qatar an emerging market

qatarAn Emerging Market!

ByAditya RamachandranPGDM14000052014-16

INTRODUCTION

State of Qatar is a sovereign country located in Southwest Asia, occupying the small Qatar

Peninsula on the north-eastern coast of the Arabian Peninsula. Its sole land border is

with Saudi Arabia to the south, with the rest of its territory surrounded by the Persian Gulf.

Following Ottoman rule, Qatar became a British protectorate in the early 20th century until

gaining independence in 1971. Qatar is the most conservative society in the Gulf

Cooperation Council as most Qataris adhere to the strict Wahhabi interpretation of Islam.

Sharia law is the main source of Qatari legislation according to Qatar's Constitution.

Ruled by the Al Thani family since the mid-1800s, Qatar is an absolute monarchy. Qatar

transformed itself from a poor British protectorate noted mainly for pearling into an

independent state with significant oil and natural gas revenues. During the late 1980s and

early 1990s, the Qatari economy was crippled by a continuous siphoning off of petroleum

revenues by the amir, who had ruled the country since 1972. His son, HAMAD bin Khalifa Al

Thani, overthrew the father in a bloodless coup in 1995. In short order, HAMAD oversaw the

creation of the pan-Arab satellite news network Al-Jazeera and Qatar's pursuit of a

leadership role in mediating regional conflicts. In the 2000s, Qatar resolved its longstanding

border disputes with both Bahrain and Saudi Arabia.

IFIM Business School

https://en.wikipedia.org/wiki/Country

As of 2007, oil and natural gas revenues had enabled Qatar to attain the highest per capita

income in the world. Qatar has not experienced domestic unrest or violence like that seen in

other Near Eastern and North African countries in 2010-11, due in part to its immense

wealth. Since the outbreak of regional unrest, however, Doha has prided itself on its support

for many of these popular revolutions, particularly in Libya and Syria. In mid-2013, HAMAD

transferred power to his 33 year-old son, the current Amir TAMIM bin Hamad - a peaceful

abdication rare in the history of Arab Gulf states. TAMIM has prioritized improving the

domestic welfare of Qataris, including establishing advanced healthcare and education

systems and expanding the country's infrastructure in anticipation of Doha's hosting of the

2022 World Cup.

HISTORY IFIM Business School

Qatar in Early History

Evidence of early habitation in Qatar that can be traced as far back as to the 4th century BC appeared in many artifacts such as inscriptions, rock cravings, flint spearheads and examples of pottery, which were all uncovered by the Danish (1965), the British (1973) and the French (1976) expeditions.

In the 5th century BC, the Greek historian Herodotus referred to the seafaring Canaanities as the original inhabitants of Qatar.

The Greeks came to the Gulf with Alexander the Great and settled in Failaka in Kuwait, in Bahrain, in the Emirate of Sharjah and had logged all the ports that could be turned into profitable trading posts. It was in the first century AD that Pliny the Elder, a Roman writer, used the work “Catharrei” to refer to the people who lived in this area.

In the following century, Ptolemy, the famous Greek geographer, added the word “qatara” over the peninsula on his map of the Arab countries, which is believed to refer to the Qatari town of Zubarah.

Qatar in the Islamic History

In the middle of the 7th century AD, the Qatar peninsula and the surrounding region were under the rule of the Al Munzir Arabs. Their king, al-Munzir Ibn Sawi al Tamimi, embraced Islam, making Qatar to enter, ever since, the realm of the Islamic civilization and participate in all its successive stages and eras.

Records of Arabic Islamic history reflect the presence of the skilled seafaring Qataris and acknowledge their valuable contribution towards the formation and provision of the first naval fleet, which was assembled to transport the Islamic army under the leadership of Abu al-Al’a al-Hadrami.

Under the Abbasid state during the 8th century AH, Qatar experienced great economic prosperity and pledged a great deal of financial support towards maintaining the Caliphate in Baghdad.

