TABLE OF CONTENTS.

SR. NO. TOPIC PAGE NO.

1 OVERVIEW 3
2 PESTLE ANALYSIS OF OMAN 6
3 CASE STUDY-NIRULA GROUP 20
4 PEST ANALYSIS AND NIRULAS 22
5 MARKET ENTRY STARTEGY,PRICING AND MARKETING. 25
6 CONCLUSION 28
 OVERVIEW

OMAN MARKET OVERVIEW:

Oman's economy is based primarily on petroleum and natural gas,With limited
energy reserves, Oman is focused on diversifying its economy away from oil
and gas production. The long-term 'Oman Vision 2020' development plan
highlighted the need for the Omani economy to diversify through a process of
Omanization, industrialization and privatization. The largest single industrial
investment target is the port city of Sohar, near the UAE border. It has
witnessed approximately $14 billion in government investment alone in the
financing of several industrial projects, including a refinery, polypropylene
plant, steel rolling mill, a fertilizer plant, and an aluminum smelter. The
permitted level of foreign ownership in privatization projects is 70 percent,
with up to 100 percent in certain cases. The government has proceeded with
several major privatization programs, including power generation projects in
Salalah, Sohar, Barka, Rusayl, and the Sharqiyah region, and a water
production plant in Sur. Other power and water generation projects are
scheduled for construction in Salalah, Barka, and Duqm. The government is in
the process of expanding its privatization efforts to its wastewater and solid
waste management operations. In addition to industrialization efforts, Oman
is aggressively marketing itself as an upscale, environmentally conscious tourist
destination. Through aggressive marketing campaigns and improved
infrastructure, Oman hopes to triple the industry's one percent contribution to
GDP and eventually create over 114,000 tourism-related jobs. International
investors are taking advantage of significant improvements in local
infrastructure to develop ambitious new tourist projects.Loads of
infrastructure projects are underway in Oman.To name few the government
will build a second runway and much-needed new terminal at Muscat
International Airport by 2011, a new terminal and taxiway at Salalah Airport by
2010, and new airports at Sohar, Ras al-Hadd, and Duqm in order to support
increasing air traffic.Then Oman is focusing on its port infrastructure as well.
Two of Oman's principal ports, Sohar and Salalah, are aggressively moving
forward on expansion of their respective operations. The Omani government is
developing a port at Duqm, a lightly populated area along the Arabian Sea.
Master plans call for the construction of a drydock facility, oil refinery,
petrochemicals complex and fish processing center to eventually compete with
Dubai's Jebel Ali port complex. The Duqm development plan also calls for the
construction of an airport to facilitate passenger and cargo shipments and a
three-hotel tourism resort complex.

OPPORTUNITIES IN OMAN:
Oman actively seeks private foreign investors, especially in the industrial,
information technology, tourism, and higher education fields. The government
hopes to attract over $12 billion in new foreign investment over the next 25
years. Investors transferring technology and management expertise, and
providing employment and training for Omanis, are particularly welcome.

The Omani Center for Investment Promotion and Export Development

(OCIPED) opened in 1997 to attract foreign investors and smooth the path for
business formation and private sector project development. OCIPED also
provides prospective foreign investors with information on government
regulations, which are not always transparent and sometimes contradictory.

Notwithstanding the existence of bureaucratic barriers, a number of important

factors favor Omani trade and investment development, including:

--Oman's accession to the World Trade Organization (WTO) on November 9,

2000, which facilitated Oman’s integration into the global marketplace. WTO-
consistent protection of intellectual property, market access, and customs
valuation are making Oman a more dependable trading partner and a more
attractive destination for majority foreign-owned investment

-- Oman’s long-term development strategy, which promises greater efficiency

and global competitiveness.

--There is no personal income tax in the Sultanate.

--The promising potential of Port of Salalah and Port of Sohar as international
air-sea transport hubs, and prospects for the Salalah and Sohar free trade
zones as magnets for value-added export industries.

--Of special note is that fast-food and casual dining restaurants are popular in
Oman, particularly with the younger generation. Many of the ingredients are
imported from the U.S. via Dubai. Good prospects for food exports, in
decreasing order, include: fresh and processed fruits and vegetables; snack
foods; frozen chicken parts; dairy products, particularly cheeses; breakfast
cereals; fruit and vegetable juices; canned meats; and other miscellaneous
food preparations, particularly hot sauces, salad dressings, catsup, edible oils,
mayonnaise, vinegar, iodized salt and coffee whiteners.
 PESTLE ANALYSIS OF OMAN.

POLITICAL ENVIRONMENT OF OMAN.

