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Feasibility Study 
Private Healthcare Market 
Opportunities  
Kingdom of Saudi Arabia 
Group:    Delta 1 
Module:   Proj...
Page 1 of 78
Table of Contents
1. Executive Summary .........................................................................
Page 2 of 78
Projected Cash-Flow Statement & Balance Sheet...................................................................
Page 3 of 78
1. EXECUTIVE SUMMARY
In the coming years, the Kingdom of Saudi Arabia (KSA) is set to experience a significan...
Page 4 of 78
2. INTRODUCTION
This feasibility study, having been commissioned by Dublin based start-up recruitment
agency,...
Page 5 of 78
3. SCOPE OF FEASIBILITY STUDY
The scope of this feasibility study is to investigate the private healthcare re...
Page 6 of 78
4. STRATEGIC & ORGANISATIONAL FEASIBILITY
(Analysis Conducted By: Cian Nelson)
In order to establish whether ...
Page 7 of 78
Candidates are interviewed by a specialist recruitment consultant who aims to build strong
relationships with...
Page 8 of 78
ANALYSIS4.2.
INDUSTRY ANALYSIS – APPLICATION OF PORTER’S 5 FORCES TO THE RECRUITMENT INDUSTRY
In order to ana...
Page 9 of 78
Also, given the ever-increasing number of substitute options available, particularly as a result
of technolog...
Page 10 of 78
Q. DOES THIS NEW PROPOSAL COMPLIMENT THIS SWOT ANALYSIS?
Overall this proposal compliments this SWOT Analysi...
Page 11 of 78
ORGANISATIONAL STRUCTURE, RESOURCES & CAPABILITIES ANALYSIS4.3.
MARTINSEN MAYER STRATEGY ORGANISATIONAL STRU...
Page 12 of 78
Q. HOW DOES THIS PROPOSAL FIT IN TERMS OF MARTINSEN MAYER’S ORGANISATIONAL STRUCTURE?
This proposal would im...
Page 13 of 78
Management Capabilities: Given the background and experience of the Senior Management
of Martinsen Mayer wit...
Page 14 of 78
Q 1. WILL THIS PROPOSAL PUT MM’S STRATEGY (VISION, MISSION & VALUES) IN JEOPARDY? WILL THEY BE
FORCED TO CON...
Page 15 of 78
suitably large pool of candidates from which to recruit from in order to fulfil the
requirements of this pro...
Page 16 of 78
5. MARKET FEASIBILITY
(Analysis Conducted By: Xuat Nguyen)
Martinsen Mayer are looking for business opportun...
Page 17 of 78
PESTEL ANALYSIS
The PESTEL anlaysis provides more insights into the KSA. This section draws heavily from
Mar...
Page 18 of 78
privatisation and liberalisation, however the system still remains discriminating against
women and non-Musl...
Page 19 of 78
THE KSA GOVERNMENT’S RESPONSE AND BOOM IN PRIVATE SECTOR
As a response to the issues within its healthcare s...
Page 20 of 78
Figure 5 - Physicians working in the KSA (source KSA's MOH, 2013)
Figure 6 Nurses working in the KSA (source...
Page 21 of 78
HEALTHCARE EDUCATION
Based on data from the MOH, the numbers of healthcare graduates in the KSA in 2011 and
...
Page 22 of 78
This demonstrates the potential for large investment in both facilities and workforce to cope
with demands o...
Page 23 of 78
Figure 9 - Physicians Working in the Private Healthcare Sector in the KSA (source KSA's MOH, 2013)
Figure 10...
Page 24 of 78
POTENTIAL REVENUE
As MM is trying to recruit healthcare personnel for private hospitals in the KSA, the
comp...
Page 25 of 78
COMPETITIVE ANALYSIS5.3.
Based on the target market, which is the private healthcare sector in the KSA, the ...
Page 26 of 78
aim to achieve a market share of 1% in its first year. Thus, it is estimated that 2 physician and
8 nurse ca...
 
Page 27 of 88 
 
Directory Information Services Customers and Marketing Target 
Sector 
Physical 
presence in 
KSA 
Rema...
 
Page 28 of 88 
 
Directory Information Services Customers and Marketing Target 
Sector 
Physical 
presence in 
KSA 
Rema...
Page 29 of 78
6. CULTURAL FEASIBILITY
(Analysis Conducted By: Vanessa Quintas)
The objective of this cultural feasibility ...
Page 30 of 78
Activities such as “opening a bank account”, “finding a job”, “education”, etc. are common
for women in Nort...
Page 31 of 78
EDUCATION, HEALTH AND SOCIAL SECURITY
The public healthcare system has free access for KSA nationals but for...
Page 32 of 78
Another factor that makes the business negotiation process slow is the bureaucratic and
hierarchical society...
Page 33 of 78
1. Take into account the religious holidays of Ramadan and Hajj and daily prayer breaks
when scheduling meet...
Page 34 of 78
process of adaptation to culture as well as to ensure that they comply with the laws of Islam.
Any problem w...
Page 35 of 78
7. LEGAL FEASIBILITY
(Analysis Conducted By: Vanessa Quintas)
The objective of this legal feasibility analys...
Page 36 of 78
INCOME TAX LAW
Every international company, owned by non-GCC (Gulf Cooperation Council: Kuwait, Oman,
Qatar,...
Page 37 of 78
MM needs to validate that the sponsor (private healthcare client) has the necessary
approvals from the Minis...
Page 38 of 78
8. SERVICE FEASIBILITY
(Analysis Conducted By: Julie Zhou)
REPUTABLE MEDICAL & HEALTHCARE QUALIFICATION8.1.
...
Page 39 of 78
FEASIBILITY OF SOURCING QUALIFIED MEDICAL PROFESSIONALS IN THE CURRENT IRISH HEALTHCARE8.3.
SYSTEM
A macro v...
Page 40 of 78
jobs, one quarter of all employed medical practitioners were non-Irish nationals‒ one of
the highest shares ...
Page 41 of 78
The implication here is that the supply side is matured. The emigration culture in Irish and
UK medical sect...
Page 42 of 78
In response to the special areas of interest of our client (MM), who see the increasing
demand in the KSA ch...
Page 43 of 78
More information about the Career Framework (Band 1-9) see Appendix B for more details
(NHS Career, 2014).
S...
Page 44 of 78
9. FINANCIAL FEASIBILITY
(Analysis Conducted By: Peadar O’Sullivan)
The following outlines the financial via...
Page 45 of 78
The following graph illustrates the key financial aspects of the proposed venture over its
initial five year...
Page 46 of 78
START-UP BUDGET & FUNDING SOURCE9.1.
The following outlines the forecasted costs required to bring the KSA v...
Page 47 of 78
PROJECTED REVENUE9.2.
Revenue projections are based on the initial placement being made in month six of FY 2...
Page 48 of 78
Figure 14 - Forecasted Revenue
Refer to Appendix C for a month by month projection for FY 2015 and a quarter...
Page 49 of 78
PROJECTED OPERATING COSTS9.3.
The following tables outline the forecasted operational costs associated with ...
Page 50 of 78
Table 9 - Forecasted Operating Costs
Forecasted Operating Costs 2015 2016 2017 2018 2019
Recruitment Consult...
Page 51 of 78
Assumptions
2. Based on MM current remuneration structure
4. Costs related to KSA Venture. 1 return flight a...
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia
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Feasibility Study - Private Healthcare Market Opportunities - Saudi Arabia

  1. 1.   Feasibility Study  Private Healthcare Market  Opportunities   Kingdom of Saudi Arabia  Group:    Delta 1  Module:   Project Scope and Feasibility         Evaluation    Course   Code:    BMGT 43720‐FT Evening  Date:    Monday 28th  of April 2014  Semester:   2 – January – May 2014    ‫ة‬‫المملك‬‫ة‬‫العربي‬‫عودية‬‫الس‬
  2. 2. Page 1 of 78 Table of Contents 1. Executive Summary ..........................................................................................................................3 2. Introduction......................................................................................................................................4 3. Scope of Feasibility Study.................................................................................................................5 4. Strategic & Organisational Feasibility ..............................................................................................6 Strategic Alignment................................................................................................................. 64.1. Analysis.................................................................................................................................... 84.2. Organisational Structure, Resources & Capabilities Analysis................................................ 114.3. Risks....................................................................................................................................... 134.4. Summary ............................................................................................................................... 154.5. 5. Market Feasibility...........................................................................................................................16 Macro Analysis ...................................................................................................................... 165.1. Micro Analysis ....................................................................................................................... 215.2. Competitive Analysis ............................................................................................................. 255.3. Employee Turnover & Target Market Size ............................................................................ 255.4. Summary ............................................................................................................................... 265.5. 6. Cultural Feasibility..........................................................................................................................29 Cultural Analysis .................................................................................................................... 296.1. Business Culture Analysis ...................................................................................................... 316.2. Summary ............................................................................................................................... 336.3. 7. Legal Feasibility ..............................................................................................................................35 Islamic Law ............................................................................................................................ 357.1. Key Laws of interest .............................................................................................................. 357.2. Sauditization.......................................................................................................................... 377.3. Summary ............................................................................................................................... 377.4. 8. Service Feasibility ...........................................................................................................................38 Reputable Medical & Healthcare Qualification..................................................................... 388.1. Full-spectrum Disciplines Available In the Healthcare Workforce........................................ 388.2. Feasibility of Sourcing Qualified Medical Professionals In The Current Irish8.3. Healthcare System............................................................................................................................. 39 Zoom-in Sector: Salaries of Doctors, Nursing & Midwifery in Ireland and UK...................... 418.4. Summary ............................................................................................................................... 438.5. 9. Financial Feasibility ........................................................................................................................44 Start-Up Budget & Funding Source ....................................................................................... 469.1. Projected Revenue ................................................................................................................ 479.2. Projected Operating Costs..................................................................................................... 499.3. Projected Income Statement ................................................................................................ 529.4.
  3. 3. Page 2 of 78 Projected Cash-Flow Statement & Balance Sheet................................................................. 539.5. Breakeven Analysis................................................................................................................ 559.6. Sensitivity Analysis ................................................................................................................ 569.7. Financial Evaluation............................................................................................................... 589.8. Summary ............................................................................................................................... 599.9. 10. Industry Key Success Factors..........................................................................................................60 11. Conclusions & Recommendations..................................................................................................61 12. References......................................................................................................................................63 13. Appendices.....................................................................................................................................66 Organisational Capabilities............................................................................... 67APPENDIX A. NHS Careers Framework................................................................................... 68APPENDIX B. Forecasted Revenue ......................................................................................... 69APPENDIX C. Forecasted Operating Costs ............................................................................. 70APPENDIX D. Projected Income Statement ............................................................................ 73APPENDIX E. Projected Cash-Flow Statement........................................................................ 75APPENDIX F. Martin Mayer Financial Projections For Irish Business - 2014 / 2015.............. 77APPENDIX G.
