Business Culture in Saudi Arabia
Business Culture in Saudi Arabia
Submitted to
Looksina Khan
Lecturer
Department on Management
Submitted By
Group Name: Alpha
Looksina Khan
Department of Management
Dear Ma’am,
With all due respect, the group report that we produced after working hard and diligently to
finish the report with the necessary online sources and our course materials. Your direction,
instruction, and oversight are essential to the completion of this report. In accordance with the
instructions you have given, I hope you will receive this report and find the relevant data.
Sincerely,
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Executive Summary
This project provides a thorough analysis of doing business and industry analysis in Saudi
Arabia. It also gives in-depth research into the country. Here we researched and described the
history of the country, the rulers, and the ancient trade system. Then we narrated about the
climate and geography, people, currency, economy, culture and customs, staffing policy,
advertising and communication and culture information. We also talked about the networking
opportunities in Saudi Arabia. There were many rulers in the country, and they had different
ruling systems, but all of them worked for the country’s development. We thoroughly
investigated and described this. Saudi Arabia’s people have different gestures and rules, and we
tried to write down those. We have found that the country’s economy and GDP depend mostly
on oil. And the country has lots of foreign investors in oil. The business culture is also different
from other countries. The overall norms are different because the majority of the population of
that country is Muslim, so they follow Islamic rules strictly. However, there are many challenges
because of strict rules and their cultural norms. After analyzing and researching, we have found
that Saudi Arabia is a suitable country for doing business or even expanding a business.
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Table of Contents
1. Introduction..................................................................................................................................6
2. History.........................................................................................................................................7
4. People..........................................................................................................................................9
5. Currency....................................................................................................................................10
6. Economy....................................................................................................................................11
7.1 Greetings..............................................................................................................................13
7.2 Religion................................................................................................................................13
9. Advertising................................................................................................................................16
11. Conclusion...............................................................................................................................23
12. References................................................................................................................................24
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Table of Contribution
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1. Introduction
Saudi Arabia has been conducting business, particularly with the outside world. It has
historically been done through oil exports, which have provided 90% of the state's income up to
this point. Beyond oil, the Kingdom keeps its doors open to the rest of the world's commercial
community (F. Gregory Gause III). Even yearly, the Future Investment Initiative in Riyadh
brings together the CEO of the largest corporations. In the nation, entrepreneurship is expanding
due to the government's emphasis on developing small and medium-sized businesses. The
business culture in Saudi Arabia has changed to reflect this openness. Even though over half of
Saudi Arabia's 13 million employees are foreigners, the country's business culture is essentially
regional. Most Saudi business people and decision-makers anticipate unmatched Arabian
hospitality, casual conversation, and tough bargaining.; All of it washed down with a ton of
kahwa (Culture Shock! Guides Feb 15, 2007). Going to war for business in Saudi Arabia
requires facilities, openness, and a cool head. Understanding how Saudi families interact and
affect one another is also important. Many official and informal meetings are often necessary to
make any genuine commercial progress. In Saudi Arabia, business socializing is defined
differently than in the West.
The distinction between work and play will become hazier, particularly in the Kingdom's elite
community, where many professionals reside in gated communities. As a result, you may
anticipate social gatherings serving as unofficial networking opportunities. Business networking
opportunities are growing as Saudi Arabia becomes increasingly focused on business. Actually,
from consular events that require invitations only to conferences, exhibits, and encounters with
business. The German-Saudi Arabian Liaison Office for Economic Affairs, the American
Commerce organization of the Eastern country, and the Saudi-British Connected Business
Council all promote two-sided business and partnership convenience. In Saudi Arabia, online
networking is also very popular, with LinkedIn being the most popular network. Both Saudi
Arabian society and business are hierarchical. Most firms follow a rigid top-down structure, with
most senior managers typically holding all the power. A family business is the only type that
qualifies as head of household. Junior employees are not allowed to challenge decisions or plans
out loud and are expected to show allegiance to the regulations. Although, like in Saudi culture,
your name and your contacts will determine how far up the food is ordered, some people choose
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submission over agitation. In general, Saudi Arabian business etiquette is, known as Gelam
(Grace Edwards's Living in Saudi Arabia). That is, guarded but unquestionably welcoming.
