Back

 My PhD Thesis in Manchester Business School, UK. 1996

INTERNATIONAL MARKETING PROGRAMME STANDARDISATION OF UK COMPANIES IN THE GULF.

A Thesis submitted to the University of Manchester for the degree of Ph.D. in the Faculty of Business Administration. March 1996

ABSTRACT

The standardisation/localisation policies of sixty-three UK companies operating in the Gulf states are examined, using a three-factor, sixty variable model of country, firm, and marketing programme factors. The research framework is unusually broad compared with other standardisation studies, which have also concentrated more on the developed than the developing economies. The Model is shown to differentiate the degree of marketing programme standardisation, high, moderate adaptation and low, using one country and three firm variables. The degree of standardisation of the marketing programme variables varies across the individual elements. Product strategies are much more standardised and promotion, distribution and price more moderately adapted. In the Gulf, unexpectedly, industrial product firms appear to be no more standardised in their marketing programmes than consumer goods firms.  UK companies tend to treat the six Gulf states as a single market cluster with only minor variations between them. The agents’ views about the degree of standardisation are compared with the views of the headquarters, which are similar in their perceptions of the marketing strategies used.

   CHAPTER ONE

INTRODUCTION, RESEARCH TOPIC, UK AND GCC BUSINESS    RELATIONSHIPS AND THESIS STRUCTURE.

1.1      INTRODUCTION

Many researchers, including Elinder (1961); Fatt (1964); Roostal (1963); Sorenson and Wiechmann (1975); Chase (1984); Harris (1984); Thackray (1985); Hamel and Prahalad (1985); Boddewyn et al. (1986); Friedman (1986); Hill and Still (1984); Huszagh et al. (1986); Kotler (1986); Whitelock (1987); Levitt (1983); Martenson (1987); Wind (1985); Walters (1986); Ghoshal (1987); Yip (1989); Grosse and Zinn (1990) and Wills et al. (1991) question the degree of international standardisation of various elements of the marketing mix programme and wonder whether to standardise their marketing programme or to have a different marketing programme in each country.

This question is still troubling practising business managers as well as academics, and produces divergent viewpoints. The issue has become prominent since the publication of Levitt’s (1983) article arguing that the world has become one global market. On his analysis great differences in culture, national tastes and standards are something of the past. Many researchers have tried to refute Levitt’s argument, with varying degrees of success. Some of those critics are Boddewyn et al. (1986); Douglas and Wind (1987).

According to Franzen and Light (1976) and Akaah (1991) one of the most striking developments in business in the past three decades has been the trend toward increased internationalisation of business operations. Jeannet and Hennessey (1988) argue that many companies are expanding their operations outside their local market, especially overseas, because they think the world-wide marketplace is becoming accepted as a reality.

Robock and Simmonds (1989) remind us that international business is not new, and can be traced back in history to around 2800 B.C. The Dutch East India Company, founded in 1602, was one of the first international corporations. Robock and Simmonds (1989) argue that the multinational enterprise as we know it today dates back to the mid-1800s, when the Singer Company expanded internationally and began operating with a global horizon.

According to Barker and Aydin (1991), multinational companies (hereafter MNCs) had developed by the 1960s and 1970s, followed by global companies, prominent by the 1980s. Nowadays there is greater competition, interdependence of national economies, companies aiming at the same target in the same markets and trying to improve their market position, and new competitors have entered the international market. Some international firms have lost their market position. All of this can be seen as a threat to the existing companies doing business abroad and at home, and obliging them to engage in new competitive strategies (Barker and Aydin (1991) and Barker (1993)).

The term globalisation is used in the literature in different ways: one of its meaning is standardisation as opposed to adaptation (Barker and Aydin (1991); and Barker (1993)). When a company treats the world market as a whole rather than looking at markets country by country, then it can be said to be a global company. Hout et al. (1982), Barker and Aydin (1991), and Jeannet and Hennessy (1988) have defined multinational companies as companies having subsidiaries that are autonomous and where the competitive balance is struck on a country-by-country basis. Kashani (1990) argues that global marketing is a worthy element in a firm's search for competitive advantage. Levitt (1983) claims that multinational companies are nearing extinction. He thinks that multinational and global corporations are not the same thing, since differences exist between multinational and global co-operation. “A multinational corporation operates in a number of countries, and adjusts its products and practices in each market at high relative costs. The global corporation operates with resolute consistency at low relative cost as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere”. Halliburton and Hunerberg (1987) view international, multinational and global as alternatives along a continuum. According to them, international firms “..grew from a national parent base by way of exports, with key competitors normally determined in the parent country”. Multinational firms “..evolved separate international divisions acting as semi-independent operating units, focused upon their particular markets and countries, with key competitors defined in relation to each separate market..”. The global corporation, “..operates on a world scale as an interdependent total system facing other global competitors. Non-optimal country strategies may be accepted provided the firm benefits corporately.”.

