BAHRIA UNIVERSITY

ISLAMABAD CAMPUS

TEAM PROJECT

ARAB REGION Vs PAKISTAN

COURSE: COMPARATIVE MANAGEMENT

INSTRUCTOR: PROF. COL (R) MANZOOR IQBAL AWAN

PROJECT TOPIC: COMPARISON AND CONTRAST BETWEEN TWO REGIONS

CLASS: BBA 7-C (FALL 2010)

Member’s NAME: S. SHAHERYAR ALI GHALIB ZAIDI (GROUP-LEADER)RIZWAN-ULLAHIBTESAM AHMAD SYEDAMMAD SHARIFHASSAN MEHMOOD HASHMISAQIB RASHID

EMAIL ADRESS: Ali.shaheryar@yahoo.com

CELL # 0332-5524080

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ACKNOWLEDGEMENT

First of all, we thank Allah for making us able to complete this report. And we thank Him for giving us the knowledge, power and ability that made us capable to finish our task.

Then we would thank Mr. Manzoor Awan for his instructions, guidance and suggestions for our report. And it was he, who made us able to accomplish this task.

Then finally, we would like to thank our parents, our friends and class fellows and anyone else who was directly and indirectly involved in helping us achieve our

objective.

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Table of ContentsACKNOWLEDGEMENT-----------------------------------------------------------------------------------2

Abstract---------------------------------------------------------------------------------------------------------6

Arab Region---------------------------------------------------------------------------------------------------7

Overview-------------------------------------------------------------------------------------------------------7

Culture in Arab Region – Key Values & Concepts-------------------------------------------------------7

Religion------------------------------------------------------------------------------------------------------7

Indirect Communication----------------------------------------------------------------------------------7

Hospitality---------------------------------------------------------------------------------------------------8

Personal Relationships------------------------------------------------------------------------------------8

Gender-------------------------------------------------------------------------------------------------------9

The Spoken Word------------------------------------------------------------------------------------------9

Meetings & Negotiations----------------------------------------------------------------------------------9

Business Environment & Etiquettes in Arab Region---------------------------------------------------10

Points of Etiquettes---------------------------------------------------------------------------------------10

Management Styles in Arab Region----------------------------------------------------------------------13

Communication Styles in Arab Region-------------------------------------------------------------------14

Opportunities & Attractions for MNC’s in Arab Region----------------------------------------------16

Forms of Businesses in Arab Region---------------------------------------------------------------------17

Joint Venture Company----------------------------------------------------------------------------------18

Licensing---------------------------------------------------------------------------------------------------18

Partnership Company------------------------------------------------------------------------------------18

Limited Partnership Company--------------------------------------------------------------------------19

Public Joint Stock Company (PJSC)-------------------------------------------------------------------19

Private Joint Stock Company---------------------------------------------------------------------------19

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Limited Liability Company (LLC)---------------------------------------------------------------------20

Partnership Limited with Shares Company (PLS)---------------------------------------------------20

Branch of a Foreign Company--------------------------------------------------------------------------20

Political Risk Factors in Arab Region--------------------------------------------------------------------21

Do’s & Don’ts in Arab Region----------------------------------------------------------------------------23

Do’s---------------------------------------------------------------------------------------------------------23

Don’ts------------------------------------------------------------------------------------------------------23

Pakistan as Home Region----------------------------------------------------------------------------------24

Overview------------------------------------------------------------------------------------------------------24

Culture in Pakistan – Key Values & Concepts----------------------------------------------------------24

Religion----------------------------------------------------------------------------------------------------24

Hierarchical Society--------------------------------------------------------------------------------------24

Business Environment & Etiquettes in Pakistan--------------------------------------------------------25

Building Relationships-----------------------------------------------------------------------------------25

Indirect Communication---------------------------------------------------------------------------------25

Etiquettes in Business Meetings------------------------------------------------------------------------25

Business Negotiations------------------------------------------------------------------------------------26

Business Card Etiquettes--------------------------------------------------------------------------------26

Management Styles in Pakistan----------------------------------------------------------------------------26

Communication Styles in Pakistan------------------------------------------------------------------------28

Analysis of Arab World & Pakistan----------------------------------------------------------------------30

Comparison between Arab Region & Pakistan----------------------------------------------------------33

Arab Region-----------------------------------------------------------------------------------------------33

Pakistan----------------------------------------------------------------------------------------------------33

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Similarities & Differences among Two Regions--------------------------------------------------------35

Geert Hofstedes Cultural Dimensions--------------------------------------------------------------------36

“Tricks of the Trade” for MNC’s--------------------------------------------------------------------------37

Doing Business in Arab Region------------------------------------------------------------------------37

Bibliography--------------------------------------------------------------------------------------------------40

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AbstractThe purpose of writing this paper is to compare and contrast the two regions that are Pakistan and Arab world with the perspective of business environment and culture of two regions rigorously. By doing this research work we came to know about the cultural differences among Pakistan and other countries in the Arab region. Both Pakistan and Arab world are rich in culture and they have many twists and turns in their culture. So for any outsider which does not belong to these regions and want to conduct business in these regions could be benefited by this research work of ours. We have compare the culture, environment, and business structures in the regions, communication styles, and various management practices found in these regions in detail. We have also discussed about the major opportunities and threats related to the business environment of Arab cluster and how to most effectively overcome those scenarios in fairly detailed way. Also the entry strategies and approaches by the MNC’s towards the Arab region have been discussed. The attractions of the Arab regions for the MNC’s are also explained in his research paper. Lastly there is an analysis of both the regions and also some tips for the investors as well as MNC’s who want to expand their businesses in the Arab regions.

Arab Region

OverviewSituated between Asia, Africa and Europe, the Arab region is a cultural and ethnic mosaic of linguistic and racial diversity. A large number of ancient civilizations, stretching back at least 3,000 years, have passed through the region. As people crossed the Arab Region through trade and invasion routes, they brought with

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them a plethora of traditions, cultures and religion which still exist today. The countries of the Arab Region each have their own unique identity and culture, but share many fundamental beliefs and traditions. Understanding not only the shared cultural values and attitudes but each country’s unique business and social culture is imperative for any organization wishing to do business in the region.Countries included in the Arab & Middle Eastern cluster – Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, Turkey, United Arab Emirates, Yemen.Population in Arab region – Approx. 200,000,000.Languages – Various dialects of Arabic and Persian, English is also widely spoken as well as French in Lebanon. Approximately 30 other languages are also spoken.

Culture in Arab Region – Key Values & ConceptsReligion

The Arab Region is the geographic origin of three of the world’s major religions Islam, Judaism and Christianity. The majority of the people in the Arab Region practice Islam, but Judaism and Christianity, although minor in comparison to Islam, are also practiced mainly in Israel and Lebanon respectively. Many people in the Arab Region adhere to Islamic principles and practice traditional rituals on a daily basis. Contrary to the separation of Church and State in many Western countries, Islam is a way of life and governs politics, moral values and various aspects of behavior such as how one should dress. Islam impacts on the daily lives of people in the Arab Region differently depending on what country they are in. It is a good idea to learn more about what Islamic practices are adhered to before going and to remember its influence when working alongside your Arab business colleagues.