During the 10th century AH, the Qataris aligned with the Turks to drive out the Portuguese.

Subsequently, Qatar, like the entire Arabian Gulf region, came under the Turkish rule for four successive centuries. Ottoman sovereignty, however, was only minimal as the real power and control were in the hands of the sheikhs and princes of local Arab tribes.


Qatar in the 20th century

In the early 18th century, Al-Thanis who had come from the oasis of Jebrine became the rulers of Qatar. Initially they stayed in the north of the peninsula before moving to Doha in the mid-19th century under the leadership of Sheikh Mohammed Bin Thani.

In 1878, Sheikh Jassim Bin Mohammed al Thani came to power.

In 1913, Sheikh Abdulla Bin Jassim Al Thani reigned. It was during his time when the First World War ended and the Turkish rule in Qatar came to an end. Qatar signed a protection treaty with Britain in 1916. However, the British influence in the country was limited to supervision of some administrative matters. Oil exploration also started during his term.

In 1940, Sheikh Hamad Bin Abdullah Al Thani ruled Qatar.

In 1949, Sheikh Ali Bin Abdullah Al Thani’s term followed. Offshore oil resources opened a whole new era for Qatar, an era of modernization.

Sheikh Ahmed Bin Ali Al Thani succeeded Sheikh Ali Bin Abdulla Al Thani in 1960. Qatar officially became an independent country, the Emirate of Qatar, in September 3, 1971.

In 1972, Sheikh Khalifa Bin Hamad al Thani ruled the country. There was a real economic boom in Qatar. Construction sector grew quickly. Hospitals were built.

Sheikh Hamad Bin Khalifa al Thani assumed power on the 27th of June 1995, supported by the ruling family and the Qatari people.

ECONOMY OF QATAR IFIM Business School

Let’s begin by considering Qatar’s political and economic landscape. While

Qatar is a conservative society, the country has embarked on a path towards economic

modernization and political stability. The Emir, Sheikh Hamad bin Khalifa Al-Thani,

took power in 1995 and has been the driving force behind Qatar’s openness to global

markets. The Emir is a supporter of strong relations with the United States based on

regional peace and stability, trade and investment, and educational and cultural

exchanges. U.S.-Qatari relations are strong & growing. Qatar is a member of OPEC &

Gulf Cooperation Council (GCC), whose other members are Bahrain, Kuwait, Oman,

Saudi Arabia, and the United Arab Emirates. Only one-fifth of Qatar’s population of

nearly 800,000 are actually Qatari citizens; foreign workers - mostly from South Asia,

Egypt, Palestine, Jordan, and Iran - make up the other four-fifths of the population.

The country’s economic growth potential is stunning. Qatar’s economy grew by

6.3% in 2014, and Qatar’s per capita GDP was around $93,000 in 2013, highest in the world.

Even more important is the Qatari Government’s strategy to utilize its wealth to generate

more wealth, by diversifying the economic base of the country beyond hydrocarbons.

Qatar’s economy is driven by revenues from natural gas and oil resources. Qatar

possesses the third largest natural gas reserves in the world as well as the world’s largest

single non-associated field, the North Field. Qatar’s proven reserves are estimated to be

more than 900,000 billion cubic feet (6% of the world’s total), enough to last over 200

years at current production levels. During 2009, Qatar exported over 2.4 trillion cubic feet (68

billion cubic metres) of natural gas, 70% of which was LNG. Qatar currently exports about 2

billion cubic feet (57 million cubic metres) of natural gas per day to the UAE and Oman

through the Dolphin pipeline., thus becoming the largest natural gas exporter in the world. In

five years, Qatar could very likely supply one-third of the world’s liquefied natural gas (LNG).