Boddewyn et al. (1986) argue that Levitt’s idea is good in theory but hardly grounded in fact. The validity of Levitt’s case needs to be examined. In this study we see globalisation in the context of standardisation versus adaptation. According to Kustin (1994) in globalisation there are many different interpretations of specific terms. Walters and Toyne (1989) state that “..global marketing is the process of focusing an organisation’s resources on the selection of global market opportunities consistent with and supportive of its short and long-term strategic objectives and goals”. The same definition is given by Cateora (1990), supported by Levitt (1983) and Pride and Ferrell (1991), who add that “..global marketing... strives for efficiencies of scale by developing a standardised product, of dependable quality, to be sold at a reasonable price to global markets, that is, the same country market set through the world”. According to Dahringer and Muhlbacher (1991), “Global marketing, in contrast to international marketing, concentrates on product strategies (groups of customers with shared needs), emphasising their similarities, regardless of the geographic areas in which they are located. However, it does not ignore differences among markets”.

1.2      INTEREST IN THE TOPIC

The debate on the issue of marketing standardisation goes as far back as the 1960s (Elinder (1961); Fatt (1964); Roostal (1963); Chase (1984); Harris (1984); Thackray (1985); Hamel and Prahalad (1985); Boddewyn et al. (1986); Friedman (1986); Hill and Still (1984); Huszagh, et al. (1986); Kotler (1986); Levitt (1983); Martenson (1987); Simmonds (1985); Wind (1985); Walters (1986); Ghoshal (1987); Yip (1989); and Wills et al. (1991)). Marketing standardisation is a complex question, but it should be given very careful consideration by international companies (Walters 1986). Onkvisit and Shaw (1987) also affirm that marketing standardisation is a significant problem which warrants attention and evaluation.

The concept has many implications for business firms, government, international trade, and marketing education. During the literature review stage, it became obvious that international marketing standardisation was an area relatively poorly examined by academic researchers. But the fact is that international marketing is a significant issue that deserves serious academic study. The issue is a complex one (Walters, 1986). From the literature available, a distinction was made between standardised marketing programmes and the marketing process. Most of the literature focuses on the marketing programme, and promotion is the element most researched, with some attention given to product design, whereas other elements of the marketing programme, such as price and distribution, are overlooked in the literature. Price and distribution, as well as other elements in the  marketing programme, will be included in this study. As the literature indicates, marketing standardisation cannot be accomplished without a reference market, and most of the existing research is about the developed world, while markets in the developing world are neglected. Therefore, it is the purpose of this research to study marketing standardisation in the developing world, namely the GCC market. Furthermore, of the research so far has focused on consumer-goods companies, with little attention given to companies in other sectors such as industrial goods. This study will include both consumer and industrial companies. Finally, many of the marketing standardisation studies have lacked high quality empirical evidence (Jain, (1989) and Kanso (1992)), with a few exceptions such as Sorenson and Wiechmann (1975); Kacker (1975); Killough (1978); and Huszagh, et al. (1986), which were empirical.

According to Walters (1986), most studies of marketing standardisation are limited to markets in Western Europe or the developed world. Onkvisit and Shaw (1987) plead for more empirical evidence to resolve the standardisation/localisation controversy. From the literature available, it appears that no systematic research has been conducted into the standardisation of international marketing practice since Sorenson and  Wiechmann (1975); Boddewwyn et al. (1986). According to Hornik (1980), the debate on advertising standardisation continues without reaching agreement because of the lack  of empirical data on the subject. Practical considerations are important but, also, most of the existing research has dealt with multinational companies based in the USA. Researching multinational companies in other parts of the world will give a clear comparison of UK multinational companies and USA multinational companies.

This study is significant, since previous work on marketing standardisation has concentrated mainly on the supply of goods to overseas markets through subsidiaries based in those countries, and thus ignored direct export, which is still an important part of  international marketing activity, particularly for trading nations such as the UK (Whitelock (1987); (Reichel (1989)).