Indirect Communication

Communication in the Arab Region tends to be relatively indirect and relies heavily on nonverbal cues and figurative forms of speech, where information is not explicitly stated. Respecting an individual’s honor and saving face are key drivers in the indirect communication style that is prevalent throughout the Arab Region. Directly refusing a proposal, for example, may be interpreted as impoliteness. Therefore, when conducting business discussions with your Arab Region colleagues you should avoid responding with a direct “no”, and be prepared to interpret seemingly indefinite comments and gestures. It is also

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impolite to directly criticize a Arab Region counterpart as it brings shame to the person’s honor.

Hospitality

Many people in the Arab Region take great pride in showing hospitality. Hospitality is a deeply rooted tradition that is closely linked to honor and reputation. Open displays of generosity and welcoming behavior are essential qualities for measuring a person’s good reputation and character. When offered such hospitality, whether in a business or social setting, it is important to accept it to maintain the individual’s sense of honor.

Personal Relationships

Personal relationships are highly valued in Arab Region cultures. People take a sincere interest in others and spend a lot of time getting to know each other. People in the Middle East tend to mix their business and personal life and therefore use personal relationships to further business interests. In Arab Region culture, refusing requests made by other friends is often considered rude. An emphasis is placed on networking so it is essential to develop relationships personally and professionally before doing business with counterparts in the Arab Region. Rules and regulations can be bent while doing business in the Arab Region if one has contacts in the right places.

Business is Personal – Many Westerners that have lived or worked in the Middle East might use the words chaotic, disorganized and frustrating when discussing doing business there. Although this is a matter of perception, it is true that business runs on very different tracks to business in the West.

The Arabs do not separate professional and personal life. Doing business revolves much more around personal relationships, family ties, trust and honor. There is a tendency to prioritize personal matters above all else. It is therefore crucial that business relationships are built on mutual friendship and trust.

A consequence of this mentality is the system known as 'wasta'. If you have friends or contacts in the right places then rules can be bent or things done more quickly. The system works on the basis that favors are reciprocated and never forgotten. Although it may seem biased, it is something that should be exploited when doing business in the Middle East.

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GenderThe roles of men and women are far more defined in the Arab culture. Interaction between the sexes is still frowned upon in certain arenas. However, when doing business in the Arab region it is not uncommon to come across women. If you are introduced to a woman as a male, it is advisable to wait and see if a hand is extended. If it is not, then do not try to shake hands. Avoid touching and prolonged eye contact with women.

The Spoken WordThe Arab culture places more value on someone's word as opposed to a written agreement. A person's word is connected to their honor. Contracts are viewed as memorandums of understanding rather than binding, fixed agreements. Be sure to promise only things you can deliver. Failure to do so will result in loss of honor.

Meetings & NegotiationsInitial meetings are all about relationship building. Building trust and establishing compatibility are key requisites for doing business in the Middle East. One should engage in conversation and try to get to know the 'person' you are doing business with.

Meetings can be chaotic. Always be prepared to exercise patience. Phone calls are taken during meetings and people may enter the meeting room unannounced and proceed to discuss their own agendas. Meetings are circular in nature. They do not follow a linear pattern and are not structured upon agendas or targets. Issues are raised as and when.

Punctuality is expected of foreigners. Although the Arabs place a high emphasis on punctuality they rarely practice it themselves. In fact, if Arabs want to stress that a set time must be adhered to they use the term 'mow'id inglizee' - literally, 'English meeting'. However, if you are running late don’t panic as polite excuses will be accepted.

If negotiating, remember the Arabs were a trading people and are excellent negotiators. Haggling takes places everywhere, whether at the shop or in the board room. Decisions are made slowly. Bureaucratic formalities tend to add to delays. Do not use high pressure tactics as they will be counter-productive.

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Business Environment & Etiquettes in Arab Region

As expectations regarding good manners differ from person to person and vary according to each situation, neither treatise on the rules of etiquette nor any list of faux pass can ever be complete. As the perception of behaviors and actions vary, intercultural competence is essential. As such, a lack of knowledge about the customs and expectations of people of the Middle East can make even the best-intentioned person seem rude, foolish, or worse.

Many matters of business etiquette in the Arab region are connected to Islam as it is written in the Qur’an and how it has been traditionally understood and practiced through out the centuries. Prescribed Islamic etiquette is referred to as Adaab, and described as "refinement, good manners, morals, ethics, decorum, decency, humaneness and righteousness". The traditional marketplaces of the Arab region might seem chaotic and intimidating to foreigners who don't comprehend the time-honored etiquette that governs transactions within. Shown here is a Bazaar in Iran. The Arab Region is a home to many people who follow faiths besides Islam. In many cases, however, Muslims and non-Muslims in the Arab Region will share characteristics, whether it is the prohibition against pork ordained by both Islamic and Jewish dietary restrictions, a preference for the beverage widely known elsewhere as "Turkish Coffee", or knowledge of how to conduct business in a crowded souk without being cheated. As coexistence, rather than conflict, has been the norm between people in the Arab throughout much of history, it is a place where people with different beliefs often share the same traditions.

Points of EtiquettesAlthough the Arab Region is a large expanse of geography with a variety of customs, noting the following points of etiquette can be useful when dealing with people around the world who have been raised according to the traditions of the Arab Region or, in some cases, Muslim societies elsewhere.

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1) Conducting business effectively in a souk or bazaar requires an understanding of how to haggle like the locals. This is an art requiring participants to be appropriately aggressive, keen to how much should be offered at a given point in a transaction, etc.

2) The modesty of one's personal attire is of great concern to many in the Arab Region, although the parameters of this modesty vary. In Saudi Arabia, for example, many families expect all female members to wear a Hijab while even men and women visiting from other cultures should wear very non-revealing clothes to avoid harsh confrontation. In another example, males and females in shorts, skimpy t-shirts or other "immodest" clothes might find themselves roughly evicted from a variety of places, especially holy sites (be they tended by Muslims, Jews or Christians). Get specific guidelines from locals when possible.

3) Arab societies have many rules of etiquette regarding modest clothing - especially head coverings. This Muslim woman in Unite Arab Emirates wears a Niqab, a variety of headscarf popular throughout the Arab Region.

4) Regarding head attire specifically, the etiquette at many Muslim holy sites requires that a headscarf or some other modest head covering be worn. For women this might be a Hijab and for men it might be a Taqiyah (cap) turban, or Keffiyeh. A Kippah or other head covering is expected for men in Synagogues and other places where Jews pray. Orthodox Christian sites might require the removal of hats by men but will expect women to cover their hair with a kerchief or veil.

5) Among Muslims, the left hand is reserved for bodily hygiene and considered unclean. Thus, the right hand should be used for eating. Shaking hands or handing over an item with one's left hand is considered an insult.

6) Public displays of affection between people of the opposite gender, including between married people, are frowned upon everywhere more conservative values hold sway. Public displays of affection include activities as minor as hand-holding.

7) In many cases, people of the same gender holding hands while walking is considered an ordinary display of friendship without romantic connotations.

8) In a related point, many people in the Arab Region claim a more modest amount of personal space than that which is usual elsewhere. Accordingly, it can seem rude for an individual to step away when another individual is stepping closer.

9) Special respect is paid to older people in many circumstances. This can include standing when older people enter a room, always greeting older people before others present (even if they are better known to you), standing when speaking to one’s elders and serving older people first at a meal table.

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10) Hospitality is held in high regard throughout the Arab Region . Some hosts take pride in the laborious preparation of what is known in Europe as “Turkish Coffee”, grinding fresh-roasted coffee beans to a fine powder, dissolving sugar and carefully regulating the heat to produce a result that meets exacting standards.

