Country Notebook of the Islamic Republic Of Iran

The Country Notebooka Guide for Developing Marketing Plan

The Country Notebook Outline (Click here for more information about the Country Notebook.) I. Cultural Analysis II. Economic Analysis III. Market Audit and Competitive Market Analysis IV. Preliminary Marketing Plan

I. Cultural Analysis
Guideline I. Introduction

Iranian culture have a long, creative and glorious history, unlike many other middle east countries Iran managed to remain independent throughout much of its history, today Iran has a population about 7o million persons and since 1979 Iran is an Islamic republic II. Brief discussion of the countrys relevant history

The history of Iran is long and complex its shape is determined by the rise and fall of successive dynasties-with intervals of chaos and confusion. In 1954 Iran allowed an international consortium of British, American,frensh ,and Dutch oil companies to operate its oil facilities ,with profits shared equally between Iran and the consortium ,Iran established closer relations with the west joining the Baghdad pact and receiving large amounts of military and economic aid from the untitled states until the late 1960s Starting 1960 and continuing into the 1970s the Iranian government at the shah initiative undertook a broad program designed to improve economic and social conditions land reform was a major priority. In 1973 short of the end 1954 agreement with the international oil producing consortium the shah established the full control over all aspects Iran's oil industry and it used this situation to became a leader in the rising of oil prices in disregard of the tartan agreement in 1971 In 1979 the nation under the leadership of ayatollah Khomeini they made revolution and the current republic of Iran was founded

III.

Geographical setting

Iran a middle eastern country, its west Asia and south of Caspian sea and north of the Persian gulf is three times the size of Arizona ,it shares borders with Iraq,turkey,Azerbaijan,Turkmenistan,Armenia,Afghanistan and Pakistan The Elburz Mountains in the north rise to 18603ft at mount from northwest to southeast the country is crossed by desert 800 mi (1287 km) A. Location Middle east ,bordering the gulf of Oman ,the Persian gulf, and the Caspian sea, between Iraq and Pakistan ,its country neighbors Afghanistan and Pakistan in the east and turkey to the west B. Climate Iran has a hot climate characterized by long hot dry summers and short cool winters C. Topography Most of the land area consists of a plateau 1200 m(4000 ft) above sea level and strewn with mountains. Iran is geologically unstable with occasional severe earthquakes about 140000 people were killed in Iranian earthquakes during the twentieth century IV. Social institutions

Iran is a theocratic republic as such the situation of woman is very much affected by Islam and sharia law the constitution supports equal rights to large degree but its enforcement is generally poor and its provision is still poor Woman rights activates in Iran is continue to face obstacles in their attempts to improve the conditions for women but recent studies notes that woman human rights in Iran have advanced especially in regard to family ,religion and community A. Family Iranian woman still face many challenges within the family context, the average age of marriage appears to be increasing for both men and woman but the incidence of early marriage is still high the legal age of marriage is 13 years and fathers have the right to apply for permission to marry their daughters as early as the age of nine 18% of girls in Iran between 15 and 19 years of age were married, divorced or widowed the parental authority rests with fathers reflecting the sharia principle that fathers are the natural guardians of their children

1. The nuclear family This is the dominant model in Iran father ,mother ,brother and sister and they are closely bond to each other, families tend to be small, the family in Iran is the basis for social cultural ,the concept of family is more private than in many other cultures ,females relatives must be protected from out outside influences and are taken care of all times ,it is inappropriate to ask about Iranian wife or other female relatives 2. The extended family Is quite close 3. Dynamics of the family Loyalty to the family comes before other social relationship, even business a. Parental roles Is very important as parents is being involved in making major decisions for their child like whom they should marry and what profession they should have, parents spends a lot of time with their children and if they can afford to support their children all the way until they have finished all their education and beyond, family traditionally comes before the individual b. Marriage and courtship It's a lot more prevalent for males to marry non Muslim foreigners than for males due to the fact that Muslim woman are legally barred from marrying non Muslim unless if they convert into islam, iraninan family and inheritance lows favor males, these issues might create serious problems at times of divorce custody rights and death, if marriage are registered with the Islamic authorities the Iranian legislation will be applied to such marriage both in Iran and outside the country 4. Female/male roles (changing or static?) Static

B. Education

1. The role of education in society a. Primary education (quality, levels of development, etc.) Its mandatory under the Iranian institution its starting from 5 years old student take exam at the end of each year on which their promotion grade is based at the end of grade 5 students take a notion wide examination those who pass the exam are qualified to proceed to the next cycle, there is a middle guidance cycle cover grades from 6 to 8 for children from 11 to 13 years old this cycle is providing children with general education in the phases the children interest and abilities are recognized then they applied for exam to proceed for the next cycle b. Secondary education (quality, levels of development, etc.) Due to increasing number of applicants admission to post secondary institutions is through a nationwide entrance examination and only the most talented students can enter universities ,this is a four year stage which covers grade 9 to grade 12 from age 14 to 17 secondary education is divvied in to two main branches academic/general and technical /vocational c. Higher education (quality, levels of development, etc.) 50000 Iranian students currently is studying abroad in general education in (primary,secondary,and post secondary levels )is free of charge through private schools and universities authorized by law are allowed to charge tuition fees ,there is two main ministries is responsible for ministry of cultural and higher education and ministry of health and medical education . Some points worth to mention English as a second language is introduced from grade 7, Iran also it runs number of schools outside Iran Persian gulf countries and some in European countries 2. Literacy rates Male 90.5% Female 87% Total adult literacy rate 89.1%

C. Political system 4

1. Political structure The political system of Islamic republic of Iran is the result of the Islamic revolution in 1979, the first of its type in the world, therefore, Iran political system established afterward should have been defined according to the ideals of such revolution. 2. Political parties Iran government( legislative power, judiciary power ,executive power ),which works according to Iranian constitution and Islam and other political entities which help the formation of the complete political structure ,more importantly ,the supreme leader who is the highest authority in the Islamic republic of Iran revolution ,Iran leadership is the backbone of Iran political system Islamic revolution gained victory as a result of ayatollah Khomeini and he took the control since this republic revolution. And the current is Mahmud Ahmedi nejad its the sixth president since Islamic republic 3. Stability of government

Stable 4. Special taxes The taxes in Iran is indirect system and for the same reason it is not transparent enough the only case low is stress on it ,the collection of direct tax the tax on employees salaries and workers wages On the whole taxes in Iran are divided in to five categories namely : 1) Taxies on companies 2) Occupation taxes 3) Consumption and sales taxes 4) Import taxes 5) Taxes on salaries

5. Role of local government 5

Local councils are elected by public vote to 4 years, those local councils with the parliament are decision making and administrative organs of the state ,they many different responsibilities including electing mayors ,planning and coordinating national participation in the implementation of social ,economic ,costar active ,cultural, educational and other welfare affairs D. Legal system

1. Organization of the judiciary system It headed by a scholar in Islamic law that has a sense of judgment and is capable of ruling on legal matters through interpretation of Islamic legal sources .in local terms this scholar is called the mujtahid , the supreme leader of Iran appoints the mujtahid as the head of the judiciary system and he serves a term of five years .this head of the judiciary system has the authority to nominate the ministry of justice 2. Code, common, socialist, or Islamic-law country? Islamic law country

E. Social organizations Little is known of Iranian social organization in the period. In general, it was based on feudal lines that were drawn in part by economic and social functions. Traditional Indo-Iranian society consisted of three classes: the warriors or aristocracy, the priests, and the farmers or herdsmen. Crosscutting these divisions was a tribal structure based on patrilineal descent. The title king of kings, used even in the 20th century by the shahs of Iran, implies that the central authority exercised power through a pyramidal structure 1. Group behavior * Iranian culture is Class based * Tradition for most is rooted in religion and class and patriarchy have been constant features of Iranian society since ancient times * Class in its simplest form is mainly based on income and financial status * In Iran different classes have different cultures . For example the lower and uneducated classes may regard females as inferior or different who 6

are entitled to a lesser position in the society. On the other hand the modern classes normally strive to guarantee the equality of sexes and eliminate gender discrimination. * Tradition is mostly based on religion particularly Islam and its prescribed codes of behavior

* There is a belief held by many Muslims that Islam is a body of values, ideas and beliefs that should encompass all spheres of life, including personal and social relationships, economics and politics. Consequently for the traditional practicing Muslim the only accepted relationship between the sexes may be through marriage * In such cases what is usually classified as group behavior could also be identified with religious behavior * The whole iranian dress well and dress codes are very important in distinguishing modern and traditional groups. * Generally with the affluent, men and women are expected to dress expensively and fashionably with expensive jewelry and accessories (mainly watches and rings for men) and drive luxury cars. * With the more modern, females have no problems wearing heavy make up, exposing body parts or dress sexy while in company of males. With the more traditional, female dress codes are modest and a lot more conservative with darker colors and little make up. With such groups, at mixed gatherings males and females normally end up as clusters on their own if not segregated in the first place. * On the whole Iranians dress up formally even for ordinary parties and dressing up casually is reserved for very informal occasions with immediate members of the family * Dressing up formally and appropriately is also regarded as a sign of respect and people may get offended if their guests arrive in casual outfits and sneakers * Contrary to the stereotype images of Muslim males through the media most Iranian men do not have beards and if they do, it is not necessarily for religious reasons * Iranians party a lot, are great entertainers and are known for their hospitality and generosity at such occasions * People are anticipated to behave politely at parties, being loud is considered inappropriate unless people know each other very well * Respecting elderly is another ancient practice that has survived. Traditionally the older people are respected, listened to and are treated accordingly

* Gender roles are normally well defined and clear. The priority for females is marriage and childbearing. Due to economic necessity and with the phenomenal increase in the number of highly educated Iranian women such culturally accepted norms are creating major problems for working mothers and challenging the status quo. * Iranian culture is adult oriented with parents being involved in making major decisions for their children such as, whom they should marry and what profession they should have. *Mothers and recently fathers spent lots of time with their children and if they can afford it they will financially support them all the way till they have finished all their education and beyond * Children born from non-Iranian fathers can not became Iranian citizens since it is their fathers nationality that matters and not their mothers. They are not able to own property in Iran, have an Iranian ID or passport 2. Social classes * Wealth was important, but acquiring and maintaining wealth tended to be closely intertwined with access to political power * Since being part of an elite family was an important prerequisite for entry into the political elite, marital relationships tended to bind together important elite families. The Upper Classes * The post revolutionary upper classes consisted of some of the same elements as the old elite, such as large landowners, industrialists, financiers, and large-scale merchants * For the most part, however, such persons no longer had any political influence, and in the future the absence of such influence could impede the acquisition of new wealth. * Wealth was apparently no longer an attribute of authority * Religious expertise and piety became the major criteria for belonging to the new political elite. Thus, key government administrators held their positions because of their perceived commitment to Shia Islam.

