1 NORTH SOUTH UNIVERSITY Course: BUS251 Course Title: Business Communication Sec: 17. “ Term Paper” Submitted By: The Unity . Name : Md. Ekram Islam Imtiaz Sultan Md. Maksudur Rahman Adnan Sarif ID No. 1431107630. 1430280030 1420620030 1611210630 Submitted To: Ms. Rifat Iqbal(RFQ) Lecturer Department of Management School of Business & Economic 2 Table of Contents Letter of Transmittal..................................................................................4 Executive Summary ..................................................................................5 Introduction................................................................................................5 Problems And Purpose..............................................................................6 Methodology...............................................................................................6 Brand Overview...........................................................................................7 Country Details...........................................................................................8 History :...................................................................................................8 People : ..................................................................................................9 Population :............................................................................................9 Currency :.............................................................................................10 Geology : ..............................................................................................11 Climate : ...............................................................................................11 Language: ............................................................................................12 Religion:................................................................................................12 Economic Infrastructure .........................................................................14 Overview ..............................................................................................14 Industry Analysis..................................................................................15 Competition..........................................................................................15 Staffing..................................................................................................16 Cultural Attributes.....................................................................................17 Behavioral Patterns :............................................................................17 Customs................................................................................................18 Business Etiquettes............................................................................. 18 Food Habits and Trends ......................................................................19 Conclusion : ...............................................................................................20 References..................................................................................................21 3 The Term Paper. A Sister Concern of MDO Inc. ABSTRACT Hudsonville – Midwest Crafted Creamery is a premium brand of ice cream based solely inside the United States of America. The following comprehensive report is a cross cultural study of its possible expansion strategy into Saudi Arabia. Group Name: The Unity 4 Letter of Transmittal Rifat Iqbal Lecturer, Department of Management School of Business and Economics North South University Subject: Report on the expansion plan of MDO Inc. in a Saudi Arabia Dear Madam, As per our research proposal, the attachment contains the report of, Hudsonville – Midwest Crafted Creamery. The following report is a comprehensive analysis of cross-cultural study of the possible expansion decision of Hudsonville – Midwest Crafted Creamery into Saudi Arabia. In this report we thoroughly discuss the competitive advantages that Hudsonville possibly exploit from the Saudi Arabia market. We also discuss the obstacles and challenges that Hudsonville may have to overcome in order to sustainably operate their business in Saudi Arabia. In conclusion, the report analyzes the possibilities and provides constructive recommendations for you and your conglomerate. The research team sincerely hopes that you and your team find the report to satisfactorily meet all your cultural needs. Sincerely, 5 Executive Summary The report entitled Hudsonville – Midwest Crafted Creamery is a comprehensive inter-cultural study between Saudi Arabia and the United States of America. It investigates Hudsonville – Midwest Crafted Creamery, a brand of premium ice cream based in Michigan, USA. The formal document examines the possibilities of a possible brand expansion from USA to Saudi Arabia and the possible benefits and challenges. The document comprises of a formal introduction to the Hudsonville brand, followed by an in-depth analysis of its core competencies and brand history. Afterwards, the report thoroughly analysis the country of Saudi Arabia, its cultural factors, business etiquettes and general religious & philosophical beliefs that may benefit or threaten the overall expansion strategy for Hudsonville. Introduction: According to recent study, the global ice cream market has been a gradually increasing concern of the food & beverages industry. Technological advancement in past few years have drastically improved ice-cream production all over the world advancing both local and international markets. The available range of ice-cream can be divided into the following categories: Super Premium ice-cream Premium ice-cream Regular ice-cream Soft ice- cream Light ice-cream Reduce-Fat ice-cream Normally the premium ice cream is the products sales in a highest volume during the summer. Hudsonville – Midwest Crafted Creamery, owned by MDO Inc. offers the global market a premium range of ice-cream products in the American market. As a market leader in America MDO Inc. can consider to expand their business into Saudi Arabia to increase global market share of the ice cream industry. 