  4. 4. Page 3 of 78 1. EXECUTIVE SUMMARY In the coming years, the Kingdom of Saudi Arabia (KSA) is set to experience a significant increase in its healthcare needs. Due to its growing and aging population, as well as a rise in medical issues associated with a more affluent lifestyle such as obesity, diabetes, cardiovascular diseases, cancer etc., new demands will be created and exerted on the KSA’s healthcare system. At present the KSA government operates the majority of the healthcare system within KSA. However, with a growing strain on the public system, the KSA government is forecasted to require the growing assistance of the private sector to meet these demands, and thus creating the need for additional healthcare professionals to operate and manage these systems. This feasibility study investigated the potential market that exists for Dublin based start-up recruitment agency, Martinsen Mayer, in placing healthcare professionals from Ireland and the UK into the KSA private healthcare sector. This proposal was analysed from several perspectives such as market, cultural, legal, organisational, service and financial feasibility, highlighting several key findings:  Large growth is expected in the KSA’s private healthcare sector over the coming years as a result of the country’s increasing affluent lifestyle and the current under staffing of the existing system in comparisons to international standards.  While 95% of healthcare professionals in the private sector are non-nationals, a KSA government initiative to reduce the country’s dependence on non-nationals is in place, although this initiative is yet to show any significant impact.  Although this proposal aligns with Martinsen Mayer’s current business strategy, entering into a new international market carries substantial risk particularly if conducted without a local business partner, and would therefore require much patience and cultural awareness.  Financially this proposal offers great long-term potential, however in the short-term the company could face potential financial pressures if forecasted placements fail to materialise. Therefore, it is advised that Martinsen Mayer proceed with caution regarding this proposal given that although this market does have great potential it is also being serviced by many competitors. With no international experience, little reputation or track record in the KSA market, the company will need to rely on its staff’s experience and contacts to gain access to the market. It is feasible for Martinsen Mayer to operate directly from Dublin, however to increase their chances of success, Martinsen Mayer should seek to collaborate with a local partner with connections in the private healthcare sector in the KSA, or alternatively make enquires through the likes of Enterprise Ireland (who are increasingly growing their business relationships within the KSA), so as to gain a foothold in the KSA market from which to build upon.
  5. 5. Page 4 of 78 2. INTRODUCTION This feasibility study, having been commissioned by Dublin based start-up recruitment agency, Martinsen Mayer, was undertaken to investigate the potential opportunities that exist for them in placing healthcare professionals from Ireland and the UK into the KSA private healthcare sector. The business model of this proposal will be similar to Martinsen Mayer’s existing business which sources suitable candidates to fill healthcare positions on behalf of their client – private healthcare operators. Revenue will be generated through a commission based fee determined by a percentage of the candidate’s first year annual salary. In order to assess the feasibility of this opportunity, this proposal was analysed under the following areas:  Strategic & Organisational – Identifying whether this proposal is compatible with the current strategy and organisational structure of Martinsen Mayer.  Market – Analysing the nature of the private healthcare sector within the KSA which Martinsen Mayer would be entering, and the current competition within the industry.  Cultural – Looking at the cultural differences between the UK/Ireland, and the KSA which faces candidates relocating as part of this proposal, as well as the cultural differences from a business perspective that would face Martinsen Mayer.  Legal – Highlighting any legal issues which undertaking this proposal may present Martinsen Mayer with, as well as any potential legal issues for relocating candidates.  Service – Analysing the technical feasibility of undertaking this proposal in terms of identifying and recruiting the required candidates in terms of quality as well as volume, to meet the demands of this proposal.  Financial – Analysing the financial feasibility of this proposal so as to determine the degree to which this proposal would be financially sustainable and beneficial to the company in the immediate and long-term future. By analysing these key areas, the findings will be combined to draw an overall conclusion as to the viability of this proposal. The report will conclude with some key recommendations as to how Martinsen Mayer should proceed with this business opportunity.
  6. 6. Page 5 of 78 3. SCOPE OF FEASIBILITY STUDY The scope of this feasibility study is to investigate the private healthcare recruitment sector in the KSA on behalf of Martinsen Mayer in terms of the sourcing of Irish and UK healthcare professionals for positions in the KSA private healthcare sector, with a particular focus on doctors and nurses Some of the key parameters acknowledged throughout this feasibility study are:  The business venture would be managed from Martinsen Mayer’s Dublin base, i.e. no regional offices would be set-up in the KSA.  No budget amount was allocated for the venture by Martinsen Mayer.  The analysis concentrated solely on the KSA private healthcare sector.  The analysis focused on the Irish and UK markets for suitable candidates and competitor analysis. This feasibility study focuses on the KSA market from the following perspectives: - Strategic & Organisational Analysis - Market Analysis - Cultural Analysis - Legal Analysis - Service Analysis - Financial Analysis This scope is followed throughout all sections of this feasibility study and are the parameters under which the final recommendations are based.
  7. 7. Page 6 of 78 4. STRATEGIC & ORGANISATIONAL FEASIBILITY (Analysis Conducted By: Cian Nelson) In order to establish whether or not this proposal to enter the private healthcare sector in the KSA is feasible in terms of the company’s overall capability as it currently stands, it is necessary to analyse the Strategic and Organisational impacts which this proposal will have on the company and vice versa. This will in turn highlight any potential conflicts between the proposal and how the company operates, as well as any positive impacts where the proposal is either harmonious or even beneficial to the future of the company. STRATEGIC ALIGNMENT4.1. MARTINSEN MAYER’S STRATEGY To analyse MM’s strategy in relation to this proposal, it is best to look at their current strategy under a number of headings, and to then analyse any areas of risk that this proposal will present to their current strategy, as well as any areas of opportunity for the company. CURRENT MARTINSEN MAYER STRATEGY (MARTINSEN MAYER, 2014) 1. BACKGROUND: MM is a recently founded recruitment agency based in Dublin, Ireland ‘committed to the highest professional standards in talent acquisition.’ Martinsen Mayer’s strategy is centred on their offering to both the candidates which they hope to place with their clients, as well as their offering to clients in recruiting the most suitable candidates for them. MM summarise this role as follows: FOR CANDIDATES: To provide confidential support & guidance, expert industry knowledge and how to successfully manage their next career move. FOR CLIENTS: To provide a global talent pool through a collaborative partnership to hunt for the best people in the world. MM’s aim is to place permanent, temporary & contract staff across a wide range of sectors nationally & internationally through utilising their specialist, experienced consultants with backgrounds with top tier companies, and connections across many sectors.
  8. 8. Page 7 of 78 Candidates are interviewed by a specialist recruitment consultant who aims to build strong relationships with them and to work closely with candidates to best place them in positions to help progress their career. MM also aim to simultaneously satisfy clients by working closely with them to ascertain the ideal candidates which they wish to hire and to then successfully identify and recruit such candidates for clients in an efficient manner. 2. VISION: MM’s state that their vision is “to become the recruiter of choice for industry leaders in Ireland and to be recognised nationwide for our positive, passionate and unique contribution to the recruitment industry.” 3. MISSION: MM list their mission goals as follows: - Martinsen Mayer is a prestigious recruitment agency, which is passionate about finding the right talent for clients and securing the best role for our candidates. - We take pride in hiring the most talented recruitment consultants in our industry. Our people are our most important and strategic investment and they drive our growth and innovation. - Through our range of specialized recruitment services we provide the most important ingredient that drives our clients’ success, innovation and growth – the best people! - We capitalise on national and cross border opportunities where we have a competitive advantage. - We achieve growth through superior client and candidate service, outstanding quality and innovation delivered through the expertise, passion and commitment of our people. Overall, Martinsen Mayer summarise their mission as wanting to ‘provide THE premier recruitment service to candidates and clients’. 4. VALUES: From an ethical and cultural point of view Martinsen Mayer describe their core values as follows: - Relationships: Clients & Candidates – strong & long-term. - Expertise: In their recruiters so as to recruit the most talented candidates. - Passion: In satisfying clients by recruiting the best candidates. - Humility: Recognising others, their own mistakes, reflection, hard work, and not taking anything for granted.
  9. 9. Page 8 of 78 ANALYSIS4.2. INDUSTRY ANALYSIS – APPLICATION OF PORTER’S 5 FORCES TO THE RECRUITMENT INDUSTRY In order to analyse MM’s strategy as well as the impact of this proposal upon their strategy, it is necessary to first analyse the competitive nature of the industry in which they operate so as to appreciate the various nuances affecting the company and their strategy for the future: Figure 1 – Porter’s Five Forces Framework As is evident from the above, the Recruitment Industry in which MM compete is a highly intensive industry in which to conduct business. There are numerous other recruitment companies both in Ireland as well as internationally, all of whom are competing for both many of the same clients, as well as from a very similar pool of available candidates. Given the great degrees of options which both clients and candidates have within the industry, and the ease of choosing one recruitment firm over another, this only serves to intensify the competition between the respective recruitment companies.
  10. 10. Page 9 of 78 Also, given the ever-increasing number of substitute options available, particularly as a result of technological advances, recruitment companies are increasingly coming under more and more pressure to protect their position as an industry, as well as their own market position within the industry. Q. HOW DOES THIS PROPOSAL FIT INTO THE CURRENT OUTLOOK OF THE RECRUITMENT INDUSTRY? Given that this proposal is advocating the concept of entering into a niche in the market as well as broadening the horizons of the company by expanding internationally, this proposal would very much strengthen MM’s position within the industry. With the intense competition which already exists within the industry, this proposal would give MM the potential to develop a Competitive Advantage over their current competitors, and therefore to help build the company’s reputation within existing markets also by making the company more appealing to both clients as well as candidates to do business with. SWOT ANALYSIS OF MARTINSEN MAYER’S STRATEGY In order to look at MM’s specific performance within the Recruitment Industry as outlined above, this can best be determined by performing a SWOT Analysis of the company’s current strategy in the context of the Recruitment Industry: Strengths Weaknesses Specialist, Experienced Consultants. Connections across many sectors. New to the recruitment market – no experience or reputation established as of yet. Opportunities Threats Opportunity to gain market share. Expansion into international markets. Competitors squeezing them out of the market by economies of scale. Table 1 - SWOT Analysis of MM’s Strategy This SWOT Analysis indicates that although Martinsen Mayer do possess many positive attributes, some of which may provide them with a competitive advantage over their competitors, the company does still have several weak points that may restrict their performance or damage their position within the industry.
  11. 11. Page 10 of 78 Q. DOES THIS NEW PROPOSAL COMPLIMENT THIS SWOT ANALYSIS? Overall this proposal compliments this SWOT Analysis in many areas: Strengths – This proposal builds upon the company’s key strengths and core competencies by further utilising their specialist & experienced consultants. Weaknesses – The weakness of their lack of experience and reputation can be countered by utilising this proposal to enter a new market, and at the same time help to build the experience and reputation which the company requires. Opportunities – This proposal fully compliments the opportunities to the company of entering new and potentially lucrative international markets. Threats – This threat can be countered by utilising this proposal to enter a new market in order to help build market share in a new market altogether, as well as giving the company the potential to establish a Competitive Advantage over their competitors. Therefore, this proposal is complimentary to the various strengths, weaknesses, opportunities and threats currently impacting upon MM’s performance. This proposal achieves this, as the proposal would allow Martinsen Mayer to capitalise upon their current strengths and opportunities, but more importantly, this proposal provides some solutions to the company in order to counteract the weaknesses and threats which the company faces. In essence this proposal would improve the company’s overall state of affairs and give them a greater position from which to compete with their competitors and counter the highly intense nature of the recruitment industry.
