes hears all matters related to labor and employee relations.

Arbitration

Arbitration presents a viable alternative to resolving disputes through the Saudi judicial system. Before agreeing to arbitration, however, a company should be aware of the rules in Saudi Arabia governing arbitration. A company also should investigate whether the decision of a particular arbitration can be enforced in Saudi Arabia.

Arbitration is an accepted practice for resolving disputes in Saudi Arabia. Arbitration must conform to a detailed set of requirements that govern the selection of arbitrators, the length of the arbitration, and review of the arbitrators’ decision. The chairman of the arbitrators must be expert in Sharia or Saudi commercial law. Unlike some other countries, Saudi Arabia requires a court to approve the arbitration award.

Once the arbitrators have reached a decision, a company must also consider how it will enforce the decision. In the case of arbitrations within Saudi Arabia, the Civil Rights Directorate enforces all arbitration awards. To enforce an arbitration decision, a party may have to petition a court to order the sale of the opposing party’s assets. Saudi Arabia is a party to the New York Convention on Foreign Arbitral Awards. While this generally requires a Saudi court to honor the award of an arbitration in another country, there are two conditions under which a court may refuse to enforce the award. Under Royal Decree No. M 11/1994 of January 21, 1994, Saudi Arabia made the reciprocity reservation limiting recognition of awards under the Convention to those rendered in the territory of

11

another contracting state. In addition, the Convention will not be applied retroactively to disputes initiated prior to ratification.

Saudi Arabia has also ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. However, Saudi Arabia entered a reservation to the effect: "the Kingdom reserves the right of not submitting all questions pertaining to oil and to acts of sovereignty to the International Center for Settlement of Investment Disputes, whether by way of conciliation or arbitration." The Kingdom is a member of this associated International Center for Settlement of Investment Disputes (ICSID).

In July 1995, an Agreement on Legal Protection for Guaranteed Foreign Investment between the Multilateral Investment Guarantee Agency and the Kingdom of Saudi Arabia was signed. MIGA has its own Arbitration Rules incorporated into its standard Contracts of Guarantee, based on ICSID rules.

VIII. Language

Arabic is the official language of Saudi Arabia. It is the language of the Qur’an (the holy book of Islam). Through its eloquence and the spread of Islam, Arabic has become one of the most widely used languages of the world.

English is also used in the Kingdom, most frequently in conducting business, health care, commerce and international affairs and the hotel industry.

IX. Executive summary writing guide

[insert text here]

X. Sources of information

http://www.saudiembassy.net/about/country-information/history.aspx

http://www.arabiancareers.com/saudi.html

http://www.the-saudi.net/saudi-arabia/area.htm

http://countrystudies.us/saudi-arabia/21.htm

http://www.the-saudi.net/saudi-arabia/education.htm

http://countrystudies.us/saudi-arabia/31.htm

http://www.unicef.org/infobycountry/saudiarabia_statistics.html#67

http://www.mrdowling.com/800literacy.html

http://www.nationmaster.com/time.php?stat=edu_lit_rat_age_1524-literacy-rates-aged-15-24&country=sa-saudi-arabia

http://nmun.sicherheitspolitik.de/uploads/media/RSAF_politic_01.pdf

http://www.hziegler.com/locations/middle-east/saudi-arabia/articles/political-system-of-saudi-arabia.html

12

http://countrystudies.us/saudi-arabia/52.htm

http://mpra.ub.uni-muenchen.de/21650/1/MPRA_paper_21650.pdf

http://www.nyulawglobal.org/Globalex/Saudi_Arabia.htm#_Toc200894560

http://www.the-saudi.net/business-center/saudi-market.htm

II. Economic Analysis writing guide

Guideline

I. Introduction

[insert text here]

II. Population writing guide

[insert text here]

A. Total writing guide

[insert text here]

1. Growth rates

[insert text here]

2. Number of live births

[insert text here]

3. Birthrates

[insert text here]

B. Distribution of population writing guide

13

[insert text here]

1. Age

[insert text here]

2. Sex

[insert text here]

3. Geographic areas (urban, suburban, and rural density and concentration)

[insert text here]

4. Migration rates and patterns

[insert text here]

5. Ethnic groups

[insert text here]

III. Economic statistics and activity writing guide

[insert text here]

A. Gross national product (GNP or GDP)

[insert text here]

1. Total

[insert text here]

2. Rate of growth (real GNP or GDP)

14

[insert text here]

B. Personal income per capita writing guide

[insert text here]

C. Average family income

[insert text here]

D. Distribution of wealth

[insert text here]

1. Income classes

[insert text here]

2. Proportion of the population in each class

[insert text here]

3. Is the distribution distorted?

[insert text here]

E. Minerals and resources writing guide

[insert text here]

F. Surface transportation writing guide

[insert text here]

15

1. Modes

[insert text here]

2. Availability

[insert text here]

3. Usage rates

[insert text here]

4. Ports

[insert text here]

G. Communication systems writing guide

[insert text here]

1. Types

[insert text here]

2. Availability

[insert text here]

3. Usage rates

[insert text here]

H. Working conditions writing guide

[insert text here]