6 The fact that Saudi Arabia is one of the hottest country in Middle East and the people often try to cool themselves by eating ice cream. Which is favor sales for ice cream. Increase in foreign investment in this sector has additionally encouraged the Saudi Arabia to invest more on the frozen food sector. On the other hand the diversified supply chain will help the ice cream industry. Problems & Purposes : Hudsonville – Midwest Crafted Creamery, A sister concern of MDO Inc. has been dominating the American market and has a significant proportion of market share o in the ice-cream industry. But in the modern era numerous competitors had started entering the market with a wide range of newer and more flavourful ice-cream products causing a decrease in the demand for Hudsonville’s ice-creams. Therefore, thinking about for the future and to reach the global customer they should expand their business. According to several market research Saudi Arabia will be the best fit for the expansion strategy of MDO Inc. One of the important reasons could be the weather factor. Therefore, our report will include different aspects of Saudi Arabia culture, their life styles, economy, competition, available labour, possible locations, and existing industries and so on. The purpose of this research is to find out whether MDO Inc. should expand their business in Saudi Arabia or not. Methodology: For complete the report we rely on secondary research, because it is not possible for us to conduct a survey or collect primary data by visiting Saudi Arabia. We collect secondary data by browsing internet and gather information from different websites, journals and articles and from other sources. Brand Overview: 7 Hudsonville – Midwest Crafted Creamery was a co-operative made in 1985 by local farmers in search for superior method to offer their dairy products. Their first location was on Chicago Drive in Hudsonville, Michigan, USA. Hudsonville began producing frozen yogurt in 1926 and was later making six flavours by 1940 – Butter Pecan, Orange Pineapple, Tutti Fruitie, Chocolate, Strawberry and Vanilla. Dick Hoezee purchased a controlling enthusiasm for the creamery and moved it to Burnips, Michigan order to prepare for the broadening of Chicago Street. He sold the business to his four children in 1972. Afterwards, Denny Ellens purchased Hudsonville from Hoezee family in2003 and moved it its present area in Holland, Michigan. Today, Hudsonville Ice Cream creates more than 50 flavours which are sold across over Michigan, Illinois and Indiana. 8 History: Saudi Arabia is geographically the largest independent state in Western Asia, the second-largest in the Arab world the fifth-largest in Asia. It is the only nation with both a Red Sea coast and a Persian Gulf coast, and most of its land consists of arid desert, lowland and mountains. Saudi Arabia also has one of the world's youngest populations 50 percent of its 33.4 million people are less than 25 years old. Saudi Arabia is sometimes called "the Land of the Two Holy Mosques" in reference to Al-Masjid al-Haram (in Mecca) and Al-Masjid an-Nabawi (in Medina), the two holiest places in Islam. Saudi is the world's second largest oil producer (behind the US) and the world's largest oil exporter, controlling the world's second largest oil reserves. Saudi Arabia and the United States are tactical friends and since President Barack Obama. On May 20, 2017, President Donald Trump and King Salman signed a series of letters of intent for Saudi Arabia to purchase arms from the United States totaling US$110 billion immediately and $350 billion over 10 years. People: Saudi Arabia today as an inclusive name for the people of the five regions: (Najd, Al-Hejaz, Asir, Tihama, and Al-Ahsa). The cultural setting of Saudi Arabia is Arab and Islam, and is 9 deeply religious, conservative, traditional, and family oriented. A portion of the original populations of the area that is now Saudi were nomads known as Bedouin. Saudian people are very much aware about their dresses up female are wearing black Abaya or long Borkha. Saudi men and boys, whatever their job or social status, wear the traditional dress called a Thawb which has been called the Arabic dress. People of Saudi are like to eat their national food Kasbah this dish are made with rice and meat which is delicious for them. Population Saudi people age data graph are given According to the estimation of United Nations, the current population of Saudi Arabia 34,678,755 with a density of 16 person per square kilometres. The average birth rate in Saudi Arabia 1,605 person per day and average death rate is 335 person per day. The growth rate of Saudi Arabia population in 2020 had been 1.59%. Also, the literacy rate of the Saudi Arabia people is 95.3% Saudi Arabia increased from 70.8 % in 1992 to 95.3 % in 2017 growing at an average annual rate of 7.85%. 