  12. 12. Page 11 of 78 ORGANISATIONAL STRUCTURE, RESOURCES & CAPABILITIES ANALYSIS4.3. MARTINSEN MAYER STRATEGY ORGANISATIONAL STRUCTURE The current Martinsen Mayer Organisational Structure is outlined as follows: Figure 2- MM Current Organisational Structure Within many of these roles, such as the Associate Directors, Recruitment Resourcers, Business Managers, Key Account Managers etc., Martinsen Mayer also have specifically designated staff members to act as specialists for the following sectors: - Medical (Healthcare & Pharmaceutical) - IT & Technology - Multilingual & FDI - Sales & Marketing - Legal & Professional Services This approach is based upon utilising the specialist backgrounds of Martinsen Mayer’s staff members so as to offer a specialist service to both clients and candidates alike.
  13. 13. Page 12 of 78 Q. HOW DOES THIS PROPOSAL FIT IN TERMS OF MARTINSEN MAYER’S ORGANISATIONAL STRUCTURE? This proposal would impact upon Martinsen Mayer’s Organisational Structure somewhat in that in order to fully commit to this proposal it would require a fully dedicated staff member to manage the implementation of this proposal. This could be done by either altering the current structure to re-designate a current staff member, or ideally through hiring a new staff member so as not to disrupt the company’s current Organisational Structure, therefore merely extending the company’s current Organisational Structure. This role would need to be at the level of Key Account Manager given the specific nature of this proposal as a stand-alone project within the company’s strategy: Figure 3 -Updated MM Organisational Structure with KSA Business Proposal In this updated Organisational Structure the KSA Key Account Manager would have full responsibility for this particular project from managing the project, right through to acting as the Recruitment Resourcer for the project. RESOURCES & CAPABILITIES Training, Skills, Knowledge & Experience: Martinsen Mayer’s staff possess a wealth of training, skills, knowledge and experience within recruitment, as well as many specialist sectors within recruitment. Their staff are educated to a high level, and possess many years of experience within the Irish recruitment industry
  14. 14. Page 13 of 78 Management Capabilities: Given the background and experience of the Senior Management of Martinsen Mayer within the Recruitment industry, they possess strong management capabilities with which to lead the current strategy of the company. Location: All staff members are currently based in Martinsen Mayer’s Dublin city centre office. Use of suppliers: Martinsen Mayer do not currently outsource any work to suppliers, and do not have any plans to do so at present or in the near future. Core Organisational Capabilities: Overall Martinsen Mayer offer a unique, specialised boutique recruitment service in several specific sectors, whilst simultaneously providing a highly personable experience for both candidates and clients alike, with great attention to detail and strong customer service (See Appendix A). Q. IS THIS PROPOSAL FEASIBLE IN TERMS OF MARTINSEN MAYER’S RESOURCES & CAPABILITIES? This proposal is feasible in terms of Martinsen Mayer’s Resources & Capabilities as it builds upon their current work practices and core competencies without undertaking any drastic change in what the company already does. Although the area of resourcing to this particular proposal may require serious consideration, none of the obstacles which it poses should be in any way insurmountable. As per many of their other key areas, Martinsen Mayer need to ensure that the individual tasked with the role of managing this proposal is suitably qualified and experienced in the Healthcare industry so as to meet the specialist requirements of this proposal. Furthermore, it would be advantageous if this role could be filled by someone with a background in recruitment in KSA or Healthcare recruitment specifically in KSA or with business in KSA in general. Consideration would also need to be given to locating this individual in KSA itself at certain time periods in order to fully commit to this proposal, or possibly further down the line in the future of this proposal. RISKS4.4. With any great change to a company’s strategy, there will always be an inherent risk that the proposed changes will cause unexpected consequences and cause problems to occur, therefore it is crucial to analyse the overall impact of this proposal on Martinsen Mayer’s core strategy and its various elements:
  15. 15. Page 14 of 78 Q 1. WILL THIS PROPOSAL PUT MM’S STRATEGY (VISION, MISSION & VALUES) IN JEOPARDY? WILL THEY BE FORCED TO CONTRADICT THEIR STRATEGY? Based on the above analysis, MM can maintain their current strategy including their vision, mission & values when undertaking this proposal and entering a new market. Many of these aspects are adaptable to any environment and can be customized and tailored accordingly. MM’s Vision of becoming the leading recruitment company in Ireland can be strengthened through the benefits which this proposal will bring in enhancing the company’s experience, reputation and market position by countering the various weaknesses and threats which the company currently faces. Furthermore, this proposal would allow MM to extend this vision outside of the scope of Ireland, to become the leading recruitment firm in other, international markets. This proposal very much compliments and enhances the MM mission ambitions of providing clients and candidates with the best recruitment service, by offering their candidates new exciting and lucrative opportunities in a new market, as well as providing recruitment solutions to a whole new array of clients. Finally, this proposal is very much in line with MM’s core values of relationships, expertise, passion and humility. This proposal will allow the company to display these values to a new and wider audience and therefore help to strengthen the overall company’s reputation. Therefore, this proposal would not place Martinsen Mayer’s existing strategy in jeopardy, as it compliments all of the key areas of their current strategy and may even enhance some of these areas further. Q 2. DO MM HAVE THE RESOURCES TO IDENTIFY A SUFFICIENT DATABASE OF CANDIDATES TO SUPPORT THIS PROPOSAL? MM possess a highly experienced team of recruiters with expertise and connections across a wide range of sectors in general, but also with one staff member already specifically designated Healthcare sector recruiter who is highly experienced within the sector. This should therefore put MM in a strong position to successfully identify and then recruit the required candidates in order to undertake this proposal. Given Ireland’s high standards in terms of the educational, qualification & experience of its Healthcare sector professionals, coupled with a relatively stagnant jobs market within the Healthcare sector, this large number of suitable personnel should provide MM with a
  16. 16. Page 15 of 78 suitably large pool of candidates from which to recruit from in order to fulfil the requirements of this proposal. SUMMARY4.5. Q. HOW DOES THIS PROPOSAL FIT IN TERMS OF MARTINSEN MAYER’S OVERALL ORGANISATIONAL FEASIBILITY? All in all, this proposal does fit with Martinsen Mayer’s overall Organisational Feasibility as it compliments and further strengthens the company’s desire to ‘provide THE premier recruitment service to candidates and clients’. Although the current scope of Martinsen Mayer’s Vision is to become the leading recruitment company in Ireland, by undertaking this proposal they would merely be extending this scope by broadening the same vision to the international market. Martinsen Mayer possess the necessary training, skills, knowledge and experience to be able to successfully undertake this proposal, with the flexibility in their Organisational Structure to enable this to occur. Overall, this proposal compliments Martinsen Mayer’s strategy and provides the company with an opportunity to build upon its current strengths and opportunities as well as negating many of its weaknesses and threats, and therefore should be viewed as a key strategic opportunity for the company to undertake.
  17. 17. Page 16 of 78 5. MARKET FEASIBILITY (Analysis Conducted By: Xuat Nguyen) Martinsen Mayer are looking for business opportunities in the Kingdom of Saudi Arabia’s private healthcare sectors. Thus, the objective of this market feasibility analysis is to identify whether the market is growing and whether opportunites exist. The analysis begins with the macro level analysis, and then narrows down into the target market segment. MACRO ANALYSIS5.1. COUNTRY OVERVIEWS The Kingdom of Saudi Arabia (KSA) is the largest country in the Middle East. The country’s population in 2013 was estimated to be approximately 30million, of which 30% were expatriates (Marketline 2014). The gross domestic product (GDP) per capita in 2013 was US $31,300 which ranked 44th in the world (CIA 2014). The GDP real growth rate was estimated to be approximately 3.5%. In 2014, the country ranked 26th on the global ease of doing business report (World Bank 2014). Figure 4 - Saudi Arabia (CIA Factbook)
  18. 18. Page 17 of 78 PESTEL ANALYSIS The PESTEL anlaysis provides more insights into the KSA. This section draws heavily from Marketline research (Marketline 2014). Political Analysis: The KSA is considered to be one of the most conservative countries in the world. The country’s political system is monarchial with the king as the ruler. In addition, religious traditions play a very important role in government policies and political structures. As a result, the political lanscape of the KSA is unlikely to experience dramatic shifts in the coming years even though the ‘Arab Springs’ impose some pressures on democratising the political system and the risks of uprising remains. Moreover, as these structures have been established for hundreds of years, governmental policies are expected to be stable and maintain continuity. Economic Analysis: The KSA’s economy demonstrates strong performance and consistent growth over the years. In 2012, the growth rate of 6.8% was recorded. The 9th five year economic development plan issued in 2010 was very promising with an allocated budget of $385billion investment in projects of all sectors although unemployment rates remain significant. Over 60% of the country’s GDP is from exports, most of which are oil or oil related products. This implies potential risk due to an over-reliance upon oil for revenues. Social Analysis: The country has experienced rapid economic growth since 1970. However, social development hasn’t grown at a compatible rate as the KSA maintains conservative policies. The country seems unable to provide the growing population with the access to education and healthcare comparable to the standard of developed countries. Gender inequality remains prominent. Technological Landscape: Recognising that the country’s technology and science industry was underdeveloped, the KSA government has developed policies to accelerate the transition toward a knowledge-based economy. Investment in Research and Development (R&D) comprised of 0.08% of GDP in 2009 and was estimated to reach 3% of GDP in 2020. However, the country still faces considerable challenges as there is insufficient resources for R&D. Environmental Landscape: Compared to other developed countries, KSA was late to impose environmental regulations, however the country has quickly caught up with others. In 2012, the government introduced laws to cope with environmental degradation. As the country has a low level of rainfall, the government has invested considerably in water related projects. Legal Landscape: The KSA’s legal system follows Islamic law. The judicial system is under the supervision of the Ministry of Justice. There has been significant improvement in terms of
  19. 19. Page 18 of 78 privatisation and liberalisation, however the system still remains discriminating against women and non-Muslims. HEALTHCARE SYSTEMS The healthcare system in the KSA comprises three main players, the Ministry of Health, other governmental organisations, and the private sector. The Ministry of Health (MOH) operates approximately 60% of all hospitals in the country with the corresponding number of patients served (Ahmed and Damrah, 2012). Generally, hospitals under the management of the MOH serve KSA nationals only. Foreigners living in the KSA are not permitted to access MOH services. Other governmental organisations in the country include the National Guard, the Royal Commission, and the Ministries of Defence and Aviation. These organisations only service their own employees. The private sector serves the rest of the population which mostly comprises of expatriates who don’t have access to public service. ISSUES IN THE KSA HEALTHCARE SYSTEM Some reports have found that despite having relatively high incomes in comparison to other countries, the KSA was lagging behind them in terms of healthcare facilities, manpower and expenditure. In 2010 the World Health Organisation (WHO) estimated that there were only 9 physicians per 10,000 of population, far below the average of 27 in high income countries. Likewise, the number of beds per 10,000 of population was only 22 in comparison to an average of 54 in high income countries. Worse still, investment in healthcare comprised only 3.2% of GDP in 2013 which fell well short of the average 12.4% among high income countries (The Economist, 2014). The World Bank’s report on Health Expenditure per capita by income group stated that in 2011, for high income countries, the average healthcare spending by the government was US$3,240 and in total i.e. including private spending is US$5,384 (based on Purchasing Power Parity (PPP)) (World Bank, 2012). However, the same numbers for the KSA are US$621 and US$901 respectively (PPP) (WHO, 2012). This expenditure is far below the average which indicates that improvements and an increase in investment in the KSA healthcare system must be made in response to demand. These facts suggest a gap in the KSA healthcare system which will need to be addressed soon, thus indicating a large expenditure in their healthcare system in the near future.