16

1. Employer-employee relations

[insert text here]

2. Employee participation

[insert text here]

3. Salaries and benefits

[insert text here]

I. Principal industries

[insert text here]

1. What proportion of the GNP does each industry contribute?

[insert text here]

2. Ratio of private to publicly owned industries

[insert text here]

J. Foreign investment writing guide

[insert text here]

1. Opportunities?

[insert text here]

2. Which industries?

17

[insert text here]

K. International trade statistics writing guide

[insert text here]

1. Major exports

[insert text here]

a. Dollar value

[insert text here]

b. Trends

[insert text here]

2. Major imports

[insert text here]

a. Dollar value

[insert text here]

b. Trends

[insert text here]

3. Balance-of-payments situation

[insert text here]

a. Surplus or deficit?

[insert text here]

b. Recent trends

[insert text here]

18

4. Exchange rates writing guide

[insert text here]

a. Single or multiple exchange rates?

[insert text here]

b. Current rate of exchange

[insert text here]

c. Trends

[insert text here]

L. Trade restrictions writing guide

[insert text here]

1. Embargoes

[insert text here]

2. Quotas

[insert text here]

3. Import taxes

[insert text here]

4. Tariffs

[insert text here]

5. Licensing

19

[insert text here]

6. Customs duties

[insert text here]

M. Extent of economic activity not included in cash income activities writing guide

[insert text here]

1. Countertrades

[insert text here]

a. Products generally offered for countertrading

[insert text here]

b. Types of countertrades requested (i.e., barter, counterpurchase, etc.)

[insert text here]

2. Foreign aid received writing guide

[insert text here]

N. Labor force

[insert text here]

1. Size

[insert text here]

2. Unemployment rates

20

[insert text here]

O. Inflation rates writing guide

[insert text here]

IV. Developments in science and technology

[insert text here]

A. Current technology available (computers, machinery, tools, etc.)

[insert text here]

B. Percentage of GNP invested in research and development

[insert text here]

C. Technological skills of the labor force and general population writing guide

[insert text here]

V. Channels of distribution (macro analysis) writing guide

[insert text here]

A. Retailers writing guide

[insert text here]

1. Number of retailers

[insert text here]

2. Typical size of retail outlets

21

[insert text here]

3. Customary markup for various classes of goods

[insert text here]

4. Methods of operation (cash/credit)

[insert text here]

5. Scale of operation (large/small)

[insert text here]

6. Role of chain stores, department stores, and specialty shops

[insert text here]

B. Wholesale middlemen writing guide

[insert text here]

1. Number and size

[insert text here]

2. Customary markup for various classes of goods

[insert text here]

3. Method of operation (cash/credit)

[insert text here]

22

C. Import/export agents

[insert text here]

D. Warehousing

[insert text here]

E. Penetration of urban and rural markets writing guide

[insert text here]

VI. Media writing guide

[insert text here]

A. Availability of media writing guide

[insert text here]

B. Costs

[insert text here]

1. Television

[insert text here]

2. Radio

[insert text here]

3. Print

[insert text here]

23

4. Other media (cinema, outdoor, etc.)

[insert text here]

C. Agency assistance

[insert text here]

D. Coverage of various media

[insert text here]

E. Percentage of population reached by each of the media

[insert text here]

VII. Executive summary writing guide

[insert text here]

VIII. Sources of information

[insert text here]

IX. Appendixes

[insert text here]

III. Market Audit and Competitive Market Analysis writing guide

Guideline

I. Introduction writing guide

[insert text here]

24

II. The product writing guide

[insert text here]

A. Evaluate the product as an innovation as it is perceived by the intended market writing guide

[insert text here]

1. Relative advantage writing guide

[insert text here]

2. Compatibility writing guide

[insert text here]

3. Complexity writing guide

[insert text here]

4. Trialability writing guide

[insert text here]

5. Observability writing guide

[insert text here]

B. Major problems and resistances to product acceptance based on the preceding evaluation writing guide

[insert text here]

III. The market writing guide

25

[insert text here]

A. Describe the market(s) in which the product is to be sold

[insert text here]

1. Geographical region(s)

[insert text here]

2. Forms of transportation and communication available in that (those)

region(s)

[insert text here]

3. Consumer buying habits writing guide

[insert text here]

a. Product-use patterns

[insert text here]

b. Product feature preferences

[insert text here]

c. Shopping habits

[insert text here]

4. Distribution of the product writing guide

[insert text here]

a. Typical retail outlets

[insert text here]

26

b. Product sales by other middlemen

[insert text here]

5. Advertising and promotion writing guide

[insert text here]

a. Advertising media usually used to reach your target market(s)

[insert text here]

b. Sales promotions customarily used (sampling, coupons, etc.)

