Market Benefits and Impact in the Kingdom of Saudi Arabia

Market Benefits and Impact in the Kingdom of Saudi Arabia


The Saudi Arabian economy has remained to be the largest in the Gulf region for the last two decades (Hill, Lunn, Morrison, Mueller & Robertson, 2015). Saudi Arabia is the only country in the Gulf region that is a member of the G-20 group of major economies (Hill, et al., 2015). Besides, the country depends on oil production for economic growth. Currently, the Saudi Arabian government is planning to step up and accelerate its drive to diversify the economy from an over-dependence on oil. Benefits of the market economy come with some impact globally. These advantages range from agricultural, business, and labor force paradigm to the maintenance of the economic standards of the country. The paper will examine market benefits and examples of their impact in Saudi Arabia.

Increased Sales Quantities Due to Increased Market Demand

Saudi Arabia stands to be the second leading country in oil production. To meet the market demand, Saudi Arabia produces the best quality that influences potential investors. For instance, American companies such as Aramco have invested heavily in the sector. Since the country possesses approximately 18% of petroleum reserves, the export earnings from oil and gas are about 85% (Farhan, Brevetti & Laditan, 2016). Besides, the oil industry contributes to an estimated 50% of the country’s gross domestic product.

Another sector that has benefited from increased demand is the technology sector (Zamberi Ahmad, 2012). Multinational companies that sell computers have enjoyed a large market in Saudi Arabia. Due to the development of the oil industry, infrastructure and other institutions such as schools and banks, computer companies have been able to increase the volume of sales since businesses rely on technology for efficiency. Additionally, the hospitality and tourism sector has experienced an increase in the market demand. The number of tourists who are visiting the country is approximately 14.3 million per year (Farhan, Brevetti & Laditan, 2016). Tourists are attracted to the various archeological sites and divine spots in the country.

Increased Prices Due to Quality and Reputation

Over the years, the kingdom has built its reputation on oil production. The price of oil has increased since the kingdom is known for its good reputation and selling of best quality oil. A good reputation has enabled the kingdom to survive in the competitive environment (Zamberi Ahmad, 2012). Similarly, companies in Saudi Arabia have good reputations; thus customers have built trust and confidence in them. Both foreign and local companies strive to maintain their reputation by responding immediately to the crisis.

Reduction in Costs Due to Increased Efficiency

Adoption of technology in production has enabled the kingdom to reduce cost and improve efficiency. Many firms in the region use advanced technology; therefore, less labor is required to run the companies. Similarly, technology has attracted many foreigners with skills and experience (Farhan, Brevetti & Laditan, 2016). These foreigners share new knowledge and ideas with the local population thus enabling companies to produce new and effective products.

The government of Saudi Arabia supports foreign companies by creating an environment conducive to workers. The availability of foreign companies in the region and the support from the government boosts the efficiency of domestic companies (Yusuf, 2016). The government lowered the cost of fuel and energy consumption in the oil industry without increasing the prices for consumers.

Increased Productivity

Increased labor productivity improves the overall development of the economy. Increased productivity is positively associated with the economic growth of the country. The kingdom has experienced increased investment returns and reduced cost of production due to the adoption of the electronic services in all economic sectors (Farhan, Brevetti & Laditan, 2016). The use of E-services has increased efficiency in industries thus increasing productivity.

In the past, the productivity of the various sectors in the kingdom was low, but the government has taken critical measures to ensure that it develops a model that will enable the Kingdom to achieve its objectives. Moreover, the availability of technologically advanced infrastructure will help to increase the productivity in the kingdom (Yusuf, 2016).

Reduced Future Costs related to Environmental Cleanup, Internal Control, and Breach of Ethics

Taher and Al-Hajjar (2013) argue that an immediate standard shift in minimizing emissions and introducing strong environmental measures has resulted in a significant impact on the economy of Saudi Arabia. Therefore, both short-term and long-lasting investments with a better endowed regulatory topology for environmental rules have entirely imposed a positive influence on the financial development of Saudi Arabia. Consequently, having proper internal control measures on environmental pollution such as adopting green market and exercising sound ethical guiding principles have fostered productivity of the economy ranging from health sectors to agricultural sector; thus meeting the future standards.

The continuous use of natural gasses and solar energy has enabled Saudi Arabia to increase the consumption of power for both the domestic and industrial sector. The kingdom is proposing to spend approximately $50 billion on solar energy because of the need to increase the supply of electricity to industries.

Reduced future cost related to breach of ethics implies that the Kingdom advocate good business ethics institutions. Ethics relate to the profitability of the company (Fattouh, Poudineh & Sen, 2016). Shareholders are willing to pay a significant amount of share if the organization has good governance. Most organizations in the country exhibit good ethics thus reducing the costs they would have incurred to solve ethical issues.


Saudi Arabia is among the leading producers of petroleum in the world. The economy of the kingdom is growing fast due to the increase in the volume of sales. Companies face increased market demand thus increasing the goods sold. Also, companies increase their productivity due to reduced cost of production and increased efficiency. Saudi Arabia should promote good business ethics since it will reduce costs and improve relationships with firms.



Fattouh, B., Poudineh, R., & Sen, A. (2016). The dynamics of the revenue maximization–market share trade-off: Saudi Arabia’s oil policy in the 2014–15 price fall. Oxford Review of Economic Policy, 32(2), 223-240.

Farhan, B., Brevetti, M., & Laditan, D. (2016). Unemployment in Saudi Arabia: The Ethical and Economic Impact of Foreign Workers on the Middle East Market. Middle East Journal of Business, 11(4), 21-38.

Hill, B., Lunn, M., Morrison, W., Mueller, J., & Robertson, C. (2015). Saudi Arabia: An Overview of Executive Compensation, Board Structure, and Sustainability. Drake Management Review, 4(1/2), 20-33.

Taher, N., & Al-Hajjar, B. (2013). Energy and Environment in Saudi Arabia: Concerns & Opportunities. Springer Science & Business Media.

Yusuf, N. (2016). Increased Labor Productivity, Stronger Business Environment-Transforming the Economy, Saudi Arabia. International Journal of Academic Research in Business and Social Sciences, 6(8), 1-12.

Zamberi Ahmad, S. (2012). Micro, small and medium-sized enterprises development in the Kingdom of Saudi Arabia: Problems and constraints. World Journal of Entrepreneurship, Management and Sustainable Development, 8(4), 217-232.


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