11) Many people throughout the Middle East, especially Arabs, take great pride in shows of hospitality, never failing to at least serve coffee and a snack such as figs but preferring to present guests with a lavish choice of expensive delicacies in abundance. To refuse such hospitality can cause offense.

12) In some areas in the Arab Region, it is common for people to take their food from a common plate in the center of the table. Rather than employing forks or spoons, people may scoop up hummus and other foodstuff with pita bread.

13) In many Arab Region countries, grouping the thumb and fingers together, and shaking it up and down, fingers pointing upwards, indicates "wait".

14) In Iran, the "thumbs up" gesture is considered an offensive insult.15) Displaying the sole of one's foot or touching somebody with one's shoe is often

considered rude. In some circumstances, shoes should be removed before entering a living room.

16) Many in the Arab Region do not separate professional and personal life. Doing business revolves much more around personal relationships, family ties, trust and honor. There is a tendency to prioritize personal matters above all else. It is therefore crucial that business relationships are built on mutual friendship and trust.

17) Responding to an anger or seriousness with light laughter or a smile is common. This must not be seen as an indication that the other person is not taking you or the situation seriously.

18) A common custom in many Arab countries is 'Tarof' (or tarrof) which can be translated as 'offering'. It is common for a person not to accept an offering (food, beverages etc.), the first or possibly second time, instead taking up the offer the third time. This traditionally implies dignity, self-respect and respect for the host.

19) Positioning yourself so your back is not facing another person is customary in Iran and Iraq.

20) Green is associated with Islam. Treat the flag of Saudi Arabia extremely carefully: it has the name of Allah on it! Never put the flag on a promotional item.

Management Styles in Arab RegionLocal management styles in Arab countries are Directive and Paternalistic one. In Latin Pater stands for 'father' and the paternalistic style of managers try to act as a father figure to the employees, thereby ensuring that all employees 'feel

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happy and bonded' while working in the company. Managers at the top will listen to the employee and at times ask for feedback and opinions while taking any decision. Managers are expected to give clear and direct instructions to their subordinates and the subordinate will be expected to carry out the instructions to the letter. Lack of clear directional leadership will be seen as confusing (at best) and at the extreme, as very poor management. In a nutshell this management style tells the people what is best for them.  This may sound the same as the autocratic style, but with the Paternalistic style of management, the business leaders are looking for the input of their employees.

As a result of this approach, it can appear to outsiders that local managers are overly abrupt or eve rude with their staff. It is important to think of these internal relationships in terms of a family. The boss is the ‘father’ and the employees are the ‘children’. The father tells the children what to do but also looks after them and cares for them. The ‘children’ do as they are told and show their father ‘respect’. It is a two-way relationship in which all parties benefit.

One of the by-products of this paternalistic management style can be a lack of initiative. Employees do what the boss tells them to do but no more. To do more than you are told would be to disobey your boss. Therefore, make sure that any instructions are delivered clearly, precisely and comprehensively. If you don’t, things might not get done at all.

In Iran, as in other Arab hierarchical societies, managers may take a somewhat paternalistic attitude to their employees. They may demonstrate a concern for employees that goes beyond the workplace. This may include involvement in their family, housing, health, and other practical life issues.

It is the supervisor’s job to regularly check on the work of a subordinate and to provide regular constructive feedback. This may include monitoring work quality and the timing of its completion.

In UAE, most companies tend towards extremely hierarchical structures and this is reflected in the management style most frequently manifested within these companies. The approach is often described as 'managing authority consultatively' which implies the need for discussion without any loss of perceived status or power.

Thus Emirati managers consult widely with colleagues but are expected to make the final, firm authoritative decision. This decision will rarely, if ever, be delegated to a subordinate. After a decision has been reached, subordinates are

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expected to follow it to the letter and dispute or criticism are not expected or appreciated. Thus consultation has a 'socializing' aspect within an organization, but questions have to be asked as to the true extent of its impact on any final decisions.

Management is expected to be cautious and not take too many risks - thus decision-making can seem extremely slow and cumbersome by US standards. It is also important to remember that religious considerations could form an important element in the final decision - something western businessmen often forget within the negotiating process. It is important to factor this into any negotiating stance.

In Saudi Arabia, organizations are run along strongly hierarchical lines; managers tend to be very instructional in their approach. Subordinates view it as the boss' role to take decisions and to convey those decisions down the chain for implementation. However, the leader will often include his group in a consensus-oriented style of discussion with the final decision being taken by the leader.

One of the by-products of the belief that leaders lead and followers follow is that those things which are not specifically requested are likely to remain undone. It is, therefore, imperative that all instructions given should be clear, unambiguous and complete.

It is important to the boss that his position is respected and subordinates may show extreme levels of deference. It is of course important to remember that this deference is probably not only being shown to the organizational position of the boss but also to his family status, class connections and age.

Communication Styles in Arab RegionAs in most of the Arabic world, people stand quite close to one another when communicating and many other cultures may feel that their personal space has been invaded. When this close proximity is coupled with strong same-sex eye contact and large amounts of tactility, many overseas business people can feel extremely uncomfortable. When attempting to build good relationships it is important that these differences in approach to body language do not become a barrier.

Arabic conversation can be very hyperbolic with much use of flowery language and flattery. This is a protocol of the language and is expected. Do not misinterpret this approach as insincerity or a tactic. Try to express yourself in a

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similar fashion - especially when you are interested in establishing relationships. Arabic is a language of hyperbole, where the merits of others are praised and overtly commented upon. Therefore, during the relationship-building process, it is important to offer compliments to your host, his organization, Saudi Arabia and the Muslim world in general. You, in return, will be complimented - do not seem distant, aloof or embarrassed if this happens - take the compliments in the spirit they are given.

Do not be surprised if people seem somewhat aggressive in meeting situations. Speaking volubly and with rising tone shows sincerity. This denotes engagement and interest and is in no way a negative sign. (The ability to converse in this manner is a much-admired characteristic in the region). It may sometimes appear that people of Arab countries are shouting at each other and in the throes of a very heated and acrimonious argument. Always remember that emotions are expressed and used to convey conviction and that an overly reserved and “limited to oneself” approach could be misconstrued as detachment or even lack of interest.

All Arabs are proud of their country and achievements (both ancient and modern) especially Egyptians. There standing in the world, its history and local sport are all positive topics of conversation. However it is best to avoid discussing political issues or enquiring about female relatives of business acquaintances.

When dealing with government officials, it is important to learn the titles of any contacts as titles are of considerable importance, denoting hierarchy and status. Do not address government officials in a familiar way unless specifically requested to do so. Avoid any negative references to Islam, the situation in the Middle East or the role of the House of Saud.

Finally, don’t ignore the significance and importance of good, strong eye contact. A man's sincerity and honor can be judged by their ability to look you in the eye. This can be somewhat uncomfortable for those from cultures with much weaker eye contact (many Asian countries) but efforts must be made in this area.

Opportunities & Attractions for MNC’s in Arab Region

Arab Region is one of the best places to set up business operations. The conditions, rules and laws for the same are very liberal and attractive as compared to many other countries. Thus Arab world has established itself as a great

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economic force, attracting more and more organizations, entrepreneurs and investors to set up their businesses here.

There are many options for foreign or international corporations wanting to start operations or initiate new businesses in Arab. They can start by creating a trading relationship. For many companies, there are advantages if they have a presence in Arab to research market conditions, establish contacts, meet prospective customers, and finalize transactions and orders.