1.3      DEFINITION OF MARKETING STANDARDISATION

One source of problems in the debate over marketing standardisation is the definition of the term (Onkvisit and Shaw, 1987). In the literature there are differences in definition which produce problems of comparability in the research results (Sandler which result in problems in comparability of research results (Sandler and Shani, 1992). For example, Onkvisit and Shaw (1987) define standardisation in advertising as using the same advertisement everywhere with no change in its theme, copy, or illustration, except for translation when needed. Peebles et al. (1977) and Peebles and Ryans (1984) in their definition of standardisation, allow  for local flexibility while maintaining the standardisation heading. They differentiate between prototype standardisation and pattern standardisation. First, prototype standardisation is the same marketing programme used by multinational marketers  in many markets. This programme was initially designed to be used in the home market and because of its success it has been employed in multiple markets. Second, pattern standardisation  is the design of flexible marketing programmes intended from the beginning for multi-market use. For this approach to be successful, a centralised system is necessary. In implementing this approach, multinational marketers could gain many of the advantages of standardisation, such as geo-segment image, and lower marketing cost.

Onkvisit and Shaw (1987) state that pattern standardisation  is a cross between standardisation and localisation and is designed from the outset to be susceptible to extensive modifications to suit local conditions, while maintaining sufficient common elements to minimise the drain on resources and management time. Jeannet and Hennessey (1988) define standardisation as the amount of similarity companies want to achieve across many markets with respect to their marketing programme. Levitt (1983) argues that standardisation seeks to view the whole world (or major regions) as a single entity and to sell the same standardised product in the same way everywhere. Picard (1978) defines standardisation as the degree of similarity in the marketing activities, programme or policies of a multinational enterprise between one country and another. According to Buzzell (1968), standardisation means using the same  marketing strategy in overseas markets as in the home market, while adaptation means using a different marketing strategy in each overseas market.

Miracle (1990) believes that advertising strategies, advertising objectives, and advertising execution can all be standardised to varying degrees.

As mentioned earlier, there are many definitions of marketing standardisation in the literature, producing problems of comparability in the research results. According to Halliburton and Hunerberg (1987), the measurement problem means that the concepts of standardisation and adaptation are difficult to operationalise, and standardisation and adaptation are not absolutes but should be seen rather as two ends of a continuum, suggesting that researchers should  establish the degree of standardisation or adaptation along a continuum. Similarly, Quelch and Hoff (1986) suggest that the decision on marketing standardisation is not a dichotomous one between complete standardisation and adaptation. Rather, there can be degrees of standardisation. Jain (1989) argues that total standardisation is unthinkable. As can be seen from these discussions, in practice there is no such thing as complete standardisation, since any company will change some of its marketing mix programme to some extent. It is thus impossible in practice to use an absolutely identical marketing mix programme in the overseas market as compared to the home market. Therefore, our definition of standardisation will not assume “total” standardisation, since we will not expect companies to use an identical marketing mix programme in the GCC markets to that used in the UK market. We will expect degrees of standardisation. In our definition we will consider companies standardised if on average they use a similar marketing mix programme with only minor variation in the GCC market as compared to that used in the UK market.

We will consider companies as standardising any part of the marketing programme if they rate it as identical (1) or similar with minor variation (2) on the five-point Likert scale.

In judging, overall, whether a company has a standardised, moderately adapted or localised marketing mix programme, we will take the average, for all the marketing programme variables. Thus, for a standardising company on average it will have marketing programme variables which are identical or similar with minor variation, even if a number of individual variables are localised. Similarly, a company with a localised profile on average may have some marketing programme variables which are standardised. We will thus be researching the degree of marketing programme standardisation.

1.4      RESEARCH TOPIC

For the last three decades the issue of international marketing standardisation has generated considerable discussion among both academics and practitioners (Elinder  (1961); Fatt (1964); Buzzell (1968); Sorenson and Wiechmann (1975); Brandt and James (1977); Colvin (1980); Levitt (1983); Boddewyn et al. (1986);  Douglas and Wind (1987);  Hite and Fraser (1988); Jain (1989); Muller (1991); Grosse and Zinn (1990); Kashani (1990); Akaah (1991); Whitelock and Jones (1993)). Despite the long-standing interest in the issue, there is still controversy about it and no clear answer is in sight. There are sharp differences of opinion as to the desirability and feasibility of each strategy (Walters, 1986). A continuing issue in the international marketing literature is whether multinational companies should pursue a marketing strategy that is broadly standardised across different markets or broadly  adapted to each market.