Political Structure
Monarchy

Head of State
Sultan Qaboos bin Said Al-Bu Said

Main Bodies

Council of Ministers:
Composed of the Sultan’s advisors

State Council (Majlis al-Dawla):

57 appointed tribal and religious leaders

Consultative Council(Majlis al-Shura):

84-member elected body tasked with advisory functions

Major Parties
Illegal

Last Elections
Consultative Council: October 27, 2007

Next Elections
Consultative Council: October 2011
Political power in Oman is dominated by Sultan Qaboos ibn Said Al Said who is
responsible for all major decision-making and government appointments. Since
coming to power in 1970 in a coup d’etat, Sultan Qaboos has committed
himself to promoting the country’s modernization, economic diversification as
well as continued political
stability.Owing in great part to the relatively fair distribution of the country’s
wealth, respect for the authority of the Sultan and a positive macroeconomic
environment, there is little or no organized opposition
against the status quo. A process of limited democratic reform has been
underway over the last several years including the introduction of direct
elections for members of the Consultative Council in 2000 and universal
suffrage in 2003. In recent October 2007 elections, Oman recorded a strong
68% voter turnout.While Oman is steadily moving forward on political
liberalization efforts, the Council’s role remains largely advisory. Decision-
making authority rests with the Sultan with input from his
advisors, the appointed Majlis al-Dawla and members of Oman’s influential
merchant families.Succession is a key risk issue. In 1996, the Sultan put in place
a convoluted succession mechanism which, among other elements, calls for a
committee of appointed elders to choose
the next in line upon the death of the current leader. However, whether this
will allow for a stable transfer of power remains to be seen. Given the
uncertainty surrounding succession, the longterm outlook for a continuation of
the Sultan’s current policy efforts remains unclear.

GOVERNMENT’S ATTITUDE TOWARDS FDI’S AND INCENTIVES.

The government actively encourages foreign direct investment into the

country as part of its effort to promote industrial development and increased
employment opportunities for Omanis.Rising unemployment among a fast-
growing Omani population is a key government concern. In
response, the government is steadfastly pursuing “Omanisation” quotas to
replace foreign workers with nationals. Omanisation quotas are currently in
force for six industries in the private sector, with the highest Omanisation
quotas in place for the transport, storage and communications sector at 60%,
finance, insurance and real estate at 45% and industry at 35%. Authorities
created the Omani Center for Investment Promotion and Export Development
(OCIPED) in 1997 with the aim of providing foreign investors with a “one-stop-
shop” for licensing
and registration procedures. However, bureaucratic impediments continue to
remain time consuming obstacles for foreign investors.Judicial reform is
underway and the court system is considered largely fair.Corruption levels are
low by regional standards and do not act as a significant impediment to foreign
investment.

INCENTIVES:

The government encourages foreign participation— particularly foreign

expertise and technology—that develops, diversifies and privatizes certain
areas of the economy and helps Oman benefit from its natural resources.
Government incentives to encourage local and foreign investment include tax
exemptions; the provision of industrial plots in industrial zones for nominal
charges; preference in the allocation of government land; interest-free or
subsidized loans with longer terms for repayment; reduced charges for water,
electricity and fuel; financial assistance for the development of economic and
technical feasibility studies; and the expedited arrangement of immigration
visas and permits for foreign workers.

GOVERNMENT REGULATIONS AND POLICIES:

A foreign national wishing to engage in a trade or business in Oman or to

acquire an interest in the capital of an Omani company must obtain a license
from the Ministry of Commerce and Industry.In general, the ministry grants a
license if the paid-up capital of the Omani company in which the investment is
made is at least RO 150,000 (US$ 390,000) and if the foreign ownership of the
company does not exceed 49%. In certain circumstances, the Ministry may
increase the permissible level of foreign ownership to 70%, in accordance with
a commitment provided to the World Trade Organisation (WTO). In general,
foreign companies and foreign nationals may not own land for business
purposes in Oman. The government makes certain exceptions for Gulf Co-
operation Council (GCC) nationals. Oman does not impose personal income
tax. Income tax is levied on entities that are wholly owned by Omani nationals,
entities with foreign participation, branches of foreign companies and Omani
sole proprietorships All companies incorporated in Oman irrespective of the
extent of foreign ownership and branches of companies registered in the other
member states of the Gulf Co-operation Council (Bahrain, Qatar, Kuwait, Saudi
Arabia and the United Arab Emirates) are taxed at a rate of 12%, for income
exceeding RO 30,000. A single tax rate applies to branches of foreign
companies, at rates ranging from 0% to 30%. Petroleum companies are subject
to tax under specific provisions and rates.Omani sole proprietorships are taxed
at a rate of 12%.The Omani Labor Law requires employers to pay end-of-
service benefits to expatriate employees.The Social Security Law requires
private-sector employers and their Omani employees to pay monthly
contributions to an insurance fund for old age, disability and death benefits.
Employers pay an additional monthly contribution to insure their Omani
employees against occupational injuries and diseases.

Foreign Investment

Exchange Controls and Debt-to-Equity Requirements

With the exception of certain restrictions on the foreign-currency holdings of
commercial banks,Oman does not impose exchange controls.
In general, Oman does not restrict the remittance abroad of equity or debt
capital, interest,dividends, branch profits, royalties, management and technical
service fees, and personal savings.
However, the following commercial bank transactions require prior approval
from the central bank:
• Declarations of dividends by locally incorporated banks; and
• Remittances by foreign bank branches to their head offices of any surpluses
from the previous
year’s profits.
Oman does not impose rules on debt-to-equity ratios.