Like if we talk about Qatar, oil and gas reserves have transformed Qatar from an impoverished outcrop on the Arabian Peninsula into one of the richest countries in the world. The oil deposits located and exploited from the 1970s onwards were of unusually high quality and generated a substantial income for the country. In addition, one of the world’s largest natural gas fields, known as the North Field, was discovered in Qatari waters in the late 1980s. Measured by revenue, gas production has now outstripped oil and is set to remain Qatar’s principal source of income for the foreseeable future.

Arab Region is a heaven for businesses. For anybody who wants to establish a business, or start a business venture on their own or in partnership, there are a couple of issues one should take note of:

1) There is no tax in most of the Arab countries.

2) Secondly, you are required by law to have a local Sponsor.

In Arab import business revenue is humongous. Like in Dubai, it exceeds $14 billion annually. Dubai’s non-oil imports have risen sharply and there is a lot of scope for greater expansion. Dubai is becoming a hub for trading and is in turn becoming a major supplier for neighboring countries. With a growing number of expatriates, there is an increasing demand for ‘foreign’ food products, latest electronic goods and other high-end products. So Dubai is definitely a great market and there are plenty of opportunities for greater export trading and establishing export businesses. There are no stringent foreign exchange rules, quotas or conditions. The import duties are low, and many products are exempt from taxation. The transportation facilities from the port to warehouses are unmatched in terms of efficiency and operations. So it is easy to transport and store goods in less time thus increasing profit margins.

There are 7 categories of business organizations in Dubai and they are:

1) General partnership company

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2) Partnership-en-commendams

3) Joint venture company

4) Public shareholding company

5) Private shareholding company

6) Limited liability company

7) Share partnership company

Forms of Businesses in Arab RegionThe appropriate form depends largely on the product or service. All standard international forms of business relationships are recognized in Arab. It is difficult to freely state which form is most appropriate since it largely depends on the product or service, as well as the maturity of the business and the probable market penetration.

Small companies with financial and manpower restraints usually rely on agents or distributors to sell their products. This form of distribution is most favored by companies that have limited overseas market experience or exposure. There are low investment risks and this form permits penetration into a foreign market which otherwise would be impossible.

A company that has done its due diligence and has invested in a serious market analysis for its products would most likely prefer to enter into a partnership or joint venture. This permits it to have a participation in the development, marketing and growth of the product, and allows it to invest capital or know-how in the venture, maximizing growth potential. Many times, it is preferable to license the rights to a local manufacturer rather than enter into a possible competitive situation with the local company.

Joint Venture CompanyEstablishment of joint ventures is a common practice in Arab countries. A major motivation for joint ventures is to pair foreign firms with Arab partners to compete in segments of the government procurement market or in other markets subject to government regulation, such as telecommunications, computers and capital goods. Formation of a joint venture can be accomplished through a variety of business entities.

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A joint venture is a company concluded between two or more parties to share the profits or losses of one or more commercial businesses being performed by one of the partners in his personal name. The company shall be confined to the relationship between the partners and will not be affected by third parties. A joint participation venture is restricted to the arrangement between the partners therein and must not be made to third parties. Between the partners themselves, the arrangement is essentially a partnership. Each partner conducting business will generally do so in his own name and will not declare the interest of the other partners to others. The liability of the partners who are conducting business is unlimited with respect to the liabilities of the company. If the liability of the other partners is disclosed, the venture will be treated for every purpose as a general partnership. There are no registration formalities for this type of company as it is not a distinct legal entity.

A joint venture company uses the business name and the license of the partner conducting the business. A Memorandum of Association should, however, be prepared to indicate the rights and liabilities of the partners and the method of distribution of the profits and losses.

LicensingLicensing agreements are common forms of accessing the Arab market. A major concern of foreign companies trading with Arab is protection of intellectual property rights is often inadequate and uncertain. Serious gaps exist regarding patent protection for pharmaceuticals, trademarks and trade secrets.

Partnership CompanyA general partnership is an arrangement between two or more partners whereby each of the partners is jointly and severally liable to the extent of all their assets for the company’s liabilities. The Commercial Companies Law provides that only UAE nationals are allowed to be partners in a general partnership company. There is no prescribed minimum capital requirement for the establishment of Partnership Company.

Limited Partnership CompanyA limited partnership company is a company formed by one or more partners, with liabilities to the extent of their assets. In case of one or more limited partners, their liabilities would be limited to the extent of their respective shares in the capital of the company.

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Public Joint Stock Company (PJSC)A public joint stock company is a company whose capital is divided into equal value negotiable shares. The shareholders of a PJSC are liable only to the value of their shares in the capital of the company.

A PJSC must have at least 10 founder members and its management should be vested in a board of directors consisting of a minimum of three to a maximum of fifteen persons whose term of office may not exceed three years. Directors however can be re-elected when their term of office has expired.

A PJSC is required to have a chairman (of the board of directors) who must be UAE national. The majority of the board of directors are required to be UAE nationals.

Private Joint Stock CompanyA private joint stock company is essentially the same as a public joint stock company with the following differences:

1) The shares of a private joint stock company cannot be offered to the public.

2) Only three founder members are required.

A Private joint stock company may be converted into a public joint stock company. In order to do so, the following conditions must be met:

1) The nominal value of the issued shares is fully paid up.

2) A period of not less than two financial years has passed since the company was formed.

3) During the two years preceding the application for conversion, the company has achieved net profit distributable to the shareholders, of which average is not less than 10% of the capital.

4) A resolution of the extraordinary assembly for the conversion of the company is adopted by a majority of three-quarters of the company shareholders.

5) The Ministry’s decision to convert the company form a private joint stock company to a pubic joint stock company is published in the Official Gazette.

Limited Liability Company (LLC)Limited Liability Company is one with limited liability, where the number of partners may not exceed fifty and should not be less than two. Each of the

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partners shall only be liable to the extent of his share in the capital. The partners’ participation should not be represented by negotiable certificates.

In addition, an LLC has the following legal and commercial characteristics:

1) UAE nationals must hold at least 51% of the shares.

2) Public subscription for raising capital is not permitted.

3) The management or managers are appointed by Memorandum of Association, by a separate management contract or the general assembly of the partners.

4) Managers may be one or more of the partners or any other parties provided that they do not exceed a total of five persons.

5) It is possible to provide in the Memorandum of Association that the profit and losses will be shared in a ratio different to that of the share capital ratios.

6) It is necessary to appoint an auditor who must be accredited in the UAE.

Partnership Limited with Shares Company (PLS)A partnership limited with assets is a company formed by general partners who are jointly liable to the extent of all their assets for the company liabilities, and participating partners who are liable only to the extent of their shares in the capital.

1) The partners whose liability is unlimited must be a UAE national.

2) The minimum share capital requirement for limited partnership is Dh. 500.000.

Branch of a Foreign CompanyA branch office is legally regarded as part of its parent company and does not have a separate legal identity from that of its parent company.

Branch offices are nevertheless required to have a national agent. If the agent is a company, it must be wholly owned by UAE nationals. The national agent, however, will not acquire any rights or interest in the business of the branch office and will simply provide services on matters which concern federal and local government departments.

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Political Risk Factors in Arab RegionRecent events surrounding the Arab world debt standstill raise broader questions about the political risks of investing in the Arab world. The good news is that growth and FDI have risen markedly in recent years; yet, risks undoubtedly remain. I researched the issue in depth for new Perspectives from the Multilateral Investment Guarantee Agency (MIGA) that highlights the diversity of risks within the Arab World.