[insert text here]

6. Pricing strategy

[insert text here]

a. Customary markups

[insert text here]

b. Types of discounts available

[insert text here]

B. Compare and contrast your product and the competition’s product(s)

writing guide

[insert text here]

1. Competitor’s product(s) writing guide

[insert text here]

a. Brand name

[insert text here]

27

b. Features

[insert text here]

c. Package

[insert text here]

2. Competitor’s prices

[insert text here]

3. Competitor’s promotion and advertising methods

[insert text here]

4. Competitor’s distribution channels

[insert text here]

C. Market size writing guide

[insert text here]

1. Estimated industry sales for the planning year

[insert text here]

2. Estimated sales for your company for the planning year

[insert text here]

D. Government participation in the marketplace

[insert text here]

28

1. Agencies that can help you

[insert text here]

2. Regulations you must follow

[insert text here]

IV. Executive summary writing guide

[insert text here]

V. Sources of information

[insert text here]

VI. Appendixes

[insert text here]

IV. Preliminary Marketing Plan writing guide

Guideline

I. The marketing plan

[insert text here]

A. Marketing objectives writing guide

[insert text here]

1. Target market(s) (specific description of the market)

[insert text here]

2. Expected sales 20-

29

[insert text here]

3. Profit expectations 20-

[insert text here]

4. Market penetration and coverage

[insert text here]

B. Product adaptation or modification writing guide

[insert text here]

1. Core component

[insert text here]

2. Packaging component

[insert text here]

3. Support services component

[insert text here]

C. Promotion mix

[insert text here]

1. Advertising

[insert text here]

a. Objectives

30

[insert text here]

b. Media mix

[insert text here]

c. Message

[insert text here]

d. Costs

[insert text here]

2. Sales promotions

[insert text here]

a. Objectives

[insert text here]

b. Coupons

[insert text here]

c. Premiums

[insert text here]

d. Costs

[insert text here]

3. Personal selling

[insert text here]

4. Other promotional methods

[insert text here]

31

D. Distribution: From origin to destination writing guide

[insert text here]

1. Port selection

[insert text here]

a. Origin port

[insert text here]

b. Destination port

[insert text here]

2. Mode selection: Advantages/disadvantages of each mode

[insert text here]

a. Railroads

[insert text here]

b. Air carriers

[insert text here]

c. Ocean carriers

[insert text here]

d. Motor carriers

[insert text here]

3. Packing

[insert text here]

32

a. Marking and labeling regulations

[insert text here]

b. Containerization

[insert text here]

c. Costs

[insert text here]

4. Documentation required

[insert text here]

a. Bill of lading

[insert text here]

b. Dock receipt

[insert text here]

c. Air bill

[insert text here]

d. Commercial invoice

[insert text here]

e. Pro forma invoice

[insert text here]

f. Shipper’s export declaration

[insert text here]

g. Statement of origin

[insert text here]

h. Special documentation

33

[insert text here]

5. Insurance claims

[insert text here]

6. Freight forwarder writing guide

[insert text here]

E. Channels of distribution (micro analysis) writing guide

[insert text here]

1. Retailers

[insert text here]

a. Type and number of retail stores

[insert text here]

b. Retail markups for products in each type of retail store

[insert text here]

c. Methods of operation for each type (cash/credit)

[insert text here]

d. Scale of operation for each type (small/large)

[insert text here]

2. Wholesale middlemen

34

[insert text here]

a. Type and number of wholesale middlemen

[insert text here]

b. Markup for class of products by each type

[insert text here]

c. Methods of operation for each type (cash/credit)

[insert text here]

d. Scale of operation (small/large)

[insert text here]

3. Import/export agents

[insert text here]

4. Warehousing

[insert text here]

a. Type

[insert text here]

b. Location

[insert text here]

F. Price determination writing guide

[insert text here]

35

1. Cost of the shipment of goods

[insert text here]

2. Transportation costs

[insert text here]

3. Handling expenses

[insert text here]

a. Pier charges

[insert text here]

b. Wharfage fees

[insert text here]

c. Loading and unloading charges

[insert text here]

4. Insurance costs

[insert text here]

5. Customs duties

[insert text here]

6. Import taxes and value-added tax

36

[insert text here]

7. Wholesale and retail markups and discounts

[insert text here]

8. Company’s gross margins

[insert text here]

9. Retail price

[insert text here]

G. Terms of sale

[insert text here]

1. EX works, FOB, FAS, C&F, CIF

[insert text here]

2. Advantages/disadvantages of each

[insert text here]

H. Methods of payment writing guide

[insert text here]

37

1. Cash in advance

[insert text here]

2. Open accounts

[insert text here]

3. Consignment sales

[insert text here]

4. Sight, time, or date drafts

[insert text here]

5. Letters of credit

[insert text here]

II. Pro forma financial statements and budgets

[insert text here]

A. Marketing budget

[insert text here]

38

1. Selling expense

[insert text here]

2. Advertising/promotion expense

[insert text here]

3. Distribution expense

[insert text here]

4. Product cost

[insert text here]

5. Other costs

[insert text here]

B. Pro forma annual profit and loss statement (first year and fifth year)

[insert text here]

III. Resource requirements

[insert text here]

A. Finances

[insert text here]

39

B. Personnel

[insert text here]

C. Production capacity

[insert text here]

IV. Executive summary writing guide

[insert text here]

V. Sources of information

[insert text here]

VI. Appendixes writing guide

[insert text here]

40