Internationalization Expanding Into Qatar Economics Essay

Katar is the 3rd largest state in footings of the copiousness of oil and gas militias and makes a moneymaking option for any foreign investor sing enlargement beyond the local market. The state is ranked 39 in footings of the economic freedom and this makes it a feasible option for internationalisation. The revenue enhancement Torahs are relaxed to such a grade that none of the local persons and concern have their incomes taxed. Furthermore, the aliens are allowed to keep merely 49 % of the entire portions in a concern which ensures that the involvements of the local Qataris are safeguarded. For foreign investors nevertheless, the province has in topographic point rigorous income revenue enhancement Torahs and conformity to other concern ordinances is dearly-won every bit good. This sometimes necessitates the investor entity ‘s direct interaction and influence over the authorities to decrease the load placed on the concern.

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Oil and gas ingestion in China has been traveling up for rather some clip. The supply has so far been met with through the imported oil and gas. Yet, the unstable fuel monetary values and the prevalent political state of affairs worldwide has made clear that for the smooth running of the state ‘s oil and gas based industry and general ingestion, it is imperative that the resource is acquired. Katar in this respect is a good option. First, Qatar has been back uping investing in assorted sectors ; it merely keeps a rigorous cheque on the concern activity by the aliens. Second, Qatar is rich in oil and gas militias, a status which would guarantee a smooth supply to the Chinese company throughout its operations. Additionally, the Chinese house under inquiry would non be a new entrant and therefore would non be exposed to unpredictable hazards and state of affairss since there are a batch of foreign companies runing at that place already.

With this nevertheless, the most executable manner of entry would be a joint venture particularly sing that the concerned company is merely average sized and the cost of transporting concern in Qatar is reasonably high for a foreign investor. Besides, if the JV is taken frontward with a Qatar based entity, a batch of jobs associating to the ordinances and legalities would be minimized. Along with this, both states would hold the chance of sharing the cognition and engineering developed for the related industry so far in their several states.

Departure GLOBAL

Introduction

The universe has become a planetary small town. This has brought the states and their several economic systems to go globalized every bit good. This in bend has caused the economic systems, civilizations and even specific life styles to be linked to such a grade that there is barely any state that can be defined perfectly with mention to certain features. A batch more than frequently, globalisation is defined merely in economic footings whereas in world, it has cultural, societal, military, environmental and economic deductions ( Keohane, 2000 ; Nye 2000 ) 2.

However, two distinctively alone yet frequently used interchangeably are the constructs of globalisation and internationalisation. Although economically, both the constructs may look to be the two sides of the same coin, they are distinctively different. Whereby internationalisation refers to a individual path web created between different states and economic systems, globalisation creates certain mutuality between the states involved. Besides, internationalisation basically, may be a portion of the full system of globalisation but non the other manner around.

As a portion of this system of globalisation, assorted houses and organisations expand their operations beyond their state of beginning. This attack is what represents internationalisation at the organisational degree.

Internationalization

In footings of the economic theory, internationalisation refers to the procedure by which an organisation expands its operations beyond the geographical bounds of a state.

Internationalization may get down with an organisation spread outing to one more state or to several thereby going a transnational. More so, the constructs entails the concern activity taking topographic point between two states This nevertheless, mostly depends on the available resources for enlargement and the feasibleness of the state in inquiry. Besides, the internationalisation must back up the strategic aims that the house is and wants to follow.

The really construct of internationalisation has undergone development through the many theories that have come into being to explicate the phenomena. For case, the traditional internationalisation theory negotiations about the operation of a transnational corporation, its interaction with the external environment and how the internal organisational construction contributes or collides with the outwardnesss ( Rugman, 1981 ) 4. The modern theory, nevertheless, besides sheds light how the internationalisation can impact the organisation internally.

Initially, by Rugman ( 1981 ) 4 internationalisation was more appropriate when benefits exceed the associated costs and was therefore efficiency based. Earlier, cost minimisation had been the focal point of attending for all theoreticians and non profit maximization ( Williamson, 1975 ) 4. Subsequently nevertheless, the focal point shifted from merely cost minimisation and benefit maximization to the development of internal constructions and networking capablenesss alternatively of merely good R & A ; D capablenesss ( Rugman, 1992 ; Verbeke 2003 ) 4.