  20. 20. Page 19 of 78 THE KSA GOVERNMENT’S RESPONSE AND BOOM IN PRIVATE SECTOR As a response to the issues within its healthcare system, the KSA government decided to invest heavily in the sector to bring it up to global standards. In 2007, the government’s healthcare expenditure soared from US$8billion in 2007 to US$27billion in 2013 and is estimated to reach US$46billion by 2017 (Rashad and Auyezov, 2014). As a result of the country’s economic development, the shift from contagious to non- contagious diseases is continuing. Lifestyle diseases such as diabetes or cardiovascular diseases are increasing in the country, which has led to a need for a higher quality healthcare system. In addition, the expenditure continues to soar as these chronic diseases require costly and lengthy treatment (Saudi Gazette, 2012). As a result, more funding from both governmental and private sources needs to be invested in the country’s healthcare system to cope up with the transition. HUMAN RESOURCES There are several sources of data on the healthcare systems in the KSA. The two most extensive sources are from the KSA’s MOH and the World Health Organisation. However, reports from both organisations contained somewhat conflicting data. Furthermore, as the latest data from the WHO was published in 2010, its report took a more negative viewpoint of the country’s healthcare system in comparisons to that of the MHO’s report. The data used in this report is based on data published by the KSA’s MOH in 2013. It has been acknowledged that the KSA Government may have had a vested interest in the report, therefore it has been assumed that the data used in this report may be on the optimistic side, i.e. that the actual state of the country’s healthcare system may be worse than the report indicates. Based on MHO’s report, the numbers working in the healthcare sector are demonstrated in the following graphs (KSA's MOH, 2013):
  21. 21. Page 20 of 78 Figure 5 - Physicians working in the KSA (source KSA's MOH, 2013) Figure 6 Nurses working in the KSA (source KSA's MOH, 2013) These facts show that there are high portions of non-KSA health workers in the KSA. 2006 2007 2008 2009 2010 2011 2012 Total 45589 47919 52838 54903 65619 69226 71518 Non-Saudis 36094 37568 41820 42234 51362 53719 54497 Saudis 9495 10351 11018 12669 14257 15507 17021 0 10000 20000 30000 40000 50000 60000 70000 80000 No.ofPersonnel Physicians Working in the KSA 2006 2007 2008 2009 2010 2011 2012 Total 83868 93735 101298 110858 129792 134632 139701 Non Saudis 61124 66739 71792 75036 88518 89396 89129 Saudis 22744 26996 29506 35822 41274 45236 50572 0 20000 40000 60000 80000 100000 120000 140000 160000 No.ofPersonnel Nurses Working in the KSA
  22. 22. Page 21 of 78 HEALTHCARE EDUCATION Based on data from the MOH, the numbers of healthcare graduates in the KSA in 2011 and 2012 are shown in the following table. Year Medical Students Dentistry Students Nursery Students 2012 1729 KSA; 43 Non-KSA 364 KSA; 5 Non-KSA 451 KSA; 3 Non-KSA 2011 1535 total 316 total 464 total Change +15% +15% -2% Table 2 - KSA Medical Student Graduating Statistics (source KSA's MOH, 2013) Considering that approximately 54,497 and 89,129 non-KSA physicians and nurses respectively, were working in the country’s healthcare system in 2012, it can be demonstrated that the KSA government’s policies to replace non-KSA healthcare workers with local Saudi’s, it is going to take at least 30 years to replace the non-KSA physicians and 200 years to replace the non-KSA nurses (Refer to Legal section for more information). Therefore, it can be concluded that this regulation is not going to take effect soon. The analysis also demonstrates the inconsistency in data provided by the government, which shows that the average increase in the number of nurses each year was approximately 4,000. However, only 500 nurses were trained and educated in the kingdom year-on-year at the time. MICRO ANALYSIS5.2. PRIVATE SECTOR Along with the heavy spending on the government healthcare system, the KSA government also offered financial incentives to private hospital groups to assist them in investing in new hospitals (Rashad and Auyezov, 2014). Although the government is trying to improve the country’s healthcare system, the current conditions of hospitals under the management of MOH are in poor quality. Moreover, the public healthcare facilities are overloaded which creates a long line of people waiting for hospital appointments. As a result, more and more people want to avail of the services provided by private hospital providers which are provided with a consistently high quality. Expatriates living in KSA are not covered by public healthcare services and are therefore being forced to use private healthcare services; however, their healthcare expenditure is covered by health insurance which their employers are legally obliged to cover. According to Arqaam Capital Dubai, the number of expatriates holding health insurance in KSA reached 6.5 million in 2013 (Rashad and Auyezov, 2014).
  23. 23. Page 22 of 78 This demonstrates the potential for large investment in both facilities and workforce to cope with demands on the private sectors in coming years. Data on healthcare workforce in the private sector is presented as follows. Figure 7 - Physicians in the KSA Healthcare by Sector (source KSA's MOH, 2013) Figure 8 - Nurses in the KSA Healthcare by Sector (source KSA's MOH, 2013) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2006 2007 2008 2009 2010 2011 2012 Physicians in the KSA Healthcare by Sectors Public Private 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2006 2007 2008 2009 2010 2011 2012 Nurses in the KSA Healthcare by Sectors Public Private
  24. 24. Page 23 of 78 Figure 9 - Physicians Working in the Private Healthcare Sector in the KSA (source KSA's MOH, 2013) Figure 10 - Nurse Working in the Private Healthcare Sector in the KSA (source KSA's MOH, 2013) The analysis suggests that: - The number of non-KSA employees in the KSA private healthcare sectors is increasing annually. - Despite government regulations, non-KSA employees are dominant with over 95% in both nurses and physicians. - The government’s effort in training KSA nationals to replace non-KSA professionals in healthcare is not going to take effect soon. 2006 2007 2008 2009 2010 2011 2012 Non-Saudis 13450 13856 15709 15939 20183 20936 21245 Saudis 641 612 735 828 951 1210 1234 0 5000 10000 15000 20000 25000 No.ofPersonnel Physicians Working in the Private Healthcare Sector in the KSA 2006 2007 2008 2009 2010 2011 2012 Non-Saudis 18266 20368 21424 22193 26292 27539 27496 Saudis 719 717 909 1115 1642 834 877 0 5000 10000 15000 20000 25000 30000 No.ofPersonnel Nurses Working in the Private Healthcare Sector in the KSA
  25. 25. Page 24 of 78 POTENTIAL REVENUE As MM is trying to recruit healthcare personnel for private hospitals in the KSA, the company’s revenue will be based on the annual salaries of those employees successfully recruited. As a result, the average salary of healthcare professionals in the sector plays an important role for MM. Research in the area has highlighted the following: - In the KSA, foreign workers are paid not according to their skills or experience but on the basis of their income in their home countries. Thus, North Americans and Europeans working in the KSA can earn a lot more than their colleagues from other countries working in the same positions. - The KSA government does not impose tax on personal income from sources other than investment on KSA residents. - The average salaries of western doctors at private hospitals are shown in the Table 3 which is based on data collected from BAYT.COM (BAYT, 2014). The doctors recruited must be native English speaking, and have western passports (MidEast Posts, 2012). - The average annual salary of western nurses in private hospital is £34,000 which equates to annual salaries of €41,000 (CPL, 2013). - Both doctors and nurses must be registered professionals, having at least 2 year experience. Doctor of Min. yrs of experience Salary range (monthly) Cardiology 2 – 3 US$15,000 – $30,000 Obstetrics and Gynecology 2 – 3 US$10,000 – $15,000 Nephrology 2 – 3 US$10,000 – $15,000 Orthopedic Surgery 2 – 3 US$10,000 – $15,000 Internal Medicine 2 – 3 US$9,000 – $10,000 Anesthesia 2 – 3 US$9,000 – $10,000 Hematology, Oncology 2 – 3 US$8,000 – $9,000 ICU 2 – 3 US$10000 – $15000 Radiology 2 – 3 US$9,000 – $10,000 Neurology 2 – 3 US$10,000 – $15,000 Table 3 - Average Expatriate Doctor Salary in KSA It is reasonable and conservative to assume that western doctors working in the KSA earn an average salary of US $120,000, which equates to an annual salary of €87,000.
  26. 26. Page 25 of 78 COMPETITIVE ANALYSIS5.3. Based on the target market, which is the private healthcare sector in the KSA, the aim is to provide the market with native English speaking healthcare professionals, particularly from Ireland and the UK. The competition for this market will be firms having a physical presence in Ireland and the UK doing business with private hospitals in the KSA. At first, the analysis identifies potential competitors, then analyses their resources and capabilities. Online resources were used to compile information on MM’s competitors. It has been acknowledged that using the Internet to conduct research on potential competitors will not reveal all of the necessary information about them, thus yielding imperfect results. Thus, the results should be taken into consideration with some degree of caution. Table 4 presents the findings and results from this analysis. One note of interest is that although these firms are doing business with their clients in the KSA, most of them do not have a physical presence within the state. This suggests that MM‘s current proposal of managing this business venture from their head office in Dublin is achievable, especially through frequent visits to the country to establish strong business relationships. Additionally the analysis has shown that most of them have a dedicated department specialised in recruiting healthcare professionals. EMPLOYEE TURNOVER & TARGET MARKET SIZE5.4. A report on healthcare professionals in the KSA indicates that the country experiences a higher turnover rate than in other countries (WHO, 2013). There has been no research on expatriate physician turnover rates in the KSA. At the moment, data from research in the US indicates that the average turnover rate for physicians is at a minimum 3.9% and may reach as high as 13% depending on working conditions and specialty (Misra-Hebert et al., 2004). Likewise, even though there aren’t any official statistics for turnover rates of nurses, some research indicates that the nurse turnover rate in the KSA is approximately 50% (Abu- Zinadah, 2005). The turnover rate for nursing professionals in the US ranges from 15% to 36% depending on specialty, years of working etc. Based on this data, it is estimated that the turnover rates for expatriate physicians and nurses working in the KSA is 10% and 30% respectively. Thus, the annual number of expatriate healthcare positions to be recruited for in the KSA could be: - 10% of 21,000 Non-KSA physicians = 2,100 physicians - 30% of 27,000 Non-KSA nurses = 8,100 nurses Assuming 10% of them are from English speaking countries, there will be 210 physician and 810 nurse’s positions to be recruited annually. Taking into consideration the number of competitors in the market and their target market segment, it is assumed that MM would
  27. 27. Page 26 of 78 aim to achieve a market share of 1% in its first year. Thus, it is estimated that 2 physician and 8 nurse candidates will be placed in year one. SUMMARY5.5. Based on the analysis, it is concluded the private healthcare recruitment sector in the KSA is very lucrative. Firstly, the country’s economy is undergoing a boom in investment in the healthcare sector. Additionally, even though there remains the risk of political uprisings, in general the country is going to be stable in the coming years. Secondly, 95% of people working in the sector are expatriates. Next, the private healthcare experiences a high employee turnover rate as compared to other countries. As a result, there exists a considerable number of available positions. Thirdly, even though there are a number of firms in Ireland and the UK working in the sector, there is still much room for investments and improvement. In addition, recruiting directly from Ireland is feasible as other competitors have already done so, however Martinsen Mayer should designate personnel dedicated to this job only. This supports the proposal in the Strategy & Organisational Feasibility section. Finally, as some private hospitals in the KSA only want to recruit native English speaking employees, the threats of substitutes in this case are not significant.