There are recognizable items for people conducting business outside of the Arab world. In Saudi
Arabia, males shake hands as their initial introductory greeting. If you want to ask a woman out,
wait for her to offer her hand first when you introduce yourself. If you know the seniority order
in advance, shake hands with everyone in the room, starting with the most senior person.
2. History
Saudi Arabia's location is on the Arabian Peninsula, which is in western Asia. In 1932, It was
founded by King Abdulaziz. The country has a vibrant history. Saudi Arabia played a very
important role in Islamic history because it is the birthplace of Islam. Saudi Arabs quickly turned
a modern civilization place from desert lands. In earlier times, hunters used to roam around in
those areas for hunting. Gradually their agricultural systems and quantity began to increase and
develop. Then, pottery started to grow in that country. People of that country slowly put an end
to hunting, and they became more civilized. They put emphasis on architecture, language,
politics, etc.
In the Arabian Peninsula, trade was a major thing at that time. The routes of the caravan were
crucial for making trades possible there. Back then, the Citizens of the peninsula made a critical
trading system. They used to trade for dates, fragrances, etc. But the most important trade item
was spices. Spices were traded from country to country, which was initially traded from India to
Arabian Peninsula. Caravan routes are now known as Yemen, and Oman leads to Makkah and
Madinah, two holy places for Muslims. Islam started in Saudi Arabia, Mecca. It is the birthplace
of Islam, the second largest religion in the world.
The country had lots of rulers at different times. They all worked for the county's betterment and
development. In the early 18th century, two scholars named Shaikh Muhammad Bin Abdul
Wahhab and Muhammad Bin Saud came to an agreement to teach in the community of those
places (History | The Embassy of The Kingdom of Saudi Arabia, n.d.). After that, Muhammad
Bin Saud established the first state of Saudi Arabia. He ruled the whole Arabian Peninsula,
which included Makkah and Medina as well. The ruling power of Saudi went to rulers from
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rulers at those times. But then, modern Saudi Arabia was established by King Abdulaziz, a
leader, and fierce warrior. With his control and dedication, the country's infrastructure system,
health, education, and communication system became advanced, developed, and modernized.
The rulers who ruled Saudi Arabia from the 19th century are-
King Abdulaziz (1932-1935), King Saud (1953-1964), King Faisal (1964-1975), King Khalid
(1975-1982), King Fahd (1982-2005), King Abdullah (2005-2015), King Salman (2015-
present).
Saudi Arabia is located in Southeast Asia and is bordered by the Red Sea and the Persian Gulf.
To the south of this country is Yemen. Saudi Arabia is in the Asia continent. The country has the
world's largest desert. Saudi Arabia has lots of dry deserts. The climate of this country is very hot
and dry. During the daytime, the temperature stays extremely hot; however, at night, the
temperature drops. At night the temperature stays cool. In summer, the temperature stays around
45 degrees Celsius or even more. But In winter, the country gets really cold, and the temperature
drops to 0 degrees. Other than summer and winter, the temperature stays around 29 degrees
Celsius. Moreover, the temperature of the borderline of the Red Sea and the Persian Gulf stays
mostly 38 degrees Celsius all year round. In the late spring and at the start of the summer, strong
sandstorm occurs in those places often. Rainfall occurs very less in Saudi Arabia. The
precipitation is not high when it rains.
Saudi Arabia has a biodiverse area. The land is about 1,969,000 sq kilometers, and it is the tenth
largest country in the world. Since the country has a very harsh climate, water is very valuable
there. They have water sources from surface water, groundwater from underground reservoirs,
desalinated water, and reclaimed wastewater. The major problem of that country is because of
deserts and hot temperatures, and there are less water and a crisis of underground fresh water.
The most important natural resources Saudi Arabia has is the natural oil and natural gas. Saudi
Arabia is the largest oil exporter in the world. In 1938. Natural oil was discovered there. From
estimation, the country has the world's one-fourth of natural oil reserves. Around 7.5 million
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barrels of oil are imported every day, and around 7 to 9 million barrels are extracted (Geography
of Saudi Arabia - [Link], 2020). The field of oils is located on the eastern side of the
country. On the west side of the country, in the red sea, there is the Arabian Nubian Shield which
has lost natural resources, including gold, minerals, copper, zinc, silver, aluminum, lid, etc. All
the gold sources are located in this shield.