Restrictions on Foreign Investment

Levels of Foreign Investment

The Foreign Capital Investment Law (Royal Decree No. 102 of 1994) governs
foreign investment in Oman. Under this law, foreign entities wishing to invest
in Omani companies must file applications for licenses with the Ministry of
Commerce and Industry. In general, the ministry grants licenses to applicants if
both of the following conditions apply:
• The paid-up capital of the Omani company in which the investment is made
is at least RO150,000(US$390,000).
• The foreign ownership of the company does not exceed 49%.The Ministry
may, subject to a recommendation from the Foreign Capital Investment
Committee,increase the permissible level of foreign ownership of an Omani
company to 65%. In accordance with a commitment provided to the World
Trade Organization, approvals are granted for foreign ownership of up to 70%
under certain circumstances. If a project has capital of at least RO 500,000
(US$1.3 million) and contributes to the development of the national economy,
the Ministry may recommend to the Council of Ministers that the permissible
percentage of foreign ownership be increased up to 100%.
The Ministry may exempt the following entities from the licensing conditions
specified above:
• Companies conducting business through special contracts or agreements
with the government;
• Companies established by Royal Decree; and
• Parties conducting a business that the Council of Ministers declares
necessary to the country.
In practice, contracts awarded by the government, Petroleum Development
Oman LLC (PDO) and Oman LNG LLC (OLNG) (see Section B.7, pages 13 and 14)
enable foreign companies to establish branches in Oman by registering the
branches with the Ministry of Commerce and Industry. Such foreign companies
are exempt from registering an Omani company.Foreign companies and
establishments engaged in certain sectors may open commercial
representative offices in Oman. For details concerning commercial
representative offices.

Land Ownership
Under the Land Law (Royal Decree No. 5 of 1980), companies and foreign
nationals may not own land, except in certain exceptional circumstances.
Other GCC nationals, companies wholly owned by Omanis, and general joint
stock companies with at least 51% Omani shareholding may own land in
certain circumstances. Regulations are expected to be issued shortly to allow
foreign nationals to own residential real estate in certain tourism designated
areas.
The Ministry of Housing, Electricity and Water may grant to a company or a
foreign national the Right to use a certain property for operations that
promote the economic development of Oman. For example, a lease and a right
of use may be assigned or mortgaged. However, unlike a lease, a right of use
expires on the death of the beneficiary. On expiration of a right of use, the
beneficiary must be compensated for the value of any improvements
constructed during the terms of the right of use.

Investment Incentives
The Organization and Encouragement of Industry Law (Royal Decree No. 1 of
1979) governs the provision of incentives to foreign investors in Oman. The law
established the Industrial Development Committee, which seeks to promote
increased productivity and efficiency, as well as the development and
consolidation of industrial installations. Proposals qualify for incentives only
if Omani nationals make up 25% of their total workforce, unless the Ministry of
Commerce and Industry specifically rules otherwise. Investment incentives
include the provision of industrial plots in industrial zones for nominal charges
preference in the allocation of government land; interest-free or subsidized
loans with long terms for repayment; reduced charges for water, electricity
and fuel;financial assistance for the development of economic and technical
feasibility studies; and the expedited arrangement of immigration visas and
permits for foreign workers.

Tax Exemptions
Tax exemptions from corporate tax and customs duty may be granted by the
Ministry of Finance.Tax exemptions are available for entities engaging in
manufacturing, mining, agriculture, fishing,fish farming, fish processing,
aquaculture, animal breeding, tourism, the export of manufactured and
reprocessed products, operation of colleges, universities, higher education
institutes, private schools, training institutes, private hospitals and public
utilities. Exemptions are granted for five year periods effective from the date
when production begins or services are first rendered; a five year extension
may be granted. Management agreements and construction contracts do not
qualify
for tax exemptions. Companies engaged in the activities listed above may also
obtain an exemption from the payment of customs duty on exports and on
imports of equipment, spare parts and raw materials.

Importing and Exporting

Restrictions

Imports
The import of goods into Oman requires an import license. The import of
certain classes of goods, including alcohol, firearms and explosives, requires a
special import license. Goods entering Oman must have certificates of origin.
Oman follows Arab boycott rules, which forbid the import of goods originating
from Israel.

Exports
Oman does not restrict exports. However, the export of items of historical
value requires an export license.
Customs Duties
Most imported goods are subject to customs duty levied at a flat rate of 5% on
their cost-insurancefreight(CIF) value. Consumer goods, including foodstuffs
are exempt from customs duty. Alcohol and tobacco are subject to higher rates
of duty.Goods produced within the GCC generally may be imported duty-free.
In certain circumstances,Oman may permit contractors to import duty-free
equipment and materials for use on government,PDO and OLNG projects.
Oman implemented the directives of the GCC Customs Union from 2003 Oman
does not impose quotas or other non-tariff trade barriers, and has not enacted
antidumping regulations.Oman does not impose export duties.
Oman has entered into a Free Trade Agreement with the United States of
America in late 2005.

