Economic environment Essay Example for Free

Economic environment Essay The country has been experiencing rapid economic growth due to the increasing oil prices. Oil and Gas account for more than 50% of its GDP, which is 70% of government revenues and 85% of its export earnings. Qatar’s GDP is $ 85. 35 billion, GDP growth rate is 11. 2% with and inflation rate of 15. 2%. Realizing this unhealthy dependency toward oil and gas, most of the economic policies of Qatar are now focused on dealing with Qatar’s non-associated natural gas reserves and developing foreign and private investments in non-energy sectors. The Qatari Government has been actively encouraging foreign investments in non-oil sectors like power, telecommunication and real estate. The country is significantly influenced by the Free Trade Agreement which has made investments in non-oil sectors more attractive, including the tourism sector, real estate and trade sector. It is predicted that the flow of international investment in Qatar will increase due to this development program by the Qatari government. Nevertheless, the amount of international investment in Qatar will remain on its oil and gas sector. Businesses from within the country also invest considerably on EU businesses. Furthermore, the government is highly committed to privatization of most of its state-owned businesses, like telecommunications, power and water sector. A more detailed look on its trade activities revealed that the country’s largest slice of exports are large machineries like aircraft, power generator plant, mechanical appliances, medical equipment, electrical machineries, etc. Furthermore, the country’s investment and monetary environment is reported to be a source of concerns. This is true because high oil prices and strong economic growth has been accelerating the inflation level into a rate which is hard to tolerate. This has significant effect toward the real-estate and stock markets. The stock market has experienced a correction in 2006, but reports revealed that Qatar has much recovered from it. On the other hand, the real-estate prices have been rising to an alarming rate. These increases are partly fueled by high real estate financings. It should be noted however, that the Qatari government has been limiting the overall exposure to this sector, and thus, a real estate sector shock is unlikely in the foreseeable future. Only prolonged low oil prices will dampen the development of the banking sector as well as other developing sectors in Qatar, and such occurrences are considered very difficult to become a reality. 1. 1. 1. Cultural Environment The people of Qatar are highly educated people with an overall high sense of business. 90% of the population is literate and school life expectancy is 13 years, which is a high number in any region of the world. People speak Arabic, but English are commonly used as a second language. The people of Qatar consist of quite diverse origins. 40% are Arabic, 18% are Indians, another 18% are Pakistani, 10% are Iranian, etc. Life expectancy is high and infant mortality rate a very low with beneficial age structure for business activities. 1. 2. Competitive Assessment Considering the highly developed economy and the abundant economic resources, Qatar should be considered as a highly competitive environment. This is true considering the economic appeal that the country has toward western countries, including the European Union. Qatar has maintained a strong and positive relationship to the EU countries, which would naturally bring more attention of EU businesses, to enter the Qatar markets. On the other hand, the Qataris themselves should be accounted as a possible source of competition for retail and electronic products, especially the latter. As mentioned, Qatar’s most active sector recently is the electronic and machinery sector. Even though the machinery sector is not within the realm of competition with retail products, but the electronic sector in Qatar means significant competition from local players, especially when the sector is highly developed already. The positive aspect of expanding to Qatar is being one of the first foreign presences within the particular sector. Despite the competitive nature of the business environment, being one of the first players within the industry would significantly help the image of Brookstone. 1. 3. Potential Target Market Assessment Almost 80% of the country’s population consist of people aged 15-64, which is an active consumer. Nevertheless, research indicated that the most likely consumers of Brookstone are business society, followed by the average retail consumers. This is true considering Brookstone’s specialty in delivering customers with complete set retail choices, even the ones that are generally hard to find in the general market. I believe that taking account of the rapidly expanding economy in Qatar, such offerings from Brookstone will be welcomed warmly by the society. 2. Market Entry Strategy In theory, it is safer for companies to follow the general steps of entering a foreign market. Those steps are: direct exporting first, followed by joint ventures, establishing a sales representative and then establishing a full-fledged subsidiary within the region. Nevertheless, considering the retail nature of the business, it is highly crucial for Brookstone to have the first appearance in the market as trustworthy provider of people’s needs. Therefore, a more direct approach by establishing stores within Qatar markets is a more suitable method for Brookstone. Nevertheless, several adjustments would be necessary considering that the company is entering a country with significantly different cultures and sensitive political views. It is important for Brookstone marketing managers to enter the lives of its customers and understand their perspectives in relation to retail matters. That understanding could be used to create a more effective and market-reaching in-store marketing programs or out-of-store promotional programs.