There is huge pollution because of oil spills and the burning of fossil fuels. Carbon dioxide is
released often as a result of the combustion of fossil fuels, generating air pollution.
4. People
Saudi Arabian people are very friendly and welcoming. The country has approximately 34
million people. The people of Saudi Arabia are unbending in some matters and very hospitable in
some matters. When they invite someone to their house, they arrange lots of things for guests.
There are lots of immigrated people who came from Egypt, Pakistan, and India. It is estimated
that around 30% people of Saudi Arabian people are immigrants. In this country, around 90% of
people are Sunni, and 10% of people are Shia (The Culture and People of Saudi Arabia, 2019).
The people of Saudi Arabia communicate in an indirect way but in a friendly way. They are
always positive and give positive vibes. Those people are very hopeful and always say,
"Inshallah."
Saudi Arabian men usually wear white thobe covering their ankles, and women wear Abaya,
which is black, and Niqab to cover their face. Women can't show skin to the public, so they
always wear very modest clothes.
Saudi Arabian people prefer to stick with their families, so young people don't move out of their
houses as the westerners do. And most Saudi people live in urban areas. Cities are more
developed than rural areas.
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5. Currency
The first Saudi riyal coins in Saudi Arabia were issued in 1935. In the beginning, banknotes, a
form of Haj Pilgrim Receipts, were introduced in 1953 through the Saudi Arabian Monetary
Authority (SAMA). Haj Pilgrim Receipts were used in pilgrim foreign exchange transactions but
eventually became widely popular & used for large transactions. In 1961, the SAMA replaced
Haj Pilgrim Receipts with regular banknotes. Haj Pilgrim Receipts was officially paused in 1964.
(NEWS, 2022) In 1963, the ghirsh was replaced by a new subdivision, the halala, with one
halala= one-hundredth of the Saudi riyal. In 2003, the Saudi riyal was officially pegged to the US
dollar at the exchange rate of 1 USD = 3.75 SAR. (OANDA, 2022)
Throughout history, the riyal, a currency used in the Middle East before the Kingdom's
establishment, was commonly used & traded in the region. While the founding father of the
empire began unifying the country that we know today, various foreign gold, silver, and bronze
currencies were alongside one another. (OANDA, 2022)
Nicknames None
ISO 4217 SAR
Central Bank is Saudi Central Bank
Currency Subunits are Halala =1/100
Denominations are Banknotes: one, five, ten, twenty, fifty, one hundred, two
hundred, five hundred riyals.
Coins: one, five, ten, twenty-five, fifty halalas, 1 riyal, 2
riyals
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6. Economy
Saudi Arabia's economy is heavily depending on oil; the sector accounts for 90% of its exports
and 42% of its GDP. Reports say that Saudi Arabia controls 25 percent of the world" s total oil
reserves. Now, the government of Saudi is trying to reduce its dependency on oil and increase
the growth in other industries by allowing the private sector & foreign investors to participate in
the telecom & power generation industries. The GDP in Saudi Arabia was worth 833.54 billion
US dollars in 2021, according to official data from the World Bank. The GDP value of Saudi
Arabia represents 0.62 percent of the world economy. (ECONOMICS, 2021). Below are some
previous GDP:
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The stock exchange of Saudi, called Tadawul, is the largest stock market in the Middle East and
North Africa. Globally, Saudi Arabia is one of the fastest-growing countries and one of the
world's top 20 economies. (OANDA, 2022)
According to the tax law of Saudi, effective from July 30, 2004, resident capital companies (on
non-Saudi/GCC shareholders' shares) and non-residents who have business activities in the
Kingdom through a permanent establishment, which are subject to corporate income tax in Saudi
Arabia at a rate of 20%. (KPMG, 2021)
In Saudi Arabia, individual franchisees will have no personal tax liability. They will be required
to pay zakat at the rate of 2.5 percent. Individual franchisees do not have tax obligations, and
franchisee entities are required to pay zakat or corporate tax. GCC national franchisees will be
required to a 2.5 percent zakat, and at the same time, non-GCC franchisees will be subject to a
20 percent corporate tax. These same flat tax rates apply to companies with GCC national and
non-GCC shareholders. (Arabia, 2022)
By law, conventional banks operate in line with Islamic principles. For example, account holders
earn a 'profit rate' instead of interest because of Islam's rules. While all banks have Islamic
windows, there are also several dedicated Islamic banks in Saudi Arabia. (KPMG, 2021)
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7. Culture and Customs
The Kingdom of Saudi Arabia covers most Arabian Peninsula. Arabs make up most of the
population, who are descended from the nomadic tribes who have historically roamed the area.