  28. 28.   Page 27 of 88    Directory Information Services Customers and Marketing Target  Sector  Physical  presence in  KSA  Remarks Company  sizes  Name of  company  Physical  Location  Principal  Service  Secondary  Service  How similar is  principal service  to MM?  Primary  Market  Secondary  Market  CCM  Recruitment  Ireland, UK  Healthcare Engineering Completely Middle  East  UK/USA N/A No Many Jobs in KSA  now  11 – 50  employees  Kate Cowhig  Ireland, UK  Healthcare N/A Completely Ireland,  UK  Middle East N/A No No current Jobs  available in KSA  11 – 50  employees  Locumotion  Ireland, UK  Healthcare N/A Completely Ireland,  UK  Middle East N/A No No current Jobs  available in KSA  11 – 50  employees  Geneva  Healthcare  UK Healthcare N/A Completely NZ, UK,  Australia  Middle East Other  GOs  No Many Jobs in KSA  now  51 – 200  employees  Professional  Connections  Ireland, UK  Healthcare N/A Completely KSA Australia,  UK  Other  GOs  No Many Jobs in KSA  now  11 – 50  employees  Ash International UK Healthcare N/A Completely KSA Middle East MOH &  Other  GOs  N/A Many Jobs in KSA  now  N/A  Pulsejobs  UK Healthcare N/A Completely UK Middle East Other  GOs +  Private  No Many Jobs in KSA  now  500 – 1000  employees  Medacs  UK Healthcare N/A Completely Middle  East  UK,  Australia  N/A No No current Jobs  available in KSA  201 – 500  employees  Western  Recruitment  UK Healthcare N/A Completely KSA N/A N/A Yes Many Jobs in KSA  now  N/A  Shamco  International  Recruitment  UK Engineering Healthcare No Middle East  N/A Other  GOs  Yes N/A 1 – 10  employees 
  29. 29.   Page 28 of 88    Directory Information Services Customers and Marketing Target  Sector  Physical  presence in  KSA  Remarks Company  sizes  Name of  company  Physical  Location  Principal  Service  Secondary  Service  How similar is  principal service  to MM?  Primary  Market  Secondary  Market  IMS Recruitment UK Healthcare N/A Completely Ireland,  UK  Middle East Other  GOs  &  Private  Yes N/A 11 – 50  employees  TTM Healthcare  Ireland Healthcare N/A Completely Ireland,  UK  Middle East N/A No Many Jobs in KSA  now  51 – 200  employees  OES  Healthcare  Recruitment  UK Healthcare N/A Completely Middle  East  N/A N/A No Many Jobs in KSA  now  N/A  BMJ Careers  UK Healthcare Teaching Completely UK Middle East N/A No Many Jobs in KSA  now  201 – 500  employees  elite Healthcare  UK Healthcare N/A Completely UK Middle East N/A No Many Jobs in KSA  now  N/A  Head Medical  UK Healthcare N/A Completely UK Middle East Private No Many Jobs in KSA  now  11 – 50  employees  cplhealthcare  Ireland Healthcare N/A Completely Ireland,  UK  Middle East N/A No No current Jobs  available in KSA  201 – 500  employees  PEGlobal  Ireland Engineering Healthcare No Ireland,  UK  Middle East N/A No Many Jobs in KSA  now  11  –  50  employees  Table 1 ‐ Competitor Analysis   
  30. 30. Page 29 of 78 6. CULTURAL FEASIBILITY (Analysis Conducted By: Vanessa Quintas) The objective of this cultural feasibility analysis is to identify different characteristics that define cultural differences between KSA and Northern Europe (especially Ireland and UK), focusing on how it drives customer negotiation and candidate placement in MM business processes. CULTURAL ANALYSIS6.1. The recruitment business is especially sensitive to human behaviour and interactions, and cultural differences add a new level of difficulty. The recruiter’s challenge is not just in finding people who fit into work requirements and culture, but that also fit into the culture of the country. The strong cultural differences between the KSA and Ireland or the UK have an influence on the candidate placement process by impacting the attractiveness of the market and the sustainability of the business. Candidates pursuing new careers in the KSA can face several difficulties in adapting to the local culture and thus result in candidates terminating their placements prematurely. THE KSA SOCIETY The KSA is considered a rich country in terms of cultural values, dominated by Islam and whose beliefs follow the Wahhabism sect of Muslims. The society is distinguished between locals and foreigners, but the Arabian people are generally welcoming to people from other countries and immigration does not impact upon social interaction. Other aspects about the KSA society is that the sale and consumption of alcohol is prohibited as well as the importation of pork products, and breaking these rules can result in severe consequences including fines and even imprisonment. Homosexuality and adultery are not allowed and carry the death penalty. Gender segregation is expected in public, men and woman have to minimise social interaction. On the other hand, to practice religions other than Islam is illegal. With respect to clothing, the Arabian people prefer to wear traditional clothing. However foreigners are not compelled to wear traditional clothing. Women are expected to dress conservatively with long skirts being most appropriate, sleeves at elbow length or longer, and necklines that are unrevealing.
  31. 31. Page 30 of 78 Activities such as “opening a bank account”, “finding a job”, “education”, etc. are common for women in Northern Europe but restricted in the KSA. The presence of a “Male Guardian” is required to enable women to do these activities and usually the “male guardian” is the husband or father. Women Men Dress Dress modestly, covering the entire body, only can show face, hands and feet No restrictions Can drive No Yes Work Usually stay at home taking care of household responsibilities. Only 16% are working. Usually go out to work. They are the bread winners Employment Allowed to work only in capacities in which they can serve women exclusively No Restrictions Education Lower quality Only can study with woman High quality Only can study with men Travel Only if they are under 45 years of age or older, otherwise they require a “male guardian”. No Restrictions Bank Account and money issues Require a “male guardian” to be allowed. They can’t move money between accounts by themselves. No Restrictions Elective surgery Require a “male guardian” to be allowed No Restrictions Marriage and Divorce Require a “male guardian” to be allowed No Restrictions Table 5 - KSA Social Norms (DEPICTION, E. 2010) ISLAMIC CULTURE Islamic law leads personal, political, economic and legal aspects for Saudis. Islam is a monotheistic and Abrahamic religion predominant in KSA and some of its characteristics are as follows: 1. Prayer 5 times per day. 2. Friday is a Muslim holy day and everything is closed. 3. Ramadan: is a holy month for Muslims, working hours are reduced and Muslims are forced to fast from sunrise until sunset. Foreigners are not forced to fast but they cannot eat in public places. The breaking of the fast is celebrated with families and friends.
  32. 32. Page 31 of 78 EDUCATION, HEALTH AND SOCIAL SECURITY The public healthcare system has free access for KSA nationals but foreigners need to have private medical insurance in order to receive medical treatment which is provided by their employers. On the other hand foreigners’ children are not allowed to go to state schools and they have to attend international schools costing upwards of €9,700 per year. Employers are also responsible for covering accommodation costs as part of the wage benefits offered to the candidates. The accommodation costs are different between locals and foreigners in Saudi Arabia being much more expensive for expatriates. Depending on the standard of living this could vary between “€17,000 to €50,000 per year” (Manav, 2013). On the other hand, utilities and services such as electricity, internet, etc., transportation and food are not major determinants in the cost of living. BUSINESS CULTURE ANALYSIS6.2. The KSA is considered a friendly environment for businesses; it ranked 22nd in the 2012 World Bank Report “Ease of doing business ranks economies” (BANK, 2013). Despite this fact the business culture is pretty different to western culture, especially Ireland and the UK. There are several aspects that need to be evaluated and considered in order to increase the bargaining power, and succeed in closing contracts in the KSA private healthcare sector. Preparation and keeping in mind some knowledge about business culture could make the difference between a successful or failed negotiation. The fundamental driver of Saudi Arabian business negotiation is price, even though when benefits are pretty important and valuable, these customers are highly price sensitive. In the KSA culture, the man who obtains the better deal gains respect among others and for this reason Saudis have become strong negotiators and they will try hard until they get the best value for money. Meanwhile doing business within the KSA may be highly profitable, but the negotiation process is very slow and requires several meetings to resolve, which translates into a high initial investment in time and money. The initial time expected for business development is between eight to ten months and in this time companies need to show that they are trustworthy and serious. It is also important to consider that high-pressure tactics at this stage are not recommended. Saudis like to build a strong personal relationship before closing any business deals, meeting people who they will work with is fundamental to flesh out a contract. Especially in healthcare which is a highly sensitive market with a strong social impact.
  33. 33. Page 32 of 78 Another factor that makes the business negotiation process slow is the bureaucratic and hierarchical society nature, where decisions depend on too many people that usually are not the direct negotiators. DIRECT BUSINESS OR PARTNERS Several sources don’t recommend dealing with the KSA market without the aid of a local partnership. The negotiation process represents a challenge for international companies especially if they do not have experience in the Middle Eastern business environment. It is unlikely that any serious negotiation would be made without face-to-face meetings because Saudi business is still mostly personal. This nature of the business culture requires regular visits to meet customers and in consequence increase costs at the initial stages. In addition, the time difference of two or three hours (summer or winter time in Ireland and UK) and the fact that Thursdays and Fridays are weekends make this process even more complicated. Having a local partner well connected in the healthcare industry would accelerate the negotiation process, decreasing the initial investment costs. However it would also decrease the profitability of the business for MM. The selection of a partner also needs to be done carefully, by selecting someone trustworthy because Saudi laws make it difficult and expensive to cancel contracts once agreed. Considering MM's inexperience in doing business in the KSA, it should seek support from different societies and GAA clubs active in the KSA. Both the Irish and UK embassies have much information about these groups. Connecting with these networks would be valuable in becoming known in the market, or to get experience from others. For instance, Enterprise Ireland could assist MM in making contact with many of these groups. COMMUNICATION, MEETINGS AND RELATIONSHIPS Business is mainly done using the English language but usually business cards are printed in English and Arabic. Arabs are very nationalist and in order to accelerate relations, learning some Arabic phrases for special occasions is widely appreciated. A lack of politeness in conversation and the declining of personal invitations are seen as signs of being discourteous. Furthermore an individual is called by their first name. Communication needs to be fluid, Arabs like to feel comfortable and enjoy the negotiation process. The business meetings are usually more informal than in Ireland or the UK, being very common to make last minute changes in meetings and plans. Some general advices are listed as following:
  34. 34. Page 33 of 78 1. Take into account the religious holidays of Ramadan and Hajj and daily prayer breaks when scheduling meetings. 2. Punctuality is required but is accepted that Arabs can be late. 3. Appointments are necessary but Arabs can cancel meetings at the last-minute. 4. The initial meetings are not private. It is only when the relationship has been built when the meetings can be done without any interruption. 5. Formal and polite manners and speech should be present during meetings. It is also important to consider being dressy and well-presented because Arab are likely to judge on appearances. 6. When engaged in conversation, Saudis tend to stand much closer to one another than North Europeans. 7. The purpose of meetings has to be focused on building relationships. This will accelerate the negotiation process. WOMEN AND BUSINESS The role of women is more challenging when doing business in the KSA – the gender differences are strong in the country. The negotiation process could not to be done by any woman due to the fact that they cannot attend meetings with a male partner. Additionally, it is not common for a Muslim man to shake hands or have any other bodily contact with a woman as they usually do when speaking to another man. SUMMARY6.3. In terms of initial negotiation between MM and its potential Saudi Arabian clients, there is a high risk associated with the initial investment in this project due to the inexperience of the company of doing business with Middle Eastern culture. Furthermore, considering the "price sensitive" nature of the client it is fundamental for MM to develop its bargaining power with the KSA. MM’s business sustainability in this market would depend on its ability to deal with the candidates, satisfy their needs and offer competitive opportunities in the Saudi market. The attractiveness of MM’s business for candidates is in terms of income and benefits, and the KSA healthcare salaries and benefits are strongly appealing for UK and Irish candidates. MM should offer plenty of information and care to its candidates, before and during the recruitment process, especially for women who are the most affected by cultural differences and also are the biggest business opportunity. However, having a contract does not necessary mean profit. It is necessary to give candidates support and information before and after they have been contracted to avoid any inconvenience. Candidates need to understand and follow the laws in the KSA and MM should support them at all times. Ensuring the sustainability of MM’s business, candidates must remain in the job for the time set and it is necessary for MM to help them in the
  35. 35. Page 34 of 78 process of adaptation to culture as well as to ensure that they comply with the laws of Islam. Any problem with the law impacts both the candidate and the hiring company (and therefore MM). The cultural change can be radical, especially for candidates from the UK and Ireland. MM should lead a marketing campaign in these countries to promote the salary benefits and multicultural experience of traveling and working in the KSA. The offer should be based on short-term profits.