Internationalization could be intended for all or any of the undermentioned grounds ( Daniels, 2007 ; Radebaugh, 2007 ; Sullivan, 2007 ) 5

Expanding gross revenues

Diversifying hazard

Acquiring resources

Wayss to Travel Global

Internationalization or traveling planetary for a house may take many signifiers. The organisation may prosecute in6

Foreign Direct Investment- Investment in assets owned originally by another state. This basically entails deriving partial or full ownership of these assets for current and future use therefore holding a long term engagement and interest in the plus.

Licensing- Giving another party the right to utilize one ‘s trade name name or any other trade grade stuff

Franchising- Giving a 3rd party the right to sell one ‘s trade name and merchandise

Joint Venture – a collaborative agreement between two parties whereby both own a certain degree of interest in the undertaking and portion the hazard and return. This allows for interchanging each other ‘s capablenesss for the common benefit.

Importing/Exporting- Selling and purchase of goods and services with other states

Turnkey operations- installation for operations that are in a ready-to-use signifier at the clip of installing and are handed over to another party to be run under his ain name

Going-Global- Pros & A ; Cons

One of the major benefits of spread outing operations overseas is that the concern hazard gets diversified. With this, the organisation operating at an international degree has before itself assorted and broad scope of chances to work both locally and internationally. Besides this, the traffics in foreign currency lower the fiscal hazard that the houses runing otherwise may confront.

However, it must non be forgotten that such an enlargement comes with costs ; frequently really immense. For case, apart from the installation set up costs that may do a portion of the entire costs, the organisation might hold to prosecute in activities for conformity with local Torahs and regulative bureaus. Besides, when traveling to another state, a company can non be ensured of having the same degree of rational belongings protection as the place state might be supplying. This is particularly true for states with either weak or no Torahs for such protection. Furthermore, there are costs associated with the shifting of place state employees or with the preparation of those in the host state.

Despite this, internationalisation is an attractive manner to increase concern activity and has been carried out by assorted good known organisations that have, so far, been able to keep good reputation in the planetary market. Yet, there are assorted factors that help a company in make up one’s minding when and whether or non to travel for enlargement into a certain state.

Undertaking Outline

The undermentioned text contains a elaborate analysis on the viability of enlargement of a medium sized Chinese oil and gas company into Qatar. Get downing with the general information about the Qatar oil and gas industry, the papers presents the factors that may be contributing or damaging for the constitution and subsequently, success of the Chinese company in Qatar. In add-on, a item reference of which manner to choose for entry into this market has been given particularly sing the regulative Torahs regulating foreign investings in Qatar.

The Problem

The affair under consideration in this study is the enlargement of a Chinese oil and gas company which is average sized. The purpose is to place whether or non should such a company enter the Qatari market and which manner would be the best path to doing a successful move.

Methodology

In order to make the decision about the aforesaid job statement, the primary manner of research has been secondary in nature. The information collected is based on assorted studies available chiefly on the cyberspace and relate to the Qatari oil and gas industry and the economic system at big. In order to understand the construct of globalisation and the related issues and concerns, reappraisal of the literature was conducted to guarantee that a sound apprehension has been established before measuring the state ‘s viability for concern. However, due to restrictions posed by the propinquity of the mark state, clip restraints and entree to the concerned governments for one-to-one interview based information extraction, the primary research has non been made a portion of the undertaking. This may be taken as an initial bill of exchange for farther research in which existent companies runing in the part may be contacted for an even more elaborate analysis.

