International Business: United States and Saudi Arabia

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Date:  23rd July2011
International Business: United States and Saudi Arabia
Introduction
On the fifteenth of July 2011 the Washington state department of commerce and the Saudi Arabian business council signed a memorandum of cooperation that is intended to help in promoting bilateral business relationship between the two states. In addition to that several agreements have been signed in the past and this has enabled the council to help company`s realize over $ 46.3 million in new business deals with Saudi Arabia. These include business opportunities in industries including agriculture, organic farming, live stock and water maintenance as well as water reuse technologies.
Therefore in order to ensure that an investor becomes successful in making investment in Saudi Arabia one must bear in mind the contrast and similarities in various aspects of doing business especially considering the Islamic religion as well as westernization. Fr anyone wishing to conduct business with or in Saudi Arabia understanding of Saudi etiquette and personal manner in which business conducted is very essential to success. This paper will analyze the various contrasts and differences regarding the negotiation style in business between these two countries and its significant to successful business delays. Also the roles that cultural components palsy in ensuring a successful business in Saudi Arabia especially by Americans interested in investing in the country. Finally, this paper will analyze the implication of Hofstede`s Dimensions of Culture in conducting business inn Saudi Arabia.
Negotiation
Before embarking in a new business venture in new markets, as manager its very important that one undetsand how other cultures handle the issues of negotiations to prevent offending them especially considering that different cultures do things differently. The culture of Saudi Arabia is quite homogenous and Saudi businessmen especially among younger generation are quiet experienced in doing business and interacting with culturally diversified visitors. For a long time Saudi Arabians have been engaged in trading and this has made them develop the merchant culture which has made them shrewd and skilled highly skilled bargainers. On the other hand, they are not open minded business men thus when negotiating business they expect things to be done their own way. Also, considering that Saudi Arabia is an Islamic country, showing any disrespect for Islamic religion yields disastrous results when it comes to business negotiations.
Relationships and respect
The culture of Saudi Arabian expect its member to poses a strong sense of loyalty to the group while at same time leaving an opportunity for individual preferences. Its therefore very important for one to build a lasting and trusting relationship as they expect establishment of strong bonds before closing any business deal. Its very important that one proceeds with a serious business discussion when one is sure that the business counterpart are confident and establishing productive business cooperation is a demanding process that requires greater commitment.
Business relations in Saudi Arabia exists both between companies as well as between individuals therefore keeping constant or unchanged is very important has making changes comprises trust and friendship already established. Changing company interfaces may make relations to be started over again or worst bring negotiations to a complete halt. In Saudi Arabia, establishing of relationships with others creates a powerful networks thus it`s very crucial to maintain cordial relations. Considering the fact that most Saudis don`t trust westerners introducing a third party helps in the building of a trusting relationship with potential partners.
When making negotiations in with business men in Saudi Arabia ‘saving face` is very essential hence embarrassing another person causes a loss of face of the parties involved leading to disastrous results for the business negotiations. It`s therefore very significant to exercise diplomatic restraint and keeping cool avoiding showing any signs of upset openly even under unfavorable circumstances is a go for ensuring that business deal succeeds.
Generally, in the Saudis business culture one, enjoys respect based on ones rank, status and age hence it`s very important to treat the elderly with greater respect. Its therefore recommender that one shows his stasis as it will make people to take you seriously. Also, one must carefully select transportation as well as hotel through the use of service of other people including the porter .This will ensure that one is not viewed as an intermediary from the lower rank. Some of the admired personal traits in Saudi Arabia are poise, patience and sociability.
When negotiating in Saudi Arabia it`s very important to leverage relationships. Saudi businessmen employ the distributive and contingency style of negotiation. Despite the fact that the buyer takes the superior position, each side of the business deal takes responsibility as it pertains to reaching an agreement. Most businessmen focus on long term benefits of the deal as they expect long term commitment from their business partners and this is regardless of their preferred competitive negotiation style. Saudis are sometimes very competitive and fiercely regarding for smaller gains, but in most cases search for a win-win solution and portrays a willingness to consider compromise if need be. As long as they don`t create a direct conflict Saudis respect hard bargainers thus in order to be respected one must maintain a positive and persistent attitude while remaining friendly, calm and patient with out taking anything personal. In case a dispute arises at any stage of the negotiation one must no in position to reach a movable solution by leveraging with personal relationships the leader of the Saudi negotiation in a one on one setting. To be successful one must refrain from using logical reasoning or engaging in arguments as this worsens to the problem.
Sharing of information: Saudis do not encourage free sharing of information as they believe that privileged information helps in increasing bargaining advantages. Contrary to that one must expect any shared information to reach incumbent competitors as most Saudis based on their existing relationships believe that competitors must have the right to respond to new threats from competitors.
Pace of negotiation: negotiations in Saudi Arabia are slow and protracted and one must travel several trips to succeed set objectives. One must therefore be very patient as attempts to rush the process are likely to be counter productive. It`s likely that the process proceeds fast after counterparts make positive decisions regarding the deal. Its advisable that consider the long terms perspective of the deal as even those with return-on investment that is not appealing later yield bigger profits after the partner approves of one worthiness.
Saudis prefers the polychromic style thus tend to pursue multiple actions and goals in parallel manner thus jump form one topic to another instead of dealing with them sequentially. In addition to that, Saudis open ideas already addressed upon and tend to interrupt or take phone class even in the most critical points of the negotiation and this may appear irritating and annoying to people from monochromic cultures like United States. Surprisingly, Saudis still expect one to stick to subject of conversation unless ther5e is an intention to change the topic (Mellahi, 148)
Finally, Saudi when it comes to bargaining are very shrewd and most of them tend to enjoy bargaining and haggling and may feel offender if one refuse to play along. In addition to that they also expect flexibility from their counterparts thus one must by all means possible avoid coming up with narrow expectations on possible ways of reaching a deal. The bargaining stage is often extensive with prices reaching more than fifty percent of the final and initial offers hence one must keep room for concession at different stages.
Cultural components in Saudi Arabia.
As a result of an increasing globalization of business and trading especially by multinational organizations there have been an increasing interests concerning human resource management policies as well as practices and the relativeness to culture. Management of human resources of corporations operating in foreign countries are affected by national culture a concept including traditions, values, attitudes, belief sand behavior thus human resource methods used by such multinationals reflects national culture of that country (Laurent, 231).
Thus understanding how bu...