A European Company That Could Break into the Saudi Market

Question

With Saudi Arabia planning an economic transformation in line with the ‘Saudi Vision 2030’, suggest one European Company that may have an ample opportunity to break into the Saudi market.

Answer

The ‘Saudi Vision 2030’ is a King and Government led initiative that expresses a strong and successful vision for the future of the country. One of the pillars for this initiative is turning the country into a powerhouse of global investment, with another pillar being the optimisation of the location of the country to turn it into a global hub that connects Asia, Europe and Africa (Vision 2030, 2016). With this in mind, the country aims to increase the foreign direct investment levels in the country, and thus European firms may view the country as an attractive market to break in to. Cosmote is the leading provider of telecommunications in Greece, serving 15 million customers, and with a large number of shops across Greece, also provides consumers with the latest handsets and mobile technology (Cosmote, 2016). Cosmote is owned by OTEGLOBE, and in April 2016, the opening of the Asia Africa Europe -1 (AAE-1) subsea cable system meant that Cosmote could provide connections via the 25,000 km cable line, which provides connections throughout the Middle East, including Saudi Arabia (OTEGLOBE, 2016). This suggests that given the already existing connection line, as well as the contention of Saudi Vision 2030 to open markets to foreign investors, Saudi Arabia can be a possible market for Cosmote subsidiaries. This is further highlighted by the fact that the consumers of Saudi Arabia are currently boycotting Saudi telecommunications firms due to high prices and poor service, causing huge losses to service providers in the country; thus indicating that consumers in the country would readily switch to a firm such as Cosmote which may offer cheaper or more reliable services (Arabian Business, 2016). Finally, one of the offerings of Saudi Vision 2030 is a shake-up of the telecommunications industry in the country to increase competition. These factors indicate that at present, the market conditions in Saudi Arabia hold the potential for success if Cosmote invest.

References

Arabian Business. (2016) ‘Saudi telcos boycotted over high prices, bad service.’ [Online] 5th October [Accessed on 9 October 2016] http://www.arabianbusiness.com/saudi-telcos-boycotted-over-high-prices-bad-service-647823.html#.V_ls5PArLIV Cosmote. (2016) ‘Business.’ [Online] [Accessed on 9 September 2016] https://www.cosmote.gr/mobile/cosmoportal/page/H01/section/Business/loc/en_US OTEGLOBE. (2016) ‘AAE-1 Network.’ [Online] [Accessed on 9 October 2016] http://www.oteglobe.gr/en/aae-1-network Vision 2030. (2016) ‘Thriving Economy Open for Business.’ [Online] [Accessed on 9 October 2016] http://vision2030.gov.sa/en/node/7