Internationalization of a Chinese Oil & A ; Gas Company into Qatar

Katar is amongst the largest resource proprietors of the natural gas and oil militias in the universe. It emerged from an enslaved British settlement to being an independent and progressive state. Although early 1990s saw the coup d’etat of most of the grosss from oil and gas by the Amir of Qatar so, the ulterior Amir Hamad bin Khalifa al-Thani ended this by throwing a putsch in 1995, bettering the dealingss with Bahrain and Saudi Arabia and helped Qatar achieve good economic returns. 14

Oil & A ; Gas in Qatar

With the 2nd highest per capita income globally ( CIA World Fact Book, 2010 ) 7, Qatar has been able to keep a stable economic system over the past many old ages. The major beginning of gross, of class has been oil and gas. By the estimations of 2006, oil and gas history for approximately 60 % of the Qatari GDP. The same makes more than 85 % of the net incomes from exports and 70 % of grosss to the authorities. One of the factors lending to this state of affairs is the rapid addition in the oil monetary values worldwide. When coupled with abundant oil and gas militias, these particularly becomes a beginning of advantage to the state because industries run on oil and gas through its many signifiers such as the Liquefied Natural Gas ( LNG ) .

It has the universe ‘s 3rd largest gas militias and is the individual supplier of LNG to the planetary market. An overview of the energy militias ( Appendix 1 ) reveals that the figure of proved oil militias with oil is about 15.2 billion barrels ( 2009 est. ) 8. The entire production is tantamount to 1.2 million barrels per twenty-four hours whereas the entire ingestion is about 129,000 barrels per twenty-four hours ( 2008 est. ) 8. Proven natural gas militias, on the other manus are estimated to be 890 trillion three-dimensional pess ( 2009 est. ) 8 with the day-to-day production and ingestion have been recorded to be 2.7 trillion three-dimensional pess and 3.9 trillion three-dimensional pess severally. The facts clearly tell about the handiness of extra militias with the state.

The oil industry is held chiefly by Qatar Petrolem, Qatargas and Rasgas ; companies associated with geographic expedition, refinement and distribution of the oil militias. The major oil/gas ports are in Umm Said and Ras Laffan besides lodging refineries with a capacity of 200,000 bbl/d and 146,000 bbl/d severally 8.

The foreign investing in the sector can besides be observed in the state. The major foreign companies involved in the industry include Exxon Mobil, Mitsui, Marubeni, Occidental Petroleum, Shell, Total and Chevron along with a few others. This basically means that the industry has tough competition traveling on every bit far as the engagement of foreign investors is concerned. This should besides indicate out to the fact that in order to remain in front of the competition, all the investors would be doing their best attempts to estimate the support of the authorities and non-government regulative governments thereby doing chances of a new entrant a small hard.

The undermentioned figure shows the industry construction in visible radiation of Porter ‘s five forces theoretical account ( Appendix 7 ) .

Factor

Qatar ‘s Industry

Dickering Power of Suppliers

Medium to high- because the state is amongst the largest oil/gas providers

Dickering Power of Customers

Low- oil and gas monetary values are standard worldwide usually. This would cut down this factor for the industrial purchasers every bit good as family consumers

Menace of New Entrants

High- Qatar economic system welcomes and encourages foreign investings in all sectors

Menace of Substitutes

Low- Oil and Gas can merely be consumed in alternate signifiers and have no replacements as such

Competitive Competition

High- since a batch of foreign oil and gas companies have already entered the market in add-on to the being of local companies

Expansion into Qatar

Before any foreign company can understand whether or non to come in Qatar for its expanded operations, there are a few things that are to be considered as a criterion for all instances. A item on these shall instantly follow this subdivision. Then, a more meaningful analysis would be possible by fiting the interested company ‘s strengths and failings with the chances and menaces that the state under consideration might show.

Economic Freedom in Qatar

Economic freedom in a state represents how easy houses and corporations can execute concern activities. This may include easiness based on the related ordinances, funding, belongings rights, corruptness etc.

Qatar is now the richest Moslem state in the universe. With its GDP turning quickly over old ages, the common family has been basking a good per capita income in the state ( Appendix 2 ) . This must hold been possible due to high degree of economic activity prevalent in the state. Theoretically, it is expected that such a state of affairs is existing with high degrees of support from the concerned authorities and therefore economic freedom. This ; is an of import factor in finding the attractive force of a state for carry oning concern. The following table gives a unsmooth thought of the state of affairs.

Table 1: Economic freedom indicators-Qatar

Beginning: hypertext transfer protocol: //www.heritage.org/Index/country/Qatar

A comparing with the universe norms can be seen diagrammatically in the Appendix 4.