  36. 36. Page 35 of 78 7. LEGAL FEASIBILITY (Analysis Conducted By: Vanessa Quintas) The objective of this legal feasibility analysis is to review the laws governing in the KSA and identify some of the potential issues for foreign investors trying to get into the market. ISLAMIC LAW7.1. The laws are not entirely codified and the process of judgments follows different methodologies than those understood in the civil code – “This Islam law force parties to honour principles of fairness and goods faith in their dealings” (LLP, 2014). The terms of contracts concerning to payments or receipt are not mandatory in the KSA. This approach is different to Ireland or the UK where clauses for contractors’ security are enforced by law. KEY LAWS OF INTEREST7.2. GOVERNMENT TENDERS AND PROCUREMENT LAW This law generally follows international standards and best practices but the interpretation and application of this law requires a rigorous review to determine how a foreign company can best meet the requirements that a local company requires. In the case of the healthcare sector, local recruitment companies cannot meet growing demand and in consequence it makes this process easier for MM. FOREIGN INVESTMENT LAW This law regulates foreign investment in the KSA. The company that wishes to establish a legitimate presence in the KSA needs to acquire a licence issued under this law. One of the benefits for these foreign companies is that “it permits 100% ownership of either branches of most forms of limited liability companies. (LLP, 2014). The Saudi Arabia General Investment Authority (SAGIA) is and organisation responsible for offering different types of help required by foreign companies. According to LLP, 2014, SAGIA implemented the foreign investment licensing regime and is supporting foreign companies to get and keep their licence up to date. This organisation has the most of the rules and regulations that foreign investors need.
  37. 37. Page 36 of 78 INCOME TAX LAW Every international company, owned by non-GCC (Gulf Cooperation Council: Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) have to follow the "income tax" law and paid a flat rate of 20% (LLP, 2014). In practice this number could vary depending on the investment and the nature of the company. For this reason it consulting with a tax advisor when necessary is recommended. IMMIGRATION LAW The immigration process is long and systematic having different visas available to work in the KSA. Once MM has established a close relationship with any hospital in the private healthcare sector, that hospital will act as the sponsor throughout the immigration process. Firstly the sponsor needs to have a “Block Visa” which is given by the Ministry of Labor. This visa allows companies to sponsor foreign employees. To get this visa, companies have to comply with the “Nitaquat” which exists in that company. Each company is assigned targets for employing Saudi nationals in accordance with its industry section and company size. The benefits would depend on the percentage of sauditization achieved. After getting the “Block Visa”, the company needs to obtain an authorization number and electronic power authorized by the Ministry of Foreign Affairs in KSA. It is at this stage when the company is able to sponsor foreign candidates. The KSA visa process is followed by the steps on the table in Figure 11. Foreigners can apply for visa in the consular posts abroad. Especially in Dublin and London where besides having the presence of embassies, organisations such as “saudivisa" or "saudivisauk" which are authorized by KSA government for visa formalities have offices. The immigration rules are very strict and if they are broken, they can result in heavy penalties for applicants and sponsors. Visa denial and restriction of entry into the country could be in situations that have violated regulations or customs of the Saudis, such as inappropriate behaviour or dress etc. It is important for MM to be aware of all immigration rules and changes in order to be able to advise its applicants.Figure 11 - KSA Work Visa Approval Timeline
  38. 38. Page 37 of 78 MM needs to validate that the sponsor (private healthcare client) has the necessary approvals from the Ministry of Interior (immigration file) and the Ministry of Labor (visa pre- approval document) and that all documents are certified by the Ministry of Foreign Affairs in the KSA. Its level of “sauditization” needs to be checked in order to evaluate the number of positions that may be available for MM’s business. SAUDITIZATION7.3. Sauditization is a policy applied by the KSA government whose main purpose is to decrease the percentage of foreigners working within different industries, especially the healthcare industry. According to the Saudi Gazette, 2012, “the Saudi government is taking steps to make sure that all healthcare jobs will be filled by nationals by 2018”. The plan is to nationalise the healthcare sector by recruiting only Saudis and investing in educating them. Locals have priority over expatriates, who cannot be hired until the sponsor has proven that a capable Saudi national couldn’t be sourced for the position. The recruitment procedures should be aligned accordingly. Until now the measures applied by the KSA government around Sauditization have not been successful, and results can be observed in the Market Feasibility within this report. The reason for this is that the market is growing faster than the incentive programs for education and careers for locals in KSA. SUMMARY7.4. The contract conditions in KSA do not have law restrictions in terms of parties’ security. It is important for MM to check its contracts carefully and add any condition to protect them in every aspect of potential risk. For example payment arrangements should apply late payments penalties. Contracts should be revised exhaustively, making clear every single detail referent to money and responsibilities. In terms of administration and immigration rules, despite being strict, they are also very systematized and easy to follow. Furthermore, it has been proven that the KSA is well experienced in dealing with foreigners considering the high percentage already working within the country.
  39. 39. Page 38 of 78 8. SERVICE FEASIBILITY (Analysis Conducted By: Julie Zhou) REPUTABLE MEDICAL & HEALTHCARE QUALIFICATION8.1. Ireland and the UK both enjoy long-standing reputation in providing highly qualified healthcare personnel. Ireland has a long history in high-quality medical education. The Royal College of Surgeons (RCSI) was founded in Dublin in 1784; the School of Medicine at Trinity College Dublin celebrated its tercentenary in 2011. Nowadays, Ireland is a reputable hub for the world’s top clinical research centres represented by a few large Dublin teaching hospitals: St. Vincent’s Hospital, St. James’ Hospital, The Mater Misercordiae Hospital and Beaumont Hospital. The UK’s medical qualification is equally recognised worldwide if not more so. The UK has the highest number of top medical schools in Europe, and only second to the US worldwide (The Academic Ranking of World Universities, 2013); School of Clinical Medicine of the University of Cambridge, UCL School of Life & Medical Sciences, Faculty of Medicine at Imperial College London. In Oxford, many university medics are on joint-NHS appointments and the university’s clinical departments and the local health service (NHS) are interwoven. The above are only part of the full list of the globally recognised medicine schools and medical research institutes in UK (ARWU, 2013). The registration body in the Irish healthcare industry is Irish Medical Council (IMC), with over 18,000 doctors registered. The entity with the similar nature in UK is General Medical Council (GMC). The total doctors registered on the List of Registered Medical Practitioners (LRMP) reached 235,157 by 3rd April 2014 (UK General Medical Council, 2014). FULL-SPECTRUM DISCIPLINES AVAILABLE IN THE HEALTHCARE WORKFORCE8.2. Both Ireland and the UK provide a full spectrum of highly trained healthcare workforce. In Ireland, there are five main areas: Nursing, Medicine, Dental, Medical Diagnostics and Allied Health Professionals. All positions within the above health sectors have minimum qualifications. A mature system in Ireland has set high standards for practitioners to study and qualify in particular areas (CareerPortal.ie, 2011). UK provides an even longer list of the main disciplines and sub disciplines in the UK healthcare industry (NHS Medical Careers). There are over 16 different areas in the medical specialty. The most relevant disciplines to this report are believed to be GP, Obstetrics and Gynaecology and Pediatrics. A Full list of the medical specialty can be found at medicalcareers.nhs.uk.