Fundamentally traditional and conservative is Saudi culture. Islam significantly impacts society,
influencing how people live regarding social, familial, political, and legal matters. Saudis'
common cultural and moral values include hospitality, loyalty, and a sense of responsibility to
uphold their community (Saudi Arabian Culture, 2022).
7.1 Greetings
The most frequent way to greet someone in Saudi Arabia is with a handshake and the words
"Assalaam 'Alaikum," which is followed by the phrase "Wa 'Alaikum as-salaam" (And peace be
upon you).
Muslims typically avoid physical contact with those not their own gender. Therefore, it is
advisable to nod your head in welcome when speaking to a Saudi of the opposite gender and wait
to see if they feel comfortable extending their hand (Saudi Arabian Culture, 2022).
7.2 Religion
The majority of Saudi citizens are quite pious and religious. For instance, in Saudi Arabia, where
everyone is required to practice their faith to some extent, the concept of a "non-practicing
Muslim" is rather odd. Saudis who are older tend to be more conservative and stringent in their
religious beliefs than Saudis who are younger.
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7.4 Do's and Don'ts
Do's
Before bringing up a certain topic with any Saudi counterpart, you need to spend some
time getting to know them and making a small chat. Being excessively task-oriented or
direct can come across as rude or impersonal.
Where appropriate, acknowledge the achievements and modern advancements of Saudi
Arabia. The majority of Saudis are likely to enjoy it when foreigners recognize them as
progressive people because the Kingdom is currently going through a period of cultural
and social upheaval.
Must finish with "Mashallah" (May God Bless) after praising or admiring anything. This
expression conveys to the Saudi counterpart the sincerity of the compliment.
Don'ts
Refrain from pressuring anyone to express an opinion about Saudi politics or the
leadership of the royal family. In general, Saudis are uncomfortable explaining or talking
about these areas.
Never talk about anything sexual in public, especially with someone of the opposing
gender.
Never criticize Saudi cultural customs or the Islamic faith. Comments that indicate
Saudis should become more modernized or emancipated by letting go of their culture or
religious adherence are incorrect and potentially quite hurtful.
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Meetings typically begin with a lot of small chats and can appear like a never-ending
series of dates where people are getting to know one another.
Meetings are scheduled to coincide with daily prayers, and they will be postponed if they
do so. Therefore, it is typically advisable to schedule appointments in the morning, either
before or after the midday prayer.
Communication
In professional contexts, Saudis frequently communicate in a very direct manner. If they don't
agree with someone else's viewpoint or thought, they can be rather bluntly critical. Regardless of
whether people agree with a concept, there is usually a lot of discussions as everyone offers their
opinions to help it develop. This can come off as arguing. Consider it instead as merely a means
of achieving the intended result.
All job openings must be reported to the public employment agency within 15 days of
becoming vacant, and the employment service is allowed to recommend Saudi nationals
who have registered as jobseekers for such openings.
Probationary periods of employees, which allow either party to terminate the employment
agreement without giving a reason, are limited to 90 days in length but may be mutually
extended for a further 90 days.
A contract happens between an employee and an employer in which the latter agrees to
work for a wage under the control or supervision of the former is known as an
employment contract.
Either the employer or the employee must normally provide the other party with written
notice of termination of an indefinite-term employment contract of at least 60 days if the
employee is paid on a monthly basis or 30 days if the employee is paid on any other
frequency.
Employees who are pregnant are entitled to ten weeks of paid maternity leave from their
employer; however, they are not allowed to have more than four weeks of maternity
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leave before the due date and are not permitted to work for six weeks after giving birth.
While a worker is pregnant or on maternity leave, their employer cannot fire them or give
them notice.
Employers are expected to implement the essential safeguards against harassment and
other harmful conduct in the workplace.