Business Freedom

First, sing the overall concern freedom in Qatar has been rated to be 73.7 9, greater than the norm of 64.6 for all states clearly bespeaking the favorability of the state for carry oning concern. On an overall footing, the state ranks 39th. Qatari trade policy is, nevertheless, restrictive to quite an extent with factors such as import limitations, import licensing understandings, domestic penchant for authorities purchases turn outing amongst the biggest hurdlings. The low mark in this respect is chiefly due to the non-tariff barriers.

Fiscal Freedom

Katari persons and local corporations wholly owned by Qatari persons are apt to pay zero income revenue enhancement rate to the authorities. This means that one of the major costs in concern activity does non be for the Qatari concerns. However, this is applicable to local concern proprietors merely. Any foreign transnational corporation is bound to pay a corporate revenue enhancement rate of 35 % 9. Therefore, any foreign concern would hold to basically include this cost as a major portion of its entire costs.

Government Intervention

The authorities of Qatar has considerable influence in the economic system through its impact on the monetary values. This is done through monetary value ordinance, subsidies and assorted public-service corporations and endeavors owned by the province itself. This has resulted in low freedom evaluation in this respect which is 65.9 ; approximately 70.7 on an norm for the universe economies. This would intend that if any state is to come in Qatar for concern intents, the pricing determinations would be under influence of the authorities to a great extent. This may turn out to be disadvantageous particularly in instances when the authorities has grounds to protect the local participants.

Investing Freedom

Investing capital in Qatar is as hard for foreign investors as it is easy for the locals. This is because no foreign national is allowed to keep more than 49 % of the entire capital invested in the company. As a consequence, the major retention is ensured to be in the custodies of the local parties. The state of affairs may be improved merely by taking particular blessings by the authorities for 100 % foreign ownership and that excessively for industries that are non of strategic importance to the state. Foreign investors are by and large required to name a local agent and to hold their undertakings screened earlier set up. With this nevertheless, although the execution of regulative patterns may or may non be crystalline, the transportation of financess and remittals is comparatively much easier a undertaking.

Property Rights

As is the instance with revenue enhancement and investing business-wise, belongings rights in Qatar are excessively largely in favour of the local occupants merely. Foreigners are merely allowed to ain belongings in a selective scope of undertakings through a jurisprudence enacted in 2004 9. However, instances related to misdemeanor of rational belongings rights have been successfully prosecuted and the state of affairs seems to be bettering over clip with increased ordinance in this respect.

Freedom from Corruptness

Among the 179 states ranked on the Transparency International ‘s corruptness perceptual experience index, Qatar is ranked 28th ( 2008 est. ) 9. The low ranking points to low corruptness degrees prevalent in the state. This contributes to the transparence in processs that the authorities has been seeking to present through policies such as that against the offer and reception of graft. As a affair of fact, the state has organized a commission with the United Nations to minimise the corruptness degree in the state h. As of now, nevertheless, it has the lowest corruptness degrees amongst the Middle Eastern states.

Labor Freedom

The in-migration regulations in Qatar are rather flexible. This means that in demand of suited labour for transporting out the operations, a foreign company can hold its human resource shifted from one topographic point to the other. Merely if the costs are non a affair of concern, any foreign investor can hold his human resource shifted to Qatar. Besides, because the authorities does non hold any minimal pay demands, the force per unit area on the concern proprietor reduces to some extent. As a consequence, if the company in inquiry wants so, it can easy counterbalance employees harmonizing to their accomplishment, ability and existent work end product.

For a graphical representation of the tendency over clip, see Appendix 3. With mention to other states from the same part, Qatar ranks 2nd on the economic freedom ; bespeaking favorability of the state for spread outing a foreign concern. This can be clearly seen in the figure following the text.

Figure 1: Regional Ranking

Beginning: hypertext transfer protocol: //www.heritage.org/Index/country/Qatar

Cultural Environment

Although Qatar is a Moslem state but its multiethnic composing is one of its major strengths. The state is composed of 49 % Arabs, 80 % Indians, 18 % Pakistanis, 10 % Persian and 14 % assorted cultural backgrounds ( CIA World Factbook, 2004 nose count ) 7.