Though Qatar’s growing revenue from LNG is impressive, it is important to

recognize that Qatar still earns more revenue from oil production. With oil reserves

estimated at around 14 billion barrels, Qatar is expected to continue producing oil at current

levels for over 50 years. In competition with its pro-business neighbor, the United Arab

Emirates, Qatar is striving to make the country attractive for trade and investment through

economic reform, transparency, and business-friendly policies. Qatar may find itself in a

complex neighborhood politically, but its economic fundamentals are sound and U.S. companies would be wise to investigate opportunities here in more depth.


BUSINESS CONDITIONS

There is great optimism and excitement among the business community in Qatar. By

transforming hydrocarbon wealth into modern health facilities, tourism infrastructure, and

western-style education institutions, the Qatari Government aims to engender a forward-

looking and highly-skilled population. The Qatari Government has established credibility

among the population and the business community. When plans and projects are

announced, they are usually realized, and contracts are awarded in a generally efficient and

transparent manner. Qatar is very amenable to western visitors, and security experts

consider Qatar to have one of the lowest crime countries on earth. The threat for

‘transnational terrorism’ in Qatar is rated ‘high’ (on a scale from ‘low’ to ‘critical’), though this

is due to the nature of the region in general, and security experts here admire the

capabilities of Qatar’s internal security forces. Americans who have lived here for 10 years

report little or no anti-American sentiment from locals. A car bomb attack in March 2005 of a

British theatre has been the only incident of terrorism against Westerners that has taken

place in Doha. In the last five years, Qatar has improved its trade and investment climate in

line with its WTO obligations by reducing tariffs, removing unnecessary restrictions and

barriers to trade, and providing foreign investors more opportunities. As Qatar’s largest

trading partner, the United States is in discussions with the Qatari Government to explore

the possibility of a Free Trade Agreement. There are many positive aspects to Qatar’s

business framework. U.S. companies report that the customs clearing process is generally

problem-free. Qatari companies and customers are highly interested in working with

Americans and buying U.S. products and services. Companies do not complain here about

overly burdensome bureaucratic procedures. Doing business with Qatar Petroleum and the

public sector is in general transparent and efficient. U.S. firms report that hiring labor is not

overly problematic, though there are currently restrictions on hiring South Asian labor. It is

possible to resolve commercial disputes in Qatari courts, though the process is more time-

consuming than in the United States. U.S. firms also report that industrial standards that are

applied in Qatar are favorable to U.S. exports. Also, Qatar has a stable currency and the

country imposes no foreign exchange controls. There are well-capitalized financial

institutions in Qatar, most notably Qatar National Bank.


RULES OF BUSINESS

Just like any market, Qatar has its own specific guidelines and requirements concerning foreign companies operating in this country. The following summarizes the major issues. U.S. firms should note that adequate services exist in Qatar for legal, financial, and tax matters, business counselling, company background checks, and feasibility studies. Consult an expert for professional advice in these matters. Many notable business service providers in Qatar are represented on www.buyusa.gov/qatar.

1. Taxes.

Some companies come to Qatar thinking it is a tax-free zone – it’s not! While there is no personal income tax in Qatar, foreign-owned firms must pay a tax on corporate income. The rate is a sliding scale ranging from 0% on less than 100,000 QR to 35% on more than 5 million QR. (Since U.S. firms also pay U.S. taxes on corporate income, companies considering the Qatari market should be aware that this requirement essentially results in ‘double taxation’.) Certain tax exemptions are allowed in Qatar depending on whether the activities of the foreign firm are directly benefiting Qatar; incorporating modern technology; and/or fulfilling a strategic goal of the government.

2. Documentation.

Original copies of documentation on goods shipped into Qatar are required. Commercial invoices, shipping document, packing lists, and certificates of origin must accompany goods entering Qatar. You must legalize commercial invoices at the Qatari Embassy.

3. Exporting.

The customs duty for general cargo entering Qatar is 5%. Temporary imports into Qatar require permission from the General Director of Qatari Customs, as well as a check or bank guarantee to the Customs Department for the amount of the duty to permanently ship the goods to Qatar. This is refunded upon proof of export from Qatar. Normal customs clearance by air is 1-2 days and by sea is 2-4 days.