The Middle Classes *After the Revolution of 1979, the composition of the middle class was no different from what it had been under the monarchy *There were several identifiable social groups, including entrepreneurs, bazaar merchants, professionals, and managers of private and nationalized concerns, the higher grades of the civil service, teachers, medium-scale landowners, military officers, and the junior ranks of the Shia clergy *Some middle- class groups apparently had more access to political power than they had had before the Revolution because the new political elite had been recruited primarily from the middle class. *Prior to the Revolution, the middle class was divided between those possessed of a Western education, who had a secular outlook, and those suspicious of Western education, who valued a role for religion in both public and private life. *Since the Revolution, these two outlooks have been in contention. The religious outlook has dominated politics and society, but it appears that the secular middle class has resented laws and regulations that were perceived as interfering with personal liberties. *The middle class was divided by other issues as well. Before the Revolution, an extremely high value had been placed upon obtaining a foreign education. The new political elite, however, regarded a foreign education with suspicion; accordingly, many members of the middle class who were educated abroad have been required to undergo special Islamic indoctrination courses to retain their jobs. In some cases, refusal to conform to religiously prescribed dress and behavior codes has resulted in the loss of government jobs. As a result of these tensions, thousands of Western-educated Iranians have emigrated since 1979. The Working Class *The industrialization programs of the Pahlavi shahs provided the impetus for the expansion of this class. *The workers within any one occupation, rather than sharing a common identity, were divided according to perceived skills. *The unions played only a passive role from the viewpoint of workers. Under both the monarchy and the Republic, union activity was strictly controlled by the government. 9

The Lower Class * Members of the urban lower class can be distinguished by their high illiteracy rate, performance of manual labor, and generally marginal existence. * The lower class is divided into two groups: those with regular employment and those without.

4. Race, ethnicity, and subcultures

Persian 51% Azerbaijani 24% Gilaki and Mazandarani 8%, Kurd 7% Arab 3% Lur 2% Baloch 2% Turkmen 2% Other1%

F. Business customs and practices

Doing Business - Meeting and Greeting

*When meeting someone in a business or official context always shake hands

Doing Business - Dress

*As a male you would be expected to be smart and conservative. A suit is standard although wearing a tie is no necessary. * Whether doing business in Iran or visiting, women should wear very conservative clothing that covers arms, legs and hair.

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* However, the last decade Women can now be seen wearing make-up, jeans and scarves that barely cover the hair However, as a foreigner it is best to err on the side of caution.

Doing Business - Meetings

*If you plan on doing business in Iran appointments should be made in advance both via telephone * Business hours are Saturday to Thursday 9 a.m. - 5 p.m. Lunch is usually an hour at around 1 p.m. Friday is a holiday. * There are a few key times to avoid in Iran. No-Rooz is the major holiday for Iranians , All offices, businesses, shops, etc will close for 2-3 weeks .Other times to avoid doing business are Ramadan (the month of fasting), Eid-e Fetr (festival celebrating the end of Ramadan), Eid-e Ghurban (celebrating the end of the pilgrimage) and Ashura (the tenth day of Muharram). * If you are doing business with government officials in Iran be prepared to be kept waiting. The administration and bureaucracy in Iran can be chaotic * At the beginning of any meeting engage in niceties and ask after people's health, families, work, etc. Wait for your counterpart to initiate the change in conversation to business matters.

Doing Business - Negotiations

*Your success in business is defined by your aptitude to build effective personal relationships combined with a clearly outlined and well presented proposal. *Iranians enjoy haggling and getting concessions so be prepared for long negotiations. * Decision making can be slow. It is most likely that you will meet and negotiate with less senior members of a family or state department first. Once you are seen as trustworthy you will then move on to meet more senior members. * Implementing decisions are just as slow. Iran's red tape and layered bureaucracy means a lot of waiting. Applying pressure in a non-confrontational way can help speed matters up although the most effective way to do so is to use people of influence to help you.

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V.

Religion and aesthetics

A. Religion and other belief systems

*Most Iranians are Muslims. Around 89%[1] belong to Shi'a branch of Islam, the official state religion, and about 9% belong to the Sunni branch of Islam. The remaining 2% are non-Muslim religious minorities, including Bah's, Mandeans, Yarsanis, Zoroastrians, Jews, and Christians

1. Orthodox doctrines and structures

*Christianity in Iran has had a long history, dating back to the very early years of the faith *Christianity has always been a minority religion, overshadowed by the majority state religions Zoroastrianism in the past, and Shia Islam today * While always a minority the Armenian Christians have had an autonomy of educational institutions such as the use of their language in schools

2. Which religions are prominent?

The overwhelming majority of Iranians - at least 90 percent of the total population - are Muslims who adhere to Shia Islam. In contrast, the majority of Muslims throughout the world follow Sunni Islam.

3. Membership of each religion

Islamic Conquest of Iran

The Bedouin Arabs who toppled the Sassanid Empire were propelled not only by a desire for conquest but also by a new religion, Islam. The Prophet Muhammad, a member of the Hashimite clan of the powerful tribe of Quraysh, proclaimed his prophetic mission in Arabia in 612 and eventually won over the city of his birth, Mecca, to the new faith. Within one year of Muhammad's death in 632, Arabia itself was secure enough to allow his secular successor, Abu Bakr, the first caliph, to begin the campaign against the Byzantine and Sassanid empires. 12

Shia

Although Shias have lived in Iran since the earliest days of Islam, and there was one Shia dynasty in part of Iran during the tenth and eleventh centuries, it is believed that most Iranians were Sunnis until the seventeenth century. The Safavid dynasty made Shia Islam the official state religion in the sixteenth century and aggressively proselytized on its behalf. It is also believed that by the mid-seventeenth century most people in what is now Iran had become Shias, an affiliation that has continued.
Sunni

Islam

in

Iran

Sunni Muslims constitute approximately 8 percent of the Iranian population. A majority of Kurds, virtually all Baluchis and Turkomans, and a minority of Arabs are Sunnis, as are small communities of Persians in southern Iran and Khorasan.
Bahai

Islam

in

Iran

The largest non-Muslim minority in Iran is the Bahais. There were an estimated 350,000 Bahais in Iran in 1986. The Bahais are scattered in small communities throughout Iran with a heavy concentration in Tehran. Most Bahais are urban, but there are some Bahai villages, especially in Fars and Mazandaran. The majority of Bahais are Persians, but there is a significant minority of Azerbaijani Bahais, and there are even a few among the Kurds.
Christianity

Iran's indigenous Christians include an estimated 250,000 Armenians, some 32,000 Assyrians, and a small number of Roman Catholic, Anglican, and Protestant Iranians converted by missionaries in the nineteenth and twentieth century's. The Armenians are predominantly urban and are concentrated in Tehran and Esfahan; smaller communities exist in Tabriz, Arak, and other cities.
Judaism

in

Iran

The Constitution of 1979 recognized Jews as an official religious minority and accorded them the right to elect a representative to the Majlis. Like the Christians, the Jews have not been persecuted. Unlike the Christians, the Jews have been viewed with suspicion by the government, probably because of the government's intense hostility toward Israel.
Zoroastrianism in

in

Iran

Iran

Like the Christians and Jews, the Zoroastrians are recognized as an official religious minority under the Constitution of 1979. They are permitted to elect one representative to the Majlis and, like the other legally accepted minorities, may seek employment in the government. They generally enjoy the same civil liberties as Muslims. Although Zoroastrians probably have encountered individual instances of prejudice, they have not been persecuted because of their religious beliefs.

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VI.

Living conditions

The Islamic Republic of Iran portrays its self as the champion of Arab rights in all of the abovementioned countries, but the Arab population of Iran faces discrimination and violence in all spheres of life. Every year hundreds of Arab-rights activists are imprisoned, tortured, raped and executed in Iran just because they raise their voices about the gross living conditions of Arabs in Iran. The province of Khuzestan, which has an Arab majority, produces the majority of Irans oil, but none of the benefits of the oil reach the people living in the region. The Islamic Republic of Iran drains Khuzestan of its riches and systematically oppresses the Arab population, only to send its oil profits to Arab-extremists in other parts of the region. This kind of policy is expected from the regime in Tehran, but what strikes Arabs in Iran as strange is that no Arab country or organization raises their plight or objects to Irans treatment of their kinsmen.

E. Social security

Social Security Organization (SSO) is a social insurer organization in Iran which provides coverage of wage-earners and salaried workers as well as voluntary coverage of self-employed persons. In 1975, the Social Security Law was approved and the SSO was established. Iran did not legislate in favor of a universal social protection, but in 1996, the Center of the Statistics of Iran estimated that more than 73% of the Iranian population was covered by social security. Membership in the social security system for all employees is compulsory. SSO is a nongovernmental organization and it is solely financed by contributions (with participation of insured (7%), employer (20-23%) and government (3%)).Social protection is extended to the self-employed workers, who voluntarily contribute between 12% and 18% of income depending on the protection sought. SSO provides the following services: 1. Retirement, disability and death; 2. Unemployment; 3. Old-age; 4. Helplessness, loss of caretaker and social vulnerabilities; 5. Accidents and injuries; 6. Physical, mental and psychic disability; 7. Health care and medical insurance; 8. Protecting mothers especially during the maternity period and child-rearing; 9. Protecting orphan children and unprotected women; 10. Planning particular insurance system for widows, old women and self-dependent women; 11. Poverty and inequity alleviation; 12. Assistance and rescue. 14

F. Health care

Health care in Iran

From Wikipedia, the free encyclopedia

Imam Khomeini hospital Health care in Iran and medical sector's market value was almost US $24 billion in 2002 and was forecast to rise to US $31 billion by 2007. With a population of almost 70 million, Iran is one of the most populous countries in the Middle East. The country faces the common problem of other young demographic nations in the region, which is keeping pace with growth of an already huge demand for various public services. The young population will soon be old enough to start new families, which will boost the population growth rate and subsequently the need for public health infrastructures and services. Total healthcare spending is expected to rise from $24.3 billion in 2008, to $50 billion by 2013, reflecting the increasing demand on medical services. Total health spending was equivalent to 4.2% of GDP in Iran in 2005. 73% of all Iranians have health care coverage.[3] The World Health Organization in the last report on health systems ranks Iran's performance on health level 58th, and its overall health system performance 93rd among the world's nations. The health status of Iranians has improved over the last two decades. Iran has been able to extend public health preventive services through the establishment of an extensive Primary Health Care Network. As a result child and maternal mortality rates have fallen significantly, and life expectancy at birth has risen remarkably. Infant (IMR) and under-five (U5MR) mortality have decreased to 28.6 and 35.6 per 1,000 live births respectively in 2000, compared to an IMR of 122 per 1,000 and a U5MR of 191 per 1,000 in 1970. Immunization of children is accessible to most of the urban and rural population.

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VII.

Language

A. Official language(s)

The official language of Iran is Persian (the Persian term for which is Farsi). It is the language of government and public instruction and is the mother tongue of half of the population. Persian is spoken as a second language by a large proportion of the rest. Many different dialects of Persian are spoken in various parts of the Central Plateau, and people from each city can usually be identified by their speech. Some dialects, such as Gilaki and Mazandari, are distinct enough to be virtually unintelligible to a Persian speaker from Tehran or Shiraz.

B. Spoken versus written language(s)

The second most widely spoken Iranian language after Persian is Kurdish. Kurdish script is based on the Perso-Arabic script and the Latin alphabet. There are also many new Iranian languages which have emerged over time. They are spoken by people living across the Iranian plateau but unfortunately many are now diminishing due to more dominant surrounding languages. The following two cases give an example of the new Iranian languages: Pashtu is a fairly new Iranian language which is spoken by individuals living in southern Afghanistan and northern Pakistan. As with the Kurdish language it is primarily written in the Perso-Arabic script, although it has additions from Urdu as opposed to the Latin alphabet. Baluchi is spoken primarily within south eastern Iran and Western Pakistan. Again, it is written in the Perso-Arabic script but there is no established written tradition of this language.