In the literature, arguments for and against both of these strategies are found. Multinational companies typically assume one of two extremes when dealing with the world market. Some companies see the world as one homogeneous entity, and consequently use a standardisation strategy. Others view each nation of the world as unique and for that reason they use a localisation strategy. In recent years it has been suggested that multinational companies could be more effective by avoiding these extreme positions and instead recognising the presence of market clusters within the world. Whitelock and Jones (1993) note, for example, that the most frequently practised strategy lies somewhere between standardisation and localisation. From the discussion above there seems to be considerable controversy concerning the most appropriate marketing strategy for multinational companies when they operate overseas, and this is of practical significance since their success will largely  depend upon the right choice.

To clarify this controversy it is important to provide  empirical evidence: this is the object of this study. The research offers two additional perspectives to most previously conducted research. Firstly, whereas most studies have involved a relatively narrow focus, our research proposes a broader framework entailing the simultaneous manipulation of variables across three main broad factors: firm, country and marketing programme. Secondly, we research the marketing strategies of UK companies in a developing economic region (the Gulf States), in contrast to the great majority of studies which have focused on the developed economies.

1.5      OBJECTIVES OF THE STUDY

There are several objectives the research will try to achieve.

The first objective is to determine the overall degree of standardisation of marketing mix programme activities used by UK companies  exporting to the Gulf States, using a three-factor, sixty variable model of country, firm, and marketing programme. (as discussed earlier complete standardisation is impossible, companies will standardised some of their marketing programme and adapt some of it)

The second is to test several hypotheses that have been propounded or supported in the relating fragmented literature on international marketing.

The third is to see if there is any differences in views regarding marketing programme strategies between UK companies and their agents in the Gulf States.

1.6      GCC AS A TARGET  MARKET

The GCC was set up on 26 May 1981, under an agreement signed by the six  leaders of the states of Saudi Arabia, Kuwait, Qatar, Bahrain, Oman, and the United Arab Emirates. The objective, as stated, is to bring the six states gradually closer together by developing common economic and social policies. Although there are differences, the States are  similar in their economic, political, religious, and geographical profiles, and cultures. The GCC states provide tremendous opportunities for exporters of a wide variety of products. They have been attractive targets for companies from all over the world (Yavas and Glauser, 1985; Abu-Ismail, 1982; Balasubramanian, 1992). They offer immense business opportunities and they are collectively one of the strongest financial powers in the world. From the literature available it emerges that writers have two different approaches regarding multinational companies operating  in the GCC market.

 1.6.1    THE AGGREGATE APPROACH

Writers who support this approach assume that multinational companies see the GCC market as one homogeneous entity due to the  similarities of the States. Consequently, they argue for marketing standardisation among these countries (Berger, (1962); Almaney, (1981); Elbashier and Nicholls, (1983); Fernea and Fernea, (1985); Culpan, (1985) ; Looney, (1989) and Hourani, (1990)). It is argued that the cultural and geographical proximity as well as similarities in the economic, and political sphere and in life styles might lead to the emergence of similar behaviour patterns to encourage the use of standardised marketing activities all over the region. In general, consumers in the GCC markets are much alike. They live under largely similar conditions and consume the same food and drinks (Kassem et al. 1993). As a result, Yavas and Alpay (1986) suggest that multinational marketers aiming at the Gulf countries may profitably employ standardisation in their marketing activities, and several reasons are given for this suggestion. First is the formation of the Gulf co-operation council, and an Arabic and Islamic Common Market that includes the GCC. Second, the markets are relatively homogeneous in economic development, social structure, and language. Third, the GCC are also in geographical proximity that might lead to the emergence of similar behaviour patterns and therefore standardisation is possible. Fourth, economic, political and lifestyle factors are related, leading to a standardisation of marketing activities  throughout the GCC market. Fifth, cross-national circulation of media is rising, due to the emergence of pan-Arabic publications which make regional advertising campaigns possible. The overlap in the media is increased by the exchange of TV programmes through the Arab satellite (Arabsat). Above all, Kassem et al. (1993) suggest that "...marketers should view the six nations of the GCC as a single market area due to their geographical proximity as well as the remarkable homogeneity of their cultures, economies, politics, language, religion, income levels and consumption patterns..".

