Introduction To The Sultanate Of Oman Economics Essay

The Sultanate of Oman is a place of unrivalled natural beauty and cultural richness. Oman is considered to have some of the most beautiful landscape in the Arabian Peninsula.
Even in its modernity, Oman remains distinctly Arabic and offers many unique old-world wonders. As the oldest independent state in the Arab world, Oman has a wealth of archaeological and historical marvels, including ancient walled cities, forts and mosques.
Oman has transformed access to education over the past 40 years, and is now expanding post-school education and training. Oman is diversifying its economy away from oil and gas, and there has been strong growth in tourism, IT and the knowledge-based economy in recent years. Oman has a predominantly young population, with over 70% of people under the age of 30.

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The Sultanate of Oman (maps) occupies the southeastern tip of the Arabian Peninsula – 300,000 sq. km boasting some 1,700 km of coastline stretching along the Indian Ocean and the Arabian Gulf. It is the second largest country in Arabia, and has the most diverse landscape including fjord-like rugged mountains in the far north, magnificent tracts of desert and a lush south.
An ancient civilization, Oman’s history can be traced back to 12,000 BC. The country is strategically located on the crossroads of several trade routes that linked the ancient world. It became a center of power in the 17th century with Omani rule extending from Zanzibar in East Africa to parts of Persia and Pakistan.
Oman takes pride in its rich cultural and architectural heritage bestowed by hundreds of years of international trading and foreign occupation. Evidence of a glorious ancient past is spread all over the country which spread all over the country which boasts more than 500 forts, castles, and towers. Their diversity and numbers reflect the high standards achieved by Omanis in architecture. Trips to the Oman museum at Qurm and to the Natural History Museum in Al Khuwair are invaluable in helping the visitor gain an insight into Oman’s history.The Sultanate’s varied geography makes for a wide range of climatic conditions. The best time of the year to visit Oman is between October and April, when the weather is pleasantly warm in the day and cool in the evening. Temperature average is 25-35 degrees centigrade during the day and plummet to 17-19 degrees centigrade at night.
Oman enjoys many unique features including an unspoiled culture and lifestyle traditional in almost every aspect. The people are friendly and offer incomparable hospitality. A rich variety of flora and fauna abound, together with panoramic beauty witnessed in its mountain ranges, deserts and sand dunes.
Overall Industrial view of Oman
Industrial development receives great importance in the country’s development plans so as to reduce Oman’s heavy reliance on oil. A number of projects are engaged in producing intermediate goods for construction, and a wide variety of manufacturing goods are produced in the country, ranging from food and beverages to furniture, textiles, paper products, chemicals, fabricated metal products, electrical goods, consumer products, etc.
New manufacturing industries have been growing through continuous encouragement by the government through soft loans, good infrastructure and facilities, import duty exemptions, etc. The government has also established industrial estates in Rusayl, Raysut, Sohar and Nizwa. The small size of the local market and free imports are major constraints on development of the manufacturing sector. The manufacturing sector contributes more than 10% to the GDP. However, this contribution is expected to increase with plans to develop gas intensive industries including a petro chemical complex, a fertilizer plant, an aluminium smelter plant, etc. The government is actively promoting Sohar as an industrial Center, through the Sohar port and providing incentives to the private sector. The Omani Center for Investment Promotion and Export Development was established by the government to promote private sector and foreign investments, and to support the export of Omani products. The Center also acts as a one stop shop, offering various services to investors including processing of proposals, assistance in raising finance, facilitating / obtaining of licenses, approvals, exploring foreign markets / customers, etc.
Market Opportunities
Oman offers stability, security, a predictable investment climate, respect for free markets and property rights, rule of law, access to capital, good health care and schools, easy access to global markets through a modern infrastructure network, and a strong demonstrated commitment to Intellectual Property Rights enforcement.
Although oil and gas production will remain the backbone of Oman‟s economy for years to come, the non-oil sector of the economy is making great strides. Growth areas include: infrastructure, including rail and airports; water and power projects; medical equipment, services and supplies; construction and engineering services; building products; renewable energy construction, technology, and services; industry; and aquaculture. The Ministry of Finance announced that as part of the 2011-16 Eighth Five Year Plan, RO13bn ($33.8bn) would be spent on infrastructure, e.g., ports, highways, rail and airports, with RO8bn (S20.8bn) focused on financing oil and gas projects to achieve 15-17% growth in the sector and RO3.4bn ($8.84bn) for the electricity sector in order to keep pace with 7-10% annual demand growth fueled by tourism and industry. RO700m ($1.8bn) has been allocated to the tourism sector, which is aiming for 11% growth with a focus on meetings, industry conventions, and exhibitions; RO 500m ($1.3bn) will be
directed toward resorts and conference centers while RO 200m will be earmarked for infrastructure.
The GoO is spending $9bn to develop various economic zones around the country, with $3bn invested just in Salalah port and free zone. Salalah boasts a unique location astride international shipping lanes, connecting American cargo to India, Southeast Asia, and the Middle East within two weeks. The port has also recently announced a new intermodal facility in partnership with OmanAir. Duqm special economic zone, the newest, will be one of the largest in the world once completed, and has attracted $6bn in public and private investment so far, with up to $15bn expected in the next decade. A joint venture with the Port of Antwerp, Duqm can accommodate the largest ships in the world and is located near Al Wusta, the site of many minerals as well as oil and gas resources. By 2014 the Port of Duqm expects to be able to accommodate ships of up to 150,000 deadweight tons in its multi-purpose, container, and dry bulk terminals, with liquid jetties following in phase two. Plans for Duqm Economic Zone include: an oil refinery and petrochemical complex, a ship repair and construction dry-dock, fuel storage and bunkering facilities, a fish farming complex, and the construction of two tourist hotels. In addition, the new surrounding city will require sewage treatment, drainage, water desalination, power plants, buildings, telecom services and landscaping. A joint venture with the port of Rotterdam, Sohar port and free zone also hosts the world‟s largest vessels, offers cargo, liquid and container terminals, and is also located in a mineral rich region. Sohar has found success hosting downstream industrial activities such as sulfur processing, aluminum rolling and steel pelletizing in its adjacent free zone. The port/free zones offer investors well-equipped facilities outside the congested Strait of Hormuz to serve as low-cost manufacturing and re-export hubs; in 2011, Oman‟s chemical exports achieved a 121.5% growth rate, while base metal exports grew by 51.5%.
American investment in Oman is addressed in the U.S.-Oman Free Trade Agreement. American companies may register as an Omani firm, with 100% American ownership. GCC investors are also permitted to fully own companies in Oman. Other nationalities are bound by the Foreign Business Investment Law of 1974, as amended. In general, the law limits non-American / non-GCC foreign shareholding to 65% of any company, thus requiring other foreign investors to partner locally unless they seek an exception from the Omani Cabinet, which may decide to allow a fully foreign-owned company to form in Oman based on national interest. American companies must only demonstrate capital reserves of OR 20,000 ($52,000) to start a basic LLC, whereas other foreigners are subject to a minimum of OR 150,000 ($390,000). Corporate profits are taxed at a flat rate of 12%, and the first $78,000 is tax free. For special free trade zones there is up to a ten year holiday on taxation. Oman does not have a personal income tax or sales / value-added taxes. There are a few local and “luxury” taxes mostly aimed at tourist facilities, and temporary consultancies that do not establish long enough in Oman to pay the annual corporate tax are subject to 10% withholding on royalties and other management or research fees.
Advantages of investing in Oman
Oman offers following advantages to the foreign investors to invest in Oman.
Political stability.
Liberal foreign ownership in companies permitted.
Oman is rich in oil and gas.
Capital and profits of a business entity is fully repatriable.
No personal income-tax. All individuals can fully repatriate their savings.
Committed to privatization, industrialization, economic diversification and development.
Free trade and open market policy.
Low income tax rate structure for companies and double taxation relief treaties available with many countries.
Income tax holiday period of five years renewable for further period of five byears, available for business entities engaged in priority areas of economic development.
Geographically ideally located, proximity to Gulf, Asian and African markets.
Well regulated stock exchange.
Industries fulfilling certain conditions can get interest free/ soft loans, exemption from custom duty on import of plant, equipment and raw materials and export credit insurance.
Government leased land available at a concessional rate with good utilities.
Modern infrastructure with good roads, airports, sea ports, and state of the art telecommunications and other services.
English is used widely in day to day business commerce
Education in Oman
Before 1970, only three formal schools existed in the whole country, with less than 1,000 students receiving education in them. Since Sultan Qaboos came to power in 1970, the government has given high priority to education to develop a domestic work force, which the government considers a vital factor in the country’s economic and social progress.
Today there are 1,052 state schools and about 563,236 students. In 1986, Oman’s first university, Sultan Qaboos University, opened. Other post secondary institutions include a law school, technical college, banking institute, teacher training college, and health sciences institute. Some 200 scholarships are awarded each year for study abroad.
Pre-university education
Pre-university education in Oman has three stages: primary, preparatory, and secondary. Six years of primary schooling are followed by three years of preparatory school. Academic results of the preparatory exams determine the three years of secondary education the student will receive.
Higher education reform
Nine private colleges exist, providing 2-year post secondary diplomas. Since 1999, the government has embarked on reforms in higher education designed to meet the needs of a growing population, only a small percentage of which are currently admitted to higher education institutions. Under the private university applied colleges reformed system, five public regional universities are created, and incentives are provided by the government to promote the upgrading of the existing nine private colleges and the creation of other degree-granting private colleges.
Education statistics
Adult literacy rate (% ages 15 and above) 2006 (83.7).
As of 2005, 76% of primary-school-age children were enrolled in school, while 75% of those eligible attended secondary school
In 2001, there were 346 literacy centers and 214 adult education centres.
Six teacher training college are functioning at the moment with 9000 students.
The Institute of Agriculture at Nazwa became a full college by 1985.
Sultan Qaboos University opened in 1986 there are currently some 12.000 students at the University.
What are the Opportunities for Us?
As we know that the adult literacy rate in Oman is 83.7% and people also ready for spending on the higher Education so, we have a chance or we can say the opportunities to open our own higher educational institutions in Oman.
We can provide them Under graduation and Post graduation Education.
The per capital income in Oman is very high so, they can affored the education to their child and also they are ready to spend on the education.
Government is also helping the new comers in education
From Gujarat we can get the professional people at cheaper cost for establishing the education institutes at Oman.
Health Care
The standard of healthcare in Oman is high thanks to the efforts of the government to ensure investment in a national health service over the past few decades. Both public and private medical facilities provide a good standard of care, and there are now over 180 local, district and regional health facilities in Oman, with the largest and best facilities located in Muscat.
The majority of Oman’s medical doctors and staff are expatriates. However, with the government’s policy of Omanization, this is slowly changing, and the government is trying to encourage Omani nationals to go into the medical field.
Medical treatment in Oman can be expensive and facilities may expect payment upfront. Expats should ensure that they full medical insurance. 
of hospitals
Hospital beds
/10,000 people
Govt health centres,
clinics, dispensaries
/10,000 people
Nurses/10,000 people
Hospitals in Oman
There are 58 hospitals in Oman and 897 medical centers, dispensaries and clinics. Only 9 hospitals are private and the rest are Government hospitals.
Opportunities For Gujarat Enterprenures:
From the above information we can say that there are very less private hospitals and medical facilities provider there in Oman. Even they are very costly because of the less number of hospitals in these country.
As we know that India is the only country whose Doctors and Chartered Accountants are very famous for their excellent services.
The Indian doctors are very experts in their field or we can say that they are having very good knowledge regarding their work because of regular Practices and experience.
Yearly hospital per capita expenditure in Oman is 294.6$ which is high as compared to India.
The average age or the life Expentacy of Omani people is 74.76 year which is high as compared to India 63.5 year.
So these people are living more years as compared to Indian so, they are having more old life as compared to India and the the research says that the Hospital expenses are more in old age as compared to the young age.
So, the chances for Indian doctors or we can say the enterprenures are more in Oman.
We can open our own Hospital and Medical in Oman for providing the health care services to the Omani citizens.
Here we may face a competition with the doctors of U.S., Pakistan, Europe, Egypt, etc., but we are able to face this competition because we can provide better Quality (Experts) services at reasonable price.
These is because of we are having good professional at cheaper cost.
We can open our own private hospital and medical facilities in Oman through which we can enter the Omani market and can earn by serving the Omani people.
They are ready for spending on the good medical and hospital facilities.
The Omani people are having good trust on the Indian doctors as compared to the rest of the country because these people (Indian Doctors ) are having good practical knowledge as compared to the others because in India we are having very large population and the rate of illness is very high in India.
These doctors are having regular practice and also passing from different-different types of illness.
Agriculture in Oman
Prior to the discovery of oil in the 1960s, the agricultural sector was central in the Omani economy. However, in 1999 the sector contributed only 3 percent to GDP and was heavily subsidized by the government. Oman is not self-sufficient in food and in 1995 the country spent US$572 million on food and live animals. This figure rose to US$650 million in 1999.
There are efforts underway to develop self-sufficiency in staple foods. The main crops grown in Oman are tomatoes, eggplant, dates, bananas, limes, and carrots.
The principal agricultural area is found along the Batinah coast, in the northeast between Muscat and Diba al-Hisn, which accounts for about half the total crop area of approximately 101,000 acres. In the south, agriculture is centered on a small coastal plain that is fed by monsoon rain coming from the Indian Ocean. In spite of its small contribution to GDP, the agricultural sector is still a major employer. In 1994, the World Bank estimated that over half the Omani labor force was working in the agricultural sector. The Omani government reports that a total of 140,000 people are employed permanently in this sector and that 47,000 of these people are unpaid family workers. Agricultural employees are primarily of Oman descent.
Oman is famed for producing very high quality agricultural goods and the highest quality products are usually exported to the neighboring Gulf Cooperation Council (GCC) countries. (On 26 May 1981 an agreement was sign between the six conservative monarchies of the Gulf; Saudi Arabia, Bahrain, United Arab Emirates, Kuwait, Oman, and Qatar to co-ordinate their economic, political, cultural, and security policy.) However, the agricultural farm is threatened by many problems, including outdated technology and an increase in the salinity of the water. The government has responded to these issues by investing more into the sector. Its goal is to obtain self-sufficiency in food production by improving agricultural conditions. In working to make the agricultural sector internationally competitive, the government has introduced incentives for foreign investors. These exemptions include tax reductions, utilities discounts, loans, and tariff protection. The government has also helped Omani firms in exporting their products.
Agriculture in Oman has been important for centuries. The government’s economic development policy emphasizes the expansion of such non-oil sectors as agriculture, fishing, industry, and mining in its bid to diversify the economy and diminish its dependence on oil exports. The goal is to establish a sustainable economic base in preparation for the time when hydrocarbon reserves are depleted. The government launched several economic campaigns, naming 1988 and 1989 as Years of Agriculture and 1991 and 1992 as Years of Industry. Through these campaigns, the government has encouraged private-sector investment by allocating generous amounts of cash support for private industry to be disbursed mainly through official development banks. For example, the Oman Bank for Agriculture and Fisheries, created in 1981, extends loans at concessionary rates to individuals for whom farming or fishing is the principal activity. The bank acts as a distributive institution, receiving an interest subsidy from the government. In 1990 there were 1,308 loans, totaling RO4.7 million. Development programs also incorporate the government’s policy of indigenization, with a large component of funds.
Oman has five distinct agricultural regions. Going roughly from north to south, they include the Musandam Peninsula the al Batinah coast the valleys and the high platform of the east region, the interior oases, and dhofar region, along the narrow coastal strip from the border with Yemen to Ras Naws and the mountains to the north.
In the early 1990s, interior farming areas accounted for more than one-half of the country’s cultivated land. Rainfall, although greater in the interior than along the coast, is insufficient for growing crops. Most of the water for irrigation is obtained through the falaj system, in which a vertical shaft is dug from the surface to reach water in porous rock. From the bottom of this shaft, a gently sloping tunnel is dug to tap the water and allow it to flow to a point on the surface at a lower level or into a cistern or underground pool from which it can be lifted by bucket or pump.
A falaj may be many kilometers in length and require numerous additional vertical shafts to provide fresh air to the workers digging the tunnels and to permit the removal of the excavated rock and soil. A falaj requires tremendous expenditure of labor for maintenance as well as for construction. Because private maintenance efforts during the 1970s and early 1980s proved inadequate, the government initiated repair and maintenance of the falaj system to increase the quantity of water available to cultivated areas.
The cooler climate on the high plateau of the Al jabal al Akhdar enables the growing of apricots, grapes, peaches, and walnuts. The Al Batinah coastal plain accounts for about two fifths of the land area under cultivation and is the most concentrated farming area of the country. Annual rainfall along the coast is minimal, but moisture falling on the mountains percolates through permeable strata to the coastal strip, providing a source of underground water only about two meters below the surface. Diesel motors are used to pump water for irrigation from these shallow wells.
By the mid-1980s, the water table along the Al Batinah coast had dropped to a low level, and salinity of the wells had increased, significantly reducing the water quality. This was caused by the combined effect of cultivating land too close to the sea and pumping more well water than was being recharged by nature, thereby permitting seawater to encroach.
Over farming and attendant water problems caused the government to establish the Ministry of Water Resources in 1990 with the mandate of limiting water consumption and improving irrigation. A freeze on new wells was imposed in addition to delimiting several “no drill zones” in areas where groundwater supplies are low. The ministry is also considering the installation of water meters.
Recharge dam are designed to hold rainwater in the wadi for a period of time to facilitate the trickling of water down into the ground; replenishing aquifers have been built mainly in the northeastern Al Batinah region, where the groundwater levels are up to five meters below sea level.
Apart from water problems, the agricultural sector has been affected by rural-urban migration in which the labor force has been attracted to the higher wages of industry and the government service sector, and by competition from highly subsidized producers. As a result, agriculture and fishing have declined in relative sectoral importance. In 1967 the two sectors together contributed about 34 percent of GDP; by 1991 they accounted for 3.8 percent of GDP. The government encourages farming by distributing land, offering subsidized loans to purchase machinery, offering free feedstock, and giving advice on modern irrigation methods. As a result, the area under cultivation has increased, with an accompanying rise in production. But extensive agricultural activity has also depleted freshwater reserves and underground aquifers and has increased salinity.
The area under cultivation increased by almost 18 percent to 57,814 hectares over the period from 1985 to 1990. Fruits were grown on 64 percent, or 36,990 hectares, of the area under cultivation in crop year 1989-90. Dates accounted for 45 percent of the total area, or 70 percent of the area under fruit cultivation. Grains such as barley, wheat, and corn accounted for 19.2 percent, or 11,092 hectares and vegetables accounted for 16.8 percent, or 9,732 hectares, of the total area under cultivation.
In the same five-year period, overall agricultural production increased by 3 percent to 699,000 tons. Field crops, largely alfalfa, accounted for more than one-half of total production, or 354,300 tons, a 40 percent increase in the five-year period. Fruit production (including dates and limes) was 182,400 tons, up from 154,500 tons. Vegetable production totaled 162,300 tons, an increase of almost 50 percent.
What are the opportunities for Gujarat Entrepreneur?
From the above information we can say that there are salinity of water and outdated technology in Oman. So, Oman is very less resources for the agriculture.
As we know that the Water is inevitable natural resource for mankind. It is necessary at every step that the human being take to live. So it is also important for Agriculture activity.
In Oman there is a lack of the kind of water that can be use for Agriculture purpose. And at a same time there is also a lack of updated Technology that can be used for increasing the effectiveness of the agriculture activity that the farmers are doing.
So it is the opportunity to provide above mentioned facilities to grab the opportunity by establishing the business there.
Agricultural development in the state is to a large extent dependent on availability of water. A large percentage of the water in Gujarat State (both surface and groundwater) is consumed by the agricultural sector.
Ground water and surface water are the two different sources from which water is utilized for irrigation purposes. These two sources are mainly replenished by rainfall and stream flows.
As mentioned above we can say that water source is easy available in Gujarat. In Gujarat farmers are very experts in farming activities. So, farmers of Gujarat are working huge amount of farming in Oman.