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C. Dialects

Central Iranian, or Central Iran, is a group of Western Iranian languages spoken in villages and towns of central Iran, mostly in Markazi and Isfahan provinces. They are typically considered "dialects" of Persian, and many are giving way to Persian among the younger generations. VIII. Executive summary writing guide [insert text here] IX. Sources of information [insert text here] X. Appendixes [insert text here]

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II. Economic Analysis

Guideline I. Introduction

Irans economy has been crippled by the 1979 Islamic revolution, the IranIraq war, economic mismanagement, and corruption. International concern about Irans nuclear development and support for terrorism remains high. Mahmud Ahmadinejad, reinstalled as president after a June 2009 election that sparked widespread political protests, has led a violent crackdown against opposition forces. His regime, which has greatly expanded government spending, now plans to reduce government subsidies, particularly for food and energy, and replace them with cash payments to low-income Iranians. A gradual decline in oil production combined with lower world oil prices has reduced oil export revenues, which provide about 85 percent of government finance. Irans economy remains burdened by rising inflation, corruption, costly subsidies, and an increasingly bloated and inefficient public sector. Unemployment remains high. Heavy state interference in many aspects of private economic activity has resulted in economic stagnation in Irans non-oil sector and a serious lack of overall economic dynamism. A restrictive business and investment environment continues to hamper private-sector development. More than 500 companies remain state-owned, and privatization has been negligible in the past year.

II.

Population

The 18th largest country in the world in terms of area at 1,648,195 km2 (636,372 sq mi), Iran has a population of around 78 million. It is a country of particular geopolitical significance owing to its location in the Middle East and central Eurasia

A. Total

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It is a growing population it is now reaching about 77,891,220 (July 2011 est.) 1. Growth rates Annual population growth rate 1.248% (2011 est.) 2. Birthrates 18.55 births/1,000 population (2011 est.) B. Distribution of population

1. Age 0-14 years: 24.1% (male 9,608,342/female 9,128,427) 15-64 years: 70.9% (male 28,083,193/female 27,170,445) 65 years and over: 5% (male 1,844,967/female 2,055,846) (2011 est.) 2. Sex At birth: 1.05 male(s)/female Under 15 years: 1.05 male(s)/female 15-64 years: 1.02 male(s)/female 19

65 years and over: 0.91 male(s)/female Total population: 1.02 male(s)/female (2011 est.) 3. Geographic areas (urban, suburban, and rural density and concentration) Urban population: 71% of total population (2010) Rate of urbanization: 1.9% annual rate of change (2010-15 est.) 4. Migration rates and patterns -0.13 migrant(s)/1,000 population (2011 est.) 5. Ethnic groups [Persian 51%, Azeri 24%, Gilaki and Mazandarani 8%, Kurd 7%, Arab 3%, Lur 2%, Baloch 2%, Turkmen 2%, other 1% III. Economic statistics and activity

Iran's economy is closely tied to its natural resources since 80 percent of the country's export revenues are derived from oil and gas. Iran contains 8.9 percent of proven global oil reserves, and its reserves contain 20 percent of the world's total amount of natural gas. Other important exports are carpets, pistachios, leather, and caviar. Important imports include motor vehicles, machinery, steel, chemicals, pharmaceuticals, and food. A. Gross national product (GNP or GDP) Gross National Product. GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. Basically, GNP measures the value of goods and services that the country's citizens produced regardless of their location. GNP is one measure of the economic condition of a country, under the assumption that a higher GNP leads to a higher quality of living, all other things being equal. 1. Total $818.7 billion (2010 est.) 2. Rate of growth (real GNP or GDP) 1% (2010 est.) B. Personal income per capita $10,600 (2010 est.) 20

C. Distribution of wealth A Group of people within a society who possess the same socioeconomic status. 1. Income classes 1. Capitalists: Owners of physical and financial means of economic activities, who employ workers. Capitalists are divided into modern and traditional occupational categories. 2. Petty bourgeoisie: Self-employed persons who do not hire any paid worker but may rely on unpaid family labor. They, too, consist of modern and traditional categories. 3. The middle class: Employees of the state or the private sector, in administrativemanagerial and professional-technical positions. They exercise some authority and enjoy relative autonomy. In this category are those who are employed in economic activities and social services of the state. Those employed in the administrative or managerial position in the political apparatus of the state are not included here. 4. The working class: Workers who do not own the means of economic activity and do not benefit from the authority and autonomy of those in the middle class. They are employees of the state or the private sector, excluding those in the lower ranks of the political apparatus of the state. D. Minerals and resources Mining in Iran is under-developed. Yet the country is one of the most important mineral producers in the world, ranked among 15 major mineral rich countries, holding some 68 types of minerals, 37 billion tones of proven reserves and more than 57 billion tones of potential reservoirs. Mineral production contributes only 0.6 per cent to the countrys GDP. Add other mining-related industries and this figure increases to just four per cent (2005). Many factors have contributed to this, namely lack of suitable infrastructure, legal barriers, exploration difficulties, and government control over all resources. The most important mines in Iran include coal, metallic minerals, sand and gravel, chemical minerals and salt. Khorana has the most operating mines in Iran. Other large deposits which mostly remain underdeveloped are zinc (world's largest), copper (world's second largest), iron (world's ninth largest), uranium (world's tenth largest) and lead (world's eleventh largest). Iran with roughly 1% of the world's population holds more than 7% of the world's total mineral reserves. E. Surface transportation Transport in Iran is inexpensive because of the government's subsidization of the price of gasoline. The downside is economic inefficiency because of highly wasteful consumption 21

patterns, contraband with neighboring countries and air pollution. In 2008, more than one million people worked in the transportation sector, accounting for 9% of GDP 1. Modes Iran has a long paved road system linking most of its towns and all of its cities. In 2007 the country had 178,152 km (111,000 mi) of roads, of which 66% were paved. In 2008 there were nearly 100 passenger cars for every 1,000 inhabitants. Trains operated on 11,106 km (6,942 mi) of railroad track. The countrys major port of entry is Bandar-Abbas on the Strait of Hormuz. After arriving in Iran, imported goods are distributed throughout the country by trucks and freight trains. The Tehran-Bandar-Abbas railroad, opened in 1995, connects Bandar-Abbas to the railroad system of Central Asia via Tehran and Mashhad. Other major ports include Bandar e-Anzali and Bandar e-Torkeman on the Caspian Sea and Khorramshahr and Bandar-e Emam Khomeyni on the Persian Gulf. Dozens of cities have airports that serve passenger and cargo planes. Iran Air, the national airline, was founded in 1962 and operates domestic and international flights. All large cities have mass transit systems using buses, and several private companies provide bus service between cities. Tehran, Mashhad, Shiraz, Tabriz, Ahwaz and Esfahan are in the process of constructing underground mass transit rail lines. 2. Availability

Railways

Total: 11,106 km o Standard gauge: 8,273 km of 1,435 mm (4 ft 8 12 in) gauge (146 km electrified) (2006) o Broad gauge: 94 km of 1,676 mm (5 ft 6 in) gauge (connected to Pakistan Railways)

Electrified railway is 146 km from Tabriz to Jolfa and the tender for electrification of Tehran- Mashhad has been finished according to Railway electrification in Iran. Note: Broad-gauge track is employed at the borders with Azerbaijan Republic and Turkmenistan which have 1,520 mm (4 ft 11 56 in) broad gauge rail systems; 41 km of the standard gauge, electrified track is in suburban service at Tehran (2007).

Metro

City with underground railway system:

o

Tehran Metro

Along with extension work on the Tehran Metro, six other metro projects are being built. In total, 172 extra kilometers will be built in Tehran between now and 2012 and over 380 kilometers in the other cities. All these work sites are ongoing at present (2008).

Other cities with plans to construct a metro:

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o o o o o o

Mashhad Light Rail Isfahan Metro Shiraz Metro Tabriz Metro Ahvaz Metro Karaj Metro

Roadways and automobiles

Total: 172,927 km (2006)

o o

Paved: 125,908 km (includes 1,429 km of expressways) Unpaved: 47,019 km

Waterways

850 km (on Karun River; additional service on Lake Uremia) (2006)

Merchant marine

Total: 74 (2008) By type: bulk carrier 18, cargo 34, chemical tanker 4, container 6, liquefied gas 1, passenger/cargo 4, petroleum tanker 2, refrigerated cargo 2, roll on/roll off 3 Foreign-owned: 1 (UAE 1) Registered in other countries: 115 (Barbados 2, Bolivia 1, Cyprus 10, Hong Kong 15, Malta 79, Panama 7, Saint Vincent and the Grenadines 1) Shipping freight (important for liquid natural gas (LNG) exports) will grow by an average of 5.3 percent a year in the 2009-2013.

Over the next two decades, Iran would need 500 new ships, including 120 oil tankers, 40 liquefied natural gas (LNG) carriers and over 300 commercial vessels.

Airports and airlines

Irans airports are improving their international connections, and Arak Airport in Markazi province has recently begun to operate international flights, making a total of five such airports in the country, in addition to ten local airports. In May 2007 international flights into the capital, Tehran, were moved to the Imam Khomeini International Airport (IKIA), just outside the city because of capacity constraints at the existing central Mehrabad Airport.

Airports: 316 (2009) There are 54 "major" airports in Iran (2008): 8 international, 21 air border, and 25 domestic. Number of flights from airports nationwide reached 31,088 in a month (October 20November 20, 2008): 10,510 domestic, 4,229 international and 15,404 transit. 23

National airline:

Iran Air

Airports - with paved runways Total: 129 (2007)

over 3,047 m: 40 2,438 to 3,047 m: 28 1,524 to 2,437 m: 25 914 to 1,523 m: 34 under 914 m: 6 (2009)

Airports - with unpaved runways Total: 183 (2007)

over 3,047 m: 1 1,524 to 2,437 m: 9 914 to 1,523 m: 139 under 914 m: 33 (2009)

Heliports Total: 19 (2009) 3. Usage rates

The majority of transportation in Iran is road-based. The government plans to transport 3.5% of the passenger volume and 8.5% of the freight volume by rail. Extensive electrification is planned. The railway network expands by about 500 km per year according to the Ministry of R&T. Also there were more than 11 million vehicles in Iran by 2010 mostly manufactured or assembled locally

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4. Ports

Ports and harbors

The capacity of container loading and unloading in the countrys ports is currently at 4.4 million which will increase to 7 million by the end of 2015. Port capacity will increase to 200 million tons in 2015 from 150 million tons in 2010.

All ports: Abadan (largely destroyed in fighting during 1980-88 war), Ahvaz, Bandar Abbas, Bandar-e Anzali (Caspian sea), Bushehr, Bandar-e Emam Khomeyni, Bandar-e Length, Bandar-e Mahshahr, Bandar-e Torkaman (Caspian sea), Chabahar (Bandar-e Beheshti), Kharg island, Lavan island, Sirri island, Khorramshahr (limited operation since November 1992), Noshahr (Caspian sea), Arvand Kenar. Main: Assaluyeh, Bandar Abbas, Bandar-e Eman Khomeyni[6] Bandar Abbas is in southern Iran and handles 90% of the country's container throughput. Major Export Terminals (loading capacity): Kharg Island 5,000,000 bbl/d (790,000 m3/d), Lavan Island 200,000 bbl/d (32,000 m3/d), Neka 50,000 bbl/d (7,900 m3/d), Assaluyeh 250,000 bbl/d (40,000 m3/d) gas liquids, Kish Island, Abadan and Bandar Mahshahr. Major Oil/Gas Ports: Kharg Island, Lavan Island, Sirri Island, Ras Bahregan.