1.6.2    THE REDUCTIONIST APPROACH

Writers who support this approach assume that multinational companies  see each market in the GCC as unique, and as a result, marketers should devote attention to each market, using a localisation strategy (Apgar, (1977); Abu Naba, (1984); Tuncalp, (1988); Luqmani et al. (1989)). According to Sriram and Gopalakrishna (1991), economic characteristics are often used to identify groups of countries that are potential candidates for a standardised approach. In their research in 1989 they found that countries which are similar economically are not necessarily similar in their media usage and availability pattern, which is very important for standardising advertising messages. Huszagh et al. (1986) used economic development measures to group 21 industrial nations into 5 clusters based on their similarity, but found differences in product acceptability even within the same economic cluster, and concluded that economic similarity may be necessary but not sufficient for standardisation. Walters (1986) showed that differences between consumers even in similar countries do exist and gave an example of the differences in the level of disposable income between European consumers. Green and Cunningham (1980) suggest significant differences in the way in which family purchasing decisions are made in the United States and Venezuela.

In the GCC differences certainly exist. For example, Saudi Arabia, which is the biggest market in the GCC, exhibits unique characteristics deriving from its culture, which is different from that of other GCC countries, even though they have a common heritage and religion. Above all, within Saudi Arabia the different regions exhibit strikingly different characteristics.

differences in character. To conclude, the GCC market has never been quite as homogeneous as some international marketers believe.

GCC countries represent a very important market for UK companies, and inversely the UK market is still very important for GCC oil products. The UK and GCC represent two groups with common interests. The GCC countries and the UK have enjoyed very good business relations for the last two decades. In the following pages, their business relations will be discussed to show how important both the GCC and the UK are in their trading.

1.7      UK AND GCC BUSINESS RELATIONS

GCC countries have been one of the biggest markets for capital equipment and consumer goods. They have been attractive to many international companies from all over the world, including UK companies. The GCC represents very important countries in terms of commercial as well as political and strategic factors. The GCC holds world  oil reserves on which the UK is expected to be heavily dependent by the end of the century when supplies from other sources are running out.

According to trade statistics, the GCC markets have taken  75 per cent of British exports to the entire Arab region and supplied 67 per cent of British purchases from it  in the last few years. These figures contrast with 70 per cent and 56 per cent respectively in 1990. Of all the GCC countries Saudi Arabia is by far Britain’s biggest Arab trade partner, absorbing £2,229 million worth of UK exports in 1991 (46 per cent of UK exports to all Arab countries) and supplying £964 million of British imports (48 per cent of total UK imports from the Arab region).

In value terms, Saudi Arabia accounted for the biggest rise in British exports to any Arab country in 1991. The increase was £218 million, or 10.82 per cent. The United Arab Emirates, again a GCC country, is the UK’s second biggest trade partner among Arab countries. The British exports to UAE also rose in 1991, by 14.3 per cent to £760 million, and UK imports from the UAE also increased significantly, rising by 28 per cent to £232 million. Table 1.1 shows the British exports to the six GCC countries.

Historically, GCC markets have been profitable markets for UK companies and British products were in a dominant position until recently (Abu-Ismail, (1982) and Greenstock, (1984)). The reasons for losing the dominant position are many but, according to Abu-Ismail (1982) and Yavas and Tuncalp (1984), the most important one is that UK companies fail to match their competitors’ marketing expertise and skills in adapting their marketing strategy to the needs of the local customers. Oil and military projects seem to control the level of economic and commercial co-operation between the UK and GCC countries, but  recently GCC countries have tried to diversify this co-operation in the interests of both sides. According to Shah (1985), over 350 UK companies are very active in Saudi Arabia. There is no proof that this figure is correct because the only directory issued by the Department of Trade states that UK companies with representatives in Saudi Arabia numbered no more than 180 in 1993. In recent years a good deal of British business with Saudi Arabia has comes under the Al-Yamamah economic offset programme started in 1989, involving supply of air defence equipment and training. It was  agreed in 1986 and involved participation by UK companies in industrial and other joint ventures in Saudi Arabia. The agreement emphasises commercial viability and technology transfer. The main industries in the GCC are petrochemical, oil refining, steel, fertilisers, cement, cables, truck assembly, and pipes; the main exports of the GCC are crude and refined oil and  petrochemicals.

