Analysis on Qatar’s Further Development

Analysis on Qatar’s Further DevelopmentStudent Name：Module：Date：Table Contents1. Introduction (1)2. Managerial Problem and Research Questions (1)3. Background Research (2)3.1 PESTLE Analysis (2)3.2 Resource-Based View (3)4. Hypotheses (4)5. Evidence (4)5.1 PESTLE Analysis (4)5.2 Resource-Based View (7)6. Conclusions, Discussions and Recommendations (8)References: (10)1. IntroductionQatar’s economic growth has become global famous in recent years due to its abundant natural resources (primarilyoil and gas), as well as its investment diversification and diversified development. The new emir (Sheikh Tamim Bin Hamad) came into power, Qatar is faced with the choice between previous development and the more aggressive one. The purpose of this case study is to analyse who Qatar should make its selection on the future development from the PESTLE frameworkand the perspectiveof resource-based view.2. Managerial Problem and Research QuestionsThe managerial problem faced by the new emir of Qatar is whether he should adopt a more aggressivedevelopment plan or he should continue the previous strategies. In pursuit of fulfilling all the broad goals, the new emir of Qatar has to answer additional hard questions.In details, the research questions in this case study are as follows:Was Qatar greatly depending on hydrocarbon revenue genuinely diversifying, particularly under the circumstance that nearly all capitals used for investing new industry came from oil and gas revenue?Should Qatar shift to a new development plan because of the challenges in its increasingly modern stage?What would Qatar as well as the royal family have to sacrifice for the purpose of accomplishing their common aims?3. Background ResearchThe theoretical basis for this analysis includes the PESTLE framework and the resource-based view.3.1 PESTLE AnalysisPESTLE analysis is a basic strategic analysis tool. It can assist the decision makers to identify the aspects that should be further enhanced as well as the aspects that should be prevented.PESTLE analysis is generally employed to analyse a country’s external environment. In this case, Qatar is viewed as both a country and an organisation. PESTLE analysis can be effective to measure the comprehensive aspects of a country’s situation, including political, economic, socio-economic, technological, legal, as well as environmental aspects (Figure 1). This framework is easy to conduct and it would result in the identification of the potential opportunities within the target market or country (Ha and Coghill, 2006). However, this framework tends to be oversimplified and it should be used with other supplementary analysis. As a result, resource-based view is eventually employed to discover the potential challenges and the opportunies for Qatar. This case study employs this framework to analyse and answer the research questions.Figure 1: Framework of PESTLE Analysis (Source: Ha and Coghill, 2006)3.2 Resource-Based ViewServing as a foundation for the competitive advantage of a company, the resource-based view (RBV) rests mainly on the usage of a package of intangible resources or tangible resources at the disposal of the company (Wernerfelt, 1984, p172). Both heterogeneous nature and imperfectly mobility of these resources are required for transforming a short-term competitive advantage to a long-term one (Peteraf, 1993, p180，Figure 2). In an effective way, this can turn into valuable resources with no great efforts, and these valuable resources are not only irreplaceable but also lack perfect imitability (Barney, 1991, p117). With these conditions satisfied, these resources are able to support the company to gain above average returns.Figure 2: Analysis Framework of Resource-Based View (Source: Peteraf, 19931) 4. HypothesesBased on the research question, three hypotheses were formed:H1: Qatar’s diversification strategy still needs further development.H2: A new development plan of Qatar should be adopted due to the modern trends in Qatar.H3: Qatar’s royal families needto make sacrifice such asdecentralising their power and increase transparency to enhance the further development.5. Evidence5.1 PESTLE AnalysisPolitical and Legal AspectThe political stability is comparablystrong in Qatar thanks tothe previous Emir’s endeavour. Furthermore, the emphasis on the development of the regional and internalrelationship would also contribute to Qatar’s political stability. Qatar has adopted the mixed legal system, combining civil law and Islamic law (Index Mundi, 2014a). The latter is based on the consideration of the personaldisputes and the religious tradition. Besides, the law shows preferential terms to promote the small and medium business and the government provides favourable compensation for local residents.Economic AspectThe economic growth in Qatar is eye-catching, especially in the recent years.This country’s GDP indicates strong growth since 2004, and it is estimated to reach202.45 billion USD in 2014, accounting for over 3.3% of the global economy (Figure 3).Oil and gas serve as the core revenues, and it also promote the tourism industry and real-estate industry in Qatar (Table 1).Nonetheless, the inflation in Qatar boost in correspondence to the significant DGP growth (Figure 4).Figure 3: Qatar GDP (Source: Trading Economics, 2014a)Table 1: Qatar’s GDP by Capital in 2007 and 