Examining the potential business opportunities in Oman

The purpose of this research is to examine the potential business opportunities in Oman, especially in exporting telecommunication equipment into this country. Therefore, Oman’s macro-environmental factors such as Cultural Environment, Political and Legal Environment and Economic Environment will be discussed in term of international trade. Moreover, the research will summary the country’s current international trade 2009 in comparison to that of after 1970 when the nation’s name was changed to the sultanate of Oman. On the other hand, theories and concepts of International Trade will be used to determine attitude of the government to international trade strategy. Then, some recommendation will be given in conclusion part to improve the current position international trade of Oman.
1. Business Environment in Oman
1.1 Cultural Environment in Oman
Language: Arabic is the official language of Oman, and English and Asian languages such as Hindi, Urdu, and Baluchi are also widely spoken. Swahili is spoken by some, a legacy of Oman´s former East African presence. English is widely used in business.
Ethnic groups: Arab, Baluchi, South Asian (Indian, Pakistani, Sri Lankan, Bangladeshi), African
Religions: Ibadhi Muslim 75%, other (includes Sunni Muslim, Shi’a Muslim, Hindu) 25%
Omani Culture – Key Concepts and Values
Investing or doing business in Oman successfully requires an in-depth understanding of Oman’s unique business culture and etiquette.
Omani attitudes to time are much more relaxed than in many Western cultures. People and relationships are more important than schedules and punctuality.
Status is an important part of Omani society and is determined by factors such as age, wealth and family or tribal relations. Those with status have a high level of authority and should be shown deference.
The hierarchy present in Omani society is often seen in the use of titles and formal greetings. When first entering a room or greeting your Omani counterparts for the first time, for example, you should shake hands with the most senior person first using their appropriate titles.
Relationships and mutual trust are paramount for any successful business interaction and can only be developed through face-to-face meetings. It is important to therefore spend time with your Omani business counterparts and have frequent meetings to ensure that the relationship continues to develop.
As part of the relationship building process, guests are often invited to partake in festive occasions or simply share a meal together. Accepting these invitations will help strengthen your relationship with your Omani counterparts. If you are a businesswoman or have a female partner, however, be prepared to be separated from the group since men and women do not eat together during traditional meals or religious festivals.
1.2 Political Environment in Oman
Political power in Oman is dominated by Sultan Qaboos ibn Said Al Said who is responsible for all major decision-making and government appointments. Since coming to power in 1970 in a coup d’etat, Sultan Qaboos has committed himself to promoting the country’s modernization, economic diversification as well as continued political stability (EDC Economics).
Oman ranked 31st out of 180 countries in Transparency International’s 2009 Corruption Perception Index, receiving a score of 5.5/10, with higher scores indicating less corruption.
1.3 Economic Structure and Growth in Oman
Oman is a rural, agricultural country, and fishing and the government’s economic development policy emphasizes the expansion of such non-oil sectors as agriculture, fishing, industry, and mining in its bid to diversify the economy and diminish its dependence on oil exports.
2. International Trade in Oman
2.1 The Nature of Oman’s International Trade
Overseas trading is important to Oman. The discovery of oil drastically improved Oman’s economy. Sustained high oil prices in recent years have helped build Oman’s budget, trade surpluses and foreign reserves. Crude oil, refined petroleum, and natural gas account for most exports while imports consist mainly of machinery and transport equipment, basic manufactured goods, and foodstuffs. Some manufactured products are also exported. In spite of the fact that over the past 30 years, Oman has come to rely more and more on imports, Oman has enjoyed trade surplus through advantage of exporting the production of crude oil.
Among the country’s major trading partners are China, Japan, South Korea, and the United Arab Emirates. (See Appendix 1)
2.2 Attitude to International Trade of Oman
Oman has diplomatic relations with over 140 countries and is a member of over 105 regional and international organizations.
On 7th October 1971, Oman gained membership in the UN and its specialized organs (IMF, World Bank); the nation belongs to ESCWA and all the non-regional specialized agencies except IAEA. Oman also participates in G-77, GCC, and the Arab League, as well as the Islamic Conference. Oman accessed to the World Trade Organization (WTO) on November 9, 2000, which facilitated Oman’s integration into the global marketplace. In addition, Oman has sign several co-operation agreements with 20 countries. It concluded a free-trade agreement (FTA) with the United States, signed on 19 January 2006, covering trade in goods, IPRs, and services (WTO nd). Through these formal economic co-operations with other nations, Oman has become more dependable trading partner and more attractive destination for majority foreign-owned investment. Thus, the potential for exporting telecommunication equipment into Oman is closer.
The government’s trade policy space, as measured by the wedge between bound and applied tariffs (the overhang), has been relatively constant in the recent years and in 2008 it was 8.3 percent for Oman. Oman has a very liberal services trade regime, and as such is ranked 13th out of 148 countries according to the GATS Commitment Index.
Moreover, the Oman’s government is engaged in an aggressive effort to woo foreign investors and enhance international trade links as part of the ambitious Vision 2020 program of economic diversification aimed at reducing the country’s dependence on shrinking reserves of oil.
3. Viewing Oman’s International Trade Through Theories Related
3.1 The nature of Advantage
Daniels and Radebaugh (1998) have summarised advantage in the context of International Trade Theory into five categories as below:
Natural advantage refers to climate, soil and nature resources;
Acquired advantage refers to technology and skill development;
Comparative advantage against another nation’s endowment of assets;
Country size as a proxy for the range of natural factors such as climate, soil, minerals and etc, size of population that provides opportunities to process materials and create markets;
Factor proportions that suggest their optimum utilisation in production.
Daniels, Radebaugh and Sullivan (2004) Framework, the evolution of International Trade Theory is depicted as below:
Besides Porter’s Competitive Advantage of Nations theory, this research will use Product Life Cycle theory and Absolute Advantage theory to explore the status of international trade in Oman.
Adam Smith’s Absolute Advantage Theory
According to Adam Smith (1776), a country’s would be either natural or acquired. Relating to Oman, this country’s economy is heavily reliant on oil exports for revenue, though diversification into natural gas production has mitigated this to a degree. About two-thirds of Oman’s total energy consumption comes from natural gas and the remainder comes from oil, reflecting the country’s relative abundance of oil and natural gas reserves.

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3.2 Justification of Telecommunication Equipment Industry Potential in Oman
The Oman’s government has embarked on an ambitious campaign to develop the information technology (IT) sector. Agreements between Oman Telecommunications Company (Omantel) and foreign firms hold the potential to significantly expand telecommunications services and lay the ground for the establishment of a state-of-the-art IT infrastructure. In May 2006, Telecommunication Minister Mohammed bin Abdullah bin Isa Al-Harthi announced that the government is preparing to “fully liberalize” the telecommunications sector, with private companies permitted to offer fixed-line and Internet services (U.S Commercial Service 2009).
In July 2005, the government, which was required per WTO commitments to liberalize its telecom sector, floated 30 percent of its shares in state telecoms giant Omantel (formerly known as the General Telecommunications Organization, or GTO).
3.3 Summary of Oman current trade position using the extended form of Porter’s Diamond of National Competitiveness
According to Porter (1994), there are four principal attributes of a nation’s international success in a particular industry such as: Factor conditions; Demand conditions; Related and supporting industries and; Company strategy, structure and rivalry. In addition, Porter defines the role of chance as well as the role of government as the secondary determinants. However, a further research by Dunning (1993) proposed that multi-national business activities bring additional factors that may encourage advances in support industries, etc.
In term of exporting telecommunication equipment into Oman, the four board attributes of the nation are:
Factor conditions would be capital, quality of infrastructure.
Demand conditions would be determined that “Overall telecommunications infrastructure and service in Oman remains less developed than in its Gulf neighbors. Fixed line and Internet penetration rates are low, yet the young and growing population is generating increased demand for modern telecommunications and broadcasting systems” (U.S. Commercial Service 2008) .
Related and supporting industries would be the profitable oil and gas industries. Oil and Gas is the leading economic sector (U.S. Department of State 2007). Revenue generated can help the Kazakhstan’s government fund the healthcare industry. Firm strategy, structure, rivalry would be depicted as below:
“In 2008, imports of U.S. equipment reached an estimated $31 million, while market share declined to 3.8%. America’s closest competitors are Russia, Germany, and Japan. Local production of medical equipment in 2008 accounted for only 1.7% of the total market” (U.S. Commercial Service 2001-2009).
Relating to exporting medical equipment into Oman, the three secondary determinants are:
Chance for Oman is observed that in term of oil and gas reserves this country is ranked the 24 and 29 respectively in the world (CIA nd). Besides that, Oman has a strategic geographic location for marine trade.
The role of government would relate to: “In July 2005, the government, which was required per WTO commitments to liberalize its telecom sector, floated 30 percent of its shares in state telecoms giant Omantel. The company is now looking for a strategic investor in advance of government efforts to open the fixed-line communications sector through the issuance of additional licenses. All telecommunications companies are governed by the Telecommunications Regulatory Authority, which was established by the government in 2003 to oversee all aspects of privatization and regulation.” (U.S. Commercial Service 2008).
Multi-national Business Activities in telecommunication industry in Oman have played important role in supplying technology and equipments or software solutions for development of Oman’s telecommunication market. Omantel has contracted with Ericsson, Siemens and Motorola to expand GSM service in some areas of Oman (U.S. Commercial Service)

Small And Medium Enterprises In Oman Economics Essay

Recent decades have been marked by the rapid internationalization of business and the emergence of global competition. Markets in many industries, whether for consumer products, industrial goods and services or markets for resources such as capital, materials and technology, are becoming increasingly integrated worldwide (Craig and Douglas, 1996)  . At the same time, the formation of various trade agreements and the establishment of liberal trade policies by both developed and developing countries has resulted in the abolition of protectionist measures and the removal of most trade barriers, As result, virtually all firms, irrespective of size, industry or national origin, are now confronted with the consequences of this new commercial reality, and have realized that choosing not to participate in global markets may no longer be an option (Craig and Douglas, 1996)  .

