Saudi Arabia is not the easiest place in the world for Western enterprises to do business. On the one hand, the oil-rich kingdom offers many opportunities for enterprising businesses. Western construction companies have long played a role in building infrastructure in the kingdom. Western brands from Coca-Cola, Nike, and McDonald's to Body Shop, Next, and Benetton have a significant presence. Western aerospace companies such as Boeing and Lockheed have sold a significant number of aircraft to Saudi Arabia over the years. The Saudi market is one of the larger in the Middle East. For more than a decade now, the government has signaled that it is more open to foreign investment in certain sectors of the economy, although oil and gas extraction is still reserved for state-owned enterprises. On the other hand, Saudi Arabia is a historically conservative country where a large segment of the population desires to preserve the religious values and ancient traditions of the region. This can and does spill over into the business sector. The culture of the countryhas been shaped by a combination of Islam and Bedouin traditions. In 1744 when desert nomads populated the Arabian Peninsula, the oasis-dwelling al Saud clan made a pact with Ibn Abd-al-Wahhab. Wahhab was an influential Islamic scholar who sought to purify Islam and return it to its traditional roots through strict adherence to what he believed were the original principles of Islam, as expressed in the Koran. In exchange for protecting Wahhab and following his teachings, Wahhab offered his backing to the ambitious al Saud family. One hundred and forty years later, the family united the nomadic desert tribes under their rule, and in 1922 the Saudi Kingdom was born. Today, the strict Wahhab sect of Islam still has a profound influence on Saudi culture, something that is very visible to foreign travelers. For example, stores and restaurants close at the five daily prayer times, and many restaurants, including Western ones such as McDonald's, have separate dining areas for men and women. Women in Saudi Arabia are not allowed to drive a car, sail a boat, or fly a plane or to appear outdoors with hair, wrists, or ankles exposed-something that Western companies need to keep in mind when do- ing business in the country or with Saudis elsewhere. Indeed, women traveling on their own have generally needed government minders or permission slips. Saudi adherence to Islamic values has also given rise to anti-American sentiment, which increased following the American-led invasion of another Muslim nation, Iraq. Cultural solidar- ity expressed itself in consumer boycotts of American products. More disturbing than consumer boycotts have been terrorist attacks against Western expatriates in Saudi Arabia during the past decade, significantly increasing the perceived risks of doing business in the kingdom. Bedouin traditions have been just as strong as Islamic values in shaping Saudi culture. Values that were important to those proud nomads-and that have enabled them to sur- vive in their harsh desert landscape-are still found in modern Saudi society. They include loyalty, status, an emphasis on interpersonal relationships, the idea of approximate ratherthan precise time, and an aversion to any behavior that might seem menial or servile (in- cluding manual labor). Reflecting Bedouin traditions, Saudis will often conduct business only after trust has been well established-a process that might require (by Western standards) a large num- ber of face-to-face meetings. Saudis may resent being rushed into a business decision, preferring to let discussions proceed in a more relaxed fashion-something that Western- ers with their attachment to precise rather than approximate time might find taxing. Busi- ness meetings may be long because many Saudis maintain an "open office" and will interrupt a meeting to conduct other business, which can be traced back to the Bedouin tradition where all tribal members have a right to visit and petition their leaders without an appointment. Given the cultural importance attached to status, Saudi executives will not react well if a foreign company sends a junior executive to transact business.

Loyalty to family and friends is a powerful force, and job security and advancement may be based on family and friendship ties, rather than, or in addition to, demonstrated technical or managerial competence. Westerners might construe this negatively as nepo- tism, but it reflects a nomadic culture where trust in family and tribe was placed above all else. Saudi executives will also consult with family and friends before making a business decision, and they may place more weight on their opinions than that of experts whom they do not know as well. The Bedouin aversion to menial work has produced a chronic labor problem in the king- dom, and foreign companies will quickly discover that it is difficult to find Saudi nationals who will undertake manual labor or basic service work. Consequently, some 6 million foreign nationals reside in Saudi Arabia. These expatriates, who are primarily from other Muslim na- tions, such as Pakistan and Indonesia, undertake many of the menial occupations that Saudis disdain. Although oil revenues have made this social stratification possible, the Saudi govern- ment sees it as a potential long-term problem-almost 90 percent of all private-sector jobs in Saudi Arabia are filled by foreign nationals-and it has launched a program of "Saudiaza- tion." The aim is to change cultural values toward work perceived as menial, and by doing so, to help build a modern economy. So far success had been halting at best. Saudi society is starting to change in other important ways. Slowly the rights of Saudi women are being expanded. In 1964, Saudi girls were not allowed to go to school; today, more than half of university students in the kingdom are women. In 2004, Saudi women were granted the right to hold commercial business licenses, a significant ad- vance considering the women held some $25 billion in deposits in Saudi banks and had little opportunity to use them. As Saudi society evolves, women may come to play a greater role in business.

Case Discussion Questions:

1. What forces shaped modern Saudi culture? How similar or different are these forces from those that shaped the culture of Western nations?

2. What kinds of misunderstanding are likely to arise between an American company and a Saudi enterprise, neither of which has experience dealing with the other?

3. If you were in a position to advise a Western company that was considering doing business in Saudi Arabia for the first time, what would your advice be?