2011 (Source: Musacchio et al., 2013)Figure 4: Qatar Inflation Rate (Source: Trading Economics, 2014b)Socio-Cultural AspectThe population growth in Qatar grew significant from 2001 to 2011, rising from 436 thousands to 1.472 million. However, the most significant growth is the migrant from other countries that took up 89.2% of the total population (Table 2). Those migrants also account for the major labour force and the local Qatarismainly work for the government.Though the education is emphasised, it mainly provided for the local residents.Table 2: Qatar’s Population and Labour (Source: Musacchio et al., 2013)Technological AspectThe technological development is emphasised by Qatar, but the local culture leads to limited interests of local Qataris. Accordingly, the technological development of Qatar depend more on the well-educated Western employees.Environmental AspectThe environmentalsituation is not promising due to theheavy dependence on oil and gas, as well as the fast development of the manufacturing and tourism industry in Qatar. According to Huff Post (2012), Qatar’s carbon dioxideemission per capita was the highest level globally. It exerts considerable influence on the global climate change.5.2 Resource-Based ViewBased on the PESTLE analysis, Qatar’s resources and capabilities are listed in Table 3. However, those resources and capabilities should be further evaluated based on the VRIN model. This model evaluates the resources and capabilities from the four aspects: valuable (V), rare (R), in-imitable (I), and non-substitutable (N). In details, valuable means that a resource must provide a company an ability to adopt a value-creating strategy by means of achieving higher performances than its rivals or decrease its own flaws. Rare means that the resources should be hard to identify. In-imitable indicates thata valuable resource possessed and controlled by one entity would be a source of a competitive advantage.Non-substitutable means that lackingsubstitutability is an equally significant feature for a resource, even though this resource is regarded as rare, possibly value-creating as well as imperfectly imitable (Hoops et al., 2003).The VRIN analysis was listed in Table 4.Table 3: Resources and Capabilities of QatarTable 4: VRIN Analysis of Qatar6. Conclusions, Discussions and RecommendationsAccordingly to Table 4, it shows that the tangible resources of oil and gas as well as the shares in the global company serve as the major competitive advantages for Qatar compared with other countries. Furthermore, its reliable financial market and strong economic growth provide strong support for this country’s development. Besides, the strong control over the internal financial market also makes this country strong. Nonetheless, it shows that Qatar’s development mainly on the oil related investment,and the global oil and gas industry would be unstable as a result of the wars, inflation and supply and demand. Accordingly, Qatar’s diversification strategy needs further development (H1 is accepted).Furthermore, Qatar’s education, though improves its literacy, still cannot provide sufficient high-end talents in the corresponding technique domains due to its socio-cultural traits. The reliance on the foreign human resources would reduce its competence in the long-term. Accordingly, Qatar should adopt further strategies to improve its education for talents in the hard science (H2 is accepted). Besides, through the Qatar government focus on the improvement of its people’s lives, the problem remains that the governmenttransparency and the transparency of the internal; process of the state-owned enterprises are low. The power is centralised in the royal families and this might lead to internal corruptions and might result in biased decision making. Freeman (2010) showed that the participatory leadership and endow the power to agent would further promote the efficiency of the business management. As a result, Qatar should further enhancethe information transparency to ensure the optimization of resource distribution and to prevent the risk of internal corruption (H3 is accepted).References:Barney, J. (1991), ‘Firm resources and sustained competitive advantage’, Journal of Management, 17(1), pp. 99-120.Freeman, R. E. (2010), Strategic management: A stakeholder approach, Cambridge University Press.Ha, H., and Coghill, K. (2006), ‘E-Government in Singapore—A Swot and Pest Analysis’, Asia-Pacific Social Science Review, 6(2), pp. 103-130.Hoopes, D. G., Madsen, T. L., and Walker, G. (2003), ‘Guest editors' introduction to the special issue: why is there a resource‐based view? Toward a theory of competitive heterogeneity’, Strategic Management Journal, 24(10), pp. 889-902.Huff Post (2012), 'Qatar's Impact On The Environment: How The U.N. Climate Talks In Doha Cast A Spotlight On The Country' [online], Huff Post, Nov. 30, Available at: </2012/11/30/qatar-environmental-impact-climate_n_ 2213298.html>Index Mundi (2014a), Qatar Legal system, Available at:</qatar/legal_system.html> [Accessed 25 Oct. 2014]Musacchio, A., Donovan, C., Mikati, S., Sarafa, R., and AlMisnad, A. (2013), ‘Qatar: Energy for Development’, Harvard Business School, Case 714-003.Trading Economics (2014a), Qatar GDP, Available at:</qatar/gdp> [Accessed 25 Oct. 2014]Trading Economics (2014b), Qatar Inflation Rate, Available at:</qatar/gdp> [Accessed 25 Oct. 2014]。