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Madhoun & Analoui (2004)  contend that Micro and Small Enterprises (SME’s) occupy an important and strategic place in the economies of all countries as they contribute significantly to wealth and employment. All the foretasted benefits of Small and Medium Scale Enterprises cannot be achieved without the direct intervention of the government. SME entry mode choice has been considered one of the most important new research fields on internationalization of firms (Jones, 1999; Burgel, and Murray, 2000)  5. Over the years a number of Market Entry Strategies have been formulated by the government with a view to developing Small and Medium Scale Enterprises. Therefore it is visible that there are several factors which challenge the success of small business. Apart from these challenges, there are several strategic options which will help SMEs to overcome these challenges. Awareness of these issues and challenges and the strategic options in this field is very important factor to these SMEs in Oman for the development of this sector.
This proposal research will discuss deeply the impact of foreign market entry strategies of SMEs on their performance in Oman. In particular, the research will examine several Market Entry Strategies aimed at developing business performance of Small and Medium Scale Enterprises in Oman and focus on evaluating the most appropriate market entry strategies that SMEs should consider prior to penetrating market. The researcher will establish the objectives of the study and will formulate the research statements. Then he will state questions and finally, the methodology to be used is discussed.
1.2 Research Problem
SMEs in Oman, as in other countries, are still facing a number of difficulties and obstacles that are complicating their growth and performance. Firm`s growth and performance are much affected by marketing strategy, and specifically through market entry strategies. Many market entry strategies have been identified by researchers can enhance SMEs performance if these strategies are followed in their business operations there should be improving the performance of the business.
There are few studies that link market entry strategies of SMEs with its performance. The intent of this study is to fill these research gaps by producing empirical evidence to clarify the relationship among SMEs, market entry strategies and organizational performance. The fundamental research questions are whether SMEs and market entry strategies are linked from a performance perspective and whether this link adds to the bottom-line of organizations. The study attempts to improve understanding of the issues that have theoretical and practical relevance. A combination of quantitative (survey research) and qualitative (case studies) research was
In this study the researchers considered only about the market entry strategies adopted by SMEs and its impact on business performance. Therefore it is important to measure the impact of market entry strategies in term of performance for SMEs in Oman.
1.3 Research Questions
The study considers the need of the SMEs to increase their performance due to the increased impacts of the external environment such as economic crisis, competition, and globalization. The researcher can extract several questions to help the study achieve the proposed objectives.
1. What is the impact of foreign market entry strategies of small and medium enterprise on their performance in Oman?
2. What is the impact of exporting strategy of small and medium enterprise on its performance in Oman?
4. What is the impact of joint venture strategy of small and medium enterprise on its performance in Oman?
5. What is the impact of licensing strategy of small and medium enterprise on its performance in Oman?
6. What is the impact of foreign direct investment strategy of small and medium enterprise on its performance in Oman?
1.4 Research Objectives
The main objective of the study is to identify the impact of market entry strategies for SMEs in Oman in terms of the organization’s performance. The second objective is determining the appropriate market entry strategies that can be used by the SMEs which lead to improvement in their performance. The specific objectives are to examine the market entry strategies available for SMEs in terms of its performance; and to determine the main barriers to enhance performance of SMEs;
1.5 Justification (Rationale) for Research
Nowadays the globalization of markets has been one of the hottest topics of discussion among academic researchers and business practitioners during the past 25 years. The successive governments in Oman have continued to articulate policy measures and programme to achieve a sustainable industrial growth and development, through appropriate marketing strategies. No study has been available that link between market entry strategies and performance which can be used by SMEs. The researcher hopes that the findings of the research would contribute to the growing body of knowledge on SME`s market entry strategies specifically in terms of performance in the Omani context. It is also hoped that researchers on entrepreneurship would benefit from this study, directly or indirectly, in terms of the research approach and the applicability of results, among others.
The output of this study can be used as a source in variety of ways such as: (1) baseline data for Small and Middle Enterprise (SMEs) to enhance their performance through market entry strategies. (2) basis for policy formulation and implementation by the local and national government in regulating and reinforcing small business industry; and (3) reference for future comprehensive study in the field of market entry strategies.
1.6 Statement of the Hypothesis
The research work sets out to test the following hypothesis:
H0: Foreign market entry strategies of small and medium scale enterprises do not enhance their performance in Oman.
H1: Exporting strategies of small and medium scale enterprises do not enhance their performance in Oman.
H2: Joint venture strategies of small and medium scale enterprises do not enhance their performance in Oman.
H1: Licensing strategies of small and medium scale enterprises do not enhance their performance in Oman.
H1: Foreign direct investment strategies of small and medium scale enterprises do not enhance their performance in Oman.
1.7 Research Methodology
The proposed approach of the study is the use of descriptive approach and using both the primary and secondary data. The secondary data will be collected from the previous studies in the books, newspapers, websites and journals. The method will enable the study to evaluate the effectiveness of the different foreign market entry strategies that are mostly applied by the SMEs in terms of performance. In addition, the primary and secondary data can establish the conceptual framework for these strategies which can be applied specifically in the issues of globalization. The questionnaire is the approach which is used to collect the data in this research. Mcdonough and Mcdonough (2008)  sited that to get data for the research; there are two types for asking people questions which are interviews and questionnaires. Kuter and Yilmaz (2001)  added that the questionnaire is very benefit to get the data because you can ask many people the same questions in short time. Kuter and Yilmaz (2001)  gave that questionnaires are not very expensive like other ways or tools of collecting data and if you use the online questionnaire it is very easy to distribute and analyse. So, the researcher chose to use the questionnaire because it helps to get the ideas of a huge number of people but the interviews are giving the ideas of a few numbers of people. Furthermore, it is very easy to analyze the questionnaires.
In order to achieve the study objectives, the researcher will use analytical descriptive approach which includes sequent of procedures such as identification the population of the study as well as its dimensions and determination study tools to measure the dimensions which we are going to study it. The researcher will use a representative sample which includes all SMEs available in different industrial areas in Oman. The researcher will divide his study into dimensions including the importance of market entry strategies for SMEs in Oman, the evaluation of existing market entry strategies available for SMEs in Oman to measure specifically the extent of satisfaction about those strategies in terms of performance.
1.8 Research Limitation
Several limitations can be seen due to the time and cost constraints. The study is only focused on the manufacturing sector due to its significant contribution to the national economy.
2. Literature Review
2.1 Introduction
It refers to any company or individual establishment that operates within a certain industrial sector and have a registered capital exceeding $42,300 and more than ten registered employees within the social security program. Bethke & Raynard (2003)  states that the contribution MSEs makes towards economic development in developing countries cannot be understated. Allal (1999)  support these researchers by stating that MSEs are considered main engines of economic growth. Hodgetts and Kuratko (1995)  also suggest that small businesses not only create employment but are the economic engines driving the global quality of life (Hills, 1995)  . Bridges (2002)  , states that micro, small, and medium enterprises are often the backbone of the private sector in developing world and creating jobs. As per Cagliano et al. (2001)  , ‘small enterprises score significantly low on practice related to long term planning and strategic management, such as business vision, manufacturing planning and strategy and performance management as compared to medium enterprises. Batra and Mahmood (2003)  support public policy initiatives and call for creating and enabling environment for the development of small business. World Bank Report (2004)  despite the success of SMEs strategies in some countries, the majority of developing countries have found that the impact of the SMEs development programs on enterprise performance has been less than satisfactory.
Implementation of international market diversification strategy involves the development of a comprehensive product/market plan that includes choosing a foreign market entry mode (Root, 1987)  . Foreign market entry mode is defined as institutional arrangements that allow firms to use their product or service in a country exchange (Calof, 1993)  . Entry modes vary in the degree of control the firm has over invested tangible and intangible resources, and the transactions costs associated with that resource commitment (Anderson & Gatignon, 1986; Domke-Damonte, 2000)  20. In terms of the performance implications of internationalization, evidence supports the idea that foreign market entry, regardless of mode, significantly increases returns on sales and assets (Daniels & Bracker, 1989)  .
2.2 Small and Medium Enterprises in Oman-An Overview
Oman is a country with unique features. It is a developing and an oil producing country. Oman is a country where there are ample scopes for the local people to generate income from different sources especially after the introduction of Omanisation policy. According to the (Ministry of National Economy,2010)  the total number of SME units registered in Oman in 2009 is 118,386 and contribute around 23% of the gross domestic product (GDP) which are scattered in four governorates, Muscat, Dhofar, Musandam and Al Buraimi and five regions, Al Batinah, Al Dhahirah, Al Dakhliyah, Ash Sharqiyah and Al Wusta. According to the Oman Ministry of Commerce and Industry, SMEs represent more than 90% from the total number of enterprises in Oman. These estimation show a considerable potential for the Omani`s SMEs to grow and to be competitive at local and international level. This paper offers contributions to international business studies by providing a conceptual framework of market entry strategies that enhance Omani`s SMEs’ business performance.
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3. Conclusion
Small and Medium Scale Enterprises constitute essential ingredients in the lubrication and development of any economy. In Oman, the story makes no remarkable difference as Small and
Medium Scale Enterprises dominate the economy. Government over the years has formulated a number of policies aimed at developing Small and Medium Scale Enterprises. SMEs throughout the world have been considered as the silent drives of a nation’s economy. Their enterprise is laudable and their ability to generate pools of growth and employment, invaluable. This is true for most developed, as well as developing economies.
In the emerging economic order SMEs are the leading edge when it comes to innovation and entering new global markets. The SME story in the Sultanate is not different. SMEs form the backbone of Oman’s economy. The studies show that SMEs’contributions towards GDP and employment creation in Oman is far below when compared to other developed and developing countries. Many failures in SME sectors reported in the past few years were due to the absence of efficient management systems especially the effective market entry strategies in the enterprises. A study of the marketing strategies of SMEs of Oman particularly the market entry strategies will give light to the real issues of this sector and thereby strengthen the very base of the SMEs in Oman.

Suburu in Oman, SWOT AND PEST

Marketing Plan: SUBARU Oman
Market situation analysis
Oman, one of the countries in the region of GCC, officially called as the Sultanate of Oman, situated on the south west Asia on the southeast coast of Arab Peninsula. The total population of Oman is 3,314 million with the GDP of 78.11 billion with the high income level citizens and with peaceful condition prevails in the country. The country is rich with its storage of mineral oil and natural gas reserves. The country is rated as the most improved nation during the preceding 40 years globally. The people of the country, with the ability to live affluent life, can afford to have vehicles in their possession with the high quality grade. The main car manufacturing companies are present in the country with their range of different level cars. The market leader is Toyota with their varied range of cars. There are others from Europe, Japan and Korea also. The prominent names are Nissan, Hyundai, Kia, Lexus, Isuzu, etc. Subaru is one of the stake holders of the automotive market with their presence in the automotive market of Oman. The competition is stiff with the presence of so many stalwarts but due to the stake holding of Toyota in Subaru, the brand finds its distinctive place with the range of customized cars with latest features. The corporate Vice President and General Manager, Mr.Hidetoshi Kobayashi, in his speech reiterated that Oman will be the prime target of Fuji Heavy Industries for their Subaru brand of cars so far top priority market id concerned. He had also ranked as the best selling market for the brand of Subaru within the GCC and Africa market. The distributors’ meet held in Oman is keeping in mind the growth prospect of the market and the brand recognition Subaru enjoys here. The safety aspect is well taken care of with the highest ranking of safety prevails in the all cars manufactured by Subaru. The competitors are there in the market with their presence, but the presence of Subaru is also there with the view of 1% growth by 2015, as projected by the management of Fuji Heavy Industries. The associates in Oman for Subaru are OTE group as the strategic business partner and their role is excellent as per the management of Subaru.

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Segmentation and targeting
The ratio of own vehicle holder in Oman comparison to population is 215 per 1000 population. It denotes the percentage of 2105% which is extraordinary keeping in mind the population factor. The segmentation of the customers is obviously in three major groups of economy cars, sedan cars and premium SUV. Subaru has the variety in all the segments with the added advantage of smart look and other excellent features prevailing in the range (Abdul-Muhmin, 2010). With special emphasis on the luxury cars keeping in mind the demand generation, the company mainly highlights the models named Legacy, the most established brand with its two varieties of 2.5lt and 2.5lt GT. The most demanded vehicles are Legacy and Impress in the segment of sedan cars. The SUV segment is being served by the models of Outback, Forester and Tribeca. With the introduction of the boxer engines, the travelling will be more smooth and easy and effortless. The target audience of the sedan or leisure car is the affluent class of people with their demand of the luxury life style which is fulfilled by the Subaru cars. The target audience of different of segments of cars is fixed as per the population statistics of Oman. The consumers of Sports Utility Vehicle are the neo stylist group with their choice intended for the SUV car. The advertisement drawing attention of the group of people afford the cars will come automatically to purchase the same. The people of Oman are the well off people and they decided their own choice. The buyer will look for the offers Subaru offers, and they will compare and buy their desired vehicles. The more discussed range of sports car termed as sports coupe with the high capability engine of 2.0lt boxer engine with the feature of rear wheel for comfortable driving (Geiger-Oneto, Gelb, Walker, & Hess, 2013).
The objective of Subaru is obviously to prove its presence in the market of Oman. The market is now dominated by the automotive giants like Toyota, Nissan, Hyundai, Issuzu etc. The first objective is to get into the market. For this reason Subaru has tied up with OTE of Oman for marketing of their vehicles with the additional feature of servicing of their vehicle. OTE is a renowned name in the automotive business of Oman by their tie up with the big players of automotive in Oman. The objective of raising the market share by 1% by 2015, as stated by the Corporate Vice President, is not so easy. The main goal is to be divided into several micro natures of goals, which will, with their accumulated effect of achievement, make the company reach the ultimate goal. The micro objectives are to ensure the supply of the vehicles as soon as possible after getting the booking. The next objective is to deliver the vehicle with the basic features of the vehicle to be understood by the cliental base. The next objective is to provide proper servicing for the vehicle with the stipulated nature for the stipulated period, the fourth goal is to make the provision for the spares which are to be imported from the mainland of Japan. All these objectives are done with the macro objective of making the presence in Oman market. The role of promotion is also very important for achieving the objective, as the awareness of the features of the cars must be known to the people so that they can opt for their preferred type of vehicle.
Marketing mix strategies
The basic features of marketing mix strategies for the case of Subaru is given below:-
Product- the vehicle of Subaru is not the type which can be treated with the question on quality. The parent group, Fuji Heavy Industries never compromises on quality. Moreover the stake of 16.5 % held by Toyota gives the vehicle the edge in the market with the professional expertise rendered by Toyota. The products are state-of-the-art with their salient features of rear wheel drive and powerful Boxer engines in use, make the vehicles of Subaru special and make their presence felt in the market (Anderson, Fornell, & Lehmann, 1994).
Price- the price of the vehicles of Subaru with different brands and segment are at per with the market price. It is bit difficult to negotiate the price due to the nature of transportation which only gets from the manufacturing place of Japan. The non availability of local assembling unit is not available in GCC as well as Mena countries. Even the spares are also get imported from the mainland of Japan. So the prices which can be manageable with the existence of local assembling units are not there. The buying power of the people of Oman is quite good and they never ask for this too.
Promotion- The promotion by way of advertisement in print and electronic media is obvious and at the same time the help of social media should be considered for better reach to the customers. The Facebook page with the Subaru vehicle can attract the people who feel interest in automotive industry. The regular advertisement in the form of big sign boards or flex in the proper attractive eye-catching place with the image of the premium vehicle along with a attractive catch line can make the job of promotion easier and above all, the role of the distributors can’t be denied whose active participation in promoting the vehicles of Subaru will make the company achieve their objective of increasing their market share by 1% by 2015 in GCC looks viable (Chandrashekaran, 2015). The other area is sponsorship of events which ahs social implication. The awareness program of a social event will always give the organization a self-boosting because the people of the country feel that the company thinks for the country too.
Distribution strategies- The distributors, with their sole responsibility sell the cars. They have good amount of margin for each transaction. So it is not worth to discuss about their interest. But the distribution strategy should be fixed in such a ways that the distributor should not overlap as far as distance is concerned, an ideal situation of offering the distributorship with the geographical distance of 100 kms is good for big countries, but in a small country like Oman with affluent customer base the distance from one distributor to other may be fixed by 50 kms. The distributors should be amply provided with the service facilities taken care by the service provider and the availability of spares would be available in need to keep the customer in comfort zone.
Implementation strategies
The implementation strategies of various steps are to be followed methodically after they are set and acknowledged by the management. Related to product, the benchmark objective of quality maintenance and control is to be followed as per the strategy fixed by Subaru. The price strategy is to be fixed as per the cost analysis and the expected profit margin from the turnover of the vehicles (Eden & Ackermann, 2013). The promotion strategy is to be fixed and implemented with the look of the demand of the society of the country and at the same time increasing the visibility by way of banners, flex, billboard and other media campaign. The distributions strategy to reach the customer easily must be motivated with the proper setup of distributor network within Oman and GCC.
The PEST analysis
Political-The political scenario of Oman is quite peaceful and the untoward hazards are not affecting this country. This type of stable country should be the ideal place for business of an organization. Even the recent improvement of ISIS is also not making any difference in the political situation of that country so this type of country is suitable for any organization to grow their business.
Economical- The economical situation is excellent due to its reserve of natural resources by way of oil and natural gas. The GDP of 78.11 billion (2012) can easily distinguish the status of the country so far economic power is concerned. The people are well off to afford the best quality of life style and owned vehicle is one of the most important features for that (Desai, 2013). The buying power is immense and the selection is the only criterion to have the luxury goods in possession.
Social- The social situation os cool with no untoward incident to disturb the social life of the country. Most of the citizens of Oman are of Muslim origin and the expatriates residing in Oman for the sake of job, does also peace love. The social status of Oman has put them in the place of 45th in peace keeping countries.
Technological- the technological background of Subaru is unquestionable with the `backup of best technological team of automotive industry deployed in Japan in the production unit of Subaru under the technical guidance of Fuji Heavy Industries. Toyota being the stake holder of 16.5% of Subaru always extends its technical support to the manufacturing unit with the support of best ancillary industries of automotive industry who are affiliated to Toyota. The evolution of latest technology by the research and development team of both Subaru and Toyota constantly work on the common mission to make the vehicles the best available in the market with their expertise and experience.
SWOT analysis
Strength- The brand Subaru is famous in US and China for their quality vehicles marketed and sees constant growth in different segment. Backed by the achievement of global existence, Subaru is intended to make their presence felt in the region of GCC and Africa. In GCC region, Oman is the prime target for Subaru due to its well affluent people and the quality of their life style. The market is open and the entry is made; only job left is to acquire a substantial market share to justify their presence in Oman.
Weakness- As the entire range of vehicles is imported for the factories of Subaru, the time lag is bit high as per the reordering level of inventory at the end of distributors. The time taken for delivery after booking is substantially high and the customer may lose interest, by the mean time, can go for other alternative.
Opportunities- The automotive market of Oman has sufficient scope for Subaru, as the target audience is fit for consuming the vehicles with the best of features provided with high power Boxer engines and rear wheel driving. The sports car, with its unique features, attracts the target audience of rich people to exhibit their ability to afford the same. Above all the presence of Subaru in one’s garage makes him special in the eyes of the neighbors and associates. That situation may be exploited by the proper planning, strategy and marketing skill to achieve the coveted place of automotive market of Oman.
Threat- The threat normally comes from the competitors and the unmanageable situations occur due to some unplanned situation. The competitors never wish to lose their market share, instead with constant effort to remain the same, they will not leave an inch of the market share. That situation is to be taken care with proper strategy of servicing and proper replacement option of spares (Crittenden, Crittenden, & Ferrell, 2011). The threat for the unwanted situation like global recession can’t be avoided, but the plan to come out of the situation must be planned with plan A, plan B or plan C.
Executive summary
The recent case study of the existence of Subaru and its excellence through sale of their vehicles in Oman has been discussed. There are constraints which are discussed above. The minimal market share of Subaru vehicles in Oman, with the scope immense market potentiality, turns the parent company, Fuji Heavy Industries, to concentrate in this market with the vision of steady growth and market presence of Subaru vehicles in the market of GCC, especially Oman. The trend of vehicle business is well known to the management of Fuji Heavy Industries and they import cars from Japan of the category or segment which is well adored by the people of Oman. The SUVs, sedans and sports cars will generate true demand in the market as per the taste of the people of Oman. The problem of supply chain should be taken care with priority with the reordering level of inventory should be well derived as per the trend of the market and the same should be properly executed with the minimum no of vehicles to be maintained in the stores. The steady supply line will make hell of difference with the competitors. If the vehicle ordered be supplied by a stipulated time, the reputation of Subaru will go high with the quality of steady supply chain. The other areas are service which are been taken care of by OTE group and the supply chain of spares are to be maintained to make the market steady and keep the customers happy.
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Sales forecast
With the thrust and plan for development of Oman market for Subaru vehicles, the sales are expected to grow steadily. The Vice President is foreseeing the growth of 1% from 2010 to 2015 by value to reach the targeted sales and be one of the recognized players in the area of sedan, SUV and sports care segment. The proper application of strategy so far the marketing skill, the supply chain management and the steady supply of spares along with regular provision of service will make the dream comes true. The marketing skill to convince the buyer that Subaru vehicle is best of the lot available in the market is possible when the man behind the operation believes that form core of his heart. The other factors like the lack of proper supply chain of competitors can’t be denied. It is to be kept in mind that the buyer of vehicles are not impulse buyers, instead they are loyal buyers to the brand. So switch over of bran is not easy, but once it is done convincingly, the result will come automatically with no extra efforts required.
The budget of sales and other overhead costs related to sales of vehicles made in Oman are to be fixed judicially without any hidden factors not considered. The budget of sales should be done with a increasing trend, but looking in toe effect of actual turnover of past with the trend of growth. A good budget can assist the organization to set its strategies in different areas of operations with reality. On the other hand a wrong budget can put the organization in dilemma with the result of holding high stock or no stock, and high overhead and lesser profit. In the case of Subaru, as the vehicles are to be imported from Japan, the cost of transportation is also a substantial factor which is to be considered while budgeting for the next financial period. The professional team of management of Subaru will not take any wrong step and will sail the ship of success from Japan to Oman by the strategic move and success will be just not far away.
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Swot Analysis Of Country Oman Finance Essay

The UAE has achieved stable progress over the past three decades to emerge as a important global player in both the political and the economic position The tremendously fast rate of economic growth until 2008 was due to the constant demand for oil, in addition they a move their focus to a number of non-oil sectors. The UAE had maintains a dynamic political ties up with over 60 countries, mainly in Europe and Asia. The UAE is considered to be one of the foremost political forces in the Middle East and is a member of a number of regional organizations, including the Gulf Cooperation Council (GCC), the Arab union and the Organization of the Islamic Conference.

