Business / Country Business Analysis Of Iraq

Country Business Analysis Of Iraq

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Autor:  anton  17 May 2011
Tags:  Country,  Business,  Analysis
Words: 2252   |   Pages: 10
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Introduction to Iraqi Business Analysis

Iraq has a rich and diverse resource base—the second biggest proven reserves of oil, at 112.5bn barrels (BBC News, 2004), abundant water, and a national labor force of more than 7 million people—much larger than any member country of the Gulf Cooperation Council (CIA: The World Fact Book, 2007). War is a very good business, mainly after the war is over. But the war in Iraq is still going on. It takes the lion-hearted and realistic person to do business in the midst of an unending sectarian violence that juxtaposes a civil war and in a completely different culture. It will be lot of fun too! Success factor is learning from the Iraqi war project.

Historical and Political Background of Iraq.

Iraq is a Middle Eastern country, bordering the Persian Gulf, between Iran and Kuwait. It has a land mass of totaling 437,072 square kilometer, slightly more than twice the size of Idaho. It was formerly part of the Ottoman Empire, occupied by Britain during the course of 1920’s World War I. An advanced civilization existed by 4000 B.C. After 2000 B.C. the land became the center of the ancient Babylonian and Assyrian empires. Iraq attained its independence as a kingdom in 1932 and declared a republic 1958. Ironically, it had been ruled by series of military juntas until 2003 when the U.S-lead coalition forces ousted the last dictator—Saddam Hussein. Iraq now has a fragile democracy established by the U.S-led coalition forces. Some of the world’s greatest ancient civilizations developed here.

It has a population of 27,499,638, with more than 40 percent of the population under 15 years (CIA: The World Fact Book). Official language of Iraq is Arabic, secondary language is Kurdish, which is official in Kurdish regions, Assyrian, Armenian. According to CIA: The World Fact Book, as at 2006, Iraqi literacy rate was 74.1%; the population of age 15 and over can read and write.

Economic profile.

Iraq has a rich and diverse resource base—the second biggest proven reserves of oil, at 112.5bn barrels, abundant water, and a national labor force of more than 7.4 million people—much larger than any member country of the Gulf Cooperation Council (GCC).

The Iraqi currency is the new Iraqi dinar (NID). It has Gross Domestic Product—purchasing power parity $87.9 billion as at 2006. GDP - per capita (PPP) is $2,900. It is a monocultural economy where 95 % of foreign exchange earnings come form oil. Besides petroleum, other natural resources are natural gas, phosphates, sulfur. Iraq’s major business center are Baghdad, the capital city, with 6,777,300 (metro. area), 5,772,000 (city proper); Mosul, with 1,791,600; Basra, 1,377,000; Irbil, 864,900 and Kirkuk, 755,700. Iraq is 1.9 ranked nation number 161 in the “Corruption Index” (Globalcommunity.com, 2007).

Country Business Culture and Customs

Like many Arab countries, Iraq embraces and honors the achievements of its past and maintains its strong tribal culture. Culture includes norms based on learned attitudes, values and belief (Daniels, Radebaugh and Sullivian, 2006). Culture is a shared, learned, symbolic system of values, beliefs and attitudes that shapes and influences perception and behavior—an abstract “mental blueprint” or “mental code.” Culture is the way people do, say and see things—from their own beliefs, values and attitude eye-glasses. Understanding Iraqi culture is a sine-qua-non for any business success.

As a general rule, business hours in Iraq are 8.00 am to 4.00 pm. Government organizations work from 8:00 am to 1:00 pm or 2:00 pm. Some private businesses and businessmen are available to work at any hour from Sunday to Thursday. Friday is an Islamic holy day and therefore part of the weekend. Offices tend to be closed on Fridays. During the month of Ramadan, hours are reduced. Even though it is not always necessary, it is considered polite to make business appointments in advance. When arranging business meetings it is important to take into account the impact of official and unofficial holidays on all business activities. Punctuality is viewed as positive attribute in Iraq. It is a formal business practice to arrive at business meetings on time as lack of punctuality impacts the negotiations negatively.

Structure and hierarchy in Iraqi companies. Companies in Iraq are hierarchical in structure. There is a strong sense of authority and a large power distance, which creates a distinct separation between those in senior business roles and their subordinates. As a direct consequence of company hierarchy, decisions are always made at the top of the organization, either by one person, who has the ultimate authority, or a small council.

Business and working relationships in Iraq. Establishing good working relationships with your Iraqi business colleagues helps to create an environment of mutual respect and trust and is a crucial part of Iraqi business culture as well as win-win situation. Respect over-rides most other societal rules and is imperative for successful business relationships. It is customary to show respect for elder business associates by greeting them first.

When greeting your Iraqi business colleagues, it is customary to shake hands on both arrival and departure. Offer a firm but gentle handshake, always with the right hand. One should not attempt to shake hands with a female associate unless she initiates the gesture. Status and respect for others is a fundamental element of Iraqi culture, therefore it is necessary to address your Iraqi counterpart by the appropriate title, for example “Doctor”, followed by their last name, or for example “Abo Ahmad”, which means “Father of Ahmad”. However, first names are only used between close friends and family, therefore you should wait to be invited before you address someone in this way.

Initial meeting. It is common practice for senior-level business associates to exchange business cards at initial meetings. Ensure you have one side of your card translated into Arabic or Kurdish and include your company position and title, since rank and social standing are vital in Iraqi business culture. When exchanging cards, present your card so that the translated side faces the recipient. Business meetings are the most significant part of doing business in Iraq. The initial appointment is generally considered to be an informal, yet polite, introductory meeting, where associates take time to get to know one another and establish trust as opposed to immediately discussing business matters.