10 The following graphical chart shows the growth rate of Saudi Arabia population from 2012 to 2020, along with the forecasts of their probable growth rate in near future:  Saudis are a nation who collected with the Arab ethnic groups. Saudi nationals represented alost 20,768,627 making up 62.15% of the total population. Their national language is Arabic and Religion is Islam majority of the population is Muslim and non-Muslim people don’t have any exact record. Even irreligious people can’t enter Macca and Medina. Saudi Arabia's Central Department of Statistics & Information estimated the foreign population at the end of 2014 at 33%. Foreign Muslims who have resided in the kingdom for ten years may apply for Saudi citizenship. Saudi people are very much sensible about the prayer time even they close their business every prayer time. Currency: The official currency of the Saudi Arabia is known as Riyal. Each Saudi riyal is divided into 20 qurush or 100 halala. The Monetary agency of Saudi Arabian establish in 1952and it has the authority to use coins and bank notes in the kingdom. The symbol of Saudi Arabian currency is س. رor SAR. Currently, the central bank of Saudi Arabian known as Saudi Arabian Monetary Authority (SAMA) is in charge of controlling monetary of the country and fiscal policy. Geology: 11 Saudi Arabian is the Thirteen largest country in the world, located in the Red Sea and the Gulf of Aqaba to the west, the Persian Gulf to the east, and Yemen to the south. The borders of Saudi Arabia resolved with Yemen to the south and southwest. With the United Arab Emirates remains undefined. Saudi-Iraqi Neutral Zone was legally settled in 1981 by partition. Saudi Arabia, once upon a time this country of small cities and towns bt it has become increasingly urban; Saudi Arabia traditional centres such as Jeddah, Mecca, and Medina have grown day by day large cities. World’s largest continues sand desert situated in Saudi Arabia this is al-Rub al-Khalil. In Saudi there are four major regions. The first one is Najd. This is the largest. A central plateau, which rises about 1500 meters in the west. The capital of Saudi Arabia is Riyad which is located in the Najd. The eastern province extends along the Persian Gulf and the primary region of the country is oil producing. Climate: Saudi Arabia climate most of the time is hot and dry but the nights are cool. Frosts occur in winter. In summer the temperature is very high, it’s reaching well over 45 °C but in nights there are generally cold. In winter extreme temperatures well below 0 °C. the daily maximum temperature is mild during the short spring and autumn seasons, averaging about 29 °C. The annual average precipitation rarely exceeds 100 millimeters, which is insufficient to maintain crops or livestock. The average monthly temperatures observed in Saudi Arabia over the last century ranged between a low of 15.5 °C from December to February to 30 °C from May to September. Language : The official language of Saudi Arabia is Arabic which is used in business and other communication purposes. English is widely spoken and is taught as a compulsory second language in schools. Foreigners who went Saudi Arabia for visit use English language for communication(Wikipedia). There are three other languages used as regional variants spoken by Saudi people are Hejazi Arabic ( it is about 6 million speakers ) , Najdi Arabic ( it is about 8 million speakers ) and Gulf Arabic (its about 0.2 million people speakers ) . Faifi is spoken by about 50,000 . Saudi Arabian Sign language is the principal language of the deaf community people . The large expatriate communities of Saudi Arabia also speak their own languages , the most numerous of which are Tagalog( people of 700000), Rohingya (400000 people) , Urdu 12 (380000 people) Egyptian ( 300000 people ) and Indonesian ( 250000) who come from outside of Saudi. According to language observation of Saudi Arabia, we will use Arabic and English language for branding our products and our official business communication. Religion : Total population is 34,173,489 and increasing gradually. Virtually all Saudi Arabian Citizens are Muslims and almost all Saudi residents are Muslim. Estimates of the Sunni Population of Saudi Arabia range between 75% to 90% , with the remaining 10-25% being Shia Muslim(Wikipedia). According to estimates there are about 1,500,000 Christians in Saudi Arabia , almost all foreign workers who are not permanent residents of Saudi Arabia. Saudi Arabia allows Christian people to enter into the country as foreign workers for temporary works , does not allow them to practice their faith in their religion openly. The percentage of Christian citizens in Saudi Arabia is officially zero, as Saudi Arabia forbids religious conversion from Islam and punishes it by death. Pew Research Centre says there are 390,000 Hindus in Saudi Arabia who are all foreign workers. Every year, millions of people visit Saudi Arabia for visiting the most important place for Muslim people Quba ( Masjida Haram) which is situated in the Makkah of Saudi Arabia and also for Hajj and other business purpose. Almost all of the visitors are Muslims. Main religion of Saudi Arabia is the Islam. The people of Saudi Arabia strictly follow their religion. We will try to strictly follow Islamic rules and regulation for doing our business in Saudi Arabia. We will use 100% halal food elements for manufacturing our products and product branding. We will give full respect to their religion of Islam for business Communication also. 13 14 Economic Infrastructure : Overview: The Saudi Arabia economy have