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Under the control of former President Sheikh Zayed, the UAE transformed from a nation of large-scale poverty to a highly developed and wealthy country. With the death of Zayed in 2004, his son, Sheikh Khalifa, immediately took over as president. Although the government structure in the UAE is not democratic, both Zayed and Khalifa have bear the responsibility of retain the country’s development. The government has constantly received appreciation for its efforts to creating business opportunities in Oman. The country’s tax rule is also considered among the best in the world for businesses. The UAE market is capable to with a well-built telecommunication network and, as a result, the country’s IT market is slowly becoming competitive. However, the level of science education remains low. The country has a strong integrated environmental development program. Its ecological procedures are integrated with the Environmental Impact Assessment (EIA) program, which is part of business practice in the UAE.
PESTEL stands for Political, Economical, Social, Technological, Environmental and Legal. It is used to describe an analysis that determines the opportunities and risks of global growth. It is also termed as a PEST or PESTLE analysis.
Political, Economical, Social, Technological, Environmental and Legal issues differ from one country to another. As a company looks to influence the advantages that the democratization of technology, information and finance, and grow beyond the national borders that previously controlled them, it is necessary that they consider a PESTEL analysis to accompany their SWOT analysis.
The PESTEL analysis provides a strong outline which is used by global and multinational firm to set the stage to develop specific strategy to ease the risks involved in carry out their vision in new environments.
This PEST country analysis report on Oman provides a holistic view of the country, with understanding analysis of current and future issues, supplemented with significant quantitative data to support trend analysis.
Following are benefit that business will gain if they implement pestle analysis in their planning process:
Useful to know political environment:
It is helpful to understand the political system in Oman through examination of key factors in the country and governance indicators.
Useful to know economic situation:
It is useful to understand the economic situation in Oman through a balanced evaluation of core macroeconomic matter.
Useful to know demographics analysis:
To understand the customer demographics in Oman through analysis of income distribution and the rural-urban split, as well as healthcare and education.
Use to evaluate technology advancement:
It is use to evaluate the technological background in Oman through analysis of related laws and policies, as well as patent data.
Useful for controlling changes:
By making effective use of PEST Analysis, it makes sure that it has united positively with the forces of change that are affecting the world. Good use of PEST Analysis helps to avoid taking action that is meant to failure for reasons beyond control.
Helpful to know about new country or region:
PEST is useful when we are start operating in a new country or region. Use of PEST Analysis helps to break free of lifeless assumptions, and helps to quickly adapt the reality of the new environment.
The political landscape section discusses the evolution of the political scenario in Oman, as well as the country’s economic, social, foreign, and defence policies. The section also discusses the country’s performance according to World Bank Governance Indicators.
The economic landscape section outlines the evolution of Oman’s economy, as well as the country’s performance in terms of GDP growth, composition by sector (agriculture, industry, and services), fiscal situation, international investment position, monetary situation, credit disbursement, banking sector, and employment.
The social landscape section analyzes the government’s social welfare policies, as well as the country’s performance in terms of healthcare, income distribution, and education.
Following are the main reason for using pestle & swot:
Useful to formulate goal:
Strategic management is an essential aspect of managing modern businesses that involves forming goals and implements the programs that fulfil those goals.
Useful to intact environmental scanning:
Environmental scanning is a component of strategic management where mangers study various economic, political and social factors that might affect the business.
It is helpful to small business also:
It can help small businesses to identify intact markets and avoid costly mistakes. Small businesses can better compete by using these critical tools to assess opportunities and challenges.
It is useful to manager for conducting an effective business:
SWOT analysis and PESTLE analysis are two common strategic management equipment that the help managers brainstorm and organize their ideas during the environmental scanning process.
It is broad & wider concept:
A main reason companies use both SWOT and PESTLE is because these tools offer broad and efficient analyses of key areas of a strategic plan. SWOT is an acronym that stands for strengths, weaknesses, opportunities and threats. PESTLE has wider coverage of business and external issues, including political, economic, social, technological, legal and environmental factors.
The stability and structure of a country’s government gives a basis to understand future changes in the region’s political environment. Policy at the local or federal level can differ significantly. Political power in Oman is dominated by Sultan Qaboos ibn Said Al Said who is responsible for all major decision-making and government actions. Decision-making authority rests with the Sultan with contribution from his advisors, the appointed Majlis al-Dawla and members of Oman’s leading merchant families. Succession is a key risk concern. Sultan Qaboos has dedicated himself for promoting the country’s reconstruction, economic diversification as well as continued political stability.
A process of limited elected reform has been in progress over the last several years including the introduction of direct elections for members of the counselling assembly in 2000 and universal suffrage in 2003. In recent October 2007 elections, Oman records a strong 68% voter turnout. While Oman is gradually moving forward on political liberalization efforts, the Councils role remains largely advisory.
Following is the political structure of Oman country:
Head of State
Sultan Qaboos bin Said Al-Bu S aid
Council of Ministers
Composed of the Sultans Advisors
State Council (Majlis al-Dawla)
57 Appointed tribal and religious leaders
Consultative Council (Majlis al-Shura)
84 member Elected body with advisory functions
Major Parties
Last Elections Consultative Council
October 2011
The Sultan is a direct heir of Said bin Sultan, who had first opened relations with the United States in 1833. The Sultanate is neither political parties nor governing body, although the bicameral representative bodies provide the government with advice. The present Sultan has no direct heir, and has not publicly selected a successor. Instead, the ruling family should generally select a new Sultan after his death. If they do not select a new ruler after three days, then they open a letter left to them by the late Sultan, containing a proposal for a new Sultan.
Current Sultan of Oman, Majesty Sultan Qaboos bin Said Al Bu Said holds an unexpected amount of power. Along with his position as Sultan, he is prime minister, defence minister, finance minister, foreign affairs minister and chair of the central bank. Moreover, Qaboos has only a few family members in his cabinet and the offices they hold are considered quite powerless. His cousin Hay him for example, is minister of national legacy and culture while his uncle, Shabib is special advisor for environmental affairs. This style of control has suggestion as none of his family members have gained the necessary managerial skills to rule Oman after Qaboos death.
The court system in Oman is regulated by Royal Decree 90/99. There are three court levels in Oman; the Elementary Court is the lowest court, followed by the Court of Appeal, and then the Supreme Court as the highest court in the country. In addition to this there is an Administrative Court that looks into cases made against the government.
The government keenly support foreign direct investment into the country to increased employment opportunities for Omanis. Omanisation allowance are currently in force for six industries in the private sector, i.e. the transport, storage and communications sector at 60%,finance, insurance and real estate at 45% and industry at 35%. Authorities created the Omani Centre for Investment Promotion and Export Development (OCIPED) in 1997 with the aim of providing foreign investors with a one-stop-shop for licensing and registration procedures. Judicial transformation is in progress and the court system is considered largely fair. Corruption level are low by regional standards and do not act as a significant obstacle to foreign investment.
In Oman the regulation for land are expected to be less because the minister wants to increases the opportunity for tourism. The Ministry of Housing, Electricity and Water may grant permission to a company or a foreign national the Right to use a certain property for operations that promote the economic development of Oman.
Government incentives to promote local and foreign investment include tax exemptions; the provision of industrial plots in industrial zones for nominal charges; preference in the allocation of government land; interest-free or subsidized loans with longer terms for repayment; reduced charges for water, electricity and fuel; financial assistance for the development of economic and technical possibility studies; and the accelerate arrangement of immigration visas and permits for foreign workers.
A foreign national desire to engage in a trade or business in Oman or to acquire an interest in the capital of an Omani company must obtain a license from the Ministry of Commerce and Industry. In general, the ministry grants a license if the paid-up capital of the Omani company in which the investment is made is at least Rs 150,000 (US$ 390,000) and if the foreign ownership of the company does not exceed 49%. The Social Security Law requires private-sector employers and their Omani employees to pay monthly contributions to an insurance fund for old age, disability and death benefits. Oman does not impose personal income tax. Income tax is levied on people that are wholly owned by Omani nationals, entities with foreign participation, branches of foreign companies and Omani sole proprietorships. All companies incorporated in Oman irrespective of the extent of foreign ownership and branches of companies registered in the other member states of the Gulf Co-operation Council (Bahrain, Qatar, Kuwait, Saudi Arabia and the United Arab Emirates) are taxed at a rate of 12%, for income exceeding RO 30,000. A single tax rate applies to branches of foreign companies, at rates ranging from 0% to 30%. Petroleum companies are subject to tax under specific provisions and rates. Omani sole proprietorships are taxed at a rate of 12%.The Omani Labour Law requires employers to pay end-of-service benefits to expatriate employees.
With the exemption of certain restrictions on the foreign-currency holdings of commercial banks, Oman does not impose exchange controls. In general, Oman does not restrict the transfer of funds overseas of equity or debt capital, interest, dividends, branch profits, royalties, management and technical service fees, and personal savings.
The Foreign Capital Investment Law (Royal Decree No. 102 of 1994) governs foreign investment in Oman. If the foreign body want to invest in Omani companies they must file applications for licenses with the Ministry of Commerce and Industry. The ministry grants licenses to applicants if  both of the following conditions apply: The paid-up capital of the Omani company in which the investment is made is at least Rs.1, 50, 000(US$390,000). The foreign ownership of the company does not exceed 49%.The Ministry may exempt the following entities from the licensing conditions : Companies conducting business through special contracts or agreements with the government; Companies established by Royal Decree; and Parties conducting a business that the Council of Ministers declares necessary to the country.
In Oman tax is exempted from corporate tax and customs duty which may be granted by the Ministry of Finance. From the following activities tax is exempted such as manufacturing, mining, agriculture, fishing, fish farming, fish processing, aquaculture, animal breeding, tourism, the export of manufactured and reprocessed products, operation of colleges, universities, and higher education institutes, private schools, training institutes, private hospitals and public utilities. Exemptions are granted for five year periods effective from the date when production begins or services are first rendered; a five year extension may be granted. .Management agreements and construction contracts do not qualify for tax exemptions. Companies engaged in the activities listed above may also obtain an exemption from the payment of customs duty on exports and on imports of equipment, spare parts and raw materials.
The import of goods into Oman requires an import license. The import of certain classes of goods, including alcohol, firearms and explosives, requires a special import license. Goods entering Oman must have certificates of origin. Oman follows Arab boycott rules, which forbid the import of goods originating from Israel.
Oman does not restrict exports. However, the export of items of historical value requires an export license.
In Oman most imported goods are subject to pay customs duty at a flat rate of 5% on their cost-insurance freight (CIF) value. Consumer goods, including food substance are exempt from customs duty whereas alcohol and tobacco are subject to pay higher rates of duty. Goods produced within the GCC generally may be imported duty-free. In certain circumstances, Oman may allow the contractors to import duty-free equipment and materials for use the on government, PDO and OLNG projects. Since from 2005 Oman has entered into a Free Trade Agreement with the United States of America.
The government promote foreign contribution to develop the country tourism industry. Since the mid-1980s, the government has gradually opened its desert, mountains and coastlines to foreign tourists and the Ministry of Tourism has share part in various international tourism exhibitions to introduce Oman to the world tourist trade. Due to recent changes made in visa a regulation that had increases arrival of a large number of populations which in turn are likely to increase the flow of tourists in Oman. Due to the development of International Airport which increase the tourist probable of the country. A new Tourism Ministry was set up in 2004 to provide push to this sector. The Ministry of Tourism has free provisional tourist arrivals figures for 2011. These showed a slight decline of 1.8% in arrivals over the year to 1,427,611. In light of this to some extent unsatisfactory figure, BMI has change down it’s predict for tourist arrivals in 2012, believe that an increase of 10% is now the most likely outcome for the year, down from 15% previously. BMI’s predict is in line with the government’s outlook for the industry.
Oman’s economy is based mainly on petroleum and natural gas. With limited energy reserves, Oman has decided to expand its economy away from oil and gas production. The ‘Oman Vision 2020’ development plan highlighted the need for the Omani economy to expand its economy through a process of industrialization and privatization. The main single industrial investment target is the port city of Sohar, near the UAE border. The government has direct with several main privatization programs, including power generation projects, and other power and water generation plan. Oman expects to triple the industry’s one percent contribution to GDP and finally create over 1, 14,000 tourism-related jobs. Besides these the government had built a second airstrip and new terminal at Muscat International Airport by 2011.
The government is also in the procedure of expanding its privatization efforts to its wastewater and solid waste management operation. In addition to this the Omanis aggressively marketing itself as a enchanting, environmentally aware tourist goal. The Omani government is developing a port at Duqm, an evenly populated area along the Arabian Sea. This strategy call for the construction of a dry dock facility, oil refinery, petrochemicals complex and fish processing centre to ultimately fight with Dubai’s Jebel Ali port complex. The Duqm development plan also calls for the construction of an airport to facilitate passenger and cargo shipments and a three-hotel tourism resort complex.
Following is the macro data of Oman country.
Normal GDP
Real GDP
Origin of GDP
Population & income
GDP per head
Fiscal indicators
Govt. Indicators
Govt. Expenditure
Govt. Balance
Net public debt
Prices & financial indicators
Consumer prices (average, %)
Lending interest rate (average %)
(Sources: GCC construction fact sheet)
The government is looking to expand the economy beyond the hydrocarbon sector, which still account for about 75% of export earnings, given the limited sector possible to force and maintain growth beyond 2020. Foreign investment maintain of natural gas projects, along with the government investments will sustain growth. Oil prices & natural gas represents a small proportion of GDP and export revenues. To this end, the government is shifting its plan to aim renewable energy as a key developmental goal with hope that it will contribute
about 30% of GDP by 2020.
G:images omanOman-50Rials-f.jpg
The inflation rate for the year ended 2010 was about 4%. This was the outcome of declining crude oil prices. The oil and natural gas being the core business of Omanis & it play an important role in determine the per capita income and their purchasing power. However, the situation is changing. There is gradual boom in the per capita income.
The period of rapid growth has come to an end, and in the absence of a sharp recovery in oil prices Oman looks set to grow in the 3-4% range over the coming 5-10 years. The cost of living in Oman is high as most of the goods are imported.
Oman’s mineral resources include chromite, dolomite, zinc, limestone, gypsum, silicon, copper, gold, cobalt, and iron. Several industries have grown up around them as part of the national development process which, in turn, has boosted the minerals sector’s contribution to the nation’s GDP as well as providing jobs for Omanis. The mineral sector’s operations include mining and quarrying, with several projects recently completed, including: an economic feasibility study on silica ore in Wadi Buwa and Abutan in the Wusta Region, which confirmed that there were exploitable reserves of around 28 million tonnes at the two sites; a feasibility study on the production of magnesium metal from dolomite ore; a draft study on processing limestone derivatives; a project to produce geological maps of the Sharqiyah Region; economic feasibility studies on the exploitation of gold and copper ores in the Ghaizeen area; a study on raw materials in the wilayats of Duqm and Sur for use in the Sultanate’s cement industry; and a study on the construction of a new minerals laboratory at Ghala in the Governorate of Muscat. Metkore Alloys will build a world-class 1,65,000 tonnes per annum capacity ferro chrome smelter project in Oman with an envisaged investment of $80 million.
Oman commercial banks are the primary source of short, medium, and long-term credit. Because there is no restriction in obtaining credit in Oman they can also obtain credit from commercial banks in the neighbouring Gulf countries. The Oman Development Bank they grant loans to small and medium-size companies, for less than Rs.2,50,000. Investors also obtain financing from the Gulf Investment Corporation located in Kuwait which is established by the GCC, is a major financial institution whose main purpose is to invest in the equity and provide loan funding to the new companies.
The Capital Market Authority in Oman is established in 1998 which regulates the securities market. Muscat Securities Market, which began its operations in 1989, over sees the flow of funds into securities and develops the local financial market. Membership in the exchange is compulsory for Omani licensed banks, specialized loan institutions, authorized financial intermediaries, joint stock companies and Omani public authorities whose shares are registered on the securities market.  Commercial banks, joint stock investment and brokerage companies which is registered in Oman they may establish investment funds called joint investment accounts. The accounts are listed on the Muscat Securities Market and may be up to 49% foreign-owned & these funds are exempt from taxation.
The Omani government is developing a port at Duqm, which is a less populated area along the Arabian Sea. This plans call for the construction of a dry dock facility, oil refinery, petrochemicals complex and fish processing centre to eventually fight with Dubai’s Jebel Ali port complex. The plan also calls for the construction of an airport to facilitate passenger and cargo shipments and a three-hotel tourism resort complex. . Oman is focusing on its port infrastructure as well. Two of Oman’s principal ports, Sohar and Salalah, are aggressively moving forward on expansion of their respective. To increases the tourism facilities the government will build a second runway and much-needed new terminal at Muscat International Airport in 2011, they also built a new taxiway at Salalah Airport in 2010, and new airports at Sohar, Ras al-Hadd, and Duqm. Oman is focusing on its port infrastructure as well. Two of Oman’s prime ports, Sohar and Salalah, are aggressively moving forward on expansion of their respective.. Oman is focusing on its port infrastructure as well.
In 2002, Oman attracted some 1.2 million foreign visitors; about 7,00,000 came from the GCC (GULF CO-OPERTION COUNCIL) states. And of those700, 000 tourists, an overwhelming 85 percent of them came from the UAE. For all the talk in Muscat and Salalah about bringing in European tourists, the fact remains that the bulk of the sultanates visitors come from a lot closer to home- and, of those, huge numbers are simply driving across the border for a very short-term stay. Oman has so much more to offer than the other Gulf States in terms of culture and history. Oman offers an real Arabian experience that’s not easily available elsewhere in the region.
(Sources: www.Omannet.Om)
The Omanis have been trader since ancient times. Their transport and group carried Omani goods – including frankincense, dates and limes – across the seas and over the old frankincense and silk routes, encourage cultural interactions with other peoples.
Today, Oman is a part of a number of economic communities including the Arab Gulf Co- operation Council (AGCC), the Greater Arab Free Trade Zone, the Indian Ocean Rim Association for Regional Cooperation (IORARC) and the World Trade Organisation (WTO).
The Sultanate has raised its laws on investment activity and has begun “One Stop Shop” permission facilities along with easy, transparent procedures. There is protected coordination between the bodies and authorities involved in providing services for investors, while current progress towards the establishment of e-government have led to a growing confidence on electronic channels. Commercial laws and regulations are being modernized, including the Law on Trade Marks, Descriptions, Trade Secrets and Protection against Unfair Competition, the regulation of foreign trade representation offices, the Consumer Protection Law and the Law on the Protection of Intellectual Property. Beside these measures, the country has also raised its ports and established free trade zones in all Mazyounah and Salalah.
Omani goods are exported to the markets to world countries. Government authorities and departments give main concern to Omani products when making purchases and Omani goods are actively promoted in the local market through seminars and exhibitions.
Broader promotion campaigns are also held in the regional and world markets, where Omani products have already begun to make their mark because of their high quality specifications. The Ministry of Commerce and Industry has established a certificate by the United Kingdom’s Human Investment Programme, recognizing it as an investor in human resources.
Since Oman is a Muslim country, all the activities are influenced by the Muslim culture. The main characteristic of Omani culture is respect for others and it prevents others from letting their face down. In Oman the foreigners have to make sure that they don’t make any unpleasant remarks in the public places. Otherwise they feel insulted and let down in the society.
Language: In Oman country Arabic is local language.
Following are key factors that determine the living style of the population in Oman.
In order to fully understand any country culture, is very important to know because it influence society whole. In Oman Islam culture is followed by every people. Oman is the Muslim country so majority of them follows Ibrahim sect & it is very conservative culture. Islam directs every part of a Muslim life, from holidays to the food they eat to how they dress and do business. Kindness, humility and respect for others are key thought which are present in both social and professional field of life.
Traditional handicraft such as silver and gold jewelry, goat- and camel-hair carpet, woven baskets, water jugs, weapon and “khanjar”, a special type of dagger etc are generally practiced in this country. Besides these, drawing, painting, photography etc are also practiced.
Music in Oman is a vital part of art. The traditional folk songs are very popular and practiced in the country. Arabic music has left a deep influence in the Oman music.
Life expectancy at birth in Oman is approximate to be 74.47 years in 2012. As of 1999, there were an approximate 1.3 physicians and 2.2 hospital beds per 1,000 people. In 1993, 89% of the population had access to health care services. In 2000, 99% of the population had access to health care services. During the last three decades, the Oman health care system has established and account great achievements in health care services and preventive and curative medicine. In 2001, O