THRUST ON THE TOURISM SECTOR The government encourages foreign

participation to develop the country’s tourism industry. Since the mid-1980s,
the government has gradually opened its desert, mountains and coastlines to
foreign tourists and the Ministry of Tourism has participated in various
international tourism exhibitions to introduce Oman to the world tourist trade.
Recent changes to visa regulations allowing tourist visas on arrival for a large
number of nationalities are expected to significantly increase the flow of
tourists into the country. Oman’s total income from tourism is expected to
reach RO 43 million (US$ 118 million) by 2005. The planned expansion of the
Seeb International Airport continue to increase the tourist potential of the
country. A new Tourism Ministry was set up in 2004 to provide thrust to this
sector.

LEGAL ENVIRONMENT
Oman’s Basic Law (Royal Decree No. 101 of 1996) states that the Islamic code
— the Sharia— is the basis for Omani legislation. The Sultan issues laws
consistent with the Basic Law through Royal Decrees.
Judicial power lies with the courts, which are independent of the executive
authority. The Commercial Court has jurisdiction over commercial disputes. In
enforcing agreements between partners and reaching decisions based on the
Sharia, the court applies Omani laws established by Royal Decrees.
The Judicial Authority Law organizes the following different courts in Oman:
• The Supreme Court
• The Appellate Courts
• The Preliminary courts (Court of First Instance)
• The Courts of Summary Jurisdiction
Other components of the legal system include the Administrative Judicature
Court, the Supreme Judicial Council and the Public Prosecution Authority.

Labor Legislation
The comprehensive Omani Labor Law issued in 2003 applies to Omani and
foreign employers and employees. The law governs work contracts, wages,
overtime pay, leave, work hours, industrial safety, labor disputes, vocational
training, and the employment of Omani and foreign nationals.

Workweek
The typical working week is 45 hours and generally runs from Saturday through
midday on Thursday.

Wages
The government prescribes a minimum monthly wage of RO 100 for unskilled
Omani employees and a minimum monthly wage of RO 150 for Secondary
school passouts. In addition, employers must pay their Omani employees a
monthly accommodation allowance of RO 10 and a monthly transportation
allowance of RO 10.

Payroll Taxes and Employee Benefits

The Social Security Law (Royal Decree No. 72 of 1991) introduced a system of
social security to insure employees against old age, disability, death, and
occupational injuries and diseases. The law currently applies only to Omanis
working in the private sector. Under the law, private-sector employers must
make monthly contributions to the Public Authority for Social Insurance at a
rate of 9.5% of each Omani employee’s monthly wage. Covered employees
contribute at a rate of 6.5% of their monthly wages. Employers contribute an
additional 1% of each Omani employee’s monthly wage as security against
occupational injuries and diseases. The government contributes 2% of each
Omani employee’s monthly wage. The Public Authority for Social Insurance
invests all funds received, and it pays out sums due to employees on their
retirement and as compensation for injuries and diseases.
In accordance with the Labor Law (Royal Decree No. 35 of 2003), employers
must pay an end-ofservice benefit (ESB) to their foreign employees. ESB is
calculated on an employee’s final wage and paid according to the following
guidelines :
• For the first three years of service: the equivalent of 15 days’ basic pay for
each year worked; and
• For each subsequent year, the equivalent of one month’s basic pay.
Special Requirements for Foreign Nationals
For each non-Omani employed, an employer must make an annual
contribution of RO 100 towards a vocational training levy.

Tax Law
The Income Tax Decree 1971 introduced taxation in Oman. This decree was
superseded by the Law of Income Tax on Companies (Royal Decree No. 47/81),
which was published in 1981. The Law of Profit Tax on Commercial and
Industrial Establishments (Royal Decree No. 77/89), which was published on 16
September 1989, introduced a tax on business establishments that are wholly
owned by Omani citizens. However, subsequent decrees exempted these
businesses from the tax until 31 December 1993. The Law of Profit Tax also
introduced a tax on commercial and industrial establishments that are owned
or operated by non-Omani individuals. All tax legislation is enacted by Royal
Decree. Provisions that implement the tax law are introduced by Ministerial
Decisions.
The Omani government imposes tax on the following entities:
• Joint stock companies;
• Holding companies;
• Limited liability companies;
• General and limited partnerships;
• Joint ventures
• Branches of foreign companies and
• Civil companies
In addition, the following individuals are treated as taxable entities:
• Non-Omani individuals carrying out revenue-generating business activities
and
• Omani sole proprietors.
Citizens of other Gulf Cooperation Council (GCC) countries are treated as
Omani residents for tax purposes if they are engaged in specified economic
activities.

Customs duty is the only indirect tax imposed in Oman.

ECONOMIC ENVIRONMENT :
GDP (approx.):$59.946billion.
Per capita GDP(approx.):$21,646.

Real GDP growth rate (approx.): 7.8%.

The period of rapid growth has come to an end, and in the absence of a sharp
recovery in oil prices Oman looks set to grow in the 3-4% range over the
coming 5-10 years. Oil fields are maturing and natural gas has only limited
upside in terms of boosting export earnings potential. The government is
looking to diversify the economy beyond the hydrocarbon sector,which still
account for about 75% of export earnings, given the limited sector potential to
drive and sustain growth beyond 2020.