F. Communication systems Irans telecommunications industry is almost entirely state-owned, dominated by the Telecommunication Company of Iran (TCI). Fixed-line penetration in 2004 was relatively welldeveloped by regional standards, standing at 22 lines per 100 people, higher than Egypt with 14 and Saudi Arabia with 15, although behind the UAE with 27. In terms of mobile provision in 2004, however, Iran lagged all the countries mentioned above. The government runs the broadcast media, which includes three national radio stations and two national television networks, as well as dozens of local radio and television stations. In 2000 there were 252 radios, 158 television sets, 219 telephone lines, and 110 personal computers for every 1,000 residents. Computers for home use became more affordable in the mid-1990s, and since then demand for access to the Internet has increased rapidly. In 1998, the Ministry of Posts and Telecommunications (renamed the Ministry of Information & Communication Technology) began selling Internet accounts to the general public. In 2006, the Iranian telecom industry's revenues were estimated at $1.2 billion. By the end of 2009, Iran's telecom market was the fourth-largest market in the region at $9.2 billion and is expected to grow to $12.9 billion by 2014 at a CAGR of 6.9 percent. 25

The Fourth Five Year Economic Development Plan has proposed the following key benchmarks for 2010: 36 million fixed lines; 50% penetration rate for mobile phones; establishment of reliable rural ICT connections and 30 million internet users. Given the recent developments of the industry, the objectives are very likely to be achieved. More than 23 million Iranians have access to the Internet and over 45 million own mobile phones. Tech-savvy citizens use text messages to communicate with friends and browse the Internet which the government controls in terms of access and speed for a multiplicity of purposes. Blogging is also immensely popular. Iran is among 5 countries with cyber warfare capabilities according to the Defense Tech institute (US military and security institute). 1. Types, 2.Availability and 3.Usage rates

Press
The press in Iran is privately owned and reflects a diversity of political and social views. A special court has authority to monitor the print media and may suspend publication or revoke the licenses of papers or journals that a jury finds guilty of publishing antireligious material, slander, or information detrimental to the national interest. Since the late 1990s the court has shut down many pro-reform newspapers and other periodicals. Most Iranian newspapers are published in Persian, but newspapers in English and other languages also exist. The most widely circulated periodicals are based in Tehran. Popular daily and weekly newspapers include Ettelaat, Kayhan, Resalat, Iran Daily and the Tehran Times (both are English-language papers).

Satellite
Since the 1970s, there have been a number of proposals for a state-owned communications satellite, called Zohreh (en:Venus) from 1993 onwards. The planned satellite would have similar capabilities to a commercially-produced Western satellite, while such capabilities are already provided through leases owned by the Iranian telecommunications sector. Most recently, an agreement was signed between Iran and Russia in 2005 to develop the satellite with a planned launch date of 2007,but the launch has been postponed until at least 2009, set to follow actual construction of the satellite.

Telephone
Inadequate but currently being modernized and expanded with the goal of not only improving the efficiency and increasing the volume of the urban service but also bringing telephone service to several thousand villages, not presently connected.

Domestic
As a result of heavy investing in the telephone system since 1994, thousands of mobile cellular subscribers are being served; moreover, the technical level of the system has been raised by the installation of thousands of digital switches.

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Irans telecommunication network enjoys the highest growth rate in the Middle East. One of the indicators that clearly illustrate this growth rate is the increase in the number of installed main lines. In 1978 there were only about 850,000 fixed lines installed in Iran. This number rose to about 1,767,000 by 1986 and to about 2,380,000 by 1989. One of the objectives of the first fiveyear development plan (19891994) for the telecommunication sector was to add one million new fixed lines to the network. However, due to the establishment and expansion of many lowcapacity and high-capacity exchanges, the actual growth rate that was achieved was considerably higher. In fact more than 3.1 million new main lines were installed during the period of the first five-year plan. Four million new lines were expected to be added by the end of the second five-year plan (19941999), which would increase the number of installed main lines to about 9,510,000 fixed lines. Landlines 24.8 million (2008), with a penetration rate of 34%. Mobile phone

Mobile: 41 million (Nov. 2008) from 35 million (early 2008) and 4.3 million in 2004. Penetration rate: 60% as of January 2009. Projected: over 80% in 2012. Short Text Messages: Iranians send 80 million SMS per day (Nov. 2008). Major mobile operators as of 2008: Telecommunication Company of Iran (MCI/Hamrah Aval) with 70% market share, MTN Irancell (28%), Taliya (1%), and Emirates Telecommunications Corp (Etisalat) who won a license for 300 million Euros in December 2008.[19][21][22] The two national operators, Mobile Company of Iran (MCI) and MTN Irancell both offer GPRS-based data services. Abu Dhabi-based Etisalat and Tamin Telecom, the telecommunications investment arm of Irans social security and pensions department, will gain exclusive rights for two years to offer second- and third-generation services (3G) in Iran (2008). Assuming a minimum network investment of $4 billion, Etisalat can gain about 20 percent to 25% market share over five years of its operations (by 2013). In 2009 it was announced that Etisalat, however, failed to secure the right to be Irans exclusive 3G operator for two years. Later, Tamin Telecom announced that, IDRO and Imam Khomeini Decree Center have replaced Etisalat because of contractual disagreements.

International

As of 2010, international connection services are provided exclusively by Infrastructure Company of Iran, a fully owned subsidiary of TCI.[20] Submarine fiber-optic cable to UAE with access to Fiber-Optic Link Around the Globe (FLAG); Trans Asia Europe (TAE) fiber-optic line runs from Azerbaijan through the northern portion of Iran to Turkmenistan with expansion to Georgia and Azerbaijan; HF radio and microwave radio relay to Turkey, Azerbaijan, Pakistan, Afghanistan, Turkmenistan, Syria, Kuwait, Tajikistan, and Uzbekistan; satellite earth stations - 13 (9 Intelsat and 4 Inmarsat) . Apart from Iran-Kuwait submarine communications cable network, Iran is launching an optical fiber channel and a submarine communications cable in the Persian Gulf. The 27

next program is to connect the country with global optical fiber networks from northern and northwestern borders.

Radio

Radio broadcast stations: AM 72, FM 5, shortwave 5 (1998) Number of Radios: 22 million (2005)

Television

Television broadcast stations: 29 (plus 450 repeaters) (1997 Number of televisions: 15 million (2007 est.) Although formally illegal, the use of satellite television receivers in urban areas is widespread. Over 30 percent of Iranians watch satellite channels.

Internet
In 1993 Iran became the second country in the Middle East to be connected to the Internet, and since then the government has made significant efforts to improve the nation's ICT infrastructure. Iran's national Internet connectivity infrastructure is based on two major networks: the public switched telephone network (PSTN) and the public data network. The PSTN provides a connection for end-users to Internet service providers (ISPs) over mostly digital lines and supports modem-based connections. The Data Communication Company of Iran (DCI), a subsidiary of TCI, operates the public data network. Iran's external Internet links use the basic Internet protocol of TCP/IP (transmission control protocol/Internet protocol) via satellite exclusively. For data lines, copper, fiber, satellite and microwave are the available media, and popular services are high-speed Internet via digital subscriber lines (DSL), high-bandwidth lease lines and satellite. About 33 Iranian cities are connected directly by the Trans-Asia-Europe cable network, or "silk road", connecting China to Europe.

National internet
Since 2005, Iran has been developing a "national Internet" to improve control over its content as well as speed. The project, which is separate from the world wide web, will be completed by 2013. This network will be separated from the rest of the internet, specifically for domestic use. Creating such a network, similar to one used by North Korea, would prevent unwanted information from outside of Iran getting into the closed system. Myanmar and Cuba also use similar systems.

ISPs
The leading Data Communication Company of Iran (DCI) which belongs to Telecommunication Company of Iran (now privatized) and the Iranian Research Organization for Science and Technology (IROST) are two bodies that act as ISPs. The largest privately owned ISP is Parsnet, which serves only Tehran. The leading ISP with a 28

provincial focus is Isfahan-based Irangate.net. The Neda Rayaneh Institute (NRI) was the first private ISP in Iran. Domain names with the ".ir" suffix are assigned by the Institute for Studies in Theoretical Physics and Mathematics (IPM). DCI maintains the network infrastructure, providing Internet access via the IRANPAK X.25 packet-switching network, which covers most major cities. DCI is the only ISP with a permit for supplying government agencies. DCI supplies both dial-up and leased lines to its users. By the regulations of Iran, these ISPs should rely on the Telecommunication Company of Iran (TCI) for their bandwidth. Previously serviced by TCIs Public Switch Telephone Network, the ISPs have recently been provided with modern data line capacity through a national IP-based network. With the completion of this new network, Internet services in Iran are expected to improve dramatically. G. Working conditions The highly fluid nature of Iran's labor market and the large size of the informal services sector make accurate estimates of employment levels difficult. 1. Employer-employee relations There is a minimum national wage applicable to each sector of activity fixed by the Supreme Labor Council which is revised annually. In 2010 the minimum wage, determined by the Supreme Labor Council, was about US$303 per month (US$3,636 per year). Membership in the social security system for all employees is compulsory. The national poverty line for Tehran in the year ending March 20, 2008 was $9,612 per year and the national average was $4,932. 2. Employee participation Although Iranian workers have, in theory, a right to form labor unions, there is, in actuality, no union system in the country. Workers are represented ostensibly by the Workers' House, a state-sponsored institution that nevertheless attempts to challenge some state policies. Guild unions operate locally in most areas but are limited largely to issuing credentials and licenses. The right of workers to strike is generally not respected by the state, and since 1979 strikes have often been met by police action. The comprehensive Labor Law covers all labor relations in Iran, including hiring of local and foreign staff. The Labor Law provides a very broad and inclusive definition of the individuals it covers, and written, oral, temporary and indefinite employment contracts are all recognized. The Iranian Labor Law is very employee-friendly and makes it extremely difficult to lay off staff. Employing personnel on consecutive six-month contracts is illegal, as is

29

dismissing staff without proof of a serious offense. Labor disputes are settled by a special labor council, which usually rules in favor of the employee. The Labor Law provides the minimum standards an employer must adhere to when forming an employment relationship. The minimum age for workers in Iran is 15 years, but large sectors of the economy (including small businesses, agricultural concerns, and family-owned enterprises) are exempted. H. Principal industries petroleum, petrochemicals, fertilizers, caustic soda, textiles, cement and other construction materials, food processing (particularly sugar refining and vegetable oil production), ferrous and non-ferrous metal fabrication, armaments

1. What proportion of the GNP does each industry contribute? Oil exports account for nearly 80 percent of foreign exchange earnings. In the early 21st century the service sector constituted the largest percentage of gross domestic product (GDP), followed by industry (mining and manufacturing) and agriculture. In 2008 GDP was estimated at $382.3 billion, or $5,470 per capita

2. Ratio of private to publicly owned industries The constitution mandates that all large-scale industries, including petroleum, minerals, banking, foreign exchange, insurance, power generation, communications, aviation, and road and rail transport, be owned publicly and administered by the state. Basic foodstuffs and energy costs are heavily subsidized by the government.

I. Foreign investment

Firms from over 50 countries have invested in Iran in the past 16 years (1992-2008), with Asia and Europe receiving the largest share

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1. Opportunities?