The Ever Changing Market Place Of Oman Marketing Essay

Oman Retail Industry is characterized by a strong consumer demand, robust economic growth, distinct demographic factors and high end technology system that ensure the better customer service and efficient customer checks. The sultanate is one of the developing countries that has succeeded in achieving, within a short span of time, a high level of economic growth. Out of the total GDP 57.1% is from the service industry. As in any other country Retail Sector in Oman is having both the sectors organized and unorganized retail sector. The paper is focused on the organized retail sector of Oman. Even in the organized sector, there is a stiff competition amongst large number of hypermarkets, convenience stores, warehouses and gas-station chain stores. Everyday new entrants are coming in the business with their new competitive strategies and niches. Oman has good organized retail markets in GCC. Oman’s Per Capita retailing space is highest in GCC.
Major development happenings in the area of retail space in Oman are hypermarkets and malls. Oman is witnessing an exponential growth in the space occupied by organized retailers. The paper presents a comprehensive view of the organized retail industry across Muscat.
Keywords : Retail Industry, Hypermarkets, Competition, Developing Countries
Oman is the second largest country in GCC after Saudi Arabia with total land area of 212,960 square kilometers and over 80% of its current population of 3 million is Omani nationals. Oman is a middle income economy in the Middle East with notable oil and gas resources, a substantial trade surplus and low inflation.
Oman Economic development has seen three phases. A phase of rapid expansion then economic retrenchment and rationalization because of oil prices collapse and the last phase a period of standardized growth since 1990. Economic growth and structural change have proceeded rapidly in Oman during the rule of His Majesty Sultan Qaboos Ibn Said. When HM Sultan Qabus Ibn Said assumed power in 1970’s, he immediately implemented an economic development and modernization programs .Priority was given to expanding the countries nonexistent infrastructure. Economic Growth was accompanied by increase in contribution of the service sector from 18% in 1970 to 57% today. The GDP Average annual Growth exceeded the world as well as middle east growth rate by 3%( 6% in 1991- 2000 in Oman 3% in the middle east and Africa and world) Retailing consists of the sale of goods/ merchandise for personal or household consumption either from a fixed location such as a department store or away from a fixed location and related subordinated services. In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public or end user customers, usually in a shop, also called store. Retailers are at the end of the supply chain. Marketers see retailing as part of their overall distribution strategy.
Retailing is not just buying and selling necessities, it is now more of a lifestyle staement, one whose foundation is based on choice, convenience and brand value. Shopping is buying things, sometimes as a recreational activity.Retailing is world’s largest private industry. It is estimated to have US $ 6.6 Trillion sales annually.
Retail outlets can be divided into categories according to the amount of square feet of floor space, the level of services offered and width and depth of product offering. In practice stores may have different names in different countries and definitions based on selling area may also vary. Clarence Saunders, invented Keydoozle in 1930’s in which shoppers stuck keys in glass display case to choose specific products which were taken via conveyer to check out line. This perhaps was the basis for today’s Supermarkets and Hypermarkets. A variety of terms are used to large stores Hypermarkets, mass merchandisers, supermarkets, superstores, shopping malls and shopping centres etc. France, Belgium, Spain & Colombia are the countries in which supermarket industry is very well developed. Retailing is a two way street. There exist potential advantages and disadvantages to this retailing venture. A retailer has following things to offer consumers:
1. One price Policy : No Place for Negotiations
2. Selection of goods at a lower price
3. One Stop shopping
4. Large Assortments
5. Centalization of the nonselling functions
6. Amenities (Beauty Parlour, Free Decorations, Nursery)
7. Overall manner in which the goods are offered in store setting, including store site, parking facilitiies, instore setting and customer services.
8. More Personal Services than discounts
Retailing and Oman
Till late 70s and 80s the country was having unorganized retail market. Traditionally the retail business was run by small souks. The traditional Arabic market place is called the souk and these are still found in many of the towns throughout Oman. More than 90% of retailers function in less than 500 Sq ft of area. Most of the items were bought by the liking of the souk owner and pricing was done on adhoc basis or on seeing the face of the customer. Selling prices were largely controlled by manufacturer.Weekly Juma Bazaars were very popular and almost all commodities were sold there including livestock. Juma bazaars are still an important weekly bazaar in Oman but now the main attraction now is second hand goods. Bargaining was common. Retailer to customer ratio was low. Most of the buying by mass population was need oriented. Impulsive buying or consumption was restricted to food or vegetables etc. Household items as well as traditional handcrafts are on sale in the souks. In some souks like Nizwa and Sinaw livestock are auctioned and bartered. Beside its obvious economic purpose, the souk has long been the fulcrum of social interaction.
Some of the Important Traditional Souks of Oman are Muttrah Souq
Muttrah Souq is the oldest market place in the Capital Area and is located behind the
Corniche of Muttrah, rumbling over a large area. Entering the Souq. A cornucopia of exotic sounds, smells and flavours assail in the senses in bewildering yet exciting chaos. The Souq of Muttrah is a maze of pathways leading in and out of each other. The important thing while shopping in a souq is bargaining.
Nizwa Souq
This traditional souq hosts a lively cattle market early each Friday morning where cows, goats and sheep are auctioned. The obstinate behaviour of the animals often provides great amusement for the spectators. There is an abundance of local handicrafts and produce in the new covered souq. Silversmiths can be seen hammering patterns into the hilts of Khanjars and women sell the burqa —a glittering, embroidered facemask worn by local ladies.
Sinaw Souq
It has similar ware to Nizwa souq, including a cattle market. Some of the silver shops sell the old silver Bedouin jewellery,
Ibra Souq
This one is unique: it is open to all, as long as you are female! It is a fairly recent innovation, opened in 1990 and is held on Wednesday mornings. It is the only souq in Oman which lends itself totally to the needs of women. Lotions, cosmetics, powders, textiles, perfumes and henna are amongst some of the items on sale.

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Retailing in Oman: The New Dimension
Omani capital’s mallspace is changing. Some of the indicators that the retailing has come out of age are fashionable store facades, daring displays an everchanging numbers of international brands, loyalty cards, cineplexes, foodcourts kids zone in malls etc. The mall and shopping centres in Oman not match Dubai in size and style but have their own character and ambience . Dubai depends upon a floating population of visitors, but Oman caters mainly citizens, residents and a small number of visitors. The Omani Capital Muscat has come a long way from the simple old souk to the ultramodern hypermarkets. The concept of the friendly neighborhood store, by all indications, appears to be on its way to becoming history.
It is the malls with their better ambience, wider choice, better facilities and the convenience of having all that you need under one roof that are attracting more and more customers . Retailers, realizing the potential have been quick to set both expansion and re-branding plans in motion. For retailers in Oman, the accent has been on acceleration. We can observe it if only we take a look at the number of malls and hypermarkets in the sultanate to see how quickly growth has taken place. The capital has number of shopping malls and hypermarkets. Customers are driven toward the hypermarket due to several alliance shops and international brands. Customers nowadays want a total shopping experience under one roof. The shift to hypermarkets as a natural progression along the retail evolution path. Customer perceives that as compared to small souks, hypermarkets, offer better variety at lower prices and the quality of products is guaranteed as well. Customers in Oman become more educated aware and demand choice . Choice, it would seem, translates into convenience. Customers are the main beneficiaries in this shift from small shops to large hypermarkets. The move from micro to macro also owes itself to the strength of the economy. With the Omani economy growing at a very rapid pace, there is tremendous interest among retail sector investors in the region.
One of the reasons for the growing interest of Omani nationals is the increased income and spending power .The sultanate has seen in the past, a rapid increase in the income due to omanisation. Omanisation has created many job opportunities for the nationals who in turn have increased the spending power of the nationals which is driving them more and more towards the shopping malls. Oman is witnessing a retail sector boom in the past six years with a number of big-format hypermarkets slated to open and expand their retail chains in the country including the big names such as Carrefour, Sultan Center and Spinney’s. Moreover, Muscat has total area of 190,000 sq. meters in major malls in the capital area most of which was built in the 90’s. This means that the Omani per capita area for these shopping malls. Retail sector is making headway with number of hypermarkets opening up in Muscat the foreign direct investment is maximum in the commerce, wholesale and retail trade represented 20.75% services.
The expansion in retail sector as such has increased the levels of self awareness in the retail sector It is forcing the hypermarkets to constantly monitor the market in which they operate. The market includes a major price sensitive customer segment also. Backward integration, to further streamline operations, is another route that certain retailers in Oman are favoring. They are launching its own private label across its outlets as a measure to counter escalating prices. The other major strategy used by these hypermarkets is of collaboration. For Example the car small within a shopping mall it is this basis, in novelty as well as practicality that promises to improve existing levels of customer convenience. Another strategy of Just Ask programme, where worldwide products are directly makes their way to the homes of
consumers in Oman. The retailers understand that survival is not just about being fit. Hard work has to be combined with smart ideas that foresee the future. Considering the competition, everyone is improving their operations if they don’t, they will lose their market position and share. Efficiency is not really a relative parameter. It is important that first time customers should become permanent customers and stay that way. Considering the competition, it is no surprise that all the players in the retail market are raising the stakes. Competition is healthy, and it is needed to improve the services and operations of the hypermarkets.
With more competitions the hypermarkets will come out with innovative ideas to improve upon their quality and services. With this the customer is gaining and slowly the market is moving towards customer’s market. The markets are trying to differentiate themselves on the basis of factors like customer orientation, Number of retail outlets, low price, wide range, competent management, more space etc. The customer wants premium on good price, convenience and good customer service. Some of the major hypermarkets in Oman are as follows:
Sabco Commercial Centre, Qurum
Sabco Commercial Centre, Qurum, is one of the first shopping malls to open in Oman in 1985. The two-level centre has multiple retail outlets and a traditional souk. The souk has 27 walk-in shops that sell silver jewellery, handicrafts and clothes. The store targeted the wealthy market segment. As more and more oil fields were discovered in Oman, the store prospered. The store brought Godiva-a specialist gourmet and Belgian chocolate to Oman.
Sultan Centre
Sultan centre made several contributions to the development of the retail trade. It served not wealthy but upper income segment. A popular meeting place and great find for the latest in European and International fashion and accessories.
Lulu Hypermarket
The concept of hypermarket shopping has clearly caught on with shopper communities across the region. Emke Group recognized changing market trends and responded to them promptly, offering its customers bigger and better designed shopping environments by way of LULU shopping malls and hypermarkets. The group, has major interests in wholesale and retail distribution of food and non-foodstuff, manufacturing, export-import, frozen and processed food industry and IT has operation bases in all major cities of the Middle East, Asia and Africa. As part of their group’s policy they have laid special emphasis on recruiting Omani nationals .
They acknowledged the significance of training the local youth and have been conducting on-the job training for these national recruits. Noted authorities in retail training were hired to develop and implement employee training. The group felt the pulse and strategically designed store facilities and imported the latest state-of-the-art equipment and technology The extensive network of branch offices and sourcing centers was a big advantage in providing quality products at the most affordable prices. (Times of Oman). ‘Khimji’s Mart Supermarkets KR Group’s Retailing Division manages the popular Khimji’s Mart supermarkets and a chain of Welfare Markets for the Royal Oman Police. With 4 strategically located retail outlets in the Capital area and two large supermarkets in the interior, Khimji’s Mart LLC is a key player in its category in Oman. Fully owned and operated by the Khimji Ramdas Group, Khimji’s Mart caters to a mix of customers of diverse nationalities and varied shopping preferences by giving them unlimited options to buy the best international and regional brands in the food commodities, lifestyle and consumer non-durables segments. Khimji’s Mart outlets have taken the lead in training young Omani nationals and integrating them into key positions. They are located at Ruwi High Street, Darsait, Wadi Kabir, Al Khuwair, Nizwa & Sur.
Markaz Al Bahja
Markaz Al Bahja Shopping Mall was developed to give Oman a mall of truly International standards, so as to offer the people an alternative to Dubai as a shopping destination. The 350,000 sqft Markaz Al Bahja mall, located not very far from MCC, was opened in mid 2002. The three-level mall, easily accessible from the Capital as well as its growing suburbs, is another popular shopping destination .The mall also has a big parking facility, which can accommodate 1200 cars. Three floors of shopping and is a dream come true for most Omanis. Markaz Al Bahja has established itself as the premier shopping Mall in the Sultanate of Oman.
Al Harthy complex Location : Qurm
Easily recognizable by its unique design which features a star filled dome, the Al Harthy Complex has spacious floors of shopping with over 100 retail shops. From textiles, antiques, perfumes, children’s toys and games, fashion and beauty products, computer accessories, and watches to books, greeting cards and flowers, everything is available at the complex. With a video and amusement arcade, the laser game Q-zar and Sindbad’s play city, the complex is a hot favourite with children. For lunch or a snack one can step into Kargeen Coffee Shop, or stop by for a bite at Burger King.
Muscat City Centre (MCC)
Carrefour opened its first supermarket in Annecy, Haute- Savoie, France, in 1960. The opening of Majid Al Futtaim Investment’s (MAFI) Muscat City Centre (MCC) in 2001, ushered a new era for Oman’s retail sector. The MCC, covering a total GLA of 540,000 sq. ft. and 1,500 parking spaces, claims a weekly footfall of 155,000. Its main anchors include Carrefour and Magic Planet. This year, the MCC is poised for a further expansion, which is expected to add another 300,000sqft of retail space to its existing strength. MAFI is planning to open a Carrefour outlet in the Qurum area of Muscat later this year. Major Shopping Malls of Oman, Sponsors, Number of outlets and year of start With so much of competition and options available to the customers, all the hypermarkets are thinking in terms of the loyalty programs to keep customers with them.
Some of the loyalty programs like privilege cards, vouchers, special discounts. But what loyalty program is to be used at a specific place is the matter of great creativity. The key ingredients for any successful retailer: brand experience, convenience, customer service, social responsibility, today’s true differentiators. l Earning points toward rewards or free or discounted merchandise.
Using third-party partner currencies, such as airline miles for retail purchases.
Offering rebates or discounts for using a store-branded credit card.
Providing information that is relevant, valuable and exclusive.
Allowing member’s access to products, services and experience otherwise unavailable to the public.
Recognizing best customers with “elite status.”
Inviting customer involvement in opportunities such as beta testing, first access to new products, participating in an “advisory board,” creating and submitting advertising ideas, even inviting best customers to parties and special events.
Challenges faced by the Retailers in Oman
Price war: Competition can lead to the price wars l Discount is expected by the gulf customer in case of bulk purchase. l Sale is one of the important factor which pulls the customers towards the malls and only two promotions a year are allowed which are too less to sustain the customer for 12 months l More and more companies with international brands and structure are coming in the competition l Once upon a time, retailers knew all their customers personally. They knew their preferences and what was happening in their lives.
With this knowledge, retailers were able to react quickly and market to each customer individually. Along the way of growing chains and building malls and promoting self-service, many retailers lost touch with their customers. l E-commerce is again coming as a new challenge to the hypermarkets. l Less size of the population is another challenge in front of the retail sector as with more competition and less number of customers the market is moving more and more towards becoming the buyers market. l Dubai again is a threat to the retail sector with its competitive prices and easy approachability. l Tourism is growing but the growth is not fast enough to catch with the tourism in UAE.
More initiative from the government in the form of more commercial activities.
Connecting tourism with shopping: need to improve tourism to trap the enormous
potential present in this sector, which will enhance the retail sector further.
Duties on certain items should be reduced to encourage the retailers
Discouraging customers to buy from Dubai by creating an awareness program
those items are much cheaper here than in Duabi
International Service standards should be provided by the hypermarkets
Since the beginning of the 1970s, with Kilter’s pioneering work, the topic of atmospherics effects on consumer behavior has gained popularity Managers of retail and service outlets have understood the importance of the built environment in enhancing product evaluations, consumer satisfaction with the shopping experience and sales.
There is a need for the ongoing training programs in Retail Management for the all managerial and non managerial staff members.
There is a need to give more boost up the Tourism Industry in the country.
The challenge in retail sector in Oman is perpetual. It was the same in the past and it
will remain the same in the future: understanding the retail consumer. In Oman consumers have higher expectations for lower prices. They are not prepared to compromise their desires and ethical values for simply more expensive products or basic low cost items. Shopping is becoming increasingly individualistic, driven by the growing diversity of the consumer marketplace, technology enablers and consumer’s desire for greater influence and control. The retail power structure has permanently shifted from sellers to buyers with more and more shopping malls in Oman .Retailers have to use the problem solving approach. It means understanding what the consumer is trying to accomplish by looking at his ultimate goal.
The hypermarkets in Oman are constantly monitoring the feedbacks given by the customers and are very quick to respond to the problematic areas and suggestions. The hypermarkets as long as will keep their fingers on the pulse of the gulf customers will have a long way to go. The retailers need to understand that Retailers don’t own customers, they own retailers. There is an increasing population switching from loyalists to non preference. Consumers need to be connected. It means getting away from a transaction mentality and focusing on customer relationships, bonds of trust that create innovative opportunities to extend the relationship further. Live rich but act poor. Wealth levels and purchasing power are increasing, people overspend and retail has never been so good but there is a great consideration to shop where prices seems to be more justified.
Shopping should be not only convenient but easy, done in the consumer’s way and speed. Innovative process, service and design solutions that are simple, intuitive and in tune with shoppers’ needs. Consumers value what is scarcer and time is at the top of the first for many. They want it fast, thy want it now (immediate gratification), they want it first (latest and greatest).
Innovative retailers are networking with companies in other business sectors to offer
new products or services outside their skills. The global trends are set in more mature and yet still very dynamic markets, Similar trend with Oman Rapidly they spread across the globe carried by the increasing presence of worldwide known brands. The task is to understand the trends to anticipate the mood of the customers and as before and more then ever, there is a need to think global and act local.