Foreign investment in support of natural gas projects, alongside a sharp up-tick

in government investments will sustain growth. Weaker oil prices have had a
noticeable impact, and unlike Qatar, natural gas represents a small proportion
of GDP and export revenues. A spot of good news is that oil production rose
4% due to earlier investments at enhancing recovery, but the oil price slide has
been more damaging.

With an estimated 20 years of crude capacity remaining, the economy

desperately needs to diversify in order to improve the long term outlook. To
this end, the government is shifting its strategy to target renewable energy as a
key developmental goal that it hopes will contribute about 30% of GDP by
2020.Also tourism is the sector that offers tremendous future growth
opportunity.

SOURCE OF FUNDS AND THEIR COST:

Oman’s commercial banks are the primary source of short, medium, and long-
term credit. Because no restrictions apply to obtaining credit abroad,
commercial banks in the neighbouring Gulf countries are also significant
sources of credit. The Oman Development Bank, which specializes in loans to
small and medium-size companies, is a significant source for loans of less than
RO 250,000. Two housing banks cater to special financial
requirements.Investors may also obtain financing from the Gulf Investment
Corporation located in Kuwait. Established by the GCC, the Gulf Investment
Corporation is a major financial institution whose purpose is to invest in the
equity of, and provide loan funding to, new companies in various sectors.In
certain circumstances, the government provides loans with long terms for
repayment to finance projects. In addition, general joint stock companies may
issue shares and bonds to the public through the Muscat Securities Market.

Securities Market
The Capital Market Authority, established in 1998, regulates the securities
market. Muscat Securities Market, which began operations in 1989, oversees
the flow of funds into securities and develops the local financial market. The
capitalization of the market and the number of companies listed on it continue
to grow. By June 2005, the value of listed shares has reached RO 5.009 billion
(US$ 13.01 billion) and the number of listed companies has reached 230.
Membership in the exchange is compulsory for Omani licensed banks,
specialized loan institutions,authorized financial intermediaries, joint stock
companies and Omani public authorities whose shares are registered on the
securities market.

Investment Funds
Commercial banks and joint stock investment and brokerage companies
registered in Oman may establish investment funds called joint investment
accounts. The accounts are listed on the Muscat Securities Market and may be
up to 49% foreign-owned. The funds are exempt from taxation.

INFRASTRUCTURE AND PHYSICAL FACILITIES.

The Omani government is developing a port at Duqm, a lightly populated area

along the Arabian Sea. Master plans call for the construction of a drydock
facility, oil refinery, petrochemicals complex and fish processing center to
eventually compete with Dubai's Jebel Ali port complex. The Duqm
development plan also calls for the construction of an airport to facilitate
passenger and cargo shipments and a three-hotel tourism resort complex.
Complementing Oman's development as a tourist destination is the
government's commitment to fund the expansion plans of Oman Air through
the acquisition of long-range aircraft. To support the expected increases in air
traffic, the government will build a second runway and much-needed new
terminal at Muscat International Airport by 2011, a new terminal and taxiway
at Salalah Airport by 2010, and new airports at Sohar, Ras al-Hadd, and Duqm.
 Oman is focusing on its port infrastructure as well. Two of Oman's principal
ports, Sohar and Salalah, are aggressively moving forward on expansion of
their respective operations.

SIZE OF MARKET – TOURISM.

In 2002, Oman attracted some 1.2 million foreign visitors; about 700,000
came from the GCC(GULF CO-OPERTION COUNCIL) states. And of those
700,000 tourists, a staggering 85 percent of them came from the UAE. For all
the talk in Muscat and Salalah about bringing in European tourists, the fact
remains that the bulk of the sultanates visitors come from a lot closer to home
- and, of those, huge numbers are simply driving across the border for a very
short-term stay.
Oman has so much more to offer than the other Gulf states in terms of
culture and history. Oman offers an authentic Arabian experience that's not
easily available elsewhere in the region.
Whereas the neighbouring tourism hub Dubai has deviated from its culture in
order to attract the tourist.Thus touting Oman to be authentic Middle East can
further drag the tourist from the UAE.

SOCIO-CULTURAL ENVIRONMENT.

Official Language – Arabic

LIFE STYLE OF THE OMANIS

KEYS CONCEPTS:

Islam-In order to fully comprehend the culture of Oman, it is important to

understand the extensive influence of religion on society. Oman is the only
Muslim country to have a majority of Ibadhi sect followers which contributes
to their conservative culture. Islam governs every aspect of a Muslim’s life,
from holidays to the food they eat to how they dress and do business.
Generosity, modesty and respect for others are key concepts which are
present in both social and professional spheres of life.

Hospitality-Omanis are known for their extreme hospitality and generosity in

both social and professional contexts. Omanis welcome guests with a variety of
traditions and rituals, the most important of which is the serving of coffee, or
kahwa. Omani hospitality is closely connected to their desire to establish trust
and build relationships with people before doing business. Foreigners should
therefore show their gratitude for this generosity and spend time getting
acquainted with their Omani business counterparts.

Face – Dignity and respect are key elements in Omani culture, preserved
mainly by the concept of saving face. Through the use of compromise, patience
and self-control, Omanis avoid embarrassing or putting others down so as
prevent them from losing face. Public criticisms are therefore rare and are
instead given in private where there is less risk of losing face. When doing
business with Omanis it is important to remember this and avoid doing
anything which might offend them or make them look bad in front of others.