The Arab World, like other developing regions, provides both potential risks and rewards for international investors. The most important message from the Perspectives piece, though, is that risks vary significantly by country, by sector, and by project. As a result, it’s crucial not to take a one-size-fits-all approach to investing in the region.

The Arab World is perceived as being prone to war and civil disturbance. Yet available data from the Berne Union shows no claims for war and civil disturbance in Arab countries. Here we see a considerable gap between perceptions and reality.

Moreover, while most Arab nations hold substantial reserves, lowering the risks associated with the transfer and convertibility of domestic currency, this masks some significant variability. Foreign exchange reserve levels among countries in the region vary from four to 12 months of import cover. Expropriation events have been rare but high-profile in the Arab World. Notably, since 2005, Berne Union data show eight cases of expropriation—none in the Arab World.

Many investors enter into contracts with host governments, and in these cases breach of contract risks are paramount. The World Bank’s governance indicators reveal a gradation in the quality of governance and access to legal redress in the region; nine Arab countries are above the global mean, 13 are below.

National laws and practices over arbitration also vary considerably. Important regional arbitration centers are in Cairo, Dubai, and Bahrain. New centers are in the process of being established in Saudi Arabia and Qatar, and in the Dubai International Financial Centre. Many, but not all, Arab states subscribe to the key international arbitration agreements, conventions, and organizations.

These are some examples of the Arab World’s great diversity with respect to issues that impact political risk. Again, it’s important to stress that investors should understand the specific political risks they are facing. From there,

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investors can work to protect against and manage these risks effectively, including through the use of political risk insurance, where appropriate.

From my point of view investors must protect their investments managing risks with caution. At this moment there are some better places to invest such as India, Brazil, Russia or even some other countries in South East Asia and Latin America. In any case I would prefer a democratic country because the impact of the political risk will be lowered. Although there are many differences between Arab countries I also think that potential risks in the area are going up strongly. But these are just my impressions.

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Do’s & Don’ts in Arab Region

Do’s Don’ts

1) DO be aware that Arab people tend to use a closer physical proximity when communicating than Westerners. Though you may not be comfortable with this close distance, it can be perceived as impolite if you back up.

2) DO show respect towards your Arab business associates by taking a sensitive approach to appropriate behavior and cultural gestures. Using the left hand to pass something, drinking alcohol or eating pork while in the presence of your Middle Eastern colleagues should be avoided.

3) DO dress suitably and in a conservative manner. This is especially important for business-women, who must wear modest clothing that covers the arms and legs in particular. A headscarf is also advisable.

1) DON’T criticize your Arab counterparts in front of other business colleagues, as this may cause a loss of face and harm the individual’s sense of honor.

2) DON’T schedule business meetings during the holy month of Ramadan if at all possible as business activity tends to be reduced. Ramadan is a major Islamic tradition that includes fasting for an entire month. Although foreigners are not required to fast, it is considered impolite to eat or drink in front of others during this time.

3) DON’T give the “thumbs up” sign while in the Middle East as this is considered to be an offensive gesture.

4) DON’T inquire too much about a male colleague’s wife or female relatives. To a traditional Arab male, this is not considered a topic for public conversation but rather a private matter and as such could be taken offensively. It is polite to inquire about family as long as they are not female.

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Pakistan as Home Region

OverviewPakistan, officially the Islamic Republic of Pakistan is a country in South Asia.

Location – Southern Asia, bordering Afghanistan 2,430 km, China 523 km, India 2,912 km, Iran 909 km.

Capital – Islamabad

Population – 159,196,336 (July 2004 est.)

Ethnic Make-up – Punjabi, Sindhi, Pashtun (Pathan), Baloch, Muhajir (immigrants from India at the time of partition and their descendants)

Religions – Muslim 97% (Sunni 77%, Shi'a 20%), Christian, Hindu, and other (inc. Sikh) 3%

Culture in Pakistan – Key Values & ConceptsReligion

Islam is practiced by the majority of Pakistanis and governs their personal, political, economic and legal lives. Among certain obligations for Muslims are to pray five times a day - at dawn, noon, afternoon, sunset, and evening. Friday is the Muslim holy day. Everything is closed. During the Holy month of Ramadan all Muslims must fast from dawn to dusk and are only permitted to work six hours per day. Fasting includes no eating, drinking, cigarette smoking, or gum chewing.

Hierarchical SocietyPakistan is a hierarchical society. People are respected because of their age, status and position. Older people are viewed as wise and are granted respect. In a social situation, they are served first and their drinks may be poured for them. Elders are introduced first, are provided with the choicest cuts of meat, and in general are treated much like royalty. Pakistanis expect the most senior person, by age or position, to make decisions that are in the best interest of the group. Titles are very important and denote respect. It is expected that you will use a person's title and their surname until invited to use their first name.

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Business Environment & Etiquettes in Pakistan

Building RelationshipsThird-party introductions are a necessity in this relationship-driven culture. Pakistanis prefer to work with people they know and trust and will spend a great deal of time on the getting-to-know-you part of relationship building. You must not appear frustrated by what may appear to be purely social conversation. Pakistanis are hospitable and enjoy hosting foreign guests. Relationships take time to grow and must be nurtured. This may require several visits. Pakistanis often ask personal questions as a way to get to know you as a person. If possible, it is best to answer these questions. Pakistanis do not require as much personal space as most western cultures. As such, they will stand close to you while conversing and you may feel as if your personal space has been violated. Do not back away.

Indirect CommunicationPakistanis are generally indirect communicators. Always demonstrate deference to the most senior person in the group. In general, Pakistanis speak in a roundabout or circuitous fashion. Direct statements are made only to those with whom they have a long standing personal relationship. They also use a great deal of hyperbole and similes, and go out of their way to find something to praise. Be prepared to flatter and be flattered. Pakistanis prefer to converse in a non-controversial manner, so they will say they "will try" rather than admit that they cannot or will not be able to do something. Therefore, it is important to ask questions in several ways so you can be certain what was meant by a vague response. Silence is often used as a communication tool. Pakistanis prefer to do business in person. They see the telephone as too impersonal a medium for business communication.

Etiquettes in Business MeetingsAppointments are necessary and should be made, in writing, 3 to 4 weeks in advance, although meetings with private companies can often be arranged with less notice. The best time to schedule meetings is in the late morning or early afternoon. If at all possible, try not to schedule meetings during Ramadan. The workday is shortened, and since Muslims fast, they could not offer you tea, which is a sign of hospitality. You should arrive at meetings on time and be prepared to be kept waiting. Pakistanis in the private sector who are accustomed to working with international companies often strive for punctuality, but are not always successful. It is not uncommon to have a meeting cancelled at the last minute or

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even once you have arrived. In general, Pakistanis have an open-door policy, even when they are in a meeting. This means there may be frequent interruptions. Other people may wander into the room and start a different discussion. Meetings are formal. Business meetings start after prolonged inquiries about health, family, etc. Never inquire about a colleague's wife or daughters. During the first several meetings, business may not be discussed at all as the relationship is still being developed. Maintain indirect eye contact while speaking.

Business NegotiationsCompanies are hierarchical. Decisions are made by the highest-ranking person. Decisions are reached slowly. If you try to rush things, you will give offense and jeopardize your business relationship. The society is extremely bureaucratic. Most decisions require several layers of approval. It often takes several visits to accomplish simple tasks. If you change negotiators, negotiations will have to start over since relationships are to the person and not the company that they represent.