gained astonishing growth in the last few decades that catapulated Saudi Arabia to become the world's one of the top twenty economies ( World Bank, G20). It's economy mainly dependent Oil resources as they have the second-largest petroleum reserves and the country is the top largest exporter of petroleum in the whole world. The country also has the fifth- largest proven natural gas reserves and is called an " Energy Superpower ". The country has total worth of US$33.2 trillion according to the Saudi Arabia annual report 2019 of world bank. They have the second most valuable natural resources in the world. They export oil, natural gas all over the world. The petroleum sector accounts for 87% of the Saudi Arabian budget revenues, 90% of export earnings and 42% of GDP (World Bank). They have other industrial and agricultural sectors for rest of their earnings. The income category of the country is High and GNI Per capitia is US$21,540 ( the World bank group). For starting a business DB 2020 Rank Rank is 38 and DB 2019 Score was 80.1 according to the world bank group. GDP rank is 18th ( nominal , 2019). GDP growth was 0.3% ( 2019e) . GDP by other sector : Agriculture 2.6%; industry : 44.2% ; Services 53.2% (2017e). According to Economic infrastructure , we have great scope for starting and running our planned business in Saudi Arabia. 15 Industry Analysis : According to a statistical research report, Saudi Arabia ice cream sector is accounted for 29.9 % volume share in the Middle east and African region( marketreseasrhcom,2019). And ice cream sector of Saudi Arabia is accounted for the volume share of 0.52% of global market (foodexsuadi). Saudi Arabian ice cream sector is forcast to grow at CAGR of 7.6% in value terms of during 2016-2021. The ice cream sales value estimated Of SAR 290.89 million in 2018. Per capita consumption of ice cream products in Saudi Arabia have stood around at 3.31 kg .( Marketreasearch.com, 2019.) On-trade transaction held the value share of 41.6% followed by supermarkets and hypermarkets. Most of the Saudi Arabian people prefer to buy premium products in the ice cream market. Saudi Arabia's weather condition is one of the hottest country in the Middle East, they like to buy ice cream for having cold feelings and for getting release from hot. Competition: Due to the actual opportunities, there are domestic and international ice-cream brands in Saudi Arabia. They are doing well because of environmental situation their temperature are very high people also like to take difference types of ice-cream. Competition has already become because 16 several new company entrants in their market and they are trying their best to give customer what they are want. For the Hudsonville company is tough to survive in the Saudi marketplace. But they will be surviving if they tackle the first steps to overcome the challenges of the market. Some of the top competitors of our business in the Saudi Arabia market are given below: • Giovanni L. • Baskin Robbins • Cioccolat Italiani • Marble Slab • Amorino Gelato • Dairy Queen • Godiva Staffing: To success in the ice cream industry, Hudsonville will need to focus on their long-term staffing other than part time or periodic employees. Our international marketing manager’s focus on personality and attitude of the employees and training of the employees is an essential way during the staffing. On the other hand Hudsonville management team hired employees who has completed Bachelor’s Degree in programming computer science and who has five or more years’ experience in IT sector and a creative problem solver also manager needs to focus who work for extra hour for the improving their company in international market. Cultural Attributes Behavioral Patterns: Saudi Arabia is a sovereign Arab state that comprises the bulk of the Arabian Peninsula in Western Asia. Saudi Arabia’s cultural environment is highly influenced by 17 both the Arab and Islamic culture. In general, the culture is profoundly religious, conservative, and traditional and family centered. Many values and traditions are centuries-old, originating from the Islamic heritage and Arab culture. In order to begin a business and create a relationship, an individual needs to understand and take-in the behavioral that will reduce the amount of confusion and delays. Some of the important parts that MDO Inc. should keep in mind while dealing with the Arabian people: Modesty and profile: The majority of people in Arab are conservative. Saudi Arabia is a country in which meetings, presentations and the news are opened in the name of God. Religion pervades everything from the commercial community and business culture. Business operates at a much slower pace with an overwhelming focus on partnerships, interactions and local business practices. Agreements: Saudi Arabia–United States relations refers to the bilateral relations between Saudi Arabia and the United States. There is a maximum chance of agreement. After research, I found that Saudi Arabia's U.S. Commercial Service offers a variety of services and programs to assist U.S. companies involved in doing business in Saudi Arabia and exporting to Saudi Arabia. Risk Management: We investigated that Saudi entrepreneurs have significant characteristics with regard to risk management and financial risk tolerance. We find that the perception of entrepreneurs regarding risk has a positive impact on financial risk tolerance, risk propensity and 18 entrepreneurial openness. Furthermore, findings from this study have shown that the relationship between the