Family – Omani culture places a high importance on family and tribal

connections. The family and tribe are highly influential and play a role in
shaping a person’s values and behaviour. Loyalty to both comes before
anything else, even in a business context where it is not uncommon to have
several members of one family working for the same company.

COST OF LIVING
Because Oman imports most of its goods, the country’s cost of living is
comparatively high.

Business Hours
The business week is from Saturday through Thursday morning. Friday is
usually a day of rest, although certain shops may be open for restricted
hours.During Ramadan, the holy month of fasting, business hours are
restricted.

Social and Business Customs

Oman is a devout Muslim country, and its local customs should be respected.
Dress is generally conservative; it should cover the shoulders and the tops of
the arms, and should extend to below the knees. Photographing individuals,
particularly women, is often viewed with disapproval; therefore, permission to
take photographs should always be sought. Because the misuse or abuse of
alcohol may cause offense, alcohol should not be consumed in public places,
unless these places are licensed to serve alcohol. During the holy month of
Ramadan, observant Muslims fast from sunrise until sunset. Eating, drinking or
smoking in public places during daylight hours is forbidden. All non-Muslims in
the presence or sight of a Muslim should avoid these activities during the
period of the fast.

GENERAL OMANI ATTITUDE....

Omani attitudes to time are much more relaxed than in many Western
cultures .People and relationships are more important than schedules and
punctuality. It is not uncommon, therefore, for your Omani counterparts to
arrive late but foreigners are expected to arrive on time.
Meetings should be scheduled in advance and confirmed a few days prior.
Meetings are often cancelled or rescheduled however with little notice so
always come prepared with a business card or letter to leave to let them know
you were there.

EDUCATION AMONG THE OMANIS.

Although schooling is not compulsory, education is now almost universal.

Oman offers primary, secondary and single-sex schools throughout the
country, except in remote villages. At the end of 2002, Oman had 1,019
government schools with 298,000 male and 280,000 female students and
18,538 teachers; by comparison, in 1970, Oman had three boys’ schools with
909 students and 30
teachers. To improve its educational system, the government accords priority
to educating Omanis to become teachers. In 1986, Sultan Qaboos University
was established near Seeb, just outside the capital, and in 2002, around 12,000
students were enrolled, 50% of whom were female. In 1993, the College of
Commerce and Economics was established and the College of Law and Sharia
was established in 1997. Oman operates technical and industrial colleges,
teacher-training colleges, vocational training centers, an Institute of Health
Science, an Institute of Banking and Financial Studies and several private
colleges for engineering, commerce and business management. The
government
offers adult education to improve general literacy and to upgrade the written
and spoken Arabic language skills of Omanis.
The Sultanate is focusing on education as a means to rapidly change the
country from a traditional agrarian society to an active participant to
contemporary global economy. The Sultanate recognises the importance of
women’s education in the nation-building process.

TECHNOLOGICAL ENVIRONMENT.
INFORMATION TECHNOLOGY

Market Overview The total size of the Oman IT market in 2010 is estimated by
BMI at around US$327mn, up from US$308mn in 2009. BMI expects a market
compound annual growth rate (CAGR) of 5% for 2010-2014.

Oman's economy is relatively well positioned for the post-credit crunch era,
but IT spending is not seen as returning to its previous rate of growth over the
forecast period.

Oman's IT market is only about 10% of the size of the Saudi Arabian market,
but the Omani government is investing in IT as part of its Digital Oman
initiative and strategy to diversify the economy. In addition to ongoing demand
from the oil and gas sector, this should generate IT spending in verticals such
as telecoms, financial services and aviation.

Economic reform and trade liberalisation will fuel spending by both public
sector organisations and enterprises. Growth in e-commerce will also drive
spending by enterprises on e-commerce platforms and back-office systems. Oil
and gas remain a pillar of the local economy and will generate spending on
customised solutions, hardware and software support.

Industry Developments In August 2009, Oman's Information Technology

Authority (ITA) unveiled a new 'e-Oman' brand. The government's e-Oman
goals include bridging Oman's digital divide and making e-government service
available to all citizens and residents. In 2009, the ITA was preparing to launch
an E-Government Services Portal, a gateway to services offered by government
departments via the internet.
A key driver of Omani e-services development is expected to be tbe e-Purse
initiative, launched in 2009.

The e-Purse, which will be embedded in national ID and residence cards, was
being implemented by the ITA in association with the Royal Oman Police and
BankMuscat. During the first phase of the project, the E-Purse can be topped
up only at BankMuscat branches, but project was due to be extended.

TELECOMMUNICATIONS.

Internet Growth and Population Statistics:

YEAR Users Population % Pop. Usage Source
2000 90,000 2,424,422 3.8 % ITU
2002 180,000 2,398,545 7.5 % ITU
2005 245,000 2,424,422 10.1 % ITU
2008 300,000 3,311,640 9.1 % ITU
2009 557,000 3,418,085 16.3 % ITU
2010 1,236,700 2,967,717 41.7 % ITU

TELECOMMUNICATIONS MARKET OVERVIEW.