The Labour Market In Oman

This paper presents an analysis of the following within the working context of the author who is working as External Relations Manager for Bank Muscat, in the Bank’s Head Office in Muscat.
Main issues and trends in the labour market in Oman that impact the key competences of the organisation – Bank Muscat, Oman
An Evaluation of the Strategic approaches to HRM that can improve organisational performance
Organisation’s approaches to HRM toward ‘Talent Management’
After the analysis and evaluation of the above HRM issues and approaches, this report concludes with some recommendations for improving the performance in Bank Muscat, where the author is working as its External Relations Manager.
Issues and Trends in the Labour Market in Oman
Labour market issues and trends are driven by labour market structure and labour diversity (Schuler & Jackson, 2007). The labour market in Oman is composed of indigenous Omani workers and expatriate workers (Al-Lamki, 2005) who have different national cultures (with different ethnicities) which give rise to labour diversity (Triandis et al, 1994) as well.

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Like its member countries of the GCC-Gulf Cooperation Council, Oman’s labour market is tight which always poses recruitment difficulties (Metcalfe, 2007). The GCC – Gulf Cooperation Council countries (Saudi Arabia, Kuwait, Oman, the UAE, Bahrain, and Qatar) do not have sufficient indigenous skilled work force  as a result of which the GCC countries had been relying very heavily on imported work force for their economic development.
According to the World Tribune report  , Oman’s expatriate work force constitutes a majority of 54% of the total work force in the country. As per the recent statistics published by the Ministry of National Economy (2009), Oman, the expatriate population stood at 900,248 against the Omani population of 1,967,180 at mid year 2008. In other words, these statistics indicate that from only a third of the nation’s population the expatriates occupy a high 54% of the labour market in Oman.
In consequence of the above, the Government of Oman has been implementing its ‘Omanisation Policy’ vigorously since the start of year 2009 (although the Government’s Omanisation Policy has been active in the country since 1988 when it was introduced by His Majesty Sultan Qaboos Bin Said through the Ministry of Civil Services to replace the expatriate work force with local Omani work force) in the private sector.
This is due to the fact that the Government’s implementation of its Omanisation Policy has been successful so far only in the Omani public sector and not in the private sector as the sector still relies heavily on the expatriate work force (Table 1). Nonetheless the banking sector in Oman is an exception to the poor Omanisation in the private sector (Al-Lamki, 2005).
Table 1: Employment of Omanis in the Private Sector  
Currently there are 17 commercial banks, including Bank Muscat, in Oman. Bank Muscat is the largest and leading commercial bank in Oman  . Bank Muscat has been continuously striving to improve its human resources to enhance its operations as well as to contribute to the further development of national human resources. Currently, Bank Muscat has a very high 92% Omanisation rate which has earned the Bank the prestigious ‘GCC-Level Achievement in Nationalisation of Human Resources’ in November 2009  .
The Bank also continues to be a heavy investor in information technology to keep itself on top of the competition. Bank Muscat has won for the ninth consecutive year in 2009 the ‘Best Consumer Internet Bank’ award from the prestigious Global Finance.
Service sector organisations are labour intensive and in consequence the human resources represent a substantial portion of the overall operating cost of the service organisation (Massey, 1994). Also human resources cost continues to be one of the most difficult expenses to control in organisations yet it is the critical most factor that affects organisational performance (Pfeffer, 1998). These views apply very well to Bank Muscat also.
Being an operator in the ‘services sector’ where in the customers and the employees engage in direct contact (Schneider et al, 1980), and driven to be more cautious in conducting its daily business due to the current global economic crisis, Bank Muscat’s major focus of its HRM practice is directed at enhancing customer services through effective customisation of banking products and efficient delivery of quality banking services in a cost-effective way. It would be pertinent here to mention Bank Muscat’s Mission and its Quality Policy.
Bank Muscat’s Mission Statement & Quality Policy
Bank Muscat’s Mission Statement is effectively combined with its Vision Statement which states that, “Over one million satisfied customers by 2010 through continuous enhancement of stakeholder value  “.
And Bank Muscat’s Quality Policy Statement states, “Our Quality Policy is to achieve and sustain a reputation for quality in the national and international markets by offering products and services that exceed the requirements of our customers. We strive to remain the bank of first choice in all our product and services  “.
Accordingly, Bank Muscat’s strategic emphasis is on building further its sources of competitive advantage which are strong community of satisfied customers and quality offerings of banking products and services.
Further the financial services market in Oman (Bank Muscat competes directly with HSBC, Standard Chartered Bank, Oman International Bank, National Bank of Oman, Bank Dhofar, Bank Saderat Iran, and Bank Sohar) is becoming relatively more competitive than the financials services market in the neigbouring Qatar.
Currently Bank Muscat runs 125 branches, operates 362 ATMs and 112 CDMs, and 4,200 PoS terminals throughout Oman. And another 3 more branches are going to be opened soon in the other cities of Oman, namely, Sohar, Salalah, and Sur.
Human Resource Investment
Bank Muscat considers its investment in its human resources as the most valuable asset which forms the basis for the Bank’s operations. In as much as the Bank’s human resources contain highly-skilled and experienced people, it also has newly recruited staffs that are relatively low-skilled as they are fresh University Graduates. Human resource movements are caused by recruitments and exits.
Since bulk of Bank Muscat’s operations occur in the Bank’s retail branches, from time to time Bank Muscat recruits new Omani staffs in order to meet its human resource requirements, based on its formal recruitment and selection policies, at its new branches. There are no effects on the movements in the Bank’s human resources due to employee leaving. For instance, the employee turnover rate at the end of 2009 was 0% for the third consecutive time, as there were no exits due to resignation, retirement, or termination.
For senior positions at the branches staffs are appointed through internal recruitment – job promotions (e.g. Assistant Manager to Branch Manager) and the resultant vacancies are filled through the recruitment of new Omani staffs.
Competence and Training and Development
In view of the above Bank Muscat requires its new staffs with low-skills (who are currently filling in the first-line staffs mostly in the clerical cadre) to upgrade their skills. Acquisitions of higher level skills by these staffs would help the Bank to provide its quality-integrated services to its customers much more vigorously in the pursuit of its strategic mission and vision through a high quality services strategy and at the same time complying with the Government’s Omanisation targets.
Accordingly, the present HR competence needs of Bank Muscat are derived from the necessity to up skilling its young Omani staffs within the Bank’s need to maintain competitive advantage against the ongoing rapid changes in the business environment in Oman. To this end the Bank Muscat’s HR goals are currently focussed in training and development:
To reduce skills shortages in the area of complex tasks
To Encourage learning to acquire Bank specific-business knowledge for obtaining higher efficiency as well as to cope with changes
To provide opportunities for personal and professional development and career growth
To forge long term employment tenure on the basis of competence and skills-advancement (through higher/professional education) for entry-level staffs.
Strategic Approaches to HRM for Improving Organisational Performance
In today’s rapidly changing competitive business environment, human resource management is being increasingly considered as a critical part of the strategic management (Sheehan, 2005; Schuler & Jackson, 2007) and in consequence Strategic Human Resource Management (SHRM) as a field in itself has been increasingly applied since the 80s as part of management practice (Becker & Huselid, 2006).
According to Tichy et al (1982) the strategic approach to HRM is known as Strategic Human Resource Management. The strategic alignment of HRM with the organisation’s business strategies would contribute to enhanced organisational performance (ibid).
Strategic Human Resource Management is defined by Ulrich (1997, p.89) as, “the process of linking HR practices to business strategy”. The outcome of the application of strategic human resource management is “HR Strategy: the mission, vision, and priorities of the HR function” (ibid, p.190).
Managers can contribute more in the form of value-addition to the firm through the strategic use of their human resource competencies (Mullins, 2007). A strategic approach to HRM for improving organisational performance would demand the matching of the needs and talents of people with that of the organisation’s objectives (ibid). In other words, a competency-based HRM system can provide an organisation to sustain as well as develop its people’s competencies for the organisation’s future success.
Four-task Model of HRM
Schuler et al (2001, p.115), through their “Four-task Model of HRM”, assert that a strategic approach to HRM would contribute to the development of an effective HR plan which would help improve organisation performance by carrying out effectively the following four core HR activities:
The organisation maintains the right number of people
Employees are equipped with the right work knowledge and job skills for rendering efficient and effective performance (‘competence’)
Employee relationships and behaviour are consistent with the culture and values of the organisation.
Employees are motivated adequately to meet the organisation’s needs.
When these core activities are effectively carried out the resulting changes in the human resources in the form of employee attitudes and behaviours within a right organisational climate should lead the organisation’s successful performance (Bowen & Ostroff, 2004). For instance these four core activities can help an organisation to create cultures that maintain its unique competencies, promote social relationships built on mutual trust, knowledge sharing, and teamwork (Schuler & Jackson, 2007). Together these imply that an organisation which develops employees to acquire better work skills, become more knowledgeable, and achieve higher competencies would be able to effectively promote improved organisational performance.
High Performance Work Practices (HPWPs)
A key approach to SHRM is ‘high performance work practices’ (Huselid, 1995). HPWPs are considered by researchers to produce positive effects on an organisation’s financial and business performance (Appelbaum et al, 2000; Schuler & Jackson, 2007). When individuals are provided with the right environment and collaborative team work with adequate job discretion it is highly likely that they would produce high individual performances which collectively would lead to accomplishing a successful organisational performance (Becker & Huselid, 2006). In order to do this the management of the organisation should use high performance work practices (Huselid, 1995). In other words use of high performance work practices would impact positively on both individual performance and organisational performance.
HPWPs include employee empowerment, employee training, and teamwork (ibid) and talent management and staff retention (Huselid et al, 2005). Likewise high performance HR practices that includes a rigorous selection of staffs and robust training and development systems to increase employee ability levels and skills, supported by comprehensive incentive schemes to motivate employees, and empowering employees, have positive impact on employee productivity and organisational performance (Appelbaum et al, 2000). These HPWPs can lead an organisation to the development of skilled employees who actively engage in producing successful behaviours for the organisation which thus form a key source of competitive advantage to generate mutually beneficial outcomes to obtain higher organisational operating performances (Schuler & Jackson, 2007).
HPWPs lead to the achievement of these favourable organisational operating performances through the improved social structure within the organisation that greatly assist in better communication and higher cooperation among the work force (Appelbaum et al, 2000).
Employee empowerment today is considered as part of talent management (Bux & Tay, 2010). Hence, these two key HR practices that are in use at Bank Muscat have been discussed: in the next section 2.2.1, namely, employee empowerment; and talent management, including employee empowerment in Bank Muscat have been discussed in section 3 later.
Employee Empowerment
Only when individuals are empowered and made to get involved they can become an organisation’s most valued employees as a consequence of which they would become the right people who can offer value creation both for the organisation and its customers (Sarkar, 2009).
Mullins (2007, p.702) defines employee empowerment as, “allowing employees greater freedom, autonomy and self-control over their work, and responsibility for decision-making.”
According to Spreitzer (1995), ’employee empowerment’ is a motivational factor that embeds: employee competences and consistent behaviour and ability to initiate and regulate actions, which collectively influences operating performances in the organisation.
The concept of employee empowerment is about leaders giving up their control in order to get the desired results for the organisation (Gretton, 1995 in Mullins, 2007). This is supported by Spreitzer (1995) who states that leaders can become more effective if only they can give up their power, but retain responsibility, to their staffs and teams.
An effective management of employee empowerment is capable of producing a large number of benefits to an organisation from the top level to the bottom level (Mullins, 2007). By empowering its employees an organisation can improve both the individual ability and the organisational ability to perform successfully (ibid). Further, employee empowerment can be used as a successful organisational tool to raise employee productivity and profits (ibid).
Likewise, empowerment facilitates employees to become innovative and render good performance since conflicts can be greatly avoided and more cooperation can be obtained (Spreitzer, 1995). Appelbaum et al (2000) suggest that empowerment enables greater utilisation of employee knowledge, abilities, and skills which in turn makes them cooperate more in the form of teamwork (Spreitzer, 1995).
In many organisations HR role is restricted to routine tasks like hiring and firing, implementing the decisions made by others on pay and benefits (Frost et al, 2002). However, if the HR managers are empowered, then they would be engaged in much deeper aspects of recruitment, selection, and retention, employee training and development and focus strongly on workplace diversity which can contribute to increasing their competence and encourage them to empower their staffs in order to enhance the business and financial performance (ibid).
Approaches to Talent Management
It would be useful to understand the meaning behind two key words: ‘Talent’ and ‘Talent Management’. CIPD of the UK provides two critical definitions on ‘Talent’ and ‘Talent Management’ as follows  :
“Talent consists of those individuals who can make a difference to organisational performance, either through their immediate contribution or in the longer-term by demonstrating the highest levels of potential”.
Talent Management
“Talent management is the systematic attraction, identification, development, engagement/ retention and deployment of those individuals who are of particular value to an organisation, either in view of their ‘high potential’ for the future or because they are fulfilling business/operation-critical roles”.
As discussed earlier, Bank Muscat operates in the services sector and by nature is a labour intensive Company whose main objective of running its banking operations is to provide high-quality customer services in banking and finance. And in this pursuit the role of the Bank’s people is critical in adding value not only to the customer services they render but also add value to Bank Muscat, thus eventually adding value to the Bank’s stakeholders.
In view of the above and given the diversity of the work force of Bank Muscat, talent management at the Bank would have implications for recruitment and selection of competent staffs and staff retention. Further in terms of succession planning the Bank also has a need to mentor/coach future leaders/managers for Bank Muscat.
Figure 1 illustrates the Talent Management framework at Bank Muscat which has been reproduced from the talent management framework supported by the Government of Australia for managing skill shortages  .
Accordingly the following HR activities will be discussed here:
Staff Recruitment and Selection
Strategic Human Resource Development
Staff Retention.
In addition to the above employee empowerment in Bank Muscat has been discussed as part of the Company’s talent management practice under the heading ‘Strategic Human Resource Development’.
Figure 1: Talent Management Framework
The major recruitment and selection objective of Bank Muscat is to attract and retain and thus have the right people with core competencies to enable the Bank to continue to maintain its competitive advantage as a the country’s leading bank in terms of profits, net assets, and up to date IT infrastructure.
According to Pollitt (2004, p.24) the following are the core competencies expected from the workers by organisations world wide. These are:
“Well developed leadership skills,
The ability to shift attitudes and behaviors,
The capacity to exert effective influence and work through others,
The talent for successful partnership working and, most importantly, having the potential to adapt quickly to internal and external change, and
To get that change owned and embedded in an organization.”
Given the low level availability of talent with the above core competencies recruiting right people now is much harder for organisations (ibid). This is particularly true in the case of Bank Muscat which requires people with the above skills and consequential difficulties in finding and recruiting such talent within the tight labour market in Oman.
Main (2008) asserts that retaining highly skilled staff is a better option than recruiting new talent as recruiting would not only be an expensive option but also would be time-consuming in the present economic conditions, which applies to Bank Muscat as well though staff recruitment and selection process cannot be ignored.
Staff Recruitment and Selection
As mentioned earlier the labour market in Oman is differentiated in terms of the composition of the workforce (indigenous workers and expatriate workers). Further Oman has a tight labour market (like its other GCC member nations) which makes recruitment and staffing of employees extremely difficult due to the domestic shortage of skilled people on the one hand and the available young work force lack work experience and the required job skills.
In the current economic downturn more and more employers are driven by the need to attract and retain workers with high skills and competencies to improve their organisational performances (Lunau, 2009). Many firms in Oman are experiencing low business and Bank Muscat is no exception which is indicated by a 21% drop in its annual profits for 2010 at OR73.7 million (about USD191.4 million)  . Nonetheless, aided by its human resource planning the Bank is on the look out for new workers to meet its staffing requirements for succession planning as well as its ongoing retail branch expansions.
Without clear job descriptions any recruitment and selection process would be a failure (Frost et al, 2005). For example, the recruitment and selection process in some of the Omani public sector undertakings were criticised by the State Audit institution of Oman.
The key to Bank Muscat’s recruitment and selection process is the use of clear job descriptions for recruiting the right people. Further since competence is considered as the critical element of Bank Muscat’s HR practices, priority is given to internal recruitment through promotions which actually helps the team members to work with maximum initiatives, increased expectations, and higher motivation.
Strategic Human Resource Development (SHRD)
Incorporating the core competencies of human resources and relating them for improving organisational performance is the purpose of strategic human resource development (Bratton & Gold, 2007). When strategic human resource development is aligned the corporate strategies of the organisation it can lead to the creation of organisation-specific knowledge and skills (Garavan et al, 2007) which will also help build the core competencies of human resources.
An effective recruitment and selection process should complement and support the training and development process (Boxall & Purcell, 2003 in Bratton & Gold, 2007). Accordingly, Bank Muscat’s recruitment and selection process is complemented by its training and development process which primarily focuses on building strong customer relationships.
Training for Skill and Competence Development at Bank Muscat
For this purpose, the Bank has been operating successfully its own ‘Management Development Centre’ since year 2005 as part of its SHRD. Each training programme at the Centre is driven by the HR Department’s training needs assessment exercise. This internal training and development Centre handles the training of the low-skilled employees on one end and high-skill positions on the other end. Training is imparted by training consultants from Dubai, London, and Australia who are supported by 3 full-time professional trainers of the Centre.
The Centre’s training emphasis is based on ‘self learning and Job-integrated learning’. And the taught instructions along with the workshop learning programmes are delivered by the trainers who interact freely on a dialogue-basis rather than on a monologue-basis, encourage the trainees to participate more actively in the training and development process.
The newly recruited low-skilled employees undergo a short and vigorous training to skill them for their current jobs. Likewise, mid-level skilled employees are trained on a regular basis to develop their current skills to high skills. In other words, both these skill groups receive training for advancing their careers within Bank Muscat.
As for junior executive positions customised training programmes are provided at the Bank’s cost through the College of Banking and Financial Studies (CBFS), Muscat. These training programmes are revised from time to time to keep them up to date in terms of relevance to meet Bank Muscat’s HR needs. To ensure this the Bank’s HR Director and the College engage in the course revisions.
Additionally, for senior executive positions Bank Muscat provides fully funded educational support for the MBA programmes from the UK. However, it is left to the choice of the individual staffs to pursue the MBA programmes. Nonetheless, employees from all the three skill-level categories receive full career guidance from the Management Development Centre’s Career Counsellor.
Performance Appraisals in Bank Muscat
Staff progress and promotion are based on formal performance appraisals in Bank Muscat. Performance appraisals are carried out mainly by the branch managers and within the Bank’s Head Office they are carried out by the departmental managers (e.g. Manager – SME Department). Informational inputs to the branch and the departmental managers for these performance appraisals come through the 360 degree feedback process (including customer complaints).
Employees of Bank Muscat are expected to have knowledge and understanding of the banking products. Therefore, performance of employees in the Bank is measured on the basis of their sales performances in the branches i.e. sale of the banking products (housing and auto loans, special savings accounts, fixed deposit schemes, Bank Muscat Credit Cards, etc).
Once the performance appraisal process is completed the concerned managers and their staffs meet to discuss poor performance issues and commendations. This dialogue is facilitated by the open communication (which is continuously kept alive due to the employee empowerment practice in Bank Muscat).
To the knowledge of this author the follow-up to poor performances resulted in the issues being solved rather than the same employee being found fault with, in terms of poor performance, again. Accordingly, none of the Bank’s employees has ever been reprimanded or were subject to any disciplinary actions by the Bank’s superiors.
Employee Empowerment in Bank Muscat
As discussed under section 2.2.1 earlier, employee empowerment is part of the talent management practice in Bank Muscat.
Employee empowerment in Bank Muscat is carried out through:
A simple 15 minutes briefing before the opening hours of the Bank on each first day of the week (which in Oman is Sunday for the Banks only) by the heads of the divisions/Branch Managers with their respective staffs.
Direct communications in the form of intra-mail to the staffs from their bosses.
Introduction of team-based work groups across SME Banking, Housing Loan, and Auto Loans that are linked with group bonus schemes for the team members.
Active encouragement by departmental managers to engage their team members in planning and decision making relating to customer service issues and issues relating to operations.
Above all the HR Executives directly report to the Bank’s CEO.
By empowering its employees through delegation their productivity (faster processing of customer services) Bank Muscat has been able to keep its profitability up even in the current recessionary time.
A key strategy in the talent management is to put together the employees and their mentors to transfer the mentor’s skills, experience, and work behaviours to up-skill employee competencies in order obtain higher-levels of organisational performance (Murray, 2001).
The purpose of ‘mentoring’ process is to transfer professional, technical, and generic skills to people who will continue working in the organisation (ibid). In other words the mentoring process would help employees to stay with the organisation and thus ensure not only in retaining their talent but also help the organisation in its succession planning (ibid; Main, 2008). For example, banking companies stand to benefit from the mentoring process in the form of “decreasing time needed to master customer service skills” (Murray, 2001, p.36).
Bank Muscat’s major objective is to capture key organisational knowledge from its senior leaders who are approaching their retirement and ensure knowledge-sharing among all its staffs. Based on the outline provided by Murray (2001, p.36) the other objectives of Bank Muscat’s mentoring process are:
“To improve retention by making our experienced and skilled people feel more valued
To improve results-profit or other-with people who are more competent, confident, experienced, and motivated
To ensure representation of diverse groups at all levels of the organization
To enable our people to learn to work with others with different education, ages, cultures, physical abilities, etc.
To improve communication across functional and divisional lines”.
Bank Muscat applies this to its staffs at all levels i.e. from new workers to newly promoted Managers. In particular the following details the formal mentoring process at Bank Muscat:
Each newly promoted Manager will be paired with a mentor.
New young recruits and those who are in their early career stages are paired with senior staff members for ensuring their training and retention.
Senior members of the staff are to identify leadership and managerial talent and coach them to excel in their present and future work.
Special rewards are given to managers whose mentoring leads to staff retention (over a 5-year minimum period).
During the last 3 years the top management carried out 4 promotions among assistant branch managers and 3 promotions among branch supervisors among the branches in the Muscat area.
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Staff Retention
The noted management consultancy company, McKinsey & Company recommends the creation of ‘Employee Value Proposition (EVP)’ as a strong means to retain talent in organisations (Brannick, 2001). Four elements make up the EVP (ibid, p.30):
Great Company – Company and its people care mutually for each other. Employees have pride in working for the company.
Great Job – Employees feel that their work is highly valued and their talents and achievements are duly recognised by their company.
Great Leaders – People who provide