Potential approaches to the market

First and foremost, it is crucial to realize that Iranian authorities insist on a long-term commitment and a transfer of technology as a requisite for getting a share in the market. Foreign companies are therefore advised to adopt a medium- to long-term strategy for the Iranian market. Iran will almost never honor the interests of a company that does not show long-term commitment. Tenders are strictly required for government contracts for purchasing or projects. These are rarely competitive. Breaking up contracts into smaller parts is a common practice to try and incorporate at least 30% of the contract's value in local capability and also to negotiate on specific prices. Currently there are three main routes that a foreign company can follow to establish a long-term presence in Iran:

Joint ventures
The Flower of the East Marina, a multi-billion dollar FDI project in the tourism sector in Iran. One possible strategy is for the foreign company to enter into a joint-venture agreement with a public or private Iranian partner. The existing level of technology and infrastructure makes many Iranian companies suitable for expansion and development in conjunction with foreign companies. Many Iranian companies, especially those in the private sector, are currently actively seeking joint-venture partners both to fill their technological as well as management gaps. Others are looking for a revival of their company through foreign capital. Should a company decide to adopt this approach to the market, it is advisable to look for products and services that have both domestic demand as well as regional export potential. If a joint-venture company can earn hard currency through export of its goods, it will not be too dependent on the Iranian banking system for the repatriation of profits and dividends. It should be noted that some joint ventures consist purely of the transfer of technology to Iran by the foreign partner without any capital commitment. Since Iranian authorities are very keen on the introduction of modern technologies, this path can prove very constructive. In August 2010, the 25% ceiling set for joint venture companies in enjoying facilities from the foreign exchange reserve account has been eliminated. Industry and mines, agriculture, transport, services (such as tourism), IT and the export of goods and services are the sectors authorized to enjoy the new facilities from the Foreign Exchange Reserve Account There are seven types of juridical entity or company which can be established under the Iranian Commercial Code. From among all these different types, Joint Stock Company, in which the capital is divided by shares, is the most common and acceptable type of company which can be recommended to foreign investors. For legal and tax purposes, opening a representative office in Iran, by itself, is not considered foreign direct investment. Further information, see the document titled "Establishing a Joint Stock Company in Iran".

Buy-back
In February 2007 the government unveiled its new buyback-contract formula, which significantly extended the length of the contracts to as long as 20 years. The buy-back scheme is a formula used by the Iranian government to attract foreign investment. Following the end of the Iran-Iraq war in 1988, Iran faced a major problem: it needed foreign investment if it did not want to lose its vital income from the oil and gas industry, yet its revolutionary ideology and 31

Constitution forbid granting concessions. A compromise solution was found in 1989 with the First Five-Year Economic, Social and Cultural Development Plan. Under Note 29 of the said plan, the Iranian government is allowed to employ buybacks in its effort to meet the industrial and mineral needs in connection with exports, production and investment. Put in laymen terms, a buy-back transaction is a method of trade where plants, machinery, production equipment and technology is supplied (by a domestic or foreign private firm), in exchange for the goods that will be produced directly or indirectly by means of such facilities. Under this scheme, the foreign partner that makes the initial investment can repatriate the return on the investment (at a pre-agreed fixed rate) through goods and services produced by the project. While many foreign companies believe that this method is a mere financing instrument for Iran, it is more accurate to say that it is a compromise formula for foreign investment in the short-run. In the medium to long term, more appropriate laws and regulations will probably replace the buy-back scheme. In other words, once the constitutional concerns have been dealt with, the foreign partners of buy-back agreements can take over the projects that they are involved in, or they can enter into a joint venture with an Iranian partner. Further information: Buy-backs in Iran's oil industry

Build-Operate-Transfer (BOT)
Recent regulations have introduced the Build-Operate-Transfer (BOT) scheme for Iranian projects. This is a rather new possibility in the Iranian market. In this scheme, the foreign partner invests in one project, which is then operated for a certain period of time by the foreign investor before it is fully transferred to the Iranian government. Iranian authorities are showing some flexibility regarding the BOT, which could potentially pave the way for more foreign investment in the market.

Free trade zones and special economic zones

Advantages

Free-trade (FTZ) and special economic zones (SEZ) have been established to provide additional investment incentives such as: 15 years tax-exemption; No entry visa requirement; 100% foreign ownership possible; Flexible employment regulations; Flexible monetary & banking services; Extended legal guarantees & protection.
Locations

As of January 2010, there were six free trade zones (FTZ) and 16 special economic zones (SEZ) in Iran.[29] More FTZ and SEZ are planned in Iran. 2. Which industries?
As of 2007, Asian entrepreneurs made the largest investments in the Islamic state by investing in 40 out of 80 projects funded by foreigners. The largest amount of foreign investment was in the industrial sector, including food and beverage, tobacco, textiles, clothing, leather, chemical, steel and oil derivates. The figure exceeded US$8.76 billion. Water, electricity and gas sector ranked second, attracting $874.83 million. In the third place, the real estate sector absorbed more than $406 million. Investments in service, telecommunication, transportation and mines reached $193 million, $14.3 million and $14.2 million respectively. Asian countries invested $7.666 billion in various projects followed by several multinational

32

consortia. Investments by these multinational companies exceeded $1.39 billion (in four projects). Although European entrepreneurs were involved in 34 projects, they invested only in the range of $1.2 billion in the Islamic Republic. American countries also committed $12.329 million in the country; while investments by African states registered close to $4 million.

J. International trade statistics

1. Major exports

Petroleum 80%, chemical and petrochemical products, fruits and nuts, carpets

a. Dollar value

$84.31 billion (2010 est.)

2. Major imports

Industrial supplies, capital goods, foodstuffs and other consumer goods, technical services

a. Dollar value

$58.97 billion (2010 est.)

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3. Balance-of-payments situation

a. Surplus or deficit?

Surplus

34

4. Exchange rates
Until 2002, Irans exchange rate system was based on a multi-layered system, where state and Para-state enterprises benefited from the "preferred or official rate" (1750 rial for $1) while the private sector had to pay the "market rate" (8000 rial for $1), hence creating an unequal competition environment. The "official rate" of the Iranian rial1,750 per U.S. dollarapplied to oil and gas export receipts, imports of essential goods and services, and repayment of external debt. The "export rate", fixed at 3,000 rials per dollar since May 1995, applied to all other trade transactions, but mainly to capital goods imports of public enterprises. In 1998, in order to ease pressure on exporters, the central bank introduced a currency certificate system allowing exporters to trade certificates for hard currency on the Tehran Stock Exchange, thus creating a floating value for the rial known as the "TSE rate" or "market rate". This method finally replaced the fixed "export rate" (IR3, 000:US$1) in March 2000, and has since held steady at some IR8,500:US$1. In March 2002, the multi-tiered system was replaced by a unified, market-driven exchange rate. In 2002 the "official rate" a/k/a as the "preferred rate" (IR1,752:US$1) was abolished, and the TSE rate became the basis for the new unified foreign-exchange regime.

a. Single or multiple exchange rates?

Market-driven exchange rate

b. Current rate of exchange

Iranian rials (IRR) per US dollar 10,308.2 (2010) 9,864.3 (2009) 9,142.8 (2008) 9,407.5 (2007) 9,227.1 (2006)

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K. Trade restrictions

Irans weighted average tariff rate was 20.1 percent in 2008. Import bans and restrictions, high tariffs, export licensing requirements, restrictive sanitary and tough regulations, burdensome customs procedures, state trading, arbitrary changes in tariff and tax schedules and weak enforcement of intellectual property rights add to the cost of trade. Fifteen points were deducted from Irans trade freedom score to account for non-tariff barriers. There are extensive trade and financial sanctions in place against Iran as a result of the USA's foreign policy commitments and the imposition of European Union (EU) and United Nations (UN) sanctions and embargoes. These include: 1. Embargoes & sanctions

prohibitions on the sale, supply, transfer or export of key equipment and technology for the oil and gas industry (with a limited exemption for transactions required by, or obligations arising from, contracts that were in place before 27 October 2010) an arms embargo and a prohibition on the supply of equipment that could be used for human rights abuses prohibitions on the provision of brokering services and technical and financial assistance related to any goods and technology whose supply is prohibited; prohibitions on investment in Iranian entities engaged in manufacturing those items Prohibitions on investment in Iranian entities or bodies engaged in the exploration or production of crude oil and natural gas, the refining of fuels or the liquefaction of natural gas. asset freezes against listed individuals and entities and a prohibition of making economic resources available to them (including by the supply of goods and services which may be used to obtain funds) restrictions on transfers of funds to and from Iran, and restrictions on Iran's access to the insurance and bond markets restrictions on providing certain services on Iranian ships and cargo aircraft 3. Imports tax

Import restrictions

Permitted items no longer require specific approval from the Ministry of Commerce. Authorization from one or several Ministries is required for the import of various specified items. The import of luxury or non-essential products and services are restricted. Regulations favoring local production have been enacted where possible. 36

All foreign suppliers of equipment and machinery must have official representation in Iran. Imports of cigarettes, tobacco, cigars, cigarette paper, cigarette tips and silkworm eggs are subject to government monopoly. Imports to Iran valued at more than IR500,000 must undergo pre-shipment quantity and quality inspection in their country of origin by an internationally recognized inspection organization. Goods exported to Iran must be subject to invoices authenticated by the Iranian Embassy and by a nominated Chamber of Commerce operating in the supplier's country. Survey and certification must take place prior to consignment in the country of origin.

4. Tariffs Customs duties and Tariffs on most imported goods:

Capital goods and raw materials imported for foreign investments may be exempted from normal duties; similarly medicines, wheat and other strategic goods are exempt from duties. However, most imports are subject not only to licensing fees and tariffs, but also to local taxes. Exchange control authority is vested in the Central Bank (Bank Markazi). All foreign exchange transactions must take place through the Central Bank or authorized banks.

Following is an indicative listing of tariff rates:

-

chemical products 10 percent ordinary metals 10 percent measurement instruments 10 percent medical equipment 10 percent food industry 15 percent mining raw production 15 percent leather industry 15 percent paper and wood fabrics 15 percent mechanical machinery 15 percent agricultural raw production 25 percent electric machinery 25 percent automotive vehicles 100 percent Wheat and other strategic goods are exempt from duties. Earnings resulting from the transit of commodities through Iran are fully exempt from taxation provided that the commodities in question do not undergo any modification. A General Guide on Iranian Customs/Tariff Information, including details of general import licenses requiring the approval of relevant Ministries (eg. Ministry of Health for 37

pharmaceuticals) is also available on online for reference purposes. The Iranian importer is responsible for arranging the appropriate license approval.

L. Labor force

Iran, like many middle-income countries, has a small formal labor force, often located within nationalized (or formerly nationalized) industry. This section of the working class benefits from its position as formal labor, meaning that these workers have been able to extract better pay and benefits, working conditions, and legal contracts from their employer, who is often the state. 1. Size ( in thousands)

Country Iran

2000 15,400

2001 17,300

2002 18,000

2003 21,000

2004 22,320

2005 23,000

2006 23,680

2007 24,360

2008 28,700

2009 24,350

2010 25,020

2011 25,700

Labor force by occupation:

Agriculture: 25% Industry: 31% Services: 45% (June 2007)

Women workers in Iran suffer discrimination in the workplace. According to the official statistics, while Iranian women make up 27% of the workforce, they bear the main brunt of unemployment and layoffs. Many have to leave their jobs due to low wages, violence, unsuitable job conditions (there are no legal protections for women). Recently, Mahmoud Ahmadinejads administration has put forth proposals to reduce the work hours for female workers to 36 hours per week, which will only increase their hardships.