Table 1.1 UK Exports to the GCC countries (£M)

       Source: Arab British Chamber of Commerce, London (March) 1994 

From Table 1.1 it can be seen that British exports to the GCC increased by 10 per cent in 1993. Saudi Arabia represents a very important market for British exporters and is the largest market in the GCC, followed by the UAE. However, this growth has not been matched by GCC exports to the UK. The value of such exports was £1906 million in 1993, an increase from 1992, when the figure was £1577 million. The increase in GCC exports to the UK may be due to the strong awareness among UK companies of GCC products. The deficit in balance of trade between UK and the GCC resulted from the military projects of the latter. In general, the GCC markets represent a very important market in the Arab World and 75 per cent of total British exports. The UK exports many goods and services to the GCC countries, including food, beverages, tobacco, chemicals, manufactured goods, machinery, transport equipment, general manufactured goods, consulting, banking, contracting, insurance, shipping and training.

Table 1. 2 UK imports from the GCC (£ M)

Source: Arab British Chamber of Commerce, London (March) 1994

Table 1.2 shows that UK imports from the GCC have increased since 1989. The total reached £1906 million in 1993, which is almost double the 1989 total for exports. It can be seen from Table 1.2 that there is a gradual increase in the GCC exports. Within the GCC countries Saudi Arabian exports to UK were the largest, reaching £1274 million in 1993, followed by the UAE, which exported £251 million, and Kuwait with £236 million. The GCC countries try very hard to promote their non-oil products in the UK. Much of this growth has been in the non-oil sector, almost 42 per cent in 1993. As the figures in Tables 1.1 and 1.2 show, in terms of UK companies’ performance, a surplus has been achieved. Qatar is Britain’s smallest trade partner within the GCC countries, but despite the relatively low level of trade previously, there are many UK companies working on big projects in Qatar at present.

Table 1. 3  Economic importance of the GCC in 1992

                        Source: World Bank , Washington, USA 14 April 1994

From Table 1.3 one can see the importance of all the GCC countries, which have a total population of 24.105 million, representing a very important group of customers with a high average income per head. Although there are other groups with more customers, their purchasing power is not as great as it is in the GCC countries; for example, the GNP per head in the UAE is $22,220, which is one of the highest in the world.

1.8      MAIN DESTINATIONS OF EXPORTS AND IMPORTS FOR THE              GCC COUNTRIES IN 1992

Table 1. 4 Main destinations of exports and imports of Saudi Arabia

Source: The Economist Intelligence Unit Limited, 1993

Table 1.4 shows the main destinations of exports and imports for Saudi Arabia. As can be seen, the main destination for Saudi’s product exports is the USA and at the same time the USA is the main supplier to Saudi Arabia. The UK is the third supplier to Saudi Arabia, representing 10.6 per cent, behind the USA with 20.9 per cent and Japan with 14.2 per cent. Saudi Arabia's export performance depends heavily on crude oil and refined petroleum. Petrochemicals and plastics exports amounted to £2,536 million in 1990. The countries importing from Saudi Arabia include the USA, taking  22.4 per cent of the Kingdom's exports, followed by Japan (21.9 per cent). The Saudi government is trying hard to diversify the country’s exports and has become the world’s sixth biggest wheat exporter. The main suppliers to Saudi Arabia are the USA, which in 1990 provided 16.4 per cent of the Kingdom's imports, followed by the UK, providing 14 per cent, and Japan 13.6 per cent.

According to Tuncalp (1990), there are 35,000 British expatriates living in Saudi Arabia and, according to Shah (1985), there are 350 UK companies active in Saudi Arabia. The companies have formed 166 joint ventures, comprising 126 service ventures and 40 industrial ventures, with British capital investment of around $700 million. Saudi Arabia is regarded by Britain as a good source of income, from the transfer of profit as dividend remittances from these British joint ventures. A British-Gulf Co-operation Council Trade Exhibition was held in 1994, and considered to be the largest of its kind in Europe. The objectives of this exhibition were to promote British products in the Gulf countries, to promote Gulf products in Britain and to strengthen the business relationships between the GCC States and Britain. GCC represents a very important international marketing block for international marketers, especially those from Europe.