The telecoms sector in Oman is relatively undeveloped for the region and for
the GDP per capita. This situation has begun to change, with the introduction
of some competition in the market, but much potential remains. Both fixed-
line and mobile telecoms penetration levels are low but since the launch of
second mobile operator Nawras, mobile subscriber growth has increased
rapidly. Strong growth rates have also been recorded in the broadband
market, from low levels, as incumbent OmanTel prepares for further
competition. This report provides an overview of the telecommunications
market in Oman, accompanied by relevant statistics.

CASE STUDY.
Nirula's, a well-known name in the hospitality industryThe Nirula brothers
before going into the Hotel and Food Service Industry tried their hand at
various professions including running a pharmacy, optician shop and a
photo studio.
However, they soon realized the paucity of good eating-places in and around
New Delhi. Though completely new to the business, they began "HOTELINDIA"
in 1934 at Connaught Place with 12 rooms, a restaurant
and a bar license.

The starting of the 'Chinese Room' Restaurant and introduction of espresso

coffee for the first time in India by Nirula's was done in the 1950's. The 60's
witnessed the opening of two specialty restaurants, La Boheme a modern
restaurant serving Hungarian food & Gufa an Indian specialty restaurant. The
70s saw the company venture into the fast food business with the Pastry Shop,
Snack Bar, Hot Shoppe and Ice Cream Parlour. The Potpourri restaurant with
the first Salad Bar in India was
also opened in this period.

The eventful decades of 1980s & 1990s saw the opening of the Central Kitchen
and Family Style Restaurants at Vasant Vihar, Chanakya,
Defence Colony, Noida and numerous other strategic locations in the
NCR.

Today, the Noida production facilities include the Bakery, Confectionery,

Cheese Plant, Ice cream Plant, Food Processing Unit and Hot Kitchen.

However, now that the Sultanate Of Oman is welcoming the industries

associated with the tourism sector Nirula’s plan to venture abroad. They are
keen about launching their multicusine business model POTPOURRI
Which would enable them to capitalize the growing tourist market of Oman.
PEST ANALYSIS OF OMAN AND
NIRULA’S.
POLITICAL ENVIRONMENT ASPECTS RELEVANCE.

 GOVERNMENTS ATTITUDE TOWARDS FDI’S.

The Omani Govt. Led by Sultan Qaboos actively encourages the FDI’s
which could contribute to the development of the nation.Moreover the
Sultante is under the process of Omanization .The vision Oman 2020
aims at creation of multiple sources of income to majorly substitute the
business of depleting resources like oil and gas.Inorder to achieve this
objective govt. Has been aggressively promoting Oman as a tourist
destination.The govt. Is anticipating upto 3% contribution to GDP from
the tourism industry.Also this industry hopes to create job opportunities
for 1,20,000 people.
Thus ,the Nirula’s who plan to establish the multicusine eatery at
the tourist hot spots like Salalah can expect a huge market comprising
who European,African and the major chunk of tourist from the
neighbouring
Dubai.

 INCENTIVES.
The government encouraging local and foreign investment offers
various incentives like tax exemptions; the provision of industrial plots in
industrial zones for nominal charges; preference in the allocation of
government land; interest-free or subsidized loans with longer terms for
repayment; reduced charges for water, electricity and fuel; financial assistance
for the development of economic and technical feasibility studies; and the
expedited arrangement of immigration visas and permits for foreign
workers.
However in order to qualify for incentives the proposals must make
up 25% of their total workforce, unless the Ministry of Commerce and Industry
specifically rules otherwise.

 RULES AND REGULATIONS.

The foreign companies in Oman are prohibited from owning a land or
other such property in the country.Thus ,it becomes obligatory for the Nirula’s
to engage in a joint venture with a local firm there.Further, the Land Law in
Oman states that the general joint stock companies with at least 51% Omani
shareholding may own land in certain circumstances. Regulations are expected
to be issued shortly to allow foreign nationals to own residential real estate in
certain tourism designated areas.

Tax-Tax exemptions from corporate tax and customs duty may be granted by
the Ministry of Finance to firms engaged in tourism allied activities.Exemptions
are granted for five year periods effective from the date when production
begins or services are first rendered; a five year extension may be granted.

Imports- The import of certain classes of goods, including alcohol requires a

special import license. Goods entering Oman must have certificates of origin.
Oman follows Arab boycott rules, which forbid the import of goods originating
from Israel.Goods produced within the GCC generally may be imported duty-
free. .Oman does not impose export duties.

Since,the goods imported from GCC nations are duty free the Nirulas must
seek to import major portion of the raw materials fron the GCC itself.

Required Levels of Omani Employment-To ensure that the local population is

employed to the greatest extent possible, the government encourages staffing
with Omani nationals. Guidelines issued by the Ministry of Manpower require
private companies operating in specified sectors to employ Omani nationals as
a certain percentage of their labor force. The table below presents the
percentages, which are set to increase gradually in coming years.
Required Level of Omani Employment Sector %
Transportation, storage and communication 77
Finance, insurance and real estate 45
Industry 35
Restaurants and hotels 30
Wholesale and retail trade 20
Contracting 30

ECONOMICAL ENVIRONMENT ASPECTS RELEVANCE.

