Impact of foreign competition on Middle Eastern domestic markets

Introduction:

 Present assignment analyzes the Impact of foreign competition on Middle Eastern domestic markets. Different avenues were explored such as Presence of foreign competition in Middle Eastern domestics markets and nature of the competition and its impact. Besides, competition was illustrated with real time situation of foreign competition in drilling of oil. Firm’s level of collaboration and competition and complementary relationships in Middle Eastern Markets is also analyzed.

             Assignment is essential in exploring different elements in foreign competition in Middle East and the way the way competition govern in the market. Assignment also discusses the role of complementary relationships in Middle Eastern Markets in boosting trading activities in the region and its possible impact on the competition. Besides that, Firms level of collaboration explains the level of competition in local firms under foreign competition. All these conceptualizations are important in understanding foreign competition in Middle East.

Presence of foreign competition in Middle Eastern domestics markets:

            The economy of the Middle East is diverse. Different economies together form up and make up Middle East economy (Posusney, 2004).  The major economies in Middle East include but not limited to Bahrain, Cyprus, Egypt, Iran, Iraq, Iraqi Kurdistan, Israel, Jordan, Kuwait, and Sudan as well as State of Palestine, Lebanon, United Arab Emirates, Oman, Turkey, Saudi Arabia, Qatar, Syria and Yemen. These individual economies range from exporting renter economies to state and free economies.

            The major source of revenues comes from the extraction of oil in Middle East (Jones, 2003). Majority of the companies are operating in the region to extract oil. The production of oil in the region affects the overall economic condition of the region. Recently, the economies in Middle East have decided to diversify their market portfolio for products and services other than oil. However, progress is limited in this regard as compare to other regions of the world.

            Because of vast opportunity to tap emerging markets in Middle, East, foreign firms have keen interest sin the local economies of Middle East. Growth opportunities are available in the region, which provide excellent expansion strategies of the foreign markets. Infrastructure sector, extraction of oil, food and beverages,  telecommunication as well as IT are few of the markets where large number of foreign firms are expanding their operations.

            These firms have stake in the Middle East economy. Middle East economy is less developed and they require adequate amount of skilled labor force for different projects. Although local firms are also operating in the region, the presence of foreign firms is substantial in this regard. The operations of these firms have significant impact on the domestic markets. It is argued that local market of the Middle East is adversely affected by this competition.

Nature of the competition and its impact:

            Globalization has increased the nature of the impact on the competition among different players operating in the market and Middle East is not exceptional. Globalization has made it possible to penetrate in foreign land start operations over there. Large number of firms is currently being operated in Middle East. These firms are operating in different sectors of the Middle Eastern economy.  These sectors include defense, construction, food, sports, energy, and communication and information technology.

            Emerging economies are also targeting Middle East. There is increased thrust of competition from these economies that include China, India and Brazil. Firms in these markets export cheap labor in Middle East. Moreover, developed countries such as UK, US and Canada are engaged in providing IT solutions as well as communicational expertise (Saleh and Klei ner, 2005). Competition is coming from diverse regions of the world.

            Under such circumstances, local markets of Middle East tough competition. For instance, oil extraction companies engaged in extraction of oil face difficulties to compete with foreign firms. Foreign firms are equipped with latest technology and equipment. They have better expertise and resources. Moreover, they also offer their services with cost effective solution. Therefore, it is hard for local firms to stay in the competition.

            Governments of the local Middle Eastern economies regulate different laws that govern the trading and business. Laws for wage increase, foreign direct investment, market share and industrial regulations are formulated and implemented to protect the local and regional markets from foreign competition (Elbashier, 2006).  Foreign competition is not regarded as a bad for economy, however a protective measure is required for local investors.

Drilling competition:

            To illustrate the impact of foreign competition and market expansion, drilling market is explored. There are large number of companies that are providing off shore drilling equipment and machinery to extract oil form the Middle Est. They also provide equipotent and machinery to extract oil form pipelines. These capabilities enable these companies to provide unconventional and deeper extraction of oil, which is difficult for local companies.

            Middle East has increased capacity of oil production and local market is not in position to fulfill that demand. Moreover, presence of foreign companies in oil drilling put them in difficult condition. Market share in extraction of oil is taken by foreign competitors. Competition form North American companies are significant. Companies form US also dominate their local market production and they utilize their own capabilities to extract oil from foreign land.

Firms level of collaboration and competition:  

            Firm’s level of collaboration in Middle East with respect to foreign and local firms is limited. Foreign firms work on their own agenda. To some extent, collaboration regulations are provided by the States. However, it is minimal. Competition is tough and firms are eng in self-regulatory actions to dominate the market. In local and regional markets of Middle East, presence of collaboration can be seen to a small extent.

            Some firms are working jointly to counter the foreign competition. However, this is largely seen in the oil extraction market. Oil market is the largest and dominating market. Therefore, collaboration and competition is also seen in that market. Communication and information technology companies are also to some extant engaged in collaboration. These two sectors are comparatively developed in Middle East.

            Collaboration exists because of increased competition particularly from South American companies and Canadian companies. These companies are providing cost efficient solutions in oil extraction, communication and IT industry. Local companies though operating in the market, level of collaboration is limited. Majority of the companies are working independently

Complementary relationships in Middle Eastern Markets:

            Complementary relationships exist in the Middle Eastern markets to facilitate business activity. The purpose of this activity is to facilitate cross border collaboration and cooperation with Middle East and foreign markets. For instance, EU strategic partnership with Middle East facilitates complementary relationships. These complementary relationships facilitate reforms in social, political, economic and moniroty sectors.

            These complementary relationships have facilitated monitory relationships under economic operations and business has flourished in Middle East markets. Imports are directed form European countries. Moreover, these countries also provide trade facilitation to Middle East economies in the form of labor and technical expertise.

Conclusion:

            Present assignment has explored presence of foreign competition in Middle Eastern markets. First presence of foreign competition in Middle Eastern domestics markets was analyzed and analysis reveals that stiff competition exists. This competition comes from diverse countries around the globe. Competition particularly exists in oil, communication, and telecomm sector. Competition is tough and local companies face difficulties to cope with it. Analysis of firm’s level of collaboration and competition reveals that there is low level of collaboration among the local firms in Middle East.

            Firms are operating independently. Foreign firms are tough competitors in telecom and It sector. Moreover, Canada and Latin America is the region where companies operate in Middle East and pose challenging positions in local markets of Middle East. Complementary relationships in Middle Eastern Markets do exist. However, these relationships have not much impact on the savory of the competition. However, these relationships are better for the overall economy of the Middle East.

References:

Elbashier, A.M. (2006) ‘Export Marketing in the Middle East. The Importance of Cultural Differences’, European Journal of Marketing, vol. 17, no. 1, pp. 68 – 81.

Jones, G. (2003) ‘Middle East expansion – the case of Debenhams’, International Journal of Retail & Distribution Management, vol. 31, no. 7, pp. 359 – 364.

Posusney, M.P. (2004) ‘Enduring Authoritarianism: Middle East Lessons for Comparative Theory’, Comparative Politics, vol. 36, no. 2, pp. 127-138.

Saleh, S. and Klei ner, B.H. (2005) ‘Is sues and Con cerns Fac ing’, Management Research News, vol. 28, no. 3, pp. 56 – 62.

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