Employees are generally entitled to a weekly rest day, which is typically on Friday, and
cannot work for more than five hours without an unpaid break that lasts at least 30
minutes.
Statutes provide forth the requirements for disciplinary actions and processes.
9. Advertising
It is actually the case that this market is totally different from Lebanon, for instance, where the
standpoint is very European. This is an Islamic culture, and remembering that is significant. The
ascent of satellite TV has made publicizing more liberal. As a matter of fact, the normal watcher
approaches between 30-50 channels from everywhere in the world. This has made it harder to
focus productively on the Saudi watcher (Giuliani, 1970).
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9.2 Advertising and Restrictions
Organizations are attempting to speak to the new age of Arabs, who are frantically searching for
designs in broad communications. Simultaneously social restrictions are forcing severe
guidelines on what can and what can't be displayed openly. This war once in a while prompts
imaginative and, in some cases, upsetting outcomes (Giuliani, 1970).
Eyes
Face and eyes are not permitted to be shown outside in additional moderate regions. It's generally
expected to pixelate the eyes, yet more intelligent fixes are to allow the gifts to wear shades or
mix an idea where the models would need to shut their eyes.
Sex
The Islamic culture is extremely moderate, and showing any skin other than the face, hands, or
feet can be considered physically stirring, in this way, unseemly out there for anyone to see. The
most liberal is Dubai in the United Arab Emirates, and the most moderate is Riyadh in Saudi
Arabia. Saudi Arabia forbids the public display of any flesh (other than the portions of the body
mentioned), yet Dubai runs comparable commercials for beauty products to those in Europe.
Film advertisements should be modified to conform to severe social assumptions. Legs,
cleavage, and even shoulders should be covered. This applies to ladies, yet to man too. Indeed,
even animation characters should be spruced up (Giuliani, 1970).
Homosexuality
In any case, shows like Will and Grace should be visible on TV. Witches, Magicians, Vampires,
or outsiders. Any meaning to heavenly can be considered as another God-like power.
Drugs
Medications, liquor, or even a Champaign glass can't display in publicize. Except if it's an enemy
of the mission.
Food
Notices for breakfast or other feasts never show eggs. Promotions for fish, or recipes for
different items that are eaten with fish, are likewise near non-existent. In the Arabian
promontory, fishing is generally viewed as a second-rate calling, and selling eggs and chickens is
similarly not a good exchange. Liquor drinks and pork can't be promoted in Saudi Arabia.
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Creatures
There can be numerous other marginal issues with different creatures also; for example, fish
implies Christianity, crow implies demise, or chameleon implies quietism.
Images
The campaigns have left a profound injury to the Arab psyche. Any type of cross can consider an
affront. Red Cross doesn’t exist in the Middle East (it's Red Crescent). Indeed, even a snowflake
can be viewed as a terrible goal.
Words
Appreciate or energizing are words that can be deciphered as sexual descriptors and,
consequently, to stay away from. One must proceed cautiously with how a blameless logo would
be deciphered (Giuliani, 1970).
Blossoms
The utilization of blossoms, and particularly roses, is all around valued in Saudi notices. Truth be
told, the utilization of the rose contains a strict suggestion: the rose is known as the most loved
blossom of the prophet Muhammad (Giuliani, 1970).
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10. Communication Culture Information
First, when our country's people round our first finger to the upper side of the ear, we mean "are
you crazy" or "crazy" however, in Saudi Arabia, that doesn't mean crazy that means rethink
about it if he made up with a decision then I can do this and tell him non verbally I will rethink
about it. So, they mean crazy by open hand fully and closing a little bit to shake it around the
head; by doing this, they mean crazy. Second, in Saudi, if I want something to be done fast or I
want to say hurry up, then I need to make a sound by my thumb hitting my middle finger. In
Saudi, people want to lift by forwarding their hands a little bit and waving (YouTube, 2015).
