Be 1

TABLE OF CONTENTS.

SR. NO. TOPIC PAGE NO.1 OVERVIEW 32 PESTLE ANALYSIS OF OMAN 63 CASE STUDY-NIRULA GROUP 204 PEST ANALYSIS AND NIRULAS 225 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 StructureMonarchy

Head of StateSultan 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 PartiesIllegal

Last ElectionsConsultative Council: October 27, 2007

Next ElectionsConsultative 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 politicalstability.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 oppositionagainst 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 universalsuffrage 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 hisadvisors, 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 choosethe 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. Inresponse, 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 thecompany 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 Omanisole 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 incomeexceeding 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 RequirementsWith 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 previousyear’s profits.Oman does not impose rules on debt-to-equity ratios.

Restrictions on Foreign Investment

Levels of Foreign InvestmentThe 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 OwnershipUnder 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 IncentivesThe 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 ExemptionsTax 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 qualifyfor 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

ImportsThe 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.

ExportsOman does not restrict exports. However, the export of items of historical value requires an export license.

Customs DutiesMost 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 ENVIRONMENTOman’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 LegislationThe 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.

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

WagesThe 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 BenefitsThe 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 NationalsFor each non-Omani employed, an employer must make an annual contribution of RO 100 towards a vocational training levy.

Tax LawThe 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 whollyowned 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 companiesIn 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 MarketThe 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 FundsCommercial 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 LIVINGBecause Oman imports most of its goods, the country’s cost of living is comparatively high.

Business HoursThe 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 CustomsOman 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 30teachers. 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 ofCommerce 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 governmentoffers 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 Source2000 90,000 2,424,422 3.8 % ITU2002 180,000 2,398,545 7.5 % ITU2005 245,000 2,424,422 10.1 % ITU2008 300,000 3,311,640 9.1 % ITU2009 557,000 3,418,085 16.3 % ITU2010 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 POTPOURRIWhich 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 neighbouringDubai.

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 requireprivate 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 77Finance, insurance and real estate 45Industry 35Restaurants and hotels 30Wholesale and retail trade 20Contracting 30

ECONOMICAL ENVIRONMENT ASPECTS RELEVANCE.

MARKET SIZE. The purchasing power with the Omanis is constantly booming. AlsoThey 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.