Oman Cement Company

Oman Cement Company (SAOG) was formed in 1978. Rusayl Cement plant was completed in 1983 with an annual integrated cement production capacity of 624,000 tons, of cement. In 1999 clinkering capacity expanded to a total of 1.2 million tons per year. The second production line came on stream in mid 1998. Presently the company is working on expanding the capacity of plant form 1.26 MTS per year to 1.70 MTS per year by upgrading production line No. 1 and No. 2.
The company facilities are:
1- Computerized Manufacturing
Oman cement manufacturing process is fully computerized.
This avoids major hazards in manufacturing and needs less manpower.
2- Central Laboratory
The Quality Control is supported by central laboratory consisting of robotics, X-ray spectrometers, laser particle size analyzers and computerized physical properties testing equipment.
3- Quality Management System and Environmental Management System
oman cement Quality Management System is in accordance with the Quality Assurance Procedures of ISO 9001 : 2000 certification.
4- Pollution Control.
The Oman cement company produces many types of cement which are:
1- Ordinary Portland Cement:
It is type I Portland cement. Its uses are reinforced concrete buildings, bridges and railway structures. The typical compound compositions of this type are:
55% (C3S), 19% (C2S), 10% (C3A), 7% (C4AF), 2.8% MgO, 2.9% (SO3), 1.0% Ignition loss, and 1.0% free CaO.
2- Sulphate Resistant Cement:
It is type V, is used where sulfate resistance is important. Its typical compound composition is:
38% (C3S), 43% (C2S), 4% (C3A), 9% (C4AF), 1.9% MgO, 1.8% (SO3), 0.9% Ignition loss, and 0.8% free CaO.
3- Moderate sulphate resistant:
It is type II cement. This type of cement can be used in structures of considerable mass, such as large piers, heavy abutments, and heavy retaining walls. Its use will reduce temperature rise especially when the concrete is subject to hot weather. Its typical compounds composition is:
51% (C3S), 24% (C2S), 6% (C3A), 11% (C4AF), 2.9% MgO, 2.5% (SO3), 0.8% Ignition loss, and 1.0% free CaO.
4- Oil Well Cement
Oil well cement, used for oil wells grouting, usually made from Portland cement clinker or from blended hydraulic cements. It is used for cementing work in the drilling of oil wells where they are subject to high temperatures and pressures. Its typical compound composition is:
MgO: 6.0% SO3: 3.0% Loss On Ignition: 3.0% C3S: 48%-65% C3A: 3.0% Insoluble Residue: 0.75% C4AF+2C3A: 24%
Production methods:
There are four stages to produce cement that Oman cement using which are:
1- Preparation of the raw material at quarries
2- Heating and cooling to produce clinker
3- Preparation of the cement
4- Cement packing
Process description:
1- Preparation material at quarries
The raw material contains of limestone (80% of raw material), silica, aluminate and iron ore. The quarries located around the Oman cement plant. At quarries the raw materials are extracted with heavy equipments. Then the limestones are crushed with mobile crushers connected with long conveyer belt to transport them to storage passing the auto lab to analysis the samples with x-ray each two hours. After that the raw material are moved to reservoirs. Then they are moved with conveyor belt to the raw mill to grind the raw materials. Finally the grinding raw materials are moved to mixture reservoirs to get proper mixture before fed them to kiln.
2- Heating and cooling to produce clinker
The raw materials are moved to channel, where heat exchange is occurred between these material and the raising hot gases from kiln, then the materials are separated from the gases. After that the material moved to calciner where the limestone is converted to calcium oxide, and then the calcined materials arefed to the kiln where the temperature about 1400 c and then leave from kiln to get clinker. Then the clinker leaves from kiln to air to reduce its temperature to 100 c to be ready to be moved to cement mill.
Kiln process
3- Preparation of cement
The clinker that came out of the cooler will be transported by the bucket chain conveyor to the silo. The bag filter on the top of the silo is sized for the feeding by the bucket chain conveyor and thermal air expansion in the storage. The clinker extracted from the silo is transported by belt conveyors to the cement proportioning. The gypsum is added to the clinker. Then the proportioned materials are conveyed via belt conveyor to cement grinding. Materials ground by ball mill are transported separator by bucket elevator. The coarse particles separated return to ball mill for regrinding while the fine product is collected by the bag filter behind the separator and then conveyed to cement silo with an air slide and bucket elevator. Cement silos is used to store the cement.
Cement mill
4-Cement packing
The cement from extraction systems under the cement silo is delivered to the buffer bin by air slide and the bucket elevator and vibrating screen, before being fed into each packer. The bagged cement can be loaded directly or stored in storehouse temporarily.
Machinery and Equipments:
No. Name function
1 Limestone Crusher used in stone quarry to crush limestone
2 Clay crusher used in stone quarry to crush clay
3 Limestone Stacker Used to move limestone to preblending stockpile
4 Limestone reclaimer Used to take preblended mixture from preblending stockpile
5 Coal and iron ore Crusher Used to crush additive materials
6 Coal and iron ore Stacker Used to move iron ore to conveyor belt then to proportioning station
7 Coal & iron ore reclaimer Used for reclaiming all additive materials and coal
8 Raw mill used for raw materials grinding and drying
9 Raw mill fan Used to adjust the mill inlet temperature.
10 Preheater fan used to dry the raw materials
11 Preheater and precalciner Preheater used for preheating and partial decarbonation, and precalciner for calcination
12 Rotary kiln used to raise raw materials to a high temperature
13 Grate cooler Used for quenching
14 Cement mill Used to grind cement
15 Bag filter Used to collect dust
16 Coal mill Used for coal drying
17 Bulk loader for truck Used to load the bulk
18 Cement packer Used to pack cement product
Quality control system:
The quality control department in the Oman cement company function is to monitor product quality in every stage of production starting with extracting the limestone from the quarry till the stage of cement mills, by taking samples and analysis them.
1- The computer and x-ray analysis:
The automation lab consists of robot, x-ray spectrometers, laser particle size analyzer and computerized physical properties.
The samples will be taken by an automatic sampler from a point between the raw mill and homogenizing silo and then transported manually to the central auto lab, where it will be semi-automatically prepared and sent to an X-Ray analyzer. The results analyzed will be sent to a proportioning computer. The computer will calculate the ratio of raw materials and send out the set value to constant feeder according to the chemical compositions and raw meal module required.
2- Physical analysis:
To test the fineness, soundness, setting time, strength, specific gravity, heat of hydration and loss on ignition of the cement to achieve the American specifications requirement.
Maintenance procedure:
The department functions are:
-Checking all machinery and equipments are work properly.
-Scheduling and planning for preventive maintenance, predictive maintenance.
– Coordinating with all departments for daily problem.
– Planning, coordinating of preventive and breakdown activities for achieving high plant availability to meet production target.
The procedure that the Oman cement follows in case of breakdown, preventive and shutdown maintenance are:
1. Breakdown maintenance
In case of any breakdown maintenance in the production department, they give information regarding the breakdown to the maintenance department, and maintenance workers are sent to the production plant to fix machine failures.
2. Preventive maintenance
here, a team of maintenance workers is sent directly to the production plants to check out whether there is any failure in the machinery or not.
3. Shutdown maintenance
When the plant is shut down the employees in the production department sent a letter to the maintenance department and successive steps are taken by maintenance department to solve the failures. The plant shutdown occurs every 6 month in March and September.
The process of operating and monitoring production lines and machines instantly, so they can watch the failure and damage of the machines and equipments to repair them or replace them.
Technical management
The technical management responsibility is to supervise all the mechanical, electrical things and maintain the various equipments and everything that related to maintenance procedure, and this management divided in many sections:
a- The machine section
The responsibility of this section is prepare emergency and planning schedule and do it to all the equipments and report it to diagnose the unusual failure and fix it. Inspect the machinery, check with drawings and specifications and rectification. It contacts with store section to provide the required replacement parts and also contacts with other sections to maintain the equipments at the workshop.
At the workshop they fix the equipments in emergency conditions, check the equipments if they work properly and routinely, takes care the equipments and help to clean them.
b) The machine operation section
The responsibility of this section fabricate the replacement parts, make an order outside the company to get new parts, lathe the machine parts the required the workshops.
c) The immediate machine maintenance section
The responsibility of this section is to check and fix the production lines.
d) The electrical section
The electricity department is responsible to repair and ensure the continuation of the work of all electrical and electronic equipment and precision instruments on the production line and also supervises contact with other sections to that the electricity working properly.