Yet, the Torahs and the legal system of the state are governed by Islamic rules. The Muslim bulk is divided into Sunni and Shi’a religious orders and the several spiritual patterns are prevailing in different countries. In footings of dressing, the Qataris have preserved their traditional garb the chief characteristic of which is that it should non be uncovering at all. Although some flexibleness has been allowed for aliens, uncovering garb is purely prohibited for them every bit good 10. Matters such as these, although fiddling, can be a beginning of cultural daze to the members of the direction of the company come ining Qatar for this intent.

Similarly, another facet of the cultural environment in Qatar entails serious non-engagement of adult females in unfastened public assemblages. For this ground, adult females are non employed with work forces in most instances and if they are so they seldom reach top managerial places. The aliens can pattern their faith publicly but such cultural patterns, once more, can go a hinderance in keeping the same office environment as is possible in other states.

Geographic Influences

Geographically, Qatar is located in the Middle Eastern part and experiences pleasant winters and hot summers. The handiness of really few H2O resources is one of the biggest jobs that this state faces although it is abundant in oil and gas militias and has fishery as one of its chief industries. Absence of abundant natural H2O resources in world additions dependance of the state on desalinization workss and that excessively ; on a really big graduated table ( CIA World Fact Book, 2010 ) 7.

Otherwise, it is strategically located in the part rich in natural resources of oil and gas that are expected to last for many old ages to come. As a consequence, any foreign company related to the same industry would hold before it an ample supply to provide to its ain strategic demands provided the regulative organic structures grant needed permissions.

Political Stability

In Qatar, the political sphere is governed by the monarchal regulations whereby the Amir is the caput of the province every bit good as that of the authorities 14. While the Amir clearly has absolute powers vested in him, he is bound to take determination in the visible radiation of Islamic rules and to confer with the spiritual constitution in all of import affairs. Ever since Sheikh Hammad Bin Khalifa overthrew the unfair authorities of the old Amir in 1995, there has been no serious expostulation to the system of administration.

The state faces no serious external menaces either. In fact, its boundary line difference with Bahrain was besides settled in 2001 by the International Court of Justice. Although there have been incidents of self-destruction bombardment, but the figure is rather little and from the long standing history of Qatar, the future frequence is still expected to be really low ( John Bitzan, 2009 ) 15. Therefore, it can be safely said that Qatar is politically a reasonably stable state and apt for investing of any foreign company.

Analyzing the Situation

At this phase, it is of import to see non merely why Qatar is fit or unfit for a foreign state to travel in but besides that whether or non the current state of affairs of the company or its local state is supportive of the suggestion. Considering China ‘s state of affairs, it is foremost discernible that oil ingestion in China has gone up significantly ( Rowthorn, 2006 ) 3 and expected to turn at a rate of 500,000 barrels per twenty-four hours about ( eurasia group, 2006 ) 1. The growing over the old ages can be seen in Appendix 5. This, nevertheless, is rather high comparative to its local production degree of 3.8 million barrels per twenty-four hours. Besides, natural gas is besides going an of import portion of the fueling in China increasing beyond 3 % . This tendency initiated in 2006 with the import of LNG through the Guangdong LNG import terminus and more undertakings for the import are afoot bespeaking the rise in the imports of natural gas that would ensue from it.

The Chinese authorities has been doing attempts to ease major companies for procuring supplies of oil and gas through its policies sing the affair. The purpose is to take into ownership some foreign energy assets to guarantee smooth supply even during the times of disturbance. The authorities has besides been bettering upon the acquisition of establishing rights and port call installation along the chief oil transportation paths in the Indian Ocean ( Eurasia group, 2006 ) 1. Therefore, this really clearly points out to the support being provided by the authorities in stabilising the local supply of oil and gas and diversifying the hazard associated with the industry by manner of geting the resources. This is a good chance for any Chinese company runing in the oil and gas sector.