Table 1. 5 Main destinations of exports and imports of Kuwait

Source: The Economist Intelligence Unit Limited, 1993

Table 1.5 shows that the main destination of exports for Kuwait is France, representing 16.1 per cent. The UK is the fourth main destination for Kuwait’s exports, representing 11.1 per cent. The main source of imports is the USA, followed by Japan (12.3 per cent) and the UK, representing 8.8 per cent of  the total imports.

Table 1. 6 Main destinations of exports and imports of Qatar

Source: The Economist Intelligence Unit Limited, 1993

Table 1.6 shows that the main destination of exports from  Qatar is Japan, representing 61.4 per cent, while Japan is also the main source of imports, representing 13.6 per cent, followed by the UK, representing 11.8 per cent.

Table 1. 7 Main destinations of exports and imports for Bahrain

Source: The Economist Intelligence Unit Limited, 1993

From Table 1.7 it can be seen that Japan is the main destination for exports, representing 12.9 per cent, and Saudi Arabia is the main source of imports, representing 41.5 per cent, followed by the USA, representing 13.8 per cent and the UK, representing 7.2 per cent.

Table 1. 8 Main destinations of exports and imports for Oman

Source: The Economist Intelligence Unit Limited 1993

Table 1.8 gives the main destinations of exports and imports for Oman. It can be seen that the main supplier to Oman is Japan, representing 20.4 per cent, followed by UAE, representing 18.8 per cent, and the UK, representing 14 per cent. The main destination of exports is Japan, representing 40.2 per cent.

Table 1. 9 Main destinations of exports and imports of UAE

Source: The Economist Intelligence Unit Limited, 1993

As can be seen from Table 1.9, the main destination of UAE’s products is Japan, absorbing 39.4 per cent. The main source of imports is likewise Japan, followed by the UK and USA, representing, 14.2 per cent, 9.30 per cent and 8.50 per cent respectively. As can be inferred from the above tables giving the main destinations for exports and the main source of imports, a good partner for all the GCC countries, close behind Japan and USA, is the UK.

1.9      UK AND GCC COUNTRIES’ TRADE

In the following tables each GCC country’s balance of trade with the UK is shown.

Table 1. 10 UK-Saudi Arabia trade balance 1981-1991 (£'000)

Source: Arab-British Chamber of Commerce, London (March) 1994

Table 1.10 shows the trade balance between Britain and Saudi Arabia. As can be gleaned from the table, British exports to Saudi Arabia in 1991 were £2229 million, compared with £2011 million in 1990. Saudi Arabian imports from Britain were £795 million in 1990 and £964 million in 1991. The surplus of imports over exports was £1265 million in 1991. The British achieved a surplus from 1983 till 1991. Data are not available for more recent years.

 Table 1. 11 UK-Kuwait trade 1981-1991 (£'000)

Source: Arab-British Chamber of Commerce, London (March) 1994

From Table 1.11 it can be seen clearly that Kuwait has had strong ties with Britain for many years. British trade with Kuwait declined in 1990 and 1991 because of the Gulf war. British exports to Kuwait dropped by 21 per cent in 1990 to £181 million, and again by 1.73 per cent in 1991 to £178 million but Britain has achieved a surplus since 1982. In 1991 Kuwait’s exports to Britain were £178 million, whereas British imports from Kuwait were £30 million. For many years Kuwait has enjoyed a good relationship with the UK. Financial links have been particularly strong, with several Kuwaiti banks and financial institutions establishing branches in London. At the end of the Gulf war UK companies participated in the reconstruction of Kuwait. Figures show that the UK was Kuwait's third largest supplier in 1990, following Japan. The main industries are oil refining, petrochemicals (including fertilisers) and liquefied petroleum gas; the main exports are crude and refined oil, liquefied petroleum gas, and fertilisers.

 Table 1. 12 UK-Qatar Trade 1981-1991(£'000)

            Source: Arab-British Chamber of Commerce, London (March) 1994

From the figures in Table 1.12 it can be seen that British exports to Qatar achieved a surplus in each year. British exports in 1991 were £109 million, whereas imports were £5 million and the surplus was £104 million for the UK. British exports to Qatar in 1991 were £109 million, 2.25 per cent more than in 1990. British imports from Qatar are small and declined by 22 per cent in 1991 to just £5.5 million, giving Britain a surplus of £104 million. The main industries are petrochemicals, fertilisers, steel, flour, cement and the main export products are crude oil, petrochemicals, fertilisers and steel.