1) Pakistanis are highly skilled negotiators.

2) Price is often a determining factor in closing a deal.

3) Pakistanis strive for win-win outcomes.

4) Maintain indirect eye contact while speaking.

5) Do not use high-pressure tactics.

Pakistanis can become highly emotional during negotiations. Discussions may become heated and even revert to Urdu (the national language). It is imperative that you remain calm.

Business Card EtiquettesBusiness cards are exchanged after the initial introduction. Include any advanced university degrees or professional honors on your card, as they denote status. Business cards are exchanged using the right hand only or with two hands. Make a point of studying any business card you receive before putting into your business card holder.

Management Styles in PakistanAs has already been stated, Pakistan is an enormously hierarchical society (arguably one of the most hierarchical in the Asia) and this, obviously, has an impact on management style. Local management styles used in firms are more of

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an Autocratic Styles of Management. In Autocratic style of management, you give instruction to your staff to perform certain task without getting opinion or making consultation. If you are someone who likes to control an office situation, then you tend to use this autocratic style. Although decisions made are fast and prompt without involving others, work is usually completed on time. However this type of style may create a work environment where staffs are less motivated and build up a “wait for boss instruction” syndrome. In longer term, autocratic management style tends to drive away staff hence increase staff turnover.

It is imperative that there is a boss and that the manager acts like a boss. The position of manager demands a certain amount of role-playing from the boss and a certain amount of deferential behavior from his subordinates. The boss is definitely not expected to perform any seemingly 'menial' tasks such as making coffee for everybody or moving chairs in a meeting room. Anglo-Saxon concepts of egalitarianism where the boss is the primus inter pares are virtually incomprehensible in a society still dominated by the historical conventions of religion and the caste system.

Therefore, the boss is expected to give explicit instructions which will be followed to the letter - even if everybody knows full well that the instruction is incorrect. Vague requests for action, with the expectation that staff will show the necessary level of initiative are likely to end in inaction, as staff will be left confused as to the wishes of the manager. Managing people in Pakistan requires a level of micro-management which many western business people feel extremely uncomfortable with but, which is likely to bring the best results.

Team working, as understood in the Anglo-Saxon world is alien to the Pakistani approach to business. A team expects to be given exact and complete instructions by the team-leader or boss and then to follow those instructions exactly. Most of the times, team members would not be expected to query the instructions passed down to them and would expect to follow them even when it became apparent that things were going wrong.

Therefore, the leader takes complete responsibility for the success or failure of a project and needs to be constantly on top of progress and looking out for problems. If anything goes awry, the team leader is expected to sort it out personally. Once again, micro-management is the key.

In many ways, business structures in Pakistan mirror Pakistani society. Both are extremely hierarchical in nature, where people have an allotted position which

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they do not attempt to overturn. Thus, companies tend to be run by one very strong individual who will issue direct instructions down the chain of command. Everybody expects that these instructions will be given in a fairly authoritarian manner and that they will be followed unquestioningly by those further down the chain. People do not question either their position within the organization or the validity of decisions taken.

Thus, when doing business in Pakistan it usually necessary to liaise as near to the top as possible. A great deal of time can be wasted dealing with middle management who may have very little impact on the final decision. If dealing in the middle, try to deal with those who have some influence over the real decision-maker.

Many MNC's try to introduce a flatter, more Egalitarian structure to their Pakistani subsidiary in order to align it with other offices in the group. This may prove difficult in a country where hierarchy is unquestioningly accepted. It may not be impossible to take this approach but it is certain to require a great deal of explanation, retraining and patience. Autocratic Management style is most effective in situation when immediate decision must be made such as in the even of crisis, fire, or emergency.

Communication Styles in PakistanEnglish is the official language in Pakistan and is the only one which is universally spoken by the educated sections of society. English is deemed to be neutral and does not carry any of the regional connotations which cause so much friction in Pakistani political life. Therefore, many Pakistani people speak excellent, almost perfect English and it would be unusual to meet any business person engaged in international trade who was unable to converse in the language.

Just Can't Say No – Pakistanis do not like to express 'no,' be it verbally or non- verbally. Rather than disappoint you, for example, by saying something isn't available, Pakistanis will offer you the response that they think you want to hear. This behavior should not be considered dishonest. As with many Asians, Pakistanis find it very difficult to say no - feeling that to do so would be offensive and lead to difficult ongoing relationships. Thus, when faced with disagreement, you are likely to encounter vagueness and lack of commitment. Answers such as, 'We'll try' or 'Yes, but it may prove difficult' should be viewed with great suspicion and will probably mean 'No'. The danger is that you will be told what people think you want to hear, rather than any unpalatable truths. Do not attempt

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to force your Indian contacts to be more direct and forthright than they feel comfortable with otherwise you may frighten them away.

As Pakistanis are highly family-oriented, do not be surprised if many meetings begin with questions about your family. Such small talk is considered to be highly civilized behavior and a good way to establish meaningful dialogue later in the proceedings. Do not be over-eager to move things onto an empirical business basis too quickly.

The only proper way to approach someone you do not know is with a formal introduction. The ideal person to handle this is a high-status person or company known to both parties. This third-party introduction bridges the relationship gap between you and the person with whom you wish to meet. Negotiations often take a long time due to the lengthy process of building trust and developing a personal relationship and are conducted formally. Do not remove your suit jacket without permission. Even then, unless the most senior ranking Pakistani person does, it is a good idea to keep your jacket on despite the heat and humidity. Intercultural knowledge and sensitivity is essential to successful management. Pakistanis will seldom say "no" overtly, so you must watch their non-verbal cues. In general, Pakistanis expect concessions in both price and terms. It is acceptable to demand similar concessions for each one you grant.

Communication in Pakistan tends to be relatively indirect and relies heavily on nonverbal cues and figurative forms of speech, where information is not explicitly stated. Respecting an individual’s honor and saving face are key drivers in the indirect communication style that is prevalent throughout Pakistan. Directly refusing a proposal, for example, may be interpreted as impoliteness. Always demonstrate deference to the most senior person in the group. In general, Pakistanis speak in a roundabout or circuitous fashion. Direct statements are made only to those with whom they have a long standing personal relationship. They also use a great deal of hyperbole and similes, and go out of their way to find something to praise. Be prepared to flatter and be flattered. Pakistanis prefer to converse in a non-controversial manner, so they will say they "will try" rather than admit that they cannot or will not be able to do something. Therefore, it is important to ask questions in several ways so you can be certain what were meant by a vague response. Silence is often used as a communication tool. Pakistanis prefer to do business in person. They see the telephone as too impersonal a medium for business communication.

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Analysis of Arab World & PakistanBoth Pakistan and Arab countries are almost similar in nature. To ensure successful cross cultural management in Pakistan and Arab countries, you need to be aware of the importance of maintaining a degree of formality at all times. Older people and those in senior positions should be deferred to and treated with dignity and respect. Status is important and it is a good idea to seek situations where you can flatter your colleagues. You must exercise patience in your business dealings. Things generally take longer than expected since meetings may be interrupted and patience will be necessary because Arabs take time to get to know you. In general, punctuality is expected of the westerner but not of the Arab or Pakistani. Never do anything that would make a Saudi appear less in the eyes of others.

