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The Saudi Arabian Defense Sector - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2015

This report offers insights into the market opportunities and entry strategies adopted by foreign OEMs (original equipment manufacturers) to gain a market share in the Saudi Arabian defense industry. In particular, it offers in-depth analysis of the following:

- Market opportunity and attractiveness: detailed analysis of the current industry size and growth expectations during 2010–2015, including highlights of the key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
- Procurement dynamics: trend analysis of imports and exports, together with its implications and impact on the Saudi Arabian defense industry.
- Industry structure: five forces analysis to identify various power centers in the industry and how these are likely to develop in the future.
- Market entry strategy: analysis of possible ways to enter the market, together with detailed descriptions of how existing players have entered the market, including key contracts, alliances, and strategic initiatives.
- Competitive landscape and strategic insights: analysis of competitive landscape of the defense industry in Saudi Arabia. It provides an overview of key defense companies (both domestic and foreign), together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
- Business environment and country risk: a range of drivers at country level, assessing business environment and country risk. It covers historical and forecast values for a range of indicators, evaluating business confidence, economic performance, infrastructure quality and availability, labor force, demographics, and political and social risk.


- analysis of Defense industry market size from 2004 through 2009 and forecasts till 2015
- analysis of defense budget allocation
- Benchmarking with key global markets
- Market opportunities
- Defense procurement dynamics
- Industry dynamics
- Market entry strategy
- Competitive landscape and strategic insights
- Business environment and country risk

Reasons to buy:

- Gain insight into Saudi Arabian defense industry with current, historic and forecast market values
- Get insight on market opportunity and attractiveness
- Get insight on industry procurement dynamics
- Gain insight on industry structure
- Gain insight into the regulations governing the Saudi Arabian defense industry and the potential market entry strategies with an expert analysis of the competitive structure
- Identify top companies of the Saudi Arabian defense industry along with profiles of all those companies

Key highlights:

The Saudi Arabian defense sector, estimated to be worth US$39.9 billion in 2009, is one of the largest defense markets globally. During 2004–09, the country’s defense expenditure grew at a CAGR of 13.82%, and is expected to record a CAGR of 5.48% during 2010–15 to reach US$54.9 billion in 2015. The key drivers of this growth in expenditure include increases in cross-border insurgency, domestic unease with the ruling regime, the rising number of Al Qaeda training camps, focus on oil infrastructure security, and the country’s regional rivalry with Iran to emerge as the most influential nation in the Middle East. This significant defense budget, together with limited existing domestic capabilities in the sector, is attracting foreign OEMs into the market.