Table 1. 13  UK-Bahrain trade 1981-1991 (£'000)

Source: Arab British Chamber of Commerce, London (March) 1994

As the figures in Table 1.13 show, Britain achieved a surplus in each year from 1981 to 1991; in the latter year it was £108 million. Britain has long established trading links with Bahrain. In 1991 Bahrain ranked eighth among Britain’s Arab customers, taking £147 million worth of goods, while imports from Bahrain were worth £39 million, giving Britain a £108 million surplus. The main exports are refined oil and aluminium.

Table 1. 14 UK-Oman trade 1981-1991 (£'000)

Source: Arab-British Chamber of Commerce, London (March) 1994

Table 1.14 shows the trade balance between Britain and Oman, which proves to be a good partner. In 1991 British exports were £238 million, and imports were £74 million, achieving a surplus for Britain of £164 million. According to IMF figures, Britain was the biggest supplier to Oman. The main  industries are oil refining, cement and other construction materials, copper mining, numerous light industries, and the main exports are crude oil, copper, fish, wheat flour, dates, fruit and vegetables.

Table 1. 15 UK-UAE trade 1981-1991  (£'000)

Source: Arab-British Chamber of Commerce, London (March) 1994

Table 1.15 shows trade between the UK and UAE. UK exports in 1991 were £760 million, having risen by 14.3 per cent from 1990. The UK has enjoyed surpluses in its trade with the UAE for many years. In 1991 the surplus stood at £528 million. The main industries are oil refining, natural gas liquefaction, fertilisers and aluminium; the main exports are crude oil and refined products, fertilisers, aluminium, and  natural gas.

Table 1. 16 Exporters to the GCC by main Country suppliers, 1990 (£‘000)

      Compiled from  trade statistics Yearbook 1991, 1991

From Table 1.16  we see clearly that the main supplier to the GCC is the USA, followed by Japan, and then the UK. Saudi Arabia is the largest GCC importer. We conclude that the long-standing business relationships between the GCC states and Britain are still growing, despite the world recession. As the statistics show, the total trade between  the two sides increased by 11 per cent between 1992 and 1993, to just under £6 billion. The GCC states are trying hard to get their non-oil products into the British market. Looking at the statistics, in 1984 the GCC non-oil exports to Britain were worth £332 million, roughly a third of total GCC exports to Britain; by 1993 the GCC non-oil exports increased to £924 millions, representing almost half of total exports. This is clearly a success for the GCC. For UK companies the GCC market is now regarded as more important than a decade ago.

In 1993, 73 per cent of British exports to the whole Arab world were sold into the GCC market, compared with 59 per cent in 1984. Saudi Arabia is the largest market in the GCC, followed by UAE; these two countries represent almost 75 per cent of the market for British goods in the GCC. British exports to the GCC are dominated by machinery and transport equipment. In 1993 these were worth £1854 million, followed by chemicals (£540 million), general manufactured articles (£511 million), and manufactured goods classified by materials (£493 million). In 1993, £186 millions worth of food was exported to the GCC, roughly 12 per cent of Britain’s total annual food exports. Exports from the GCC to the UK are dominated by crude oil, but nowadays the non-oil sector is becoming increasingly important. The  GCC are the main external suppliers of oil and gas to UK and have provided a big market for capital equipment and consumer goods for UK companies. The GCC states are all seeking to achieve unity, solidarity and cohesion with the aim of becoming a single international trade block. Despite the world recession trade between Britain and the GCC grew in 1993.

1.10 THESIS STRUCTURE

The study will comprise six main chapters, followed by appendices and references. The following is a summary of the chapters.

Chapter One: this chapter is an introduction, including the research topic, UK/GCC business relations, the conceptual framework and the structure of the thesis.

Chapter Two: this chapter deals with the literature review for firm, country and marketing programme variables, which represent the proposed model. It examines previous empirical research into the question of international marketing standardisation.

Chapter Three: this chapter describes and explains the models, the methodology employed in the research and the hypotheses.

Chapter Four: this chapter represents the findings of the qualitative and quantitative stages employed in the study.

Chapter Five: includes  the perspective of the GCC agents and covers the findings which required more explanation and elaboration.

Chapter Six: this chapter discusses the findings, draws conclusions and makes recommendations; it also indicates the contribution made by the study, as well as its limitations.

The thesis concludes with appendices and a bibliography