Pakistanis and Arabs are hospitable and enjoy hosting foreign guests. At the same time, they expect you to understand the rules of their country and obey them. Do not appear overly friendly when you are first introduced. Relationships take time to grow and must be nurtured. Pakistanis often ask personal questions as a way to get to know you as a person. If possible, it is best to answer these questions. Businesswomen will be asked about their marital status and the number of children they have.

Arab managers reach decisions after many discussions with major stakeholders. Once a decision is reached, it is handed down to subordinates to implement. Employees do not question the decisions that have been reached. Managers or those in a position to do so will make decisions, while in general their subordinates will wait to be told what to do.

Similar is the case in Pakistan. Pakistani managers tend to have a rather autocratic style. At the same time, the boss is seen as a paternalistic figure and is expected to assist subordinates with personal problems. Decisions are made at the top of the company and handed down to managers to implement. Although the decision maker may consult with technical experts before reaching a decision, he is not seeking consensus, simply sufficient information to make an intelligent decision.

To ensure successful cross cultural management, you will need to bear in mind the importance of people in the office maintaining the proper behavior relative to their position.

The culture in both the regions is very relationship and group-oriented, so a strong emphasis is placed on maintaining harmony and proper lines of authority in the

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workplace. Some Arabs as well as Pakistanis, however, are extremely direct, in which case you can deal with them in the same way.

The manager makes decisions and accepts responsibility for work performed by subordinates. The middle manager may consult with subordinates before reaching a decision, although it is more likely that he will confer with trusted advisors or relatives.

To ensure successful cross cultural management, you will need to bear in mind the importance of people in the office maintaining the proper behavior relative to their position. For instance, it would be inappropriate for a manager to make copies or move a piece of furniture because these are tasks that lower level people do. To engage in behavior beneath you would lower your esteem in the office.

In Arab region, cross cultural management will be more effective with an understanding of the individual roles and existing hierarchy. Employees do not question the decisions that have been reached. Managers or those in a position to do so will make decisions, while in general their subordinates will wait to be told what to do.

Successful cross cultural managers in Pakistan will remember that each person has a very distinct role within the organization, and maintaining that role helps to keep order.

In Pakistan, as in other hierarchical societies, managers may take a somewhat paternalistic attitude to their employees. They may demonstrate a concern for employees that goes beyond the workplace and strictly professional concerns.

Pakistan’s intercultural competence and readiness for risk is low. Pakistan is a low risk and low change-tolerant culture. New projects will be carefully analyzed to assure that whatever risk they represent is thoroughly understood and addressed. In order for change to take hold, the idea needs to be perceived as good for the group and be accepted by the group. Intercultural sensitivity is important with Pakistan’s attitude toward risk dramatically impacted by the negative ramifications of failure on both the individual and the group.

Arab countries like Iran’s intercultural adaptability and readiness for change is minimal. This means that change is difficult to bring about and is not received with any enthusiasm. Projects will need to be carefully analyzed every step of the way to assure that all the risks have been assessed and understood. Failure in Iran causes a long-term loss of confidence by the individual as well as by others. Because of this attitude, intercultural sensitivity is going to be required, especially

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when conducting group meetings and discussing contributions made my participating individuals.

Pakistan is a fluid time culture, and as is the case with many fluid time cultures, it is also very relationship-oriented. People in Pakistan will not want to upset others in order to force adherence to a deadline, and while appointments and schedules need to be set well in advance as a sign of respect for the individual, you need to understand that those schedules are seen as flexible, not necessarily needing to be adhered to. Successful cross cultural management will depend on the individual’s ability to meet deadlines. Global and intercultural expansion means that some managers may have a greater appreciation of the need to enforce timescales and as such, agreed deadlines are more likely to be met.

Same is the case with the Arab people. People of Arab region will not want to upset others in order to force adherence to a deadline, and while appointments and schedules need to be set well in advance as a sign of respect for the individual, you need to understand that those schedules are seen as flexible, not necessarily needing to be adhered to. When working with people from Arab countries, it’s advisable to reinforce the importance of the agreed-upon deadlines and how that may affect the rest of the organization.

If you are working in an Arab country, intercultural sensitivity is essential. It is important to remember that reputation plays an important role. The risk becomes amplified in a team or collaborative setting. If you would like to encourage participation it is important first to clearly establish a non-threatening work environment and communicate fully that their participation is desired. Successful cross cultural management will rely on the individual’s interpersonal skills and ability to maintain cordial relationships with their subordinates.

If you are working in Pakistan, cross cultural sensitivity is needed and it is important to remember that honor and reputation play an important role. It is important to qualify ideas that are raised in a gentle manner, protecting the reputation of those bringing up ideas, so no one is shamed. If someone is exposed and embarrassed, they may likely not participate again, and it will stem the flow of ideas and the participation of the entire group. Praise should be given to the entire group, and not to individuals.

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Comparison between Arab Region & Pakistan

Arab Region Pakistan

1) Being a Manager in Arab

Business setup in Arab region is very conservative and manager will need to maintain a proper degree of formality and treat everyone with respect.

2) Role of a Manager

As in other hierarchical societies, managers may take more of an Autocratic style and somewhat paternalistic attitude to their employees. Employees do not question the decisions that have been reached. Managers or those in a position to do so will make decisions, while in general their subordinates will wait to be told what to do.

3) Approach to Change

Intercultural competence and readiness for risk is low. Arab region is a low risk and low change-tolerant culture. New projects will be carefully analyzed to assure that whatever risk they represent is thoroughly understood and addressed.

4) Approach to Time and Priorities

Cross cultural understanding is important when reviewing the

Being a Manager in Arab

Manager need to be aware of the importance of maintaining a degree of formality at all times. Older people and those in senior positions should be deferred to and treated with dignity and respect. Status is important and it is a good idea to seek situations where you can flatter your colleagues.

Role of a Manager

Manager should remember that each person has a very distinct role within the organization, and maintaining that role helps to keep order. Managers may take a somewhat paternalistic attitude to their employees. They may demonstrate a concern for employees that goes beyond the workplace and strictly professional concerns.

Approach to Change

Intercultural adaptability and readiness for change is minimal in Pakistan. This means that change is difficult to bring about and is not received with any enthusiasm. Projects will need to be carefully analyzed every step of the way to assure

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approach to timelines. Arabs will not want to upset others in order to force adherence to a deadline. Things generally take longer than expected since meetings are frequently interrupted and several meetings may be required to do what could be handled by a phone call at home.

5) Decision Making

Decisions are usually made at the top of the company but managers reach decisions after many discussions with major stakeholders. Once a decision is reached, it is handed down to subordinates to implement. Employees do not question the decisions that have been reached. Managers or those in a position to do so will make decisions, while in general their subordinates will wait to be told what to do.

6) Boss or Team Player

It is important to remember that honor and reputation play an important role and so some cross cultural sensitivity will be required. The risk becomes amplified in a team or collaborative setting.

7) Communication & Negotiation Styles

Business is personal. It takes

that all the risks have been assessed and understood.

Approach to Time and Priorities

Pakistan is a fluid time culture, and as is the case with many fluid time cultures, it is also very relationship-oriented. So there are instances where there is flexibility to standards adhering to schedule.

Decision Making

Pakistani managers tend to have a rather autocratic style. At the same time, the boss is seen as a paternalistic figure and is expected to assist subordinates with personal problems. Strong emphasis is placed on maintaining harmony and proper lines of authority in the workplace. The manager makes decisions and accepts responsibility for work performed by subordinates.