4. Banking.

There are 15 banks in Qatar. There are no exchange control regulations. There is great confidence in Qatar’s banking system. (Foreign investors need permission from the Qatari Government to invest in the banking and insurance sectors.)

5. Labour.

Non-Qataris must possess a valid work permit issued by the Department of Labor to work in Qatar. The new Labor Law of Qatar (Law 14 of 2004) aims to balance the rights of employer and employee, institutes hiring priority to Qatari nationals, and specifies a number of obligations for firms vis-à-vis their employees. These obligations include the requirement that the employment contract must be in writing, the recognition of the concept of end-of-service benefits, and limitations on the maximum number of hours worked per week. More details are available in the Country Commercial Guide. U.S. firms seeking to hire non-Qataris


http://www.buyusa.gov/qatar

6. Ways to do business

To begin a business in Qatar, foreign companies will have to appoint a service agent / sponsor first. Experts, however, say that the requirement for service agent / sponsor in Qatar is getting more lenient and may be abolished in years to come.

Foreign companies wishing to do business with Qatar need to appoint a representative agent. It is very important to distinguish between two types of agents:

(a) Commercial Agent: If you simply want to export your products to Qatar, you will need a commercial agent to act as your distributor or sales representative - note that commercial agency agreements in Qatar are exclusive.

(b) Service Agent: If you intend to execute a project for Qatari private entities and leave the country upon completion, a service agent or sponsor is required to take care of all of your administrative paperwork with the Qatari Government (visas, permits etc.). However, if your company intends to fulfil a government contract or provide a public service or utility, the Qatari Government waives the service agent/sponsor requirement.

If you want to do business in Qatar, the most common practice is for firms to establish a Limited Liability Company. In this case ownership cannot exceed 49% of the capital with a Qatari partner owning 51%. New Qatari law allows foreigners to earn up to 80% or more of the company’s profits if the foreign entity is the main player in the joint venture. The joint venture company does not require a service agent/sponsor in order to conduct business. Companies wishing to invest in agriculture; manufacturing; health; education; tourism; power; and mining sectors are allowed to establish up to a 100% U.S.-owned branch office or new company and, pending approval from the government, are not required to have a sponsor.

7. Land

Foreigners cannot own land in Qatar outside of certain real estate development projects such as the Pearl of the Gulf. But firms may rent land long-term up to 50 years in order to complete specific projects.


PEST Analysis

POLITICAL

Qatar has an emirate type government. Qatar claims that it is developing into a constitutional monarchy but it doesn’t

allow political party nor hold elections on a national level. Expatriates residents are prevented from applying for citizenship. The elected municipal council has no executive power but many offer advice to

the minister.

ECONOMIC

GDP (PPP) $199.6 Billion. 6.1% Growth. $98814 Per capita FDI Inflow - $840.4 Million. Inflation rate 3%. Exports - $121.2 Billion.

SOCIO-CULTURAL

Literacy rate - 97.4%. Life expectancy - 78. Unemployment rate – 0.4%. Population growth 3.07%. Languages - Arabic (official) & English (2nd language). Ethnic groups – Arabic (40%) Indian (18%) Iranian (10%) Pakistani (18%)

others (14%). Very Low Crime rate.

TECHNOLOGICAL

Steady Increase in IT spending over a span of 10 years. IT Services market is forecasted to be the fastest growing segment of the Qatari

IT market between 2010-14. Impressive technology is the main reason for Qatar winning bid for 2022 FIFA. More opportunities are emerging in sectors like financial services, healthcare,

education & communication.