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2.

Unemployment rates

Unemployment rate 2011 -

11.8% 2011 14.6% (2010 est.) 10.3% (2008 est.)

11.8% according to government; unofficially: 1222%; 30% 7% by 2015, by creating 1 million new according to opposition. jobs each year

M.Inflation rates

Inflation is very high, averaging 14.7 percent between 2007 and 2009. Although the inflation rate decelerated in 2009, it had picked up by the second half of 2010. The government controls the prices of petroleum products, electricity, water, and wheat; provides economic subsidies; and influences prices through regulation of Irans many state-owned enterprises. Fifteen points were deducted from Irans monetary freedom score to account for measures that distort domestic prices. 16.3% (2011 est.)

Inflation (2011):

10.1% (2010 est.) 13.5% (2009 est.)

IV.
-

Developments in science and technology Iran is an example of a country that has made considerable advances through education and training, despite international sanctions in almost all aspects of research during the past 30 years. Iran's scientific community remains productive, even while economic sanctions make it difficult for universities to buy equipment or to send people to the United States to attend scientific meetings.

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Furthermore, Iran considers scientific backwardness, as one of the root causes of political and military bullying by developed countries over undeveloped states. After the Iranian Revolution, there have been efforts by the religious scholars to assimilate Islam with modern science and this is seen by some as the reason behind the recent successes of Iran to augment its scientific output. Currently Iran aims for a national goal of self sustainment in all scientific arenas. The Comprehensive Scientific Plan has been devised based on about 51,000 pages of documents and includes 224 scientific projects which must be implemented by the year 2025.

A. Current technology available (computers, machinery, tools, etc.)

Technology parks
The government of Iran has also plans for the establishment of 50-60 parks by the end of the fifth Five-Year Socioeconomic Development Plan by 2015.
Park's name Focus area Location

Guilan Science and Technology Agro-Food, Biotechnology, Chemistry, Electronics, Guilan Park Environment, ICT, Tourism.[46] Advanced Engineering (mechanics and automation), 25 km NorthBiotechnology, Chemistry, Electronics, ICT, NanoEast of Tehran technology.[46] Tehran

Pardis Technology Park

Tehran Software and Information ICT[48] Technology Park (planned)[47] Khorasan Science and Technology Advanced Engineering, Agro-Food, Park (Ministry of Science, Electronics, ICT, Services.[46] Research and Technology) Chemistry,

Khorasan

Materials and Metallurgy, Information and Sheikh Bahai Technology Park Communications Technology, Design & (Aka "Isfahan Science and Isfahan Manufacturing, Automation, Biotechnology, Technology Town") Services.[46] Semnan Park Province Technology Semnan East Azerbaijan

East Azerbaijan Technology Park

Province

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Yazd Province Technology Park Markazi Park Province Technology

Yazd Arak

B. Percentage of GNP invested in research and development

Iran's national science budget was about $900 million in 2005 and it had not been subject to any significant increase for the previous 15 years. By early 2000, Iran allocated around 0.4% of its GDP to R&D, which ranked it "far behind industrialized societies" and the world average of 1.4%.By 2009 this ratio of research to GDP reached 0.87% and the set target is 2.5% to be reached by 2015. Iran's government has devoted huge amounts of funds for research on high technologies such as nanotechnology, biotechnology, stem cell research and information technology (2008). Iranian Research Organization for Science and Technology and the National Research Institute for Science Policy are two of the main institutions, depending on the Ministry of Science, Research and Technology, in charge of establishing research policies at the state level. In 2006, Iranian government wiped out the financial debts of all universities in a bid to relieve their budget constraints. According to UNESCO science report 2010, most of the research in Iran is government funded with the Iranian government providing almost 75% of all research funding. The share of private businesses in total national R&D funding according to the same report is very low being just 14% as compared with the Turkey's 48%. The rest of approximately 11% of funding comes from higher education sector and non-profit organizations. In 2009, Iranian government formulated a 15 year comprehensive national plan for science focused on higher education and strengthening the links between academia and industry in order to promote a knowledge based economy. As per the plan by year 2030, Iran's research and development spending is to be increased to 4% of GDP from 0.59% of 2006 and increasing its education spending to over 7% of GDP from the 2007 level of 5.49%

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V.

Channels of distribution (macro analysis) To tap into the Iranian market, identifying a reliable distributor or wholesaler with a strong business network within the country is always the best strategic move for overseas companies. Understanding the distribution channels of Iran will help you understand what will happen after selling your goods to Iranian distributors or wholesalers, many of which are stationed in Dubai.

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A. Retailers
-

With few major chain stores and only one multinational retailer the Iranian retailing spectrum is full of independent outlets that are connected to the main bazaar of Tehran. In recent years, as a result of a recession in other economic sectors such as agriculture and industry, investors have been attracted to retailing and the growth in number of outlets has continued. This traditional distribution network is very ineffective and usually culminates in several mark-ups on price before products reach the consumer. Consequently, the price of a single product may vary from region to region as small independent retailers attempt to boost their profits. A sudden increase in oil prices, which peaked in 2008, led to impressive growth in disposable income. To fill this massive demand the Iranian market was flooded with foreign goods and the total value of imports to Iran increased exponentially. Most of the imports, especially in recent years, were consumer products which was a reason for the increase in number of outlets. Iran has an extremely high number of outlets for both grocery and non-grocery retailers. This is largely because, despite the existence of hypermarkets, Iranians are used to going to a variety of outlets to do their weekly shopping. The emergence of any multinational retailers will further drive growth. On the other hand, growth will continue to be inhibited by the governments policies regarding foreign investment and privatization.

1.
-

Number of retailers

Iran's retail industry consists largely of cooperatives (many of them governmentsponsored), and independent retailers operating in bazaars. The bulk of food sales occur at street markets with prices set by the Chief Statistics Bureau. Iran has 438,478 small grocery retailers. These are especially popular in cities other than Tehran where the number of hypermarkets and supermarkets is still very limited. Apart from permanent bazaars, there are also numerous weekly bazaars, for example, the Friday bazaar or Saturday bazaar. Operating in an open space, the weekly bazaar offers a wide range of goods, including food, home appliances and handicrafts.

2.
-

Typical size of retail outlets

In the traditional Iranian retailing environment small and independent players remain dominant. In recent years, as a result of a recession in other economic sectors such as agriculture and industry, investors have been attracted to retailing and the growth in number of outlets has continued.

43

More mini-markets and supermarkets are emerging, but these are mostly one-off, independently owned operations. The biggest chain stores are state-owned Etka, Refah, Shahrvand and Hyper star Market 3. Role of chain stores, department stores, and specialty shops

- The store formats with the greatest growth in terms of consumer preference were hypermarkets and supermarkets due to the wide variety of products on offer. - Grocery retailing in Iran also entered a new phase of development as the multinational giants started activities in the country. On the other hand, non-grocery retailing is highly fragmented, largely dominated by single-outlet operations featured in the largest retailing formats including clothing and footwear specialist retailers and leisure and personal goods retailers. The concept of chain stores for non-grocery retailers still is not well grasped in Iran. Western-style supermarkets are also becoming common. Better product quality, more convenient shopping and a more comfortable shopping environment attract a lot of midto-high income earners to buy from western-style retailers. Meanwhile, many westernstyle retail shops are indeed operated by local companies or the government. Some overseas retailers are also tempted by Irans growing market. For example, Carrefour, partnering with the Makid Al Futtaim group, opened Irans first modern hypermarket under the name of Hyperstar. Migros Turk, one of the biggest supermarket chains in Turkey, also expressed interest in investing in Irans retail market. B. Wholesale middlemen writing guide

Tehran, the capital city of Iran, is the distribution hub of goods for the country. Accounting for one-tenth of the countrys population and almost one-third of Irans total consumer expenditure. Tehran is the most important wholesale hub and retail market in Iran. However, the retail markets of other major cities in the country, such as Mashhad, are emerging. Some importers and distributors from those cities have begun to buy goods directly from Dubai or other overseas countries, rather than from wholesalers within the country. In other words, goods may no longer need to be sent to Tehran before being distributed nationwide.

44

C. Import/export agents Oil and gas exports are Irans most important export. Other major export commodities are petrochemicals, carpets, and fresh and dried fruits. Top destinations for Irans non-oil exports are the United Arab Emirates (UAE), Iraq, China, Japan, and India. Major imports for Iran include gasoline and other refined petroleum products, industrial raw materials and intermediate goods used as manufacturing inputs, capital goods, food products, and other consumer goods. D. Warehousing More than 30 warehousing in Iran. E. Penetration of urban and rural markets

Urban population: 71% of total population (2010) Rate of urbanization: 1.9% annual rate of change (2010-15 est.) Rural population: 29 % of total population (2010)

VI.

Media

The Constitution provides for freedom of the press as long as published material accords with Islamic principles. The publisher of every newspaper and periodical is required by law to have a valid publishing license. Any publication perceived as being anti-Islamic is not granted a publication license. In practice, the criteria for being anti-Islamic have been broadly interpreted to encompass all materials that include an antigovernment sentiment. All the papers and magazines in circulation supported the basic political institutions of the Islamic Republic. All radio and television broadcasting is controlled by the government. Television and radio stations exist in Tehran and the major provincial cities. Stations in Azerbaijan, Kurdistan and Baluchistan are permitted to broadcast some programs in Azeri Turkish, Kurdish and Baluchi. Information in Iran is largely controlled by the state. 45

A. Availability of media
-

Yet Iran's media landscape, like many aspects of the theocratic regime, is riddled with contradictions. The flow of information into and within Iran has improved over the last decade; since 2000, Iran's leaders have oscillated between tightening and loosening restrictions on the country's domestic news media. While Iran's reformist (or liberal) news outlets have suffered funding cuts and closures, conservative newspapers now frequently criticize government policies. In the first decade of the 21st century, Iran experienced a great surge in Internet usage, and, with 20 million people on the Internet, currently has the second highest percentage of its population online in the Middle East, after Israel. When initially introduced, the Internet services provided by the government within Iran were comparatively open. Many users saw the Internet as an easy way to get around Iran's strict press laws. Media blogs and social networking sites like Twitter, Face book, and YouTube became vital sources of information inside and outside Iran during the 2009 election crisis. Harvard's Berkman Center for Internet & Society estimates there are as many as sixty thousand Persian-language blogs (PDF) that are regularly updated, serving up a diverse mix of views, from conservative and religious to secular and reformist. But journalism experts caution that so-called new media cannot replace traditional forms of reporting. While roughly one-third of Iranians have access to the Internet, sites are often blocked by Iranian censors and penalties for reading or posting to unapproved blogs can be severe. Iran was among 13 countries branded "enemies of the internet" the human rights group, Reporters without Borders, which cited state-sanctioned blocking of websites and the widespread intimidation and jailing of bloggers.

B. Costs

1.

Television & Radio

46

Television is very popular in Iran. Iran's constitution mandates complete control over television and radio broadcasting, and organizational heads are appointed by the supreme leader; there are no private or independent broadcasters inside Iran. Islamic Republic of Iran Broadcasting (IRIB) controls all internal and external broadcasting. State-controlled television airs nationally and internationally, and is also streamed online.

2.