perception of entrepreneurs and financial risk tolerance is primarily mediated by entrepreneurial openness and a tendency to take risks. Customs: Language: Arabic is the main official language of Saudi Arabia.. Nearly 200 million people speak Arabic in more than 22 countries. Although the spoken Arabic differs from country to country, for centuries, classical Arabic has remained unchanged. In Saudi, there are variations between the dialects spoken in urban areas and those spoken in rural areas and those spoken in western, eastern and southern regions. There are three regional languages which have been spoken. They are - Najdi Arabic, Gulf Arabic, and Hejazi Arabic. Music & literature: Arab countries have many rich and diverse music types, and many dialects as well; each country has its own traditional music. Besides, poetry is still popular today among Saudis. They gather at cultural events, most notably the Jenadriya National Culture and Heritage Festival, and avidly read the works of established poets that are printed in Saudi Arabia every year. There is also a popular televised poetry competition. Celebration: Saudi Arabia celebrates two public holidays, namely, ʿId al- Fiṭr and ʿId al-Aḍḥa. Id al-Fitr comes after the holy month of Ramadan and employees enjoy a customary 5 to 10 days away from work. Id al- Adha comes by the end of Hajj -pilgrimage- and employees get similar off days. Punctuality: For any business punctuality is the utmost important factor. Saudi Arabians are generally polychromic, which means that they value time as flexible and fluid. They have a relaxed approach of punctuality, but never allow meetings to encroach on their time of prayer. Meeting times are usually set as times of day rather than fixed hours, for example in the morning, afternoon or evening. Sports: The most important modern sport in Saudi Arabia is Soccer. The other popular sports among Saudis are basketball, Volleyball, handball, gymnastics, swimming, cycling, archery, and table tennis. 19 Business Etiquettes: There are some business etiquettes that the Saudi Arabian people are likely to expect from our company, those are (Todaytranslations.com, n.d.): i i) Meeting: Well prepared and presented meetings. It’s good to have a lot of copies, preferably in black and white, and in their traditional dress to give it to the host. While entering the room we should maintain hierarchical order to enter the meeting room and also introduce others member in the same order ii ii) Attire: We are expected to wear conservative full religion dress in decent color for both the genders. iii iii) Warm up: Giving salam to each other. Small talk at the start of any meeting is important. iv iv) Relationship: Establish strong relationship during this time as it is expected that we might require meeting them several times. v v) Decision making: Avoid mentioning deadline for decision making because some Saudi Arabian people have a habit of further negotiation to have some sort of advantage. vi vi) Greetings: Greet by giving each other salam, if preferable handshake. Let the Saudi Arabian person lead the gesture. vii vii) Uncomfortable topics: Avoid political discussion like human rights, animals and other uncomfortable topics. viii) Body Posture: Formal body posture is required that shows control and respect with full islamic dress. Food Habits & Trends: The main food of Saudi Arabia peoples is Wheat, Rice, Beans, Chicken, Lamb etc. Saudis Rank highest consumer peoples are eat boiler chicken eating and average person 88.2 pounds per person in every year. Saudi Arabia are strict in Muslim and they are fully restricting from eating pork and any kind of alcohol. In Saudi traditionally Lamb serve for guest people and most of the time in different kinds of festivals. By the Islam law, animal must be butcher in a particular way and bless before they can be eaten that is follow Saudi Arabian peoples very strict way. Saudi Arabia is the world largest importer of live sheep. In Saudi Camel or sheep or goat milk are still 20 favourite of all the Saudi’s peoples. By milk they produce yogurt and by yogurt they make lacci which is also favourites drink in Saudi. There is popular food is • Kapsa (Chicken and Rice) • Kimaje (Flat Bread) • Laban Drink (Yogurt Drink) • Tabbouleh (Bulgur Wheat Salad) • Hummus • Qahwa (Arabic Coffee) Conclusion : After overviewing the Saudi Arabian tradition culture, it would be better if MDO Inc. avoids offering flavors like vanilla, chocolate or strawberry and stick to the taste of Saudi Arabian people. Main advantage is hot weather condition in Saudi Arabian people like to eat ice cream for releasing from hot feeling. The market is very potential for our business. The company will gain a competitive edge by having the variety of flavors and also switching to organic substitutes since the taste of the consumers will not remain same over the years. We need to forecast and change our offerings to keep running in the business. It is advised for the benefit of the company to learn Mandarin or recruit few professional translators and strong religion as those are the ultimate barrier for setting up a business in Saudi Arabia. The knowledge of the cultural differences and communication patterns should be mastered by the managers and the employees beforehand to avoid sending any sort of negative vibes form our end and we know Saudi Arabian people are concerned with this. 21 References - Szczepanski, K. (2018). What You Should Know About China's History. [online] ThoughtCo. 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