Company Profile

Bharti Airtel Limited is a leading integrated telecommunications company with operations in 20 countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks amongst the top 5 mobile service providers globally in terms of subscribers. It is currently the 4th largest mobile operator in the world. In India, the company's product offerings include 2G, 3G and 4G services, fixed line, high speed broadband through DSL, IPTV, DTH, enterprise services including national & international long distance services to carriers. In the rest of the geographies, it offers 2G, 3G mobile services. Bharti Airtel had over 307 million customers across its operations at the end of November 2014.


SWOT

STRENGTHS

1. Renowned Telecom company: With its 19+ years of rich experience in telecom

industry this MNC had travelled far to become world’s 3rd largest telecom operator

overseas with operations in nearly 20 countries.

2. High Brand Equity: It is one of the pioneer brands in telecommunication having a high

brand recall and with a whopping subscriber base.

3. Extensive infrastructure: With the formation of Indus tower & due to its partnership

with Idea & Vodafone, the infrastructure of Airtel has extended in all parts of the country

resulting into nationwide penetration.

4. Strategic Alliances: The Company has top notch stakeholders, namely Sony Ericsson,

Nokia and SingTel, and the recent one being Apple. Such strategic alliances boost the

brand equity and the bottom line of the company.

5. Torchbearer of the telecom Industry: With its number 1 spot due to its excellent

services in developing economies, Airtel has interconnected the life of people in an

highly efficient way. Thus, where Vodafone is an external entrant, Airtel is a leading

nationwide player in India and the torchbearer of the telecom industry in India.

WEAKNESS

1. Outsourced Operations: Outsourcing operations helped Airtel in lowering its cost. But

on the other hand, they are running the risk of being dependent on some other

companies which may affect its operations.

2. Venturing into African operations: Although it’s been 4 years that Airtel has acquired

Zain’s Africa business, but Airtel is still struggling to turn around the unit which was

bought at 9 billion dollars.

3. High Debt: With its acquisitions turning out to bad investment, and credit being high and

margins being low, Airtel group is under high debt. Airtel does not have as deep pockets

as Vodafone.


OPPORTUNITY

1. Strategic Partnership: Partnering with smart phone companies is going to be a smart

strategy as far as MNP (mobile number portability in India) is concerned. This will ensure

fixed cash flows in the future and a higher customer base.

2. Market Development: With fierce competition in the telecom industry & shrinking

margins, venturing out in new markets/developing economies will prove fruitful for the

company.

3. VAS: VAS (Value Added services) is going to future of the telecommunication industry &

by specializing itself in this vertical Airtel can differentiate itself in highly competitive

market. With introduction of unique services, Airtel can avail higher margins.

4. Untapped geography of the current market: Although it is currently providing 3G & 4G

services, but these services are limited to specific geographical locations. Expansion of

these services to most of its regions will help the company get more margins and

customers.

5. LTE: The whole wireless world is moving towards LTE (long term evolution or 4G). LTE

for mobile broadband can be a good solution for India where fixed broadband

penetration is otherwise low. Airtel has taken the lead with this version of LTE in 4 cities,

but deployment needs to catch up pace. Despite a weak LTE ecosystem in India, Airtel

should portray itself as the embracer of that technology. The company lacks nationwide

3G license with spectrum in 13 out of 22 telecom service areas. Airtel’s LTE network for

mobile broadband is still confined to only 4 cities in India.

THREATS

1. Government Regulatory Framework: With the auction of spectrum & change in the

government policies on a regular basis, it is a potential threat to the stability & existence

of this industry thereby affecting the players.

2. Competition: Price war in the home market and declining margins due to this is

adversely affecting the overall business of the group.

3. MNP (Mobile number portability): MNP gives the customer independence to change

the service provider while retaining the number and as Airtel charges are premium over

other service providers, it can see slump in subscriber base in the next fiscal year with

PAN India MNP applicable from May 3rd 2015.