  40. 40. Page 39 of 78 FEASIBILITY OF SOURCING QUALIFIED MEDICAL PROFESSIONALS IN THE CURRENT IRISH HEALTHCARE8.3. SYSTEM A macro view on the medical sector as an entire market place: In Ireland, the Health Service Executive (HSE) as a single national entity managing the health service delivery in Ireland directly employs a workforce of over 100,000 people (HSE, 2014). The medical and healthcare professionals are spread in a mixture of universal public health services and a fee based private system including 47 acute public hospitals, 19 private hospitals and 22 voluntary hospitals across the country. (Career Portal, 2011) Similarly, the National Health Service (NHS) in the UK employs more than 1.7 million people, although under half are clinically qualified; 39,780 general practitioners (GPs), 370,327 nurses, 18,687 ambulance staff and 105,711 hospital and community health service (HCHS) medical and dental staff (NHS, 2013). To take a closer look at the healthcare sector breakdown, statistics published by OECD Stat shows an optimistic outlook for professional sourcing in Ireland and the UK. The total healthcare employment in Ireland is 251,500, in the UK is 3,836,604 (2012 statistics), the number of practicing physicians are around 12,450 in Ireland, 175,200 in the UK, professionally active physicians of 14,498 in Ireland, and generalist medical practitioners at around 11,008 people in Ireland, 51,010 in the UK, with the female professionals taking up to about 40% of the workforce of medical practitioners in Ireland, and 45.64% in UK (2012). As to the entire number of people employed in the healthcare occupations, between 70% and 91% are female. OECD Stat Overview, 2012 Ireland UK Total Healthcare Employment 251,500 3,836,604 Number of Practicing Physicians 12,450 175,200 Professionally Active Physicians 14,498 -- Generalist Medical Practitioners 11,008 51,010 Female Professional (%) 40.07 45.64 Table 6 - Potential Candidate Pool These people have become potential candidates for the employment opportunities in KSA. EMIGRATION CULTURE MATURE IN IRELAND AND THE UK It is not new for Irish and UK doctors to pursue medical career overseas. In Ireland, despite the fact that the employment of healthcare professionals increased by 2.4% on average annually over the period 2007-2012, resulting in a net 11,500 additional
  41. 41. Page 40 of 78 jobs, one quarter of all employed medical practitioners were non-Irish nationals‒ one of the highest shares among all professional occupations economy-wide(Careers Portal 2014). Similar situation is found in UK, GMC statistics Primary Medical Qualification (PMQ) shows that 36.8% doctors practice in UK hold initial healthcare qualification from outside of UK (UK General Medical Council, 2014). The high percentage of the non-Irish & non-UK doctors on the market pushes the trends for the emigration of Irish and UK doctors, though it is not the only reason and probably also not the major reason. IRELAND Ireland sees trends of doctors at non-consult hospital having strong interest in emigrating. In 2011, it was seen in the Irish media coverage that “around 40% of the 102 final-year intern doctors in the HSE West area will emigrate after graduating.” (The Irish Examiner, 2011) In 2013, it increased to about 50%. (Burke, 2013) As for the reasons for Irish doctors to choose to leave the country, Seanad Spokesperson on Health said “Many young hospital doctors have substantial grievances regarding the implementation of the EU working time directives and non-payment of hours worked. Excessive on-call obligations, excessive overtime, which was a feature of hospital doctors working lives, are unfair to doctors as well as being unhealthy and dangerous. A tired and over worked doctor is much more likely to make mistakes. In particular the hospital contract system for young doctors is a cause of justified resentment. Offering highly qualified professionals six-month contracts, with no certainty as to where they might be working is demeaning. Young doctors deserve better.” (Burke, 2013) UK The UK market found itself in a similar situation. The trends of “brain drain” were largely covered by the UK media: The Telegraph, BMA, and Financial Times. A researcher at Oxford also reported an increasing trend in the UK doctors considering going abroad (Riney, 2012, Wild, 2012). Multiple reasons have made medical practitioners consider going abroad. The main reasons are the long working hours, the bureaucracy of NHS, and the limited promotion opportunities in UK hospitals. The numbers of medical professionals leaving and returning to the UK, although this is difficult to track because neither the government nor health industry bodies record that information (Wild, 2012). Despite the fact that it might cause massive potential loss to the NHS (National Health Service), the emigration trends created a market for MM to recruit.
  42. 42. Page 41 of 78 The implication here is that the supply side is matured. The emigration culture in Irish and UK medical sector prepares the medical professionals to seek better opportunities if the destined countries provide attractive package, associated with a better work-life balance lifestyle, and better career development opportunities. ZOOM-IN SECTOR: SALARIES OF DOCTORS, NURSING & MIDWIFERY IN IRELAND AND UK8.4. Doctors’ Pay Scale in Ireland: In autumn 2012, the Cabinet acted on the programme for government commitment and unilaterally introduced a 30% pay cut for senior doctors taking up such posts from that point. The salary for new entrants ranged from €95,000 to €116,000 depending on the type of contract. Irish trained consultants. The newly reduced pay rates set for new entrant consultants of are around €120,000. Basic junior doctor salaries range from €30,000 for an intern (just out of medical school) to €76,000-€79,000 for a specialist or senior registrar at the top of the scale. The doctors are also entitled to allowance (HSE, 2014, NHS Careers, 2013). Irish Medical Organization and the Irish Hospital Consultants’ Association (IHCA) have argued that Irish-based consultants and senior non-consultant doctors were opting to leave while those abroad were choosing to remain overseas. The unintended consequence of the low level pay was that it made these positions much less attractive at a time when Irish-trained medical graduates were in high demand abroad (Hunter, 2014). UK Hospital doctors’ pay scales for 2013/2014: There was a three-year public pay freeze from 2010 to 2012. But doctors received a 1& pay rise fro 2013/2014. A new system of non- pensionable, short-duration bonuses is to be introduced in 2013. It is a two-tier consultant grade, with pay progression dependent on performance. Doctors in training earn a basic salary and will be paid a supplement if they work more than 40 hours and/or work outside the hours of 7am-7pm Monday to Friday. The Foundation Year 1 Trainee has a basic starting salary of £22,636. This increases in Foundation Year 2 to £28,076. For a doctor in specialist training the basic starting salary is £30,002. The supplement for the 40 hours and/or to work outside 7am-7pm is between 20%-50%. The amount paid is based on the number of extra hours and the intensity of the work. Consultants Salaries 2013/2014 vary from threshold 1 (years completed as a consultant 0) of £75,249 to threshold 8, (years completed as a consultant 19) of £101,451. Specialty doctor salaries 2013/2014 are from Scale minimum at £37,176 (period before eligibility for next pay point one year) to Scale value 10 of £69,325. GPs are self-employed and hold contracts. The profit of GPs varies according to the services they provide for their patients and the way they choose to provide these services. The salaried GPs who are part of a Clinic Commissioning Group (CCG) earn between £54,319 to £81,969. Clinical excellence awards for consultants are from Level 1 £2,957 to Platinum/Level 12 of £75,796.
  43. 43. Page 42 of 78 In response to the special areas of interest of our client (MM), who see the increasing demand in the KSA children’s nursing and midwife workforce, our report provides a zoom-in view on the availabilities of nurses and midwives from Ireland and UK marketplace. IRELAND: Nurses and midwives have by far the largest workforce and play an important role in the medical & healthcare sector in Ireland. The number of nurses and midwives registered to Nursing and Midwifery Board of Ireland (An Bord Altranais) is approximately 82,576. Over 65,415 of whom are listed on the active register and the remainder being listed on the inactive register. (Nursing Board, 2014) In January 2014, the Irish Nurses and Midwives Organisation (INMO) published the updated the minimum hourly training rates for undergraduate nurses/midwives on their rostered placement with public service management: For those over the age of 18 who are undergoing a course of study or training authorized by the employer, a 39-hour per week working time is required. Newly qualified nurses can currently expect a starting salary of about €24,418 (Careers Portal, 2013) in Ireland. The following is the minimum wages (INMO, 2014): - First 12 weeks- €6.49 per hour - Second 12 weeks - €6.92 per hour - Final 12 weeks - €7.79 per hour UK: Nursing & Midwifery Council (NMC) is the regulation body for nurses and midwives in UK. There are 670,106 nurses and midwives on the NMC register. Of these, 603,412 are nurses, 29,430 are midwives and 37,264 are on more than one part of the register (NMC. 2013). The minimum starting salary for a registered nurse in the UK is now £21,388. (Prospects, 2014) The minimum starting salary for newly qualified midwives in the NHS is £21,176 at Band 5. Further details about the salary of nurses and midwives in UK (Robinson, 2013): - Band 1 to Band 4, from £14,294 to £22,016 - Band 5 Nurse, midwife (entry level): £21,388 - £27,901 - Band 6 Midwife, nurse specialist, nurse team leader: £25,783 - £34,530 - Band 7 Midwife higher level, midwife team manager, advanced nurse, nurse team manager: £30,764 - £40,558 - Band 8 Midwife consultant, modern matron, nurse consultant and Band 9 (more senior staff): can expect a higher pay
  44. 44. Page 43 of 78 More information about the Career Framework (Band 1-9) see Appendix B for more details (NHS Career, 2014). SUMMARY8.5. MM is suggested to selectively develop partnerships using this list as a start. A full list of the nursing schools, nursing programmes, nursing degrees, nursing certificates, registered nurses, licensed practical nurses, paediatric nurses, nursing courses, colleges, Universities & institutes in Ireland and in the UK is available at a2zcolleges.com. In Ireland a qualified midwife is required to successfully complete a Bachelor’s Degree in Midwifery, which is offered in a wide range of universities and colleges countrywide. After registration as a midwife with An Board Altranais, midwives typically spend their first year gaining practical experience in a public or private healthcare setting. MM is suggested to discover candidates from those who are going through the stage of one- year practical training. Special offer and arrangement could be offered to them to secure their availability to work in the KSA immediately after they are qualified. Over ninety educational institutions are officially accredited by the UK Nursing & Midwifery Council to provide certified nurses and midwives around England, Scotland, Wales and Northern Ireland. A full list of schools can be found under the Search NMC approved programmes section at NMC Nursing & Midwifery Council website. If a KSA hospital is interested in recruiting fresh graduates, this list can help MM to consider building strategic co-operative partnerships with these schools to provide candidates. For experienced nurses and midwives, MM might want to leverage its marketing tool to attract them. All nurses and midwives who practise in the UK must be on the Nursing and Midwifery Council (NMC) register. When targeting a potential candidate, MM is suggested to check his/her background. The checking tool is publicly available at the website of NMC Nursing & Midwifery – www.nmc-uk.org
  45. 45. Page 44 of 78 9. FINANCIAL FEASIBILITY (Analysis Conducted By: Peadar O’Sullivan) The following outlines the financial viability of MM entering into the KSA Healthcare market. The feasibility has focused on the initial five years of the business with a detailed monthly projection for FY 1, a quarterly projection for FY 2 and 3 and an annual projection for FY 4 & 5. Some of the Major Assumptions made throughout this analysis are as follows:  Venture is assumed to commence on the 1st of January 2015  The business will be managed and operated from MM’s existing Dublin office. No allowances have been made for a regional base in the KSA.  Analysis is based on one full-time recruitment consultant being employed initially to focus on the KSA business.  Monthly trips to the KSA have been incorporated into the operational costs to cater for the KSA cultural preferences for face-to-face business discussions.  The business venture is assumed to be fully funded by a commercial bank loan without any funding being provided by the existing MM business.  A commercial loan has been secured on a 60 month (5 year) repayment plan.  Allowances have been made for the KSA venture to cover its share of indirect staff costs and administrative office costs in the Dublin office.  The initial placement is assumed to be achieved six months into the business venture. Section 6.2, Business Culture Analysis highlights that it takes 8 to 12 months to establish a working relationship in the KSA. However considering that MM have made some initial contact with the KSA healthcare representatives it has been assumed that this duration is reduced to six months.  It has been assumed that by the end of FY 1, MM will have captured 1% of the Irish and UK candidate market, i.e. approximately 10 placements. See Market Feasibility for more details. The viability of this venture has been analysed by forecasting the following financial aspects of the business of its initial five years of operation:  Start-up costs required to bring the business to market  Funding requirements to make the venture a reality  Projected revenues, operational costs and net income over the three year period  Projected cash-flow over the three year period  Risk analysis of the venture via a breakeven and sensitivity analysis  Key financial evaluation tools and ratios such as NPV, IRR etc.
