Business Strategies of Kuwait-Free-Samples -Myassignmenthelp.com

Questions: 1.To critically analyze and discuss the impact of relying only on a single type of industry for a nations competitive advantage. 2.To suggest and critically discuss four policies that can enable firms in your country to contribute in creating and sustaining the nations competitive advantage. Answers: 1.The competitive advantage of nation The Competitive advantage of nation is dependent upon capacity of existing industries to upgrade and bring innovation. A nation is able to have competitive advantage due to its structure and localized national process. According to Porter, a nation is able to gain competitive advantage in any particular sector where an earlier picture of clear buying needs are provided by their domestic demand (Abdullah et al. 2017). This is so because that particular sector will be pressurized by domestic buyers emerging needs to achieve refined advantage. If a particular industry is more visible in domestic country rather than any foreign country, then prevailing demand condition of home country helps in providing competitive advantage. Kuwait is one of the wealthiest countries as per capita income having a highly affluent domestic market. As a manufacturing sector, Kuwait has number of competitive advantage and this particular sector or industry is benefitted from boosting of domestic demand for output, infrastructure enhancement and thereby stimulating economic growth. Long term supply for manufacturing industries is bolstered by investment in gas and oil. If a nation is relying on any single industry such as manufacturing sector, then there exist the possibilities that it competitive advantage might be affected due to different factors or challenges faced by nation. Successful strategy of nation cannot be dependent upon only one particular industry (Whorton and Whorton 2014). National level of productivity defines their competitive advantage and if the productivity of manufacturing sector is hampered that leads to declining export volume, then the competitive position would be weakened. Global market for manufacturing industries is increasing and in order for Kuwait to maintain its competitive position in terms of its manufacturing sector, it is required to make it a world class manufacturing sector. Competitiveness of manufacturing products needs to be enhanced for engaging competitively in international market. In light of challenges faced by manufacturing sectors, a new competitive advantage is required to be built for sustaining strong industrial performance. Although, it is not possible for Kuwait to achieve competitive advantage in all sectors, it should not also be dependent upon one single industry that is manufacturing sector to sustain its competitive position. Some other export industries of Kuwait also have competitive position in global marke t. These industries includes petro chemicals, electric supplies and apparatus, metal products producing industries and petro refineries. Manufacturing sectors in Kuwait is faced with number of challenges and this calls for re positioning of industry and gains needs to be maximized for opportunities that are existing for manufacturing industries. There exist opportunities for growth of manufacturing sectors and by undertaking some measures on part of government and revival of global market, competitive position of Kuwait can be rebuild. Therefore, it is required by nation to determine its competitive advantage in few more sectors by analyzing the conditions of factor, market structure, firms strategy and domestic demand condition in the market. All these determinants will help nation to achieve competitive advantage by focusing on one or more sectors (G. Hawkins et al. 2016). Hence, nation should not rely on one single industry for gaining competitive advantage. 2.Industrial development policies: As discussed in the above question, that manufacturing industry in Kuwait is largest in chemical segments. A clear strategy for development of industries has been realized by government of Kuwait. One of the urgent issues due to lower oil prices is expansion of industrial development particularly manufacturing sector. A host of economic reforms have been promoted by government that aims at enlarging economic base, diversifying state income sources and laying down foundation that would help in development of economy based on service and finance industries. In order to support the bold development strategy of manufacturing sectors, government of Kuwait is eyeing on global capital flows. The promotion of manufacturing sector are being built by taking numerous initiatives by government that involves passing of Kuwait Development plan. It is perceived that such plan will help in developing infrastructure and stimulating economy of Kuwait. Budget of manufacturing sector has been increased by government by nearly USD 1.7 billion per year (Sidani and Al Ariss 2014). Attention is being made on building new trade zones in the country. Building of new trade zones will provide construction material to manufacturing industries as new trade zones will increase the need for building products. The success of manufacturing sector will be added on by availability of labor at lower cost. A host of modernization programs and economic reforms has been implemented by government due to long standing issues of regulations and bureaucracy. Some careful attent ion is required to be paid by Kuwait government on border and customs policies. Regulating of securities and process of permitting visa should be simplified for easing the process of export and imports. Oil is considered as the main source of income and in light of declining oil price, measures should be taken to diversify its source of income (Ahmad et al. 2017). It would assist in building and maintaining sustainability of competitive position. Policies of granting incentives to firms: A variety of incentives and license are offered by government to develop industries to support the cycle of industrial products. Such incentives includes exemption from customs, advantages for selecting products procurement, industrial financing, subsidies for land and utilities. Local industries are encouraged by providing exemption from customs and duties payment are exempted on equipment, machinery, raw materials, equipment and spare parts and packaging materials. Development of local industries are encouraged through long-term soft plans and medium by making contribution to capital for industrial projects. The procurement policy of government grants preference to national industry products that would enhance international players vis-a-vis domestic competitiveness. Government of Kuwait has passed and approved new law in fiscal year 2017 under which local industry are provided a priority guarantee where government procurement projects will be provided with a maximum 15% mark up ov er foreign products (Williamson et al. 2016). Contracts that are usually government supply based such as concrete and aluminum pipes and steel sections are applied for mark up. Development of local industries are encouraged through long-term and medium soft loans by making contribution of capital to industrial projects. Foreign contracts are further obliged to purchase contractual requirement of less than 30% from the local suppliers or local market that are listed lists of suppliers classification by the introduction of new tender law. Significant advantage will be provided to local industry by correct implementation of these policies. Policies for Industrial land: Government of Kuwait provides incentive for allocation of land across many industrial zones. Objectives of increased industrial production is supported by expansion and new zone openings in several years. Availability of land has been one of the key challenges in country. Creation of long-term plan and allocation of land across industry have been done for resolving the issue. It will allow manufacturing companies and industries for land development. Law requires that 10% of land will be dedicated to medium and small enterprises (Hoekman 2016). Supporting development of infrastructure is another effort taken by government to have efficient allocation of capital. Public authority of industry has launched Al Naeem Industrial zone for heavy industry in year 2016. Kuwait government has introduced regulation that would provide ease in finding foreign tenants and leading to industrial zone expansion. As per this law, local company having a branch for in international company or having 100% foreign equity to make investment in country (Al-Fadly 2016). Subsidy policies and programs have been introduced by government to reduce local industrialization additional cost. Local operations in country by industrial companies will be benefiting from tax exemptions, inexpensive utilities and priority of government on domestic procurement. There is a long standing issues relating to regulations and level of bureaucracy and employment of process of redistribution will help in addressing them. Trade liberalization policy: A policy of trade liberalization would enable substantial flow of equipment and capital goods for expansion and restructuring of industries. This would help in making domestic industries more responsive to market forces and competitive. Domestic product will become competitive in global market. Firms that are not able to compete on international platform will go out of business (Ibrahim et al. 2017). Therefore, for improving competitive capabilities of such industries in changing market condition, it will be required or country to introduce additional measures for technological and financial support. It is required by Kuwait to compete with other countries for attracting global firms and foreign direct investment. Firms competing on global scale will have the opportunities by providing them with incentives in the form of tax relief, low rate loans, direct subsidies and subsidized inputs and infrastructure. Kuwait should take measures to attract foreign direct investment by granting u nconditional conditions and freedom from administrative procedures and state imposed regulations (Almutairi 2014). Bottlenecks should be eliminated in the communication infrastructure and well-functioning transportation. 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