Business Etiquette that will impact the Scope, Budget and Schedule of the Project

According to AME Info (2007), formal courtesies are common and expected in all business dealings in Iraq. Meetings may not always be on a person-to-person basis and it is often difficult to confine items to the business in progress as many topics may be discussed in order to assess the character of colleagues or traders.

• Do remain patient throughout all business dealings. Meetings are often interrupted, since Iraqis prefer to handle more than one issue at once.

• Do show respect and courtesy at all times, as this is the most important element of Iraqi culture and takes precedence over all other customs.

• Do try to learn a few simple Arabic or Kurdish words and phrases such as hello (Marhaba salam alekom), thank you (Shukran), please (Men Fadlak), and so on as they will be warmly received.

• If you are invited to and an Iraqi’s house, you should take flowers or pastries, or a present for the home as a gift for your hosts. Customarily, they expect that.

• Do not criticize or highlight simple errors or mistakes your Iraqi colleagues may make in a direct manner, but try to hint or offer indirect advice and solutions. Understanding the importance of saving face is vital for successful business in Iraq.

• Do not use high-pressure tactics during business negotiations. Decisions are made slowly and this approach will only have a negative effect on your business outcome.

• Do not forget to dress in a formal and conservative manner. Women, in particular should wear modest clothing and cover their hair when necessary. Iraqis tend to judge people on first appearances; therefore dressing appropriately will create a good impression with your Iraqi business colleagues.

• When in the presence of Iraqis, be careful not to raise or cross your legs in such a way that the sole of the foot faces others in the room. This action is considered unclean and is perceived as one of the greatest insults.

• It is inappropriate and disrespectful to ask after another man’s wife during a business meeting because traditional Iraqi culture states that a man’s household and family are private matters.

• Do not use the okay sign, a circle made with the thumb and index finger. This gesture is considered the sign of the evil eye in Iraq and should be avoided.

During business dealings, it is not uncommon for your Iraqi counterparts to walk out of a meeting, express their emotions openly or threaten to terminate the relationship. Do not take them serious or personal. Iraqis openly reveal their emotions in business settings, and situations such as these may occur, at times, in an attempt to sway negotiations. They may try to win the sympathy vote by making you feel that they are telling you everything and therefore gaining your trust.

Impact on Budget of the Project

The budget of any project will be negatively impacted the by Iraqi’s customer of corruption. The security in Iraq is broken and access to infrastructure services is very high. In 2004, only 15 percent of households had a stable electricity supply, and a mere 20 percent had safe and stable drinking water (CIA). According to the World Bank Economic and Social Development Unit, Middle East Department, Middle East and North Africa Region, “An analysis of labor markets in Iraq, undertaken with limited data that are available, suggests that most private sector jobs are informal and have very low productivity. With more high-paying public sector jobs, private labor markets lost attractiveness, while queuing for public sector jobs had risen sharply.” Iraq’s labor force is growing rapidly at 2.4 percent a year and will continue to do so in the medium term. Iraq has one of the highest unemployment rates in the region—close to 30 percent, almost twice the Middle East and North Africa (MENA) average. More than half of young urban males are unemployed. Iraq also has very high underemployment, over 23 percent, while its female labor participation is a mere 19 percent—low even by MENA standards.

High unemployment, poverty, and weak social protection systems are dominant in people’s minds, threatening the fragile Iraqi democracy. Violence and crime have increased substantially since late 2003, hampering reconstruction and undermining public sector governance.

Summary

Despite the suicide bombs, Iraq is a good place for business. Currently, an estimated two-thirds of the Middle Eastern region’s USD 150 trillion wealth is managed outside the Region. Post 9/11 and the Iraq war have triggered off a strong preference by Middle Eastern region investors to have their investments both managed and domiciled in their region. However, learn from the Iraqi war mistakes and have (1) A clear Business Case (2) Adequate Consideration of Alternatives (3) No Quashing of Dissent—listen to the French (4) Do not Ignore Half the Problem (5) Test the Business Case (6) Have a Realistic Timelines and Budgets (7) Do not declare victory until the job is done. Finally, any question on business, trade, security, investment, and projects in Iraq can be answered by U.S. Department of Commerce, Iraq Investment and Reconstruction Task Force at www.export.gov/iraq.

References

AME Info (2007). Iraq: business. Retrieved July 11, 2007, from http://www.ameinfo.com/iraq_business_profile/

BBC News (June 3, 2004). Iraq aims to increase oil flow. Retrieved July 1, 2007, from http://news.bbc.co.uk/1/hi/business/3774415.stm

CIA: The World Fact Book (June 19, 2007). Iraq. Retrieved July 1, 2007, from https://www.cia.gov/library/publications/the-world-factbook/geos/iz.html#Econ

Daniels, J.D., Radebaugh L. H., and Sullivian D. P. (2006). International Business:

Environments and Operations (11th ed.). Upper Saddle River: Pearson Prentice Hall

Globalcommunity.com (2007). Global corruption index 2006. Retrieved July 17, 2007, from

http://www.globalcontinuity.com/currnt_headlines/global_corruption_index_2006

World Bank Economic and Social Development Unit, Middle East and North Africa Region. (2007). Rebuilding Iraq: Economic reform and transition. Retrieved July16, 2007, from http://siteresources.worldbank.org/IRFFI/Resources/CEMEXsum.doc.



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