  46. 46. Page 45 of 78 The following graph illustrates the key financial aspects of the proposed venture over its initial five years. As the graph illustrates this business venture is forecasted to return a small net profit of less than 1% in FY2016 and net profit of 14% in FY 2017. By FY2019 it is estimated that the business could return a net profit of 24%. Figure 12 - Financial Highlights
  47. 47. Page 46 of 78 START-UP BUDGET & FUNDING SOURCE9.1. The following outlines the forecasted costs required to bring the KSA venture to market. General start-up costs are minimal as the venture is in line with MM’s existing business model. The majority of the start-up costs required for the business are associated with providing the business with a positive cash flow throughout its first two years as can be seen through the Projected Cash-Flow Statement in Section 9.5. Working capital requirements of €90,000 have been estimated with an additional €10,000 required for set-up costs bringing the total investment required to €100,000. Funding for this venture has been sourced through commercial loan from the Bank of Ireland over a 60 month period with an APR of 5.74%. Monthly loan repayments of €1,919.95 will apply. Other minor costs include the upgrading of MM’s existing website to a dynamic system plus the purchase of equipment for a full time recruitment consultant. Table 7 - Forecasted Start-up Costs KSA Venture Start Up Costs Amount Recruitment Costs1 - Office Space2 - Computer Hardware & Associated Software3 2,000 Legal & Professional Advice4 2,000 Insurance5 - Website Upgrading to a Dynamic System6 4,000 KSA Marketing7 2,000 Cash Flow Requirements9 90,000 100,000€ Funding Source Amount Bank Loan 100,000€ Loan Term (months) 60 Loan repayment costs8 (per month) 1,919.95€ Monthly Interest Repayments 253.28€ Assumptions 1. Recruitment costs provided free of charge by the business 2. Office Space start up costs covered through existing businesses operations 3. Estimated on the purchase of new PC and associated software 4. Estimated @ €250/hr for 8 hr assistance with ensuring business complies with and understands KSA legal and taxation laws 5. Insurance covered through existing businesses operations 6. Website upgrading to enable candidates to upload resumes and create profiles for KSA positions 7. Estimate 8. Source: Bank of Ireland 60 month secured business loan @ 5.74% APR 9. Cashflow to cover initial operating costs
  48. 48. Page 47 of 78 PROJECTED REVENUE9.2. Revenue projections are based on the initial placement being made in month six of FY 2015. Revenue projections are based on MM capturing 1% of the Irish and UK candidate market in FY2015, with annual increases of 150%, 50%, 25%, 12.5% in FY2016, 2017, 2018 and 2019 respectively. By the end of FY 2019 it has been forecasted that MM could hold 5% of the current Irish and UK candidate market. See section 5 Market Feasibility for more details on the estimated market potential. Figure 13 - Forecasted Placements The average annual salary for healthcare professionals for expatriate physicians and nurses in KSA has been estimated at €87,000 and €41,000 respectively. An annual salary of increase of 5% has been assumed for every year thereafter. Candidate placements fees in KSA are known to vary from 10 – 20% with rates used for high level positions (i.e. large salaries) known to lean heavily towards the lower range. For this proposal rates of 13% have been used for the placement of physicians and 20% for the placement of nurses.
  49. 49. Page 48 of 78 Figure 14 - Forecasted Revenue Refer to Appendix C for a month by month projection for FY 2015 and a quarterly projection for FY 2016 - FY 2017. Table 8 - Forecasted Revenue Assumptions 1. EX - US$1 = €0.719 3. Based on a 13% commission of physicians and 20% of nurses annual salary 9. Based on 1% market share by end of FY2015 2015 2016 2017 2018 2019 FY FY FY FY FY Medical Staff Placed in KSA Positions filled9 10 25 38 48 53 Physicians 2 150% 5 50% 8 25% 10 12.5% 11 Nurses 8 150% 20 50% 30 25% 38 12.5% 42 Average salary of expatriate physician in KSA (€ ) 1 87,000 5% 91,350 5% 95,918 5% 100,713 5% 105,749 Average salary of expatriate nurse in KSA (€ ) 1 41,000 5% 43,050 5% 45,203 5% 47,463 5% 49,836 Commission charged by MM for physicians (%) 3 13.0% 0% 13.0% 0% 13.0% 0% 13% 0% 13% Commission charged by MM for nurses (%)3 20.0% 0% 20.0% 0% 20.0% 0% 20% 0% 20% Permanent placement fees 88,220 231,578 370,969 486,897 575,147 Total Revenue 88,220€ 231,578€ 370,969€ 486,897€ 575,147€ Revenue Forecast +/- % +/- % +/- % +/- %
  50. 50. Page 49 of 78 PROJECTED OPERATING COSTS9.3. The following tables outline the forecasted operational costs associated with the recruitment consultants and indirect staff that support the existing business. In addition the table illustrates costs associated with the administration costs associated with running the recruitment agency. Majority of the figures are based on MM’s current forecasted costs for 2015 with a few minor acceptations and additions made for inflation adjustments etc. for every year going forward. The required number of consultants is based on each consultant making 1.5 placements per month which is in line with MM current figures for FY2015, see Appendix G. Similarly recruitment consultant commission and pay structure is based on MM’s current business model. The percentage of indirect staff costs charged to the KSA venture is based on the number of placements made in the KSA in comparisons to MM’s current estimate for the Irish business in FY2015, i.e. current indirect staff costs are based on 16.25 placements being made per month as per MM financials for FY 2015. Thus 1 placement in KSA equates to 5.8% (1/17.25 = 5.8%) of indirect costs being charged to the KSA venture. The minimum (i.e. when no placements occur in first five months) indirect costs charged to the KSA venture will be 5.8%. As the number of placements in KSA increases so will its share of indirect costs. Similarly with the fixed costs, the percentage of MM’s fixed operational costs charged to the KSA venture are determined by the number of consultants employed to work directly on the venture. In MM’s FY 2015 financials, 12 consultants are estimated to be employed in their Dublin office. Thus for the KSA venture when one consultant is employed on a full time basis the fixed operational costs charged to the KSA equates to 7.6% (i.e. 1/13 = 7.6%). The number of consultants working on the KSA venture will be a good indication of how much of MM’s facilitates etc. are being utilised for the KSA business. Some costs which are associated directly with the KSA venture are additional KSA marketing costs and costs associated with a monthly trip to the KSA being made by MM management to engage to face-to-face discussions with potential clients. Travel costs are based one week long trip per month for the duration of the venture. These costs may reduce as clients become more comfortable with MM as a business partner.
  51. 51. Page 50 of 78 Table 9 - Forecasted Operating Costs Forecasted Operating Costs 2015 2016 2017 2018 2019 Recruitment Consultant Costs FY FY FY FY FY No of Recruitment Consultants6 1 2 3 3 3 Average Annual Basic Salary 36,000 3% 37,080 3% 38,192 3% 39,338 3% 40,518 Basic Salaries 36,000 74,160 95,481 118,015 121,555 Add ons 2 15% 15% 15% 15% 15% Total basic costs 41,400 85,284 109,803 135,717 139,788 Ave commission as % of revenue 10 15% 15% 15% 15% 15% Commission expense 13,233 34,737 55,645 73,035 86,272 Add ons 2 15% 15% 15% 15% 15% Total commission expense 15,218 39,947 63,992 83,990 99,213 Total Recruitment Consultant Costs 56,618 125,231 173,795 219,706 239,001 Forecasted Operating Costs 2015 2016 2017 2018 2019 Indirect Staff Costs Salary FY FY FY FY FY CEO 10 85,250 85,250 5% 89,513 5% 93,988 3% 96,808 3% 99,712 Financial Controller 10 40,000 40,000 3% 41,200 3% 42,436 3% 43,709 3% 45,020 Admin staff 1 10 22,660 22,660 3% 23,340 3% 24,040 3% 24,761 3% 25,504 Admin staff 2 10 20,000 20,000 3% 20,600 3% 21,218 3% 21,855 3% 22,510 Marketing 110 40,170 40,170 3% 41,375 3% 42,616 3% 43,895 3% 45,212 Marketing 2 10 25,000 25,000 3% 25,750 3% 26,523 3% 27,318 3% 28,138 Total 233,080 241,777 250,821 258,346 266,096 Add ons10 15% 34,962 36,267 37,623 38,752 39,914 Total cost 268,042 278,044 288,444 297,097 306,010 Percentage Charged to KSA Venture7 12 7% 11% 16% 19.59% 21.51% Total Indirect Staff Cost to KSA Venture 20,035 31,459 46,953 58,194 65,821 Total Salaries and Related Expenses to KSA Venture 76,653€ 156,690€ 220,749€ 277,901€ 304,822€ Forecasted Fixed Operating Costs 2015 2016 2017 2018 2019 Other Costs FY FY FY FY FY Job advertising 10 60,000 5% 63,000 5% 66,150 5% 69,458 5% 72,930 Marketing (inc website) 10 24,000 5% 25,200 5% 26,460 5% 27,783 5% 29,172 Total Other Costs 10 84,000 5% 88,200 5% 92,610 5% 97,241 5% 102,103 Percentage Charged to KSA Venture 11 8% 14% 17% 20.0% 20.0% KSA Specific Marketing 13 12,000 5% 12,600 5% 13,230 5% 13,892 5% 14,586 Total Other Cost to KSA Venture 18,468 25,200 29,106 33,340 35,007 Forecasted Fixed Operating Costs 2015 2016 2017 2018 2019 Admin Costs FY FY FY FY FY Audit, legal and professional5 36,000 5% 37,800 5% 39,690 5% 41,675 5% 43,758 Rent, rates etc 10 36,000 5% 37,800 5% 39,690 5% 41,675 5% 43,758 Office supplies, postage, stationery 10 12,000 5% 12,600 5% 13,230 5% 13,892 5% 14,586 Telephone 10 24,000 5% 25,200 5% 26,460 5% 27,783 5% 29,172 Light and heat10 - 0% - 0% - 0% - 0% - Insurance 10 - 0% - 0% - 0% - 0% - Motor and travel10 12,000 5% 12,600 5% 13,230 5% 13,892 5% 14,586 Marketing Consulting10 - 5% - 5% - 5% - 5% - Financial accounting service10 12,000 5% 12,600 5% 13,230 5% 13,892 5% 14,586 Other10 12,000 5% 12,600 5% 13,230 5% 13,892 5% 14,586 Total 144,000 151,200 158,760 166,698 175,033 Percentage of Admin costs charged to KSA Venture 11 8% 14% 17% 20% 20% KSA Flights & Accomm 4 21,600 5% 22,680 5% 23,814 5% 25,005 5% 26,255 Total Admin Cost to KSA Venture 32,688 44,280 51,030 58,344 61,262 Total Fixed Operating Costs to KSA Venture 51,156€ 69,480€ 80,136€ 91,684€ 96,268€ Total Operating Costs to KSA Venture 127,809€ 226,170€ 300,885€ 369,585€ 401,090€ +/- % +/- % +/- % +/- % +/- % +/- % +/- % +/- % +/- % +/- % +/- % +/- % +/- % +/- % +/- % +/- %
  52. 52. Page 51 of 78 Assumptions 2. Based on MM current remuneration structure 4. Costs related to KSA Venture. 1 return flight and weeks accommodation in Jeddah per month @ €1,100 - Source Skyscanner.com plus €100 / Day LAFHA 5. €1,000 included for additional legal costs 6. No. of consultants required based on average consultant placing 1.5 positions per month 7. Percentage of Indirect costs charged to KSA venture. % based on number of placements made in comparisons to Irish business, i.e. In 2015 average placement per month in Ire = 16.25. -> 1/17.25 = 5.8% indirect costs charge to KSA Venture 10. Based on MM's forecast costs for 2015 11. Percentage of admin costs and other costs charged to KSA Venture. % based on the number of consultants working on KSA Venture, i.e. in 2015 average number of consultants in Irish business = 12. - > 1/13 = 7.6% 12. Minimum Indirect cost 5.8%. Equivalent of one placement per month 13. Estimate Refer to Appendix D for a month by month projection for FY 2015 and a quarterly projection for FY 2016 - FY 2017.

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