Print

Newspapers: There are as many as three hundred newspapers in Iran, but only a dozen major national dailies. Like their weekly cousins, these papers are typically funded by and ideologically connected to political parties or politicians (newspapers also receive government subsidies and generate ad revenue).The most widely circulated conservative papers include Kayhan, which is owned by Supreme Leader Ali Khamenei; Resalat, closely connected with Iran's Bazaar merchants; Iran, the right-wing official government paper; Jomhouri Eslami (The Islamic Republic), whose first license holder was Ayatollah Khamenei; and Jaam-e Jam, the nation's largest non-sports daily (450,000), which is published by the Islamic Republic of Iran Broadcasting organization. Reformist papers include E'temaad (Trust), published in Tehran and licensed to the Majlis deputy from Rasht, Elias Hazrati; and Etemad-eMeli, a national daily owned by 2009 presidential candidate Mehdi Karroubi. The Iranian government also publishes three English-language papers, Tehran Times; Iran Daily; Iran News. Most Iranian newspapers are published in Persian, but newspapers in English and other languages also exist. The most widely circulated periodicals are based in Tehran. Iran Daily and Tehran Times are both English language papers.

4.

Other media (cinema, outdoor, etc.) Advertising media normally is in a major way connected to commerce and commerce even in a closed state is needed, and so it is the same in Iran. Iran is a very literate and highly educated society and with education comes certain sophistication. The advertising media with their wares have always been able to attract their attention. The restrictions on certain goods considered un-Islamic didnt have any space on the state owned media could easily be viewed on the overseas advertisement

47

media. The internet and Satellite TV, which has been banned for more than a decade has brought all forms of ware to people of Iran.

VII.

Executive summary Iran's economy is marked by an inefficient state sector, reliance on the oil sector, which provides the majority of government revenues, and statist policies, which create major distortions throughout the system. Private sector activity is typically limited to small-scale workshops, farming, and services. Price controls, subsidies, and other rigidities weigh down the economy, undermining the potential for private-sector-led growth. Significant informal market activity flourishes. The legislature in late 2009 passed President Mahmud AHMADI-NEJAD's bill to reduce subsidies, particularly on food and energy. The bill would phase out subsidies which benefit Iran's upper and middle classes the most - over three to five years and replace them with cash payments to Iran's lower classes. However, the start of the program was delayed repeatedly throughout 2010 over fears of public reaction to higher prices. This is the most extensive economic reform since the government implemented gasoline rationing in 2007. The recovery of world oil prices in the last year increased Iran's oil export revenue by at least $10 billion over 2009, easing some of the financial impact of the newest round of international sanctions. Although inflation has fallen substantially since the mid-2000s, Iran continues to suffer from double-digit unemployment and underemployment. Underemployment among Iran's educated youth has convinced many to seek jobs overseas, resulting in a significant "brain drain"

VIII. Sources of information https://www.cia.gov/library/publications/the-world-factbook/geos/ir.html http://www.heritage.org/index/country/Iran http://en.wikipedia.org/wiki/Economy_of_Iran#Macro-economic_trends http://www.irvl.net/advertising-media-in-iran/ http://www.euromonitor.com/retailing-in-iran/report http://www.hktdc.com/info/vp/a/intmk/en/1/5/1/1X07KNNG/How-Are-Goods-Distributed-InIran.htm

IX.

Appendixes

48

Economy of Iran

Central Bank of Iran

Rank

18th (PPP)[1]

Currency

1 toman (superunit) = 10 Iranian rial (IRR) (

) = 1000 dinar

Fiscal year

21 March 20 March

Trade organizations ECO, OPEC, GECF, WTO (observer) and others

Statistics

GDP

$888.355

billion

(2010

est.)[2]

(PPP;

17th)

$407.382 billion (2010 est.)[3] (nominal; 26th)

GDP growth

3.2% (real growth; 2011 est.)[4]

GDP per capita

$11,420 (2010 est.); (PPP; 94th)[5]

49

GDP by sector

agriculture (11%), industry (41.7%), services (47.3%) (2010 est.)

GDP by component Private Government Gross Exports fixed of

consumption consumption investment goods/services

[6][7]

(36.4%) (10.3%) (23.9%) (34.6%)

Imports of goods/services (19.7%) (2008 est.)

Inflation (CPI)

16.3% (2011 est.)[8]

Population below poverty line

18.7%

living

below

$11/day

(2006)[9]

3.1% living below $2/day (2006)[10]

Gini index

0.36 (2009 est.)[11]

Labor force

25.7 million (2010 est.); note: shortage of skilled labor

Unemployment

11.5% according to the Iranian government (2011 est.)[12]

Main industries

petroleum, petrochemicals, fertilizers, caustic soda, car manufacture, pharmaceuticals, home appliances, electronics, telecom, energy, power, textiles, construction, cement and other construction materials, food processing (particularly sugar refining and vegetable oil production), ferrous and non-ferrous metal fabrication, armaments

Ease

of

Doing 129th (2011)[13]

Business Rank

External

Exports

$84.31 billion (2010 est.) f.o.b.

Export goods

petroleum (80%), chemical and petrochemical products (4%), fruits and nuts (2%), cars (2%), carpets (1%), technical services

Main

export China 16.3%, India 13.1%, Japan 11.5%, South Korea 7.1%, Turkey

50

partners

4.2% (2009)

Imports

$58.97 billion (2010 est.) f.o.b.

Import goods

industrial raw materials and intermediate goods (46%), capital goods (35%), foodstuffs and other consumer goods (19%), technical services

Main partners

import UAE 15%, China 14.5%, Germany 9.7%, South Korea 7.3%, Italy 5.2%, Russia 5.1% (2009)

FDI stock

Home:

$16.82

billion

(72nd;

2010)

Abroad: $2.075 billion (68th; 2010)

Gross external debt $14.34 billion (31 December 2010 est.)

Public finances

Public debt

16.6% of GDP (2010 est.)

Revenues

$110.9 billion (2010 est.) (on exchange rate basis, not PPP)[14]

Expenses

$89.98 billion (2010 est.) (on exchange rate basis)

Economic aid

$121 million (2008 est.)[15]

Credit rating

B for sovereign risk (June 2009)[16]

Foreign reserves

$100 billion (2010 est.)[17]

Main

data

source:

CIA

World

Fact

Book

All values, unless otherwise stated, are in US dollars

Iran
Overall Score: 42.1 World Rank: 171

51

Ten Economic Freedoms of Iran Embed this data 69.4 Business Freedom Avg 64.3 0.0 Investment Freedom Avg 50.2 44.8 Trade Freedom Avg. 74.8 10.0 Financial Freedom Avg 48.5 81.1 Fiscal Freedom Avg. 76.3 10.0 Property Rights Avg 43.6 76.0 Government Spending Avg. 63.9 18.0 Fdm. from Corruption Avg 40.5 60.7 Monetary Freedom Avg. 73.4 50.7 Labor Freedom Avg 61.5

III. Market Audit and Competitive Market Analysis

Guideline I. Introduction To open a hypermarket in a country like Iran is not an easy decision; you would be attracted by its population which is more than 75 million (60% are under 30 years of age) and GDP as it has the third highest GDP in the region after Saudi Arabia and the UAE, but if you compare the GDP per capita across these countries, you will see it is much more balanced in Iran than in Saudi Arabia but we would face main issues like bureaucracy, cultural differences and political constraints. Fortunately in 2005 the law had changed and the new law allowed foreigners to come into the country and own 100% of a foreign investment.

II.

The product

Wal-Mart hypermarket

A. Evaluate the product as an innovation as it is perceived by the intended market

52

Iran has an extremely high number of outlets for both grocery and non-grocery retailers - 438,478 small grocery retailers- and these are especially popular in cities other than Tehran where the number of hypermarkets and supermarkets is still very limited.

1. Relative advantage

The number of hypermarkets and supermarkets is still very limited. The customer behavior is very demanding and they are well educated. An increase in oil price which had peaked in 2008 led to impressive growth in disposable income of Iranians. There is no other country of this size in the Middle East. The population of Iran is more than 75 million. You can say it is a very stable country, even if there are some issues. Iran has the third highest GDP in the region after Saudi Arabia and the UAE, but if you compare the GDP per capita across these countries, you will see it is much more balanced in Iran than in Saudi Arabia. Iran has a very young populationmore than 60% are under 30 years of age.

2. Compatibility

The concept of chain stores for non-grocery retailers still is not well grasped in Iran. The number of hypermarkets in Tehran is very limited Despite the existence of hypermarkets, Iranians are used to going to a variety of outlets to do their weekly shopping. Political disturbance and the American war in Afghanistan and Iraq would make it difficult to enter the Iranian market under an American name such Wal-Mart. The American Iranian dispute about Iranian intentions to have a nuclear weapon would affect any new American investment in Iran. Wal-Mart as an American name would be banned in Iran specially after the last incident of the Iranians trial to kill a Sudan diplomatic in America

3. Complexity

Products itself need a strong supply chain from many different suppliers and time is a very critical factor. Some products need installation and after sale services. There are too many rules of importing and they change very frequently. There are many, long procedures that a foreign investor has to undergo. 53

We cannot find real estate of a suitable size in Iran with only one landlord to build on.

4. Trial ability

According to the product type sold in the hypermarket

B. Major problems and resistances to product acceptance based on the preceding evaluation

The main issues are the governmental and social resistance to an American investment and bureaucracy; there are many, long procedures that a foreign investor has to undergo and cultural differences as well.

III.

The market Iranian market is a very wide market including different interests with a high purchasing power and population.

A. Describe the market(s) in which the product is to be sold Iranian market is a stable market even if there are some issues. There is no other country of Irans size in the Middle East with a population of more than 75 million. Iran has the third highest GDP in the region after Saudi Arabia and the UAE, but when we compare the GDP per capita across these countries, we will see it is much more balanced in Iran than in Saudi Arabia and it has a very young populationmore than 60% are under 30 years of age.

1. Geographical region(s)

54

Iran is the 18th largest country in the world in terms of area at 1,648,195 km2 (636,372 sq mi), It is a country of particular geopolitical significance owing to its location in the Middle Eastand it is the second largest country in it. Iran is bordered on the north by Armenia, Azerbaijan and Turkmenistan. As Iran is a littoral state of the Caspian Sea, Kazakhstan and Russia are also Iran's direct neighbors to the north. Iran is bordered on the east by Afghanistan and Pakistan, on the south by the Persian Gulf and the Gulf of Oman, on the west by Iraq and on the northwest by Turkey. Tehran is the capital, the country's largest city and the political, cultural, commercial and industrial center of the nation. Iran is a regional power, and holds an important position in international energy security and world economy as a result of its large reserves of petroleum and natural gas

2. Forms of transportation and communication available in that (those) region(s)

Routs and railways:

Major routes and railways of Iran Iran has a long paved road system linking most of its towns and all of its cities. In 2007 the country had 178,152 km (111,000 mi) of roads, of which 66% were paved. In 2008 there were nearly 100 passenger cars for every 1,000 inhabitants. Trains operated on 11,106 km (6,942 mi) of railroad track. The countrys major port of entry is Bandar-Abbas on the Strait of Hormuz. After arriving in Iran, imported goods are distributed throughout the country by trucks and freight trains. The TehranBandar-Abbas railroad, opened in 1995, connects Bandar-Abbas to the railroad system of Central Asia via Tehran and Mashhad. Other major ports include Bandar e-Anzali and Bandar eTorkeman on the Caspian Sea and Khorramshahr and BandarEmam Khomeyni on the Persian Gulf. Metro: Along with extension work on the Tehran Metro, six other metro projects are being built. In total, 172 extra kilometers will be built Railway system map of Iran in Tehran till 2012 and over 380 kilometers in the other cities (Isfahan Metro, Shiraz Metro, Tabriz Metro, Ahvaz Metro and Karaj Metro)

55

Ports and harbors: The capacity of container loading and unloading in the countrys ports is currently at 4.4 million which will increase to 7 million by the end of 2015. Port capacity will increase to 200 million tons in 2015 from 150 million tons in 2010. All ports: Abadan, Ahvaz, Bandar Abbas, Bandar-e Anzali (Caspian sea), Bushehr, Bandar-e Emam Khomeyni, Bandar-e Lengeh, Bandar-e Mahshahr, Bandar-e Torkaman (Caspian sea), Chabahar (Bandar-e Beheshti), Kharg island, Lavan island, Sirri island, Khorramshahr (limited operation since November 1992), Noshahr (Caspian sea), Arvand Kenar. Main: Assaluyeh, Bandar Abbas, Bandar-e Eman Khomeyni, Bandar Abbas is in southern Iran and handles 90% of the country's container throughput.

