Introduction
Company Background
When entering a new market it is fundamental to understand the economic environment that you are embarking into. The economic environment of Libya has changed significantly over the past ten years. Since 1999 the government has applied more liberal policies to a once highly centralized economy. Libya’s economy is rapidly changing. The removal of sanctions in Libya has made the idea of investment in Libya more appealing to players in the international market. The Libyan economy depends primarily upon revenues from the oil sector, which contribute about 95% of export earnings, 25% of GDP, and 60% of public sector wages. (www.IMF.countrydatabase.org)The government aims to consolidate and accelerate the growth and reforms of the past few years by stepping up privatization, diversification and international cooperation. It is seeking foreign involvement across all sectors of the economy, although the reform process may be slow. Recent efforts include regulatory changes, the establishment of the Libyan Stock Market and the development of the new Libyan Economic Development Board (EDB).
This is encouraging for our company as government is welcoming foreign businesses and has loosened regulations that governed and minimized foreign investments. Essentially this means that there will be fewer impediments to our entering the market.
The mobile users per 100 people in Libya stands at 73.1 and 71% of the population is covered by mobile cellular network.(www.worldbank.ICT/Libya)This is an important gauge for us as it gives an indication to how many people we can target in our market, as a percentage of the population. Nominal GDP has risen over the past few years, reaching LD89.26bn This followed GDP increases of 12.9%, 6.1%, 9.9% and 5.9% in 2003, 2004, 2005 and 2006, respectively, and represents the steadying growth and rising inflation that have occurred since the repeal of UN and US sanctions in 2003 and 2004 respectively (introduction, 2009) Thesemeasures are exciting as they depict that Libya is a new exciting market with high growth potential. Libya is a high upper middle income country with a GDP per capita of $ 146000, with an estimated GDP per capita of 17,731 USD in 2010, and a GDP purchasing power of 92 billion USD (www.IMF.countrydatabase.org).
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These economic indicators are high and are estimated to increase The GDP per capita is an important indicator for our company as it gives insight into the buying power of consumers and businesses. The projected growth rates are essential for reference for market growth and potential for our product in the Libyan market. Essentially our target market will be corporate and small to medium scale enterprises; with encouraged government policy our target market will be more receptive to our product.
Government has embarked on building more infrastructures especially telecoms and more electricity and internet lines. The renewal and building of infrastructure is fundamental to our product as its reliability depends on good mobile and internet usage and infrastructure.
CULTURAL ENVIRONMENT
Language
According to the library on Congress Country studies Libya’s national language is Arabic. English is regarded a second language however it is the official business Language. For Mobicom this means that the marketing communications and business dealings will need to be done in English with translation in Arabic to create, maintain as well as enhance our position in consumer’s minds. (www.libraryofcongress.org).
the business markets will distribute the products to consumers and may therefore decide on the language they prefer to use for a particular campaign, mobisite, mms or sms.
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Libyan Culture – Key concepts and values
Religion
HOFSTEDS FOUR DIMENSIONS OF CULTURE
The Culture of Libya like most Arabic nations such as Egypt are low individualism, high in power distance and has a high level of uncertainty avoidance. It has high masculine inclination .Faceاحترام which means the values of social status, respect and personal dignity are fundamental to Libyans, this is fundamental to the Libyan Culture where protecting the honor of your family and the collective is paramount (United States Department of commerce, 2008) As a result all business dealings are based on reputation and rely on the development and trust. This means that Mobile solutions colleagues will take their time getting to know us as well as our company. Proving potential clients with background information as well any credentials we have can prove to be benefial as our aim is to retain our customers and to build relationships with longevity. As Mobicom solutions our promotional appeals should be collective in nature with emphasis on relationships. Marketing Messages will need be formal and show status. Hence communication will need to accentuate who speaks rather than what is spoken. Libyans are high on uncertainty avoidance. Consequently our marketing messages will need to be systematic, thorough and well prepared to ensure that all doubt is removed and the new product is easily tried by prospective clients (United States Department of commerce, 2008).
Political and legal environment
It is also import to understand the domestic country’s political and legal environment. A government may enforce different trade policies and regulations which limit foreign intervention in a country in order to protect its domestic market. Libya is a single party authoritarian state which has been ruled under a dictatorship for the past 4 decades. Its sensitive relations with the West have also limited direct foreign investment into the country. In addition, it has strict media and communication laws which could have negative implications for our company.
According to (Hill 2007:203) trade policies have instruments which help protect the domestic market. These instruments include tariffs, subsidies, voluntary export restraints and administrative policies. Since Libya is a one party state, the laws are spontaneous and the success of an international market can easily be affected by the government regulations. Libya provides political incentives which allow the prominence of foreign investment. According to (Fysh: 2009) these incentives include minimal or no payment of customs duties on machinery and equipment including special provisions relating to leasing and ownership of land. This will reduce our setup costs as towers and logistical equipment is brought in at lower costs as compared to setting up in other countries.
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Since Libya is a one party authoritarian state the market is unpredictable. “Libya’s business climate remains challenging due to the opaque nature of decision-making and concerns about policy predictability.” (Fysh: 2009) However, Libya formally renounced terrorism and closed its weapons of mass destruction programme in 2003. This has improved its internal standing allowing it to enjoy a revival from a prolonged period of international isolation. This is a great opportunity for a foreign product to enter the market as Libya is encouraging foreign investment. The improved political structure implies that the introduction of a new product would not impose a high political risk as the country is stabilising.
Conclusion
Reference List
Charles W.L. Hill International Business Competing in the Global Marketplace Sixth Edition. 2007 McGraw-Hill Irwin New York
Czinkota, M.R.,& Ronkainen, I. A. (2007) International Marketing, 8th Edition Thomson Higher Education, USA
Fysh, A. (2009) General Political Environment: Political risk: a review and reconsideration”, Journal of International Business Studies volume 5 issue 10 pp 17
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Library of Congress (2008, April) retrieved 18 march 2010, accessed from http://www.libraryofcongress.org/loc.gov.libya/
IMF Country Data Base (August, 2009) retrieved 15 march 2010, accessed from,
United States Department of commerce.(2008).
Doing Business in Libya: 2008 Country commercial guide for U.S. Companies. Retrieved May 24, 2009 from Emerald Insight database Wehrs, M. (2009) mobile Marketing: The global picture, Marketing Mix Measurable Marketing Insights volume 27 issue 9 pp 4
http://www.cellular-news.com/coverage/libya.php