Saudi Arabia is viewed as a high-contact culture as to proxemics, liking to be nearer together and
contact all the more frequently in discussions (just same orientation contacting notwithstanding,
people are to stay far off in broad daylight places). There is, to a lesser extent, an idea of public
and confidential space, and close tactile contribution is a significant piece of interfacing with
others and laying out connections. As examined above, in Saudi Arabia, there is a serious level
of paralanguage as found in the way of life's fancy discourse, verbose articulations, and high-
volume talking. Kinesics conduct is correspondence through body developments. Direct eye-to-
eye connection is satisfactory between individuals from a similar orientation, and roundabout to
no eye-to-eye connection is best for between sexes. Circuitous eye-to-eye connection between
individuals from a similar orientation, be that as it may, can be misjudged as overlooking, so
frequently, there will be an elevated degree of power around here.
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Utilizing just the right hand with regards to good tidings and giving/getting things, the left hand
is viewed as messy.
Individuals move to each other to draw closer with a lengthy arm, palm down, and making a
scratching motion with the finger. An upstanding finger can be seen as an affront.
Hand under the jawline and flicked forward shows disturbance (Saudi Arabia Culture profile,
n.d).
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10.3 Personal Space
Saudi norms of individual space contrast contingent upon the unique circumstance. In the event
that the individual is a companion of a similar orientation, the distance is frequently more modest
than what Westerners are utilized openly. For instance, two companions might settle together
while sitting. However, it could be stronger if there is a disparity in power or if the other person
has a different orientation. It is ideal to keep a meter distance essentially between you and a
Saudi individual to regard the unobtrusiveness of the other individual in the event that you don't
realize them well (Pier, Home 2018).
A considerable lot of the Saudi Arabian exchange styles are totally different from those that are
found in the United States, for example. The accompanying arranging styles feature a portion of
the normal and anticipated highlights of the Saudi culture. It is critical to comprehend and
remember these styles while managing Saudi business partners. Such arranging styles include:
Foster believing connections first, Saudis work with individuals, not the organization.
Time is adaptable in Saudi culture; gatherings might begin somewhat "late."
Easygoing way to deal with cutoff times.
Saudi Arabian discussions can be clear and forceful; this is ordinary and can be an
indication that Saudi Arabian clients are keen on carrying on with work.
More significance is given to social commitments and requirements of gathering.
Oftentimes utilize full of feeling requests in view of feelings.
Intrigued by the long haul, high long-haul direction. In this way, Saudis are almost
certain than Americans to make concessions in arranging.
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The struggle is taken care of by implication and verifiably (high-setting society); stay
away from head-on a showdown to save "face" for all gatherings included.
Go between is frequently used to resolve questions.
References people who are very much regarded by adversaries, consequently forcing the
partner to alter their perspective.
Ready to oppose pressures that adversaries work out.
Moderators regularly come up short on power to finalize a negotiation (Saudi Arabia
Culture profile, n.d).
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11. Conclusion
There is no denying that culture affects commercial and legal contexts. This report emphasized
Saudi Arabia's industrial practices and cultural characteristics. No actions or processes are
directly predicted by the characteristics. It is always necessary to include other aspects in
addition to culture when using them to make sense of what is occurring in the world, most
notably national riches, history, personalities, and coincidences. In order to grasp social life,
there is no quick fix. However, when the dimensions are fully grasped, it is possible to make a
slight improvement in probability predictions. And when we move from the particular situation
to the trend, average, or expectation, they become more valuable. In this report we tend to state
how different Saudi Arabia’s culture is and how their industry behaves, and by following this,
what we need to maintain or respect their culture.
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12. References
The culture and people of Saudi Arabia. (November, 2019). Expat Guide to Saudi Arabia |
people-in-saudi-arabia-71857/
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History | The Embassy of The Kingdom of Saudi Arabia. (n.d.). History | The Embassy of The
[Link]
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Saudi Arabia Culture profile. Google Sites: Sign-in. (n.d.). Retrieved August 9, 2022, from
[Link]
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Ivypanda 100% free essay examples database for students to get inspired! Free Essays. (n.d.).
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Saudi Arabian Culture. (2022). Cultural Atlas. Retrieved from
[Link]
Employment Law in Saudi Arabia | CIPD HR-inform. (2021). CIPD। Retrieved from
[Link]
Arabia, T. F. (2022, February 01). The Franchise Law Review: Saudi Arabia. Retrieved from
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arabia#:~:text=Saudi%20Arabia%20has%20no%20personal,rate%20of%202.5%20per%20cent.
ECONOMICS, T. (2021). Saudi Arabia GDP. Retrieved from TRADING ECONOMICS:
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