Communications in Iran:

Irans telecommunications industry: is almost entirely state-owned, dominated by the Telecommunication Company of Iran (TCI). Fixed-line penetration in 2004 was relatively well-developed by regional standards, standing at 22 lines per 100 people, higher than Egypt with 14 and Saudi Arabia with 15, although behind the UAE with 27. In terms of mobile provision in 2004, however, Iran lagged all the countries mentioned above Press: it is privately owned and reflects a diversity of political and social views, Most Iranian newspapers are published in Persian, but newspapers in English and other languages also exist. The most widely circulated periodicals are based in Tehrn. Popular daily and weekly newspapers include Ettelaat, Kayhan, Resalat, Iran Daily and the Tehran Times (both are English-language papers). Internet: In 1993 Iran became the second country in the Middle East to be connected to the Internet, high-speed Internet via digital subscriber lines (DSL), high-bandwidth lease lines and satellite National internet: Since 2005, Iran has been developing a "national Internet" to improve control over its content as well as speed. The project, which is separate from the world wide web, will be completed by 2013. This network will be separated from the rest of the internet, specifically for domestic use. Creating such a network, similar to one used by North Korea, would prevent unwanted information from outside of Iran getting into the closed system. Myanmar and Cuba also use similar systems.

Radio& Telivision: as discussed in the previous section

3. Consumer buying habits

56

Consumers have a high disposable income, willing to purchase high quality products and fresh foods, well-educated and involved with business and service development

a. Product-use patterns An interesting shopping environment with entertainment activities is recommended and it depends on product and/or service sold in the hypermarket. highly

b. Product feature preferences High quality of packaging and product itself with an interesting visualization and sorting.

c. Shopping habits Iranians are used to going to a variety of outlets to do their weekly shopping.

4. Distribution of the product It needs a very strong supply chain to provide all products needed on time Installation and after sale services are required for some products Fresh foods and snacks are provided inside the hyper market and according to the snacks provider a. Typical retail outlets Iran has an extremely high number of outlets for both grocery and non-grocery retailers (438,478 small grocery retailers) 5. Advertising and promotion All types of media in Iran is censored by the Islamic regime which has been in the control of this country since the Islamic revolution of 1979. Since then every form of media has come under the state, and all that is seen by the Iranians is under the directive of the state. In that context the advertisement media have to stick to self policing in whatever they say or do 57

Advertising media usually used to reach your target market(s)

Iranian Newspaper's Iran Yellow Pages Iranian radio& television Advertizing on national transportation (Super bus, taxi, metro,.) billboards

b. Sales promotions customarily used (sampling, coupons, etc.) We want to develop our own brand. That means we are going to work on: Packaging, how to save money, and so on. We will work on private labeling. Word of mouth, Culturally, Iran is relatively high in collectivism, especially relative to the family life style. So viral marketing will be our main concern. After sales services, we'll deliver for free and call people after the delivery service to find out how it went. Public Relation, intensive promotions activities during special occasions and events.

6. Pricing strategy We are targeting to provide consumer goods by less than 10% compared with the regular grocery retailers a. Types of discounts available

Wal-Mart provides the very best choice of Discounts. Wal-Mart low cost coupons help you save money. Wal-Mart coupons can be obtained together with hot deals about the most recent regarding electronics, food products, clothing, or else. Gift cards are available in special occasions. Weekly offers. B. Compare and contrast your product and the competitions product(s)

Small retailers are not a big issue because around the world there are small retailers we have to compete with; the more important competitors are Hyperstar (Carrefoure) beside the chain cooperatives that belong to the state, the municipality and the army, like Refah

58

and Sepah. As they are non-profit cooperatives and have subsidized prices their competition is more important than that of small retailers 1. Competitors product(s) Hyperstar prices are less than the regular grocery retailers by 10% The chain cooperatives that belong to the state, the municipality and the army, like Refah and Sepah are non-profit cooperatives and have subsidized prices a. Brand name

Hyperstar (Carrefour)
b. Features

They positioned themselves as a service provider for the middle class They have a very good relations with the iranian government and municipality. Their suppliers understod that business very well and they had improved the logistics of delivery

c. Package They are focusing on quality even in packaging and also they are working on their private labeling 2. Competitors prices Consumer products are less than regular grocery retailers by 10%

C. Market size Iranian market is a very wide market including different interests with a high purchasing power and population.

59

The population of Iran is more than 75 millions Iran has a very young populationmore than 60% are under 30 years of age Iran is the 18th largest country in the world in terms of area at 1,648,195 km2 (636,372 sq mi) Iran is the second large country in the middle east

1. Estimated industry sales for the planning year

Sales show healthy growth over the forecast period

Despite the fact that retail prices are predicted to continue to increase over the forecast period, total sales are forecast to grow at a healthier AGR (Annual Growth Rate) in constant value terms than during the review period. Sales growth will be fuelled by the same factors that drove growth over the review period, including rising purchasing power and improving standards of living and lifestyles. The emergence of any multinational retailers will further drive growth. On the other hand, growth will continue to be inhibited by the governments policies regarding foreign investment and privatization. 2. Estimated sales for your company for the planning year

We are planning to serve:

15,000 customers per day. 300.000 customers on average / month . D. Government participation in the marketplace

The first step was to gain approval from the Iranian government as a foreign company making a foreign investment and establishing 100% ownership 1. Agencies that can help you
FIPPA (the Foreign Investment Promotion and Protection Act) OIETAI (the Organization for Investment, Economic and Technical Assistance of Iran)

2. Regulations you must follow

60

Iran has two types of laws concerning foreign companies. The first are laws that address issues concerning foreign companies directly such as the Foreign Investment Promotion and Protection Act (FIPPA) and the second are general laws of which certain articles or by-laws address foreign companies, for instance the Taxation Law and the Labor Law. Applied law: FIPPA and its implications regulations approved in 2002 , commercial code company law, import and export regulations, labor law the first step was to gain approval from the Iranian government as a foreign company making a foreign investment and establishing 100% ownership

IV.

Executive summary

V.

Sources of information The business year website interview with Marc (http://www.iran.thebusinessyear.com/page_detail.php?id=15) Hyperstar iran website Iran ecommerce the synonem (http://www.iranecommerce.net/) of Iran business information Corbion

The Iran virtual library (http://www.irvl.net/) Iran business law and regulations (www.irxp.com) Wikipedia website

VI.

Appendixes [insert text here]

IV. Preliminary Marketing Plan writing guide

61

Guideline I. The marketing plan [insert text here] A. Marketing objectives writing guide [insert text here] 1. Target market(s) (specific description of the market) [insert text here] 2. Expected sales 20[insert text here] 3. Profit expectations 20[insert text here] 4. Market penetration and coverage [insert text here] B. Product adaptation or modification writing guide [insert text here] 1. Core component [insert text here] 2. Packaging component 62

[insert text here] 3. Support services component [insert text here] C. Promotion mix [insert text here] 1. Advertising [insert text here] a. Objectives [insert text here] b. Media mix [insert text here] c. Message [insert text here] d. Costs [insert text here] 2. Sales promotions [insert text here] a. Objectives [insert text here] b. Coupons

63

[insert text here] c. Premiums [insert text here] d. Costs [insert text here] 3. Personal selling [insert text here] 4. Other promotional methods [insert text here] D. Distribution: From origin to destination writing guide [insert text here] 1. Port selection [insert text here] a. Origin port [insert text here] b. Destination port [insert text here] 2. Mode selection: Advantages/disadvantages of each mode [insert text here] a. Railroads

64

[insert text here] b. Air carriers [insert text here] c. Ocean carriers [insert text here] d. Motor carriers [insert text here] 3. Packing [insert text here] a. Marking and labeling regulations [insert text here] b. Containerization [insert text here] c. Costs [insert text here] 4. Documentation required [insert text here] a. Bill of lading [insert text here] b. Dock receipt [insert text here] c. Air bill 65

[insert text here] d. Commercial invoice [insert text here] e. Pro forma invoice [insert text here] f. Shippers export declaration [insert text here] g. Statement of origin [insert text here] h. Special documentation [insert text here] 5. Insurance claims [insert text here]

6. Freight forwarder writing guide [insert text here]

E. Channels of distribution (micro analysis) writing guide [insert text here]

1. Retailers

66

[insert text here] a. Type and number of retail stores [insert text here] b. Retail markups for products in each type of retail store [insert text here] c. Methods of operation for each type (cash/credit) [insert text here] d. Scale of operation for each type (small/large) [insert text here] 2. Wholesale middlemen [insert text here] a. Type and number of wholesale middlemen [insert text here] b. Markup for class of products by each type [insert text here] c. Methods of operation for each type (cash/credit) [insert text here] d. Scale of operation (small/large) [insert text here] 3. Import/export agents [insert text here] 67

4. Warehousing [insert text here] a. Type [insert text here] b. Location [insert text here] F. Price determination writing guide [insert text here]

1. Cost of the shipment of goods [insert text here]

2. Transportation costs [insert text here]

3. Handling expenses [insert text here] a. Pier charges [insert text here] b. Wharfage fees 68

[insert text here] c. Loading and unloading charges [insert text here] 4. Insurance costs [insert text here]

5. Customs duties [insert text here]

6. Import taxes and value-added tax [insert text here]

7. Wholesale and retail markups and discounts [insert text here]

8. Companys gross margins [insert text here]

9. Retail price [insert text here]

69

G. Terms of sale [insert text here]

1. EX works, FOB, FAS, C&F, CIF [insert text here]

2. Advantages/disadvantages of each [insert text here]

H. Methods of payment writing guide [insert text here]

1. Cash in advance [insert text here]

2. Open accounts [insert text here]

3. Consignment sales [insert text here]

4. Sight, time, or date drafts

70

[insert text here]

5. Letters of credit [insert text here]

II.

Pro forma financial statements and budgets [insert text here]

A. Marketing budget [insert text here]

1. Selling expense [insert text here]

2. Advertising/promotion expense [insert text here]

3. Distribution expense [insert text here]

4. Product cost [insert text here]

71

5. Other costs [insert text here]

B. Pro forma annual profit and loss statement (first year and fifth year) [insert text here]

III.

Resource requirements [insert text here]

A. Finances [insert text here]

B. Personnel [insert text here]

C. Production capacity [insert text here]

IV.

Executive summary writing guide [insert text here]

V.

Sources of information [insert text here] 72

VI.

Appendixes writing guide

[insert text here]

73