 MARKET SIZE.
The purchasing power with the Omanis is constantly booming. Also
They are undergoing a modernization phase.The youth prefer to
experiment new things.Fast food is very popular among the
youth.Thus,the Omani youth has a major stake in the success of
POTPOURRI outlets.

Last year about 7 lakhs tourist came down to Oman.Most of them

were from the UAE.And the rest came all over from the United
Kingdom,Italy,Spain and other parts in the WEST.The Nirula’s must
design their products to cater to the needs of the above mentioned
tourist.Also Oman has a major Indian population. Thus POTPOURRI can
further increase it business prospects by concentrating on authentic
Indian cusine.
 PURCHASING POWER

The inflation for the year ended 2010 was about 4%.This was the outcome
of declining crude oil prices.The oil and natural gas being the core business of
Omanis,play an important role in ascertaining the per capita income and their
purchasing power.However ,the situation is changing.There is gradual boom in
the per capita income. The period of rapid growth has come to an end, and in
the absence of a sharp recovery in oil prices Oman looks set to grow in the 3-
4% range over the coming 5-10 years.The cost of living in Oman is high as most
of the goods are imported.

 INVESTMENT FUNDS.

Commercial banks and joint stock investment and brokerage companies

registered in Oman may establish investment funds called joint investment
accounts. The accounts are listed on the Muscat Securities Market and may be
up to 49% foreign-owned. The funds are exempt from taxation.

 EDUCATION.
Basic education is compulsory for the Omanis.Thus ,skilled labourers are
easily available.

SOCIAL ENVIRONMENT RELEVANCE.

Since Oman is a Muslim country,all the activities are influenced by the

Muslim culture.The main feature of Omani culture is respect for others and
preventing others from letting their face down.The foreigners should ensure
that they don’t make any offensive remarks at the Omanis in public
places.Otherwise they feel insulted and let down in the society.

TECHNOLOGICAL ENVIRONMENT RELEVANCE.

The Omanis are uptodate with the latest softwares in the market.Thus Nirula’s
wont require extra investment on training the staff with the softwares used at
the outlets.However the telecom industry has loads of scope for
improvement.Till date only 2 telecommunications firm exist in Oman.
 MARKET ENTRY
STRATEGY,PRICING AND
MARKETING.

A company should visit Oman in order to appreciate its distinctive culture.

Personal relationships are key to finding and retaining a partner. Nirula’s plan
to enter into a joint venture with a local hospitality group.

A joint venture is formed by two or more individuals or entities. A contract

governs the objective of the venture and the terms between its members. A
joint venture does not carry a name, nor does it have the legal status of a
business entity. It can not be registered in the commercial register.

The Omani government welcomes foreign capital and provides incentives

to investors. It looks to the private sector to invest in tourism, higher
education, agriculture, services, and light industry, with special emphasis
placed on the emerging downstream opportunities in Sohar. It also seeks
foreign investment for the technical expertise it brings and the training it
provides to Omanis. In accordance with Oman's accession to the WTO, certain
changes were made to the foreign investment regime, including the relaxation
of restrictions on majority foreign-owned investments and the elimination of
tax discrimination against majority foreign-owned companies in Oman.

PRICING.

The pricing formula for a product in Oman involves the cost of production,
which includes the raw material and labor, distribution, promotion and
advertising, taxes and customs. Taxes usually are assessed on the company’s
profits, which do not include a value added tax (VAT). Companies also are
assessed municipality and tourism taxes, and labor-related taxes upon issuance
of a work visa. Many companies pass such burdens on to their customers in the
form of increased prices. Most restaurants in Oman charge municipality and
tourism taxes in their invoices.

MARKETING.

DIRECT MARKETING.

Advertising is most commonly done through newspapers, although

billboards, handouts, flyers, radio, and TV are also used. There are three
daily English language newspapers in which companies can advertise -
the Oman Daily Observer, Oman Tribune and the Times of Oman - each
of which publishes business supplements and is read predominantly by
expatriates. The three major Arabic dailies, Oman, Al-Watan and Al-
Shabiba, reach a broader Omani audience and are also published seven
days a week. Other Arabic weeklies include Al Isbou’a, Al Youm A’Saba,
Seven, and Futoon. Two independent business monthly magazines,
Business Today and Oman Economic Review, began publication in 1998,
and there are three free English language weeklies: The Week, Hi, and Y.
Advertising is also possible on Omani television and radio and on limited
highway signs. Many grocers and restaurants also distribute flyers in
residential neighborhoods.
 CONCLUSION.

THE STUDY SHOWS THAT THE OMAN OFFERS

HUGE BUSINESS PROSPECTS FOR THE
NIRULA’S.INFACT MANY INDUSTRIES LIKE OIL
REFINING,MOBILE SERVICES,INDUSTRY’S AND
OTHER TYPE OF HOSPITALITY BUSINESS HAVE
GOOD SCOPE FOR CARRYING OUT THEIR
RESPECTIVE BUSINESS.