Page 288 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

270 Dubai & Co.

The second reason to view the Gulf as a distinct business unit
is the increasing connectivity among Gulf markets. The creation of
the Gulf Cooperation Council (GCC) in the early 1980s was a major
step toward creating a common market. People and goods flow far
more freely within the GCC states than between the GCC states and
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the rest of the Middle East. While substantial steps still need to be
taken before the Gulf will truly be a “common market,” the six GCC
member countries already act as a single unit in many respects. The
political and cultural commonalities, including those found in
social structures and norms, are many. While each state has its
unique characteristics, khaleeji or Gulf culture has a full set of recog-
nizable elements. As the Gulf states, with the exception of Saudi
Arabia, have populations of below 6 million people each, it makes
sense for most multinationals to manage the states collectively
rather than as separate units. Each country will often require local
distributors and salespeople, but many of the central support func-
tions (like finance and human resources) and senior management
oversight can be best performed when the GCC states are treated as
one culturally homogeneous place. It is also usually advisable to
include Yemen—if the firm has business prospects there—in the
Gulf cluster due to its location on the Arabian Peninsula and its cul-
tural similarities. Despite its modest GDP per capita and lack of oil
wealth, Yemen has a rich heritage of leadership in the Gulf and
aspires to GCC membership one day. Some leading multinationals
use the term “Arabian Peninsula” or “Arabian Peninsula States” to
describe the Gulf cluster and include Yemen in the unit.
Figure 10.1 illustrates the three core elements that are needed by
a multinational’s Gulf organization in order to maximize business
performance. First, presence, beyond merely sales and distribution,
is essential. Second, considering the dynamism and uniqueness of
the Gulf market, a meaningful degree of decision-making rights
is also needed to ensure nimbleness and to motivate staff. And third,
resources—both material and human—are necessary ingredients for
the success of any venture.

Presence in Market
A presence in the market often means more than just a distributor
or a small sales team. Many firms have distribution agreements