Apart from this, the investing Torahs is Qatar, at this minute at least, are non really rigorous. Although the revenue enhancement policy is a small troublesome for the foreign companies, the benefit of holding obtained a few oil and gas resources ; far exceeds the cost. And so, if the concerned Chinese company makes an attempt with the Qatari authorities, it may even be able to derive 100 % ownership of the several resources. Additionally, the state is politically stable and abundant in the oil and gas militias with the ingestion and production conditions frequently in a province of excess. Therefore, if a Chinese company does enter Qatar to obtain the resources, there would non be any menace of the complete use of the oil/gas militias which may in another instance have negatively impacted the Qatari demand. Although the cultural influence may be a small unsettling for the work force, accommodations would be easier particularly with the prevalence of spiritual freedom. The demand of holding a certain per centum of the work force of Qatari beginning may curtail the company in using the right people for its direction but that excessively can be alleviated by engaging the Qataris with an experience in the industry.

With this, it is clearly discernible that the FDI in Qatar, merely demoing a slack in 2006, has been increasing which merely tells of the trust that the foreign investors place with the state and its economic conditions. Appendix 6. The undermentioned graph shows the same every bit good.

Figure 2: FDI flows over clip

Beginning: hypertext transfer protocol: //www.fdi.net/country/sub_index.cfm? countrynum=161

However, the Chinese company under consideration t the minute is a medium sized. It must be kept in head that although the state allows for a certain grade of economic freedom, the costs for conformity, revenue enhancement etc may be burdensome for a company of such a nature. This can be overcome if alternatively of traveling into Qatar as an independent party, the company enters into a collaborative agreement such as a joint venture. This would let for the sharing of costs and ease in settling affairs with the authorities.

PESTEL Analysis

Sing the enlargement with mention to the PESTEL analysis of the macro environment, there are a twosome of of import things that one is able to understand about Qatar. A brief analysis reveals that politically, Qatar is rather a stable state. This is chiefly because of a non-violent monarchal system of authorities in the state. Although the smallest state amongst all the OPEC ( Organization of Petroleum Exporting Countries ) members, it still ranks amongst the 3rd in footings of its oil militias. As a member of the Gulf Cooperation Council, Qatar is besides a portion of the Cooperation Agreement with European Union ( 1988 ) which requires constitution of affable dealingss with EU ‘s member states for bilateral economic development. In a similar attempt, China has been a portion of assorted meetings for the sweetening of Sino-GCC relationship to hike economic development in all domains as the Chinese President Hu Jintao ( 2009 ) 18 mentioned “ Beijing would wish to hike links with six state GCC in all sectors ” .

This would intend that both the states are in the procedure of prosecuting in reciprocally good economic understandings and so this would be really helpful for any Chinese company spread outing to Qatar and frailty versa. Economically, Qatar is amongst the most stable states every bit good. This is attributable partly to a fixed exchange rate of the Qatari Riyal against the US Dollar ( $ 1 US= 3.65 QR ) .With this, the economic system is besides welcoming for foreign investings in all sectors with a 51 % Qatari engagement. In add-on, the S & A ; P state evaluation for 2007 was AA Long Term and A1 short term ( 2007 ) 19. The stock exchange market is governed by rigorous regulations and ordinances that guarantee transparence and revelation rules.

As mentioned earlier, the societal composing of Qatar is multiethnic. Although two Muslim spiritual religious orders of Sunnis and Shi’as are more outstanding, none of the aliens are bound non to pattern their ain faith. However, there are limitations as to the kind of dressing and interaction between work forces and adult females. But this has really few opportunities of being a beginning of job since the Qatari office of the said organisation may hold male staff merely. In footings of the engineering, the state is progressive every bit good. The Qatari Science and Technology Park is a standing testimony to the value engineering has in Qatar. Other than this, research partnerships with international universities such as the Carnegie Mellon University shows the extent to which R & A ; D is being promoted in the state. This would be particularly helpful for the oil & A ; gas industry and for the concerned Chinese organisation if and when there would be need for cut downing costs through efficient oil polish etc.