The Poultry Industry In The Sultanate Of Oman

This report studies the poultry industry in the Sultanate of Oman, highlighting the strong performance and growth in the future. Will be identified A’Saffa food as producer and supplier of its products and its position as market leader in the industry.
The important cultural and social trends reported are the increase consumers’ awareness of healthy food, as well as the changes of the economic climate. It was found that the attractiveness of poultry industry has declined because the highly competitive of rivalry and power of buyers and also higher threats from substitutes. It’s also addressed that the position of A’Saffa is medium of the change of the attractiveness of the industry.

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Three significance functions of A’Saffa : first is the logistics and Distribution network , where A’Saffa can make efficient and quality control of distributions of its products through the network in the country. Secondly operations, which includes inventory management, quality assessment which support in value creation and third one is sales and marketing which keep A’Saffa completive by providing promotions offers. In other side, found that A’Saffa has three important resources and capabilities which can make its extremely proficient supply chain; success full supply chain, brand reputation and the location of the firm.
At the end, recommendation is in two manner, a short term by budgeted more cost on advertisement of A’Saffa as a healthy producer and convenience the consumers that the farm using natural chicken feed. In the Long term, recommended to focus on differential factors like diversify into more profitable fresh and frozen food due to probability of increase in the cost of production of the industry and which lead to less probability.
This report study A’Saffa Foods S.A.O.G (A’Saffa) position in the Food industry in Sultanate of Oman. To understand A’Saffa Foods’ Strategy, will assess its internal operations and then it’s successful. Then, can make recommendations for sustained competitive advantage of a future based on an assessment of external factors that affect the market.
With the growth of economic globalization, Food industry in the Sultanate of Oman becomes an additional significant last ten years. The poultry industry is extremely competitive in Oman and A’Saffa Foods is leader of the market with biggest annual production in Oman, Gulf Countries and other countries.
A’Saffa raised its continuing ability to meet the growing demand in the country and abroad. Starting with capacity of 7500 MT in 2004 and increased to the current capacity of 17000 MT per year. The company I planning to add more capacity to achieve the capacity of 21,000 MT by end of 2011. In addition, the company announced its entry in Bahrain and Yemen, and is planning to enter Kuwait in the near future. The revenue driver of the Company is 35 % from Omani markets.
The vision of A’Saffa is to become No. 1. and mainly winning diversified food firm in Middle East. The products of A’Saffa are natural, healthy and slaughtered as per Islamic law “Halal”. A’ Saffa has produce a frozen and fresh chicken products.
Although, that Dhofar Poultry Company SAOG , Barka Poultry Company and Sohar Poultry are the main competitor of A’Saffa Company but A’Saffa is still a single player in the industry in Oman with 25 % of market share . To meet the increase demands from domestic from Oman and Gulf countries, A’Saffa has a big capacity of its farm which allocated in “Thumrait” in the south of Oman, which is the most modern international manufacture techniques and machinery.
With a home grown market share for poultry products of over 25 per cent and plans to increase this to nearly 35 per cent in the near future, A’Saffa Foods core business is making great strides to reduce the dependency for chicken imports to the Sultanate (Oman Observer newspaper, Feb 1 ,2011). In addition, and as part of its plan, A’Saffa continues to maintain its reputation as a leader in the food market and domestic production in Oman through the establishment of a study facility for the production of table eggs for 100 million annually, and manufacture of processed meat products.
A’Saffa uses its skills and expertise to assist in issues of food security in the Gulf Countries. Where the company working as a consultant to assist in the build and operate of the largest poultry manufacture in Qatar.
The external environment analysis provides the company with a significant external link between its customers, competitors and the products it offer. In this section will analysis the external macro environment that affects the industry by using PEST analysis and examined how it will impact the profit of Al Saffa . After that will assess the position of the competitive environment by using Five Porters and will look at to the attractiveness of the industry to Al Safa in the upcoming years.
Political Factors: The government of Oman encourages the supports the business of food toward the food security in the country by grants such companies. In Oman, Exempting Wholly Omani Owned Companies from Tax for 5 Year (The law of income tax on companies, Oman,1975). This trend is give the company opportunities brought by changes of the government and public attitudes toward the industry, changes in political institutions and the direction of political processes, legal issues, and the overall regulatory climate.
Economic Factors: The economic changes in the world led to increase the level cost of food consumables, hence the consumer are thinking of other alternatives food at low prices. For example, buy frozen chicken at the lowest price rather than fresh chicken with higher-price. To compete on the low cost alternative, the company produces a frozen food instead of focusing on a fresh food only.
With international commodity prices rising it will also become increasingly expensive to import food products – making it more important than ever for the Sultanate to lower its dependency on imported food (Oman Turbine, 2011).
Social Factors: The main social trend is increase of the customer’s awareness of the health food, and this lead to produce a healthy and fresh alternatives food. This trend gives the opportunity for the Company as the main player of Poultry Farms in the market. But in other side, it’s also making a potential threat in niche farmers markets in the internal region of the country which focus in produce the fresh Poultry Farms. During last three years, ASafa achieved and gaining Macro poultry industry in Oman and also invested the opportunity in the market.
On more social factor is the trend of people to be more convenience by buying their needs from a single store includes all the products. This trend also makes the company the opportunity to increase demand for its products due to the distribution of their products to the largest number of retail market. This is an opportunity for also people to buy a fresh poultry in a manner faster without loss of time and effort where the consumer does not need to go to poultry farms to buy fresh poultry.
Technology Factors: A’Saffa has a modern international manufacture techniques and machinery. However, the technology is changing rapidly and do not need to spend more cost to renew or replace the old machine for long term.
In this section will assess the attractiveness and profitability of the poultry sector in Oman than assess the relative position of the company in the industry .
Threat of substitutes: by examining the market, the threat of substitutes is high in poultry in Oman because A’Saffa Foods faces many indirect competitors from farmers markets. Existing indictors in the local market , the indirect competitors are potential substitutes to A’Saffa Foods and create threats in the future. Farmers markets have seen a significant expansion in Oman and providing a fresh food with convenience choice. With increasing the health consciousness towards health alternatives, the farmers markets sell fresh products and natural produce and this also cause a threat potential in the future.
Degree of Rivalry: in Oman, the poultry business is highly competitive. Because the small number of main players in the market and lack of differentiation due to nature of products, a high degree of rivalry is exists in the market. Hence, the competition is based on price and other factors like sell location and choice of product. There is an increase in future rivalry due to the entry of new local company “Barka Food’ (because their business will focus on the north area of Oman, which have a large number of the population) and also new competitors from UAE and Saudi Arabia which will make the industry further competitive and risky threat in future .
Barging power of suppliers: bargaining power of suppliers is extremely very low. A’Saffa Foods controlling market share for poultry products of over 25 per cent and numbers of local suppliers have a very limited choice of intermediaries to select from. Thus, A’Saffa Foods is the main customer and purchaser of raw material in the industry. On the other hand, this set to change with the entry of new companies with Government policy increase the competition in the industry. Therefore, the bargaining power of the suppliers is a middle in the future because expect a bigger selection to deliver to.
Barging power of buyers: the buying power of customers is in an increase. The government raise the level of food security by supporting and encourage the small-scale producers and reduce the competition barriers by allow farmers markets to come in the market which lead to increase customers selections (Al Watan newspaper, 2009). As a result, the customers barraging power is increase and thus, the increase of customers bargaining power will enable customer to compare prices and select the cheaper alternative and this aspects take customers barging to a further medium level.
Threats of new Entrants: the threat of new entrants is low and this is due to the role of government of Oman to support the local business of food toward the food security in the country. A’Saffa also says that it has no fear of other competitors entering the market place – either in Oman or the region” (Times of Oman, 2010). Despite that this market does not require a high infrastructure, but its needs experience to manage the project efficiently and its easily to be exposed to losses because spread of diseases (e.g Bird Flu) or change the social factors of people regarding the health food.
Comparison of industry Attractiveness for A’Saffa:
From previous section on the Porters Five factors analysis, the poultry industry identified reasons of the weak bargaining power of suppliers and buyers and barriers to entry. Consequently, the company achieves profitability until now. Therefore, the position of A’Saffa is medium of the change of the attractiveness of the industry. Also, the profit of Company may be decrease from high to medium in future.
The reasons for this are increase in bargaining power of suppliers and buyers with the bigger rivalry and the entry of new companies.
When the industry attractiveness and profitability has decreased from earlier levels, the capability to do better than its rivals depend on the Company’s resources and capabilities which can develop in the future.
In this section will identify the major resources and capabilities of A’Saffa Foods by evaluating the situation of A’Saffa Foods in the food chain to participate in and examine the major role within A’Saffa Foods value chain which delivers the large amount value to the firm.
A’Saffa Foods is the sole supplier of all their chicken products and the food chain is provide wholesale with a channel to reach end consumers. The Company has a big farm with high capacity and intends to increase the production in the future to meet growing demands in Oman and Gulf countries. The A’Saffa farm is on the main highway between South of Oman (Muscat city) and South ( Salalah city) which make distribution process are quick and well-organized. The Farm has its own water supply .
From the poultry resource, no serious issues of supply chain face the A’Saffa Foods. A dedicated Supply Chain Management (SCM) team works round the clock to identify potential suppliers and procure the required high quality raw materials in a timely manner (
Value chain Analysis of A’Saffa Foods:
A’Saffa has made possible 100% product availability through its branch Sales offices spread across Oman covering all the regions and the interior markets. This is a very healthy sign of effective and intensive distribution system across the country. The total coverage exceeds 1600 outlets. With extensive branch network covering entire Oman, our reach is not just limited to groceries, we also cater to restaurants, butcheries, catering companies and other institutions.
There are three main value creating functions to deliver Company’s commitment:
Logistics Distribution Network: the chicken’s feed is manufactured in A’Saffa and therefore, the company has own operational control of the logist to conduct QA audits to ensure that the products is in a high manner.
A’Saffa Food is the sole supplier of all their products and its control the network of distribution of its products. To ensure that A’Saffa products are available in every Hyper Super Markets and retail stores, A’Saffa has owned a fleet of 25 reefer trucks to deliver a frozen and fresh product to be available to the customer at all time and across Oman.
Operations: this includes inventory management, customer satisfaction and quality assessment. A’Saffa offers a large choice of new products to its consumers.
Quality Assessment: A’Saffa has a commitment of the importance of the quality of its Clients/Buyers and to deliver highest quality of products .Also, the Company implements a Hazard Analysis and Critical Control Points systems. Furthermore, the chicken’s feed is manufactured in A’Saffa farm by using a scientific feed management and this allow the Company to control the quality of natural fed.
Inventory management: using a technology to make sure that stock level is adequate at all time. Also, using forecasting system to prevent unexpected increase or decrease in demand of the product.
Sales and Marketing: as mentioned before, A’Saffa Food is the sole supplier of all their products and its control the network of distribution of its products. Therefore, A’Saffa Food is compete successfully and increasing its sales by a promotion of a product inside a shop, committed to deliver the fresh products to retailer on time and enhance a consumer research and environmental changes. This is an important to identify and use a strategy to compete successfully in future.
Assessing a significant Resources and Capabilities of A’Saffa Foods:
Strategy capability examines different types of resources and competence within the organization in order to survive in the market. There are two types of resources, first is physical or tangible of the organization including (finance, Plant and labour). The other resource is the intangible resources which consist of (knowledge, brand reputation and information).
To compete, A’Saffa Foods is using strategy of differentiation and cost leadership by adopting an efficient supply chain to control the cost and brand image.
A’saffa growth-oriented strategy to branch out into other complementary products began in 2009 by adding value-added packaged food products. The packaged products are currently out-sourced from the UAE and its contribution to the company’s bottom line is less than 10 per cent.
A’Saffa has four significant resources and capabilities:
Successful Supply chain: A’Saffa food has an efficient distribution network across the country. The tangible assets such a manufacture of Chicken’s food and technological capabilities are important for A’Saffa food to achieve a higher EBIT. But successful supply chain in inadequate as a distinct competency.
Brand Reputation: A’Saffa Food has built a brand reputation as providing a fresh food and ‘Halal’ local products (The term is used to designate food seen as allowable as per Islamic law). This has already been through the consumer experience with products and also advertising campaign undertaken by the Company to promote its products. The reputation of the brand is very important of the consumer satisfaction. Therefore, the reputation is not a competitive advantage .it is a point of equality that the Company must have in order to compete.
Financial position: the Company has a good financial position in the market .In addition; the government has supported the company by a Tax exemption which was expired in 2009. Regardless of the tax deducted for the next years, the profit after tax is expected to increase for the next two with an growth plan.
Location: A’Saffa has a big capacity of its farm which allocated in “Thumrait” in the south of Oman. This location gives A’Saffa more advantage to build a big farm with water resources, government subsidy by not charging any cost of land and also near the big city in Oman.
Despite the above resources and capabilities of A’Saffa, the Company has facing a change in its top management. The growth on Omani economy has resulted in number of opportunities available to professionals. this created a challenge for A’Saffa to change its HR policy by encourage the existing top management by pay high salary and others benefiters.
Tax exemption which was expired in 2009, will lead to high cost of structure for next years. In addition, A’Saffa has a large capacity of the production of the fresh chicken and to change to frozen chicken, it would be more cost for the Company.
SWOT Analysis:
Examination of the internal and external environment is significant measurement of the strategic planning process. SWOT analysis gives information that is useful in matching the resources and capabilities of A’Saffa to the competitive environment.
By examine the Company Threats and Opportunities (External Environment) and the weakness and strengths (Internal Environment) , it can be understanding ,identifying and developing a strategy options for A’Saffa Food.
It’s important for A’Saffa to build the majority of its above strengths, avoid its weakness, take advantage of the opportunities available and control its threats. The following is the TOWS Matrix, gives A’ Saffa the options that can be could followed:
From the above evaluation of options, the “Maxi-Maxi” Strategy which use strengths to maximize opportunities is the most benefit to achieve the mission and vision of A’Saffa Food.
Scenario Analysis: investigate different futures:
Scenario Analysis is useful way to assists A’Saffa to make judgment in the situation of the different futures that could arrive. The take steps of make scenarios forces A’Saffa to challenge its assumption about the future. By determining the Company plans based on a possible scenarios, than Company can make sure that its decisions are right even if environmental changes.
The following is same of Scenario analysis process for A’Saffa Food :
High cost structure: A’Saffa is planning to become a number 1. In the Middle East by soon. this can be done by providing a high quality of the fresh and frozen food with competitive price.
From the PEST analysis, it was reported the key factors of political, economic, social and technological that impact the cost of products in A’Saffa food. Thus, the key assumption of reducing a cost of products are:
Build a new farm of poultry in North of Oman to increase the sale and reduce the cost of sale.
Using international advert to keep up a market position of A’Saffa products in order to increase the sale of fresh products
Build a marketing plan to sale the fresh products during the period of validity, so that the company not losing a cost of products if the is expired.
Developing the above Scenarios: A’ Saffa can start with improbability scenario of build of new farm in North of Oman . the future scenario will one of the following:
Economy in Oman going up: with government support to the local firms to be more competitive. Hence the Company will have a sustaining competitive advantage over ten years.
Economic slowdown : then the Company will have more cost of capicty which effect the cost advantage and loss the market.
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Strategic Direction with Ansoff Matrix
Defining strategic direction might be a big challenge for A’saffa Foods. Ansoff Product/ Market matrix is a tool to recognize the basic option and directions for A’saffa Foods. Taking into consideration A’saffa Foods approach to develop new product and penetrate new markets, four different possibilities can be applied.
Taking into account these combinations, A’safaa Foods seem to successfully attract and penetrate the highly competitive markets by offering its high quality products in a competitive price as the company have a competitive cost advantage. This itself will additionally define its market development and growth with reputation locally as well as existing market and internationally as new market, which will develop and enhance the existing products in the new markets. A’saffa could also move toward product development strategy with their existing capabilities or creating new ones to assure total satisfaction of the changing needs of the customer by developing new products. The company can also implement a diversification strategy and add new production lines such as dairy products as it has the capabilities and resources.
In future,A’saffa should have a framework and control models. Those models have set targets, feedback, and measurement of performance (Frances, et al, 2007). For instance, the Company by applying those models can recognize if there is a gap between released direction and desired trend. By this technique, A’saffa Foods can set a plan for unforeseen events and circumstances. As an example, in the near future, there will be more existing or new Food production companies entering the local market. In this situation, A’saffa Foods can use its cost control advantage and adjust its plans to overcome the change in the aggressive competitive forces.
The variable actions are planned by A’saffa Foods in nonstop developed process to administrate and control the unforeseen events the dynamic changing environment. Those actions are best technique to maintain the existing competitive advantage associates with the firm (Frances A. et al, 2007). By apply this technique; A’saffa Foods will improve the strategic planning which therefore, keeps the company doing well in long term