STP

Segmenting

On the basis Demographic variables:- Age

:1) From age group 18 < 35As most of the people start using a mobile from the age of 18 so we may make a segment of a age group 18 to 35 as most of them will be students and remaining will be young professionals working in the industry. So they need SMS plans for chatting and they also need cheap calling rates. We may provide the FRINDZ card to them.2) 35 and aboveAs most of these group will be working and don’t use mobile for SMS and chatting. So this group needs only the calling facility at a reasonable rate. This Group may continue using the general plan.

IncomePREPAID & POSTPAID Generally the mobile service providers plan their marketing strategies according to the prepaid market and postpaid market. So it basically depends upon the income of the consumer that whether he selects the prepaid or postpaid. Generally the consumers with high income choose postpaid.

Targeting

Airtel has targeted the premium and upper middle class. The motto behind this is only those segments should be targeted who value time and have the paying capacity. During the introduction stage there will be a huge pressure to get consumers across to hook up with their brand, because getting them to Airtel by their earlier brand and switching their brand loyalty was too tough. Airtel marketers will have to concentrate totally on the business executive class.

Targeting areas

Professionals by giving free calls in postpaid connections.Entrepreneur by giving various plan in which they may get internal calling free.Youth with the „FRIENDZ‟ Scheme. Targeting Students by introducing postpaid connection only for students and with zero rentals

Positioning

Position itself in the premium category aimed at elite class of society. Airtel should create an aspiration and lifestyle brand.


4p of airtel

Products

The company provides a wide array of products and services. In order to retain the maximum number of customers, Airtel has tried to provide as many products and services as possible in order to keep the customers. The following is a list of its products:

Airtel Pre-paid services Blackberry Wireless Handheld Airtel Post-paid services Value added services like instant balance inquiry, caller line

identification, 24 hour recharge facility, multimedia messaging service, call wait & call Hold, Caller divert, Airtel Live portal

SMS based information services Voice mail services Hello tunes, Ring tones, Ringtones and hello tunes offers Easy post-pay bill payment solutions Enterprise Solutions

Place

Airtel’s penetration in Qatar can be impressive as they are well known in other parts of the world mainly in Asia as the leading service provider & for being the world’s 4th largest mobile operator in the world. Hence this reputation can help them gain customers in Qatar as their main focus will be on the high income group which makes up majority of Qatar.

Promotion

Airtel engages in aggressive marketing strategy ranging from traditional print media to social network marketing. The company also engages in large scale TV and print advertising. The company frequently uses big celebrities who endorse the services.

Price

The company uses competitive pricing strategy just like any other network providers because of the competition which is present in this sector. However, Airtel will also provide flexible pricing mechanism depending on the prevailing market conditions. For instance, when the company relaxes taxation, it also reduces its prices across all affected products. The make my plan introduced by Airtel in India was a smart strategy as customers could now modify their plan as they see fit. Hence it could be launched in Qatar too.


CONCLUSION.

During 2011, Qatar’s telecoms markets experienced significant growth, driven by expansion of access to broadband services and by increasing mobile subscriber penetration. Around two thirds of telecoms services in Qatar are now mobile-based.

Some unique developments in Qatari telecom industry:-

• New fibre deployment

• Greater infrastructure access

• Implementation of number portability

• Continued economic regulation.

Enhanced consumer protection

Sector 2012 2014

Subscribers to telecoms services (million):

Fixed Broadband 0.159 0.275

Fixed-line telephony 0.327 0.455

Mobile phone 2.600 4.210

Qatar’s telecoms sector is not yet fully liberalised and is still heavily regulated. ictQATAR is

the independent industry regulator in Qatar. Qatar Telecom (Qtel) QSC (Qtel) is the

incumbent fixed and mobile network operator. The second licensee, Vodafone Qatar QSC

(Vodafone), operates competing mobile infrastructure with a fixed network deployment

underway. ictQatar has indicated it will consider licensing a third fixed operator during 2012

and may also consider whether a third mobile operator is required.


qatar an emerging market

Economy & Finance