The environmental issues in Qatar relate chiefly to its hot conditions and deficit of H2O militias. However, due to high industrialisation, the H2O militias in the state are undergoing a risky province as good due to which attempts to command impact on H2O might be required by the Ministry of Industry and Agriculture from all companies particularly in the oil & A ; gas industry. This might ensue in higher hereafter costs for the company. The competition Torahs in the state prohibits the monopoly creative activity in all sectors and advance free competition to increase the industry efficiency and quality of the terminal merchandise. A commission was particularly established in May 2008 to look into and make up one’s mind about the companies engaged in monopolistic patterns. There are besides rigorous Torahs against the controlled motion of goods from the market, monetary value use, illegal agencies to curtail people from carry oning economic activity and the similar ( Brien, 2008 ) 20. Other than this, there are clearly laid Torahs in the legal system for all commercial companies associating to their legal enrollment, revelation, income revenue enhancement and the economic activity for the foreing entities. This ensures that all activities are governed by systematic and standard Torahs of the state besides guaranting the equity of the system. This is farther enhanced by the development in the Torahs against corruptness and issues sing the rational belongings rights.

The Decision

As mentioned earlier, the purpose of the internationalisation may be increased gross revenues, hazard variegation or resource acquisition. For the affair under consideration, increased gross revenues is non the purpose. However, in order to guarantee a smooth oil/gas supply for the local market, hazard variegation and resource acquisition, the company should spread out into Qatar as one of the representatives of the Chinese oil/gas industry.

Entry Mode

Sing all facets of the Qatari economic system, it is clear that come ining into it for running a concern particularly related to oil and gas would be the right determination to take. However, this would keep true mostly for a big corporation with resources that can take the load of high costs of puting up the concern in Qatar as a alien. Since the company under consideration is average sized, there would be strong fiscal and legal restraints that it would be exposed to.

For this intent, the most advisable scheme would be to come in the Katari market through a joint venture and non an independent concern. Although this would thin ownership, there are a twosome of advantages that outweigh this one factor and be good in the long tally. First, if a joint venture is entered into, the medium sized company would hold lesser load in footings of the entire cost. Not merely this, but a joint venture would enable sharing of the latest necessary engineering of import for competitory nutriment 17. This would besides let for a better borrowing power whenever needed. Apart from this, such signifier of association would convey into the direction positions of two civilizations. In bend, this would lend to a better apprehension of the concern environment in Qatar.

Yet, the biggest advantage and demand to come in Qatar ‘s oil and gas industry through a JV is because this would enable the Chinese company to obtain the needed licenses from the Qatari authorities instead easy. Additionally, the demand to hold a important proportion of the work force from Qatari background would besides be fulfilled. Besides, because the end point concern would non be a complete foreign entity, the revenue enhancement Torahs would besides use otherwise. Furthermore, the involved Qatari entity would hold the chance to profit from cost effectual yet quality centered patterns of the Chinese. Therefore, the JV would be a reciprocally good agreement.

Decision

The aforesaid analysis points to the favorability of come ining the Qatari market but more practicably through a JV. However, it must non be forgotten that the attractive force of the state would cut down to a little extent if the Chinese company is to come in as an independent entity ; the rigorous revenue enhancement Torahs and other conformity demands would ask incurring of high costs. In such a instance so, it would be much better to come in into a trading understanding and import oil or possibly to portion costs with a non-Qatari collaborative spouse.

In any instance, the Chinese company sing enlargement has to take into history all the aforesaid countries so as to efficaciously plan a scheme for running a smooth concern once it has entered the Qatar market. Merely so would it be able to guarantee long term success in the Qatar oil and gas industry.

Appendix 1: Quick Facts about Energy Sector in Qatar

Beginning: hypertext transfer protocol: //www.eia.doe.gov/cabs/Qatar/Profile.html

Appendix 2: Economic indicators-Qatar ( 1980-2005 )

Beginning: hypertext transfer protocol: //en.wikipedia.org/wiki/Economy_of_Qatar

Appendix 3: Economic Freedom Score Over Time

Beginning: hypertext transfer protocol: //www.heritage.org/Index/country/Qatar

Appendix 4: Katar ‘s Economic Freedom VS World Average

Beginning: hypertext transfer protocol: //www.heritage.org/Index/country/Qatar

Appendix 5:

Beginning: UNCTAD

Appendix 6

Beginning: hypertext transfer protocol: //www.fdi.net/country/sub_index.cfm? countrynum=161

Appendix 7: Porter ‘s five forces theoretical account

Beginning: hypertext transfer protocol: //www.vectorstudy.com/management_theories/img/porters_five_forces.png

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