Boss or Team Player

It is important to remember that honor and reputation play an important role and so some cross cultural sensitivity will be required. The risk becomes amplified in a team or collaborative setting.

Communication &

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time for Arabs to become warm

towards foreign businesspeople.

Decisions are made slowly. Do

not try to rush the process. Most

decisions require several layers

of approval. It may take several

visits to accomplish simple

tasks. Saudis are tough

negotiators. They believe that

everything is negotiable

Negotiation Styles

Cross cultural communication will be easier if you understand the importance of personal relationships in business. Being introduced by the proper people and making the right connections is extremely helpful. Pakistanis are non confrontational and they will seldom say "no" overtly, so you must watch their non-verbal cues. It often takes several visits to accomplish simple tasks. Pakistanis are highly skilled negotiators. Price is often a determining factor in closing a deal.

Similarities & Differences among Two RegionsAs the above comparison shows that both the regions Pakistan and Arab world possess more similarities and very minor dissimilarities.

According to my research there are not great deals of differences among the people of Pakistan and Arab people. There are some cultural differences that are due to the geographical boundaries and their location. But over all the management practices in the regions and the business structures and communication styles are almost the same. Both regions are hierarchical and people are given respect according to their age, position and status. Management practices are almost same as Pakistan is more Autocratic or to some extent Permissive in nature while in Arab countries, companies tend to follow somewhat paternalistic and more dominantly autocratic style of management. Managers of both regions are good negotiators and they think that every price can be

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bargained. Both regions are rich in natural resources and indirect communication is much more appreciated in the regions. Nonverbal communication, gestures, body language, eye contact and personal space matters a lot while doing business in these two areas. Role of women in business is limited and they work in the offices with cover heads by headscarves and veils.

In my opinion there is so much resemblance exists between the two regions and one of the most important reason for this finding is that both regions have huge amount of people which follows Islam as a religion. So under the basic guidelines of Islam people of both regions possess so many similarities.

Geert Hofstedes Cultural DimensionsThis simple tool offers a great resource for people wanting to get some intercultural business dimension tips when working with people from different cultures like Arab region. With this graph we can get some insightful intercultural business communication tips for working in or with Arabs.

Please see the Cultural Comparison Graph shown on the previous page. Look at the areas where the two cultures differ greatly and then get tips by following the links from the relevant dimensions below.

PDI (Power Distance Index) - the PDI score relates to the degree of equality or inequality between people in a country's society. A high PDI score indicates that inequalities of power and wealth exist in a country where as in low scoring countries there is more social equality.

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IDV (Individualism) - the individualism score focuses on the degree to which a culture values and reinforces the importance of the individual as opposed to the group. A high scoring country will view individuality and individual rights as critical. Low scoring countries will value the group, i.e. family, tribe, etc.

MAS (Masculinity) - masculinity focuses on the degree to which a culture reinforces the traditional role of males versus females. A high scoring country will have a more acute degree of gender differentiation whereas in low scoring countries there is less differentiation and discrimination between genders.

VAI (Uncertainty Avoidance) - uncertainty avoidance looks at the level of tolerance for uncertainty and ambiguity within a culture. Cultures with a high uncertainty avoidance score will have a low tolerance for uncertainty and ambiguity. This is seen through it being a more rule-oriented society that institutes laws, rules, and regulations. A low scoring country is less concerned about ambiguity and uncertainty and is less rule-oriented, more ready to accept change, consider new ideas and take more and greater risks.

“Tricks of the Trade” for MNC’s

Doing Business in Arab RegionThe following are useful guidelines for doing business in Arab countries:

1) All aspects of life in Arab are governed by an absolute belief in the teachings of Islam and an adherence to its tenets. No business deal will ever be discussed without reference to the Almighty and His Prophet Mohammed (P.B.U.H).

2) It goes without saying that the utmost respect must be given to such devoutly held religious beliefs and accommodations made to allow people to observe religious rituals of prayer and fasting.

3) As all things emanate from the will of Allah, a degree of fatalism and acceptance are inherent in the Muslim’s character. Things will or will not happen according to the will of God and not because of the actions of man. The meeting will take place tomorrow at nine o'clock - God willing.

4) Business is usually family-based with all senior positions filled by family members. Nepotism is the natural order of things and not something that needs to be explained to visitors. This family-orientation leads naturally to the development of strong hierarchies with the oldest male relatives being at the head of the organization.

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5) Age is worthy of respect and honorable visitors will display respect to older people - therefore it is good to have some older heads amongst any delegation going to Arab region.

6) Try to find out the relationship tree of any company you wish to do business with. Power may not reside with a functional head if that head is not a family member or has poor relationships at the top.

7) One should not take credit for joint efforts. A great deal of what is accomplished is a result of group-work, and to indicate that one accomplished alone is a mistake.

8) Managers tend to lead through instruction and subordinates are not expected to show initiative. If is not requested, it may not get done.

9) Meetings can involve sitting in rooms with unknown people who are simultaneously meeting your contact. In effect, several meetings may take place at the same time. Initial meetings can be very time-consuming and appear to deliver very little in terms of tangible returns.

10) Management style is directional and employees expect managers to lead in a fairly authoritative manner. This can mean that instructions are given in a very direct, even abrupt way.

11) When in meetings, pointing the soles of your shoes at your counterparties as this could be seen as rude. It is also best to pass any documents, refreshments etc. with your right hand.

12) Same gender tactility is very common - although public tactility across the genders is very rare and frowned upon.

13) Loud and aggressive discourse denotes engagement and interest - not anger or hostility. Do not be frightened or worried if the noise levels in meetings start to grow.

14) Levels of eye contact are very strong and strong eye contact denotes sincerity and trustworthiness. Dress conservatively, but very smartly. You will be judged partly on your appearance.

15) Women play little or no active role in business life and it can be very difficult for women to even get a visa to enter the country on business.

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16) Arabic is a language of hyperbole. Therefore, it is common for business associates to lavish extravagant praise on each other as part of the all-important relationship building phase of doing business. Don’t feel inhibited to join in this process.

17) Don’t take ‘yes’ to mean ’yes’ every time. It could be being used as a delaying tactic.

18) Teams work well if birth or kinship associates everybody in the team. Teams of strangers rarely gel effectively.

19) Much of what gets done is result of going through administrative channels in the country. It often is difficult to sidestep a lot of this red tape, and efforts to do so can be regarded as disrespect for legal and government institutions.

20) Important decisions are made usually in person, not by correspondence or telephone. This is why an MNC’s personal presence often is a pre-requisite for success in the Arab World. Additionally, while there may be many people who provide input on final decision, the ultimate power rests with the person at the top, and this individual will rely heavily on personal impressions, trust and rapport.

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Bibliography http://www.kwintessential.co.uk/etiquette/doing-business-middleeast.html

http://en.wikipedia.org/wiki/Etiquette_in_the_Middle_East

http://blogs.worldbank.org/miga/how-risky-really-is-the-arab-world-for- investors

http://www.realtor.org/intupdt.nsf/Pages/ Doing_Business_in_the_Middle_East

http://www.ehow.com/way_6170193_middle-east-business-etiquette.html

http://www.cybercityonline.net/yp/OPs/html/ mnc_s_views_of_business_enviro.html

http://www.kwintessential.co.uk/intercultural-business-communication/ tool.php?culture1=36&culture2=0

http://www.aboutdubai.org/Business_Opp.php

http://www.qatar-tourism.com/

http://www.businessindubai.com/content/view/3/69/

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