The robust economy of the Saudi Arabia enables it to invest large amounts of money in the procurement of defense equipment and, indeed, during 2010–15, the nation is expected to spend an average of 9% of its GDP on its defense sector. The country has always prioritized its defense spending and, although the nation registered negative economic growth in 2009, its military spending increased from the previous year’s figures. As this trend is expected to continue in the medium-term, the Saudi Arabian defense sector is set to offer a plethora of opportunities to foreign OEMs.
1 Introduction
1.1 About this Report
1.2 Definitions
1.3 Methodology
1.3.1 Secondary research
1.3.2 Primary research
1.3.3 Conventions
1.4 ICD Research Terrorism Index
1.5 About ICD Research Defense Intelligence Centre
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1 Defense Market Size and Forecast
3.1.1 Defense expenditure to grow at a CAGR of 5.48% during 2010-15
3.1.2 Strained relationship with Iran, high spending power and lack of skilled personnel set to be key drivers of defense expenditure
3.2 Analysis of Defense Budget Allocation
3.2.1 High spend on training of personnel set to continue
3.3 Homeland Security Market Size and Forecast
3.3.1 Saudi Arabia emerges as the largest homeland security market in Middle East
3.3.2 Security threats will be the key driver of homeland security
3.3.3 ICD Research Terrorism Index shows Saudi Arabia to be a “moderately affected” region
3.4 Benchmarking with Key Global Markets
3.4.1 Saudi Arabia to become sixth largest defense spender in the world by 2015
3.4.2 Saudi Arabia spent 10.5% of its GDP on defense in 2009, largest amongst the leading military spenders
3.4.3 Saudi Arabia faces moderate risk of terror attacks
3.5 Market Opportunities: Key Trends and Growth Stimulators
3.5.1 Demand for missile defense systems to increase
3.5.2 Demand for helicopters, infantry-fighting vehicles and tanks to increase
3.5.3 Naval infrastructure modernization to drive demand for maritime weaponry
3.5.4 Demand for UAVs for surveillance and monitoring activities will increase
3.5.5 Fighter aircraft are one of the key focus areas for the Saudi air force
3.5.6 Threats to border security and critical infrastructure to create demand for monitoring and communication systems
3.5.7 Defense budget continues to increase, despite falling oil prices
4 Defense Procurement Market Dynamics
4.1 Import Dynamics
4.1.1 Defense sector heavily relies on imports from foreign countries
4.1.2 UK and US are the major defense supplyers for Saudi Arabia
4.1.3 Aircraft and ships account for 60% of defense imports
4.2 Export Dynamics
4.2.1 Saudi Arabia does not export defense equipments
5 Industry Dynamics
5.1 Five Forces Analysis
5.1.1 Bargaining power of supplier: medium
5.1.2 Bargaining power of buyer: medium to high
5.1.3 Barrier to entry: low to medium
5.1.4 Intensity of rivalry: high
5.1.5 Threat of substitution: high
6 Market Entry Strategy
6.1 Market Regulation
6.1.1 Defense sector remains closed to foreign direct investment
6.1.2 Government encourages offsets to overcome its shortcomings in the defense industry
6.2 Market Entry Route
6.2.1 Foreign OEMs seek to gain due to underdeveloped indigenous defense capabilities
6.2.2 A large number of foreign corporations enter the defense market by winning contracts
6.3 Key Challenges
6.3.1 Lack of investment opportunities
6.3.2 Political underpinnings, bribery, corruption and political affiliations
7 Competitive Landscape and Strategic Insights
7.1 Competitive Landscape: Overview
7.1.1 Saudi Arabian defense sector is dominated by foreign players
7.1.2 Domestic participation in the Saudi Arabian defense industry limited to only two companies
7.2 Key Foreign Companies
7.2.1 BAE Systems Plc: overview
7.2.2 BAE Systems Plc: defense products
7.2.3 BAE Systems Plc: recent announcements and strategic initiatives
7.2.4 BAE Systems Plc: alliances
7.2.5 BAE Systems Plc: recent contract wins
7.2.6 BAE Systems Plc: financial analysis
7.2.7 EADS N.V.: overview
7.2.8 EADS N.V.: defense products
7.2.9 EADS N.V.: recent announcements and strategic initiatives
7.2.10 EADS N.V.: alliances
7.2.11 EADS N.V.: recent contract wins
7.2.12 EADS N.V.: financial analysis
7.2.13 General Dynamics Corporation: overview
7.2.14 General Dynamics Corporation: defense products
7.2.15 General Dynamics Corporation: recent announcements and strategic initiatives
7.2.16 General Dynamics Corporation: alliances
7.2.17 General Dynamics Corporation: recent contract wins
7.2.18 General Dynamics Corporation: financial analysis
7.2.19 Lockheed Martin: overview
7.2.20 Lockheed Martin: defense products
7.2.21 Lockheed Martin: recent announcements and strategic initiatives
7.2.22 Lockheed Martin: alliances
7.2.23 Lockheed Martin: recent contract wins
7.2.24 Lockheed Martin: financial analysis
7.2.25 Science Applications International Corporation: overview
7.2.26 Science Applications International Corporation: defense products
7.2.27 Science Applications International Corporation: recent announcements and strategic initiatives
7.2.28 Science Applications International Corporation: alliances
7.2.29 Science Applications International Corporation: recent contract wins
7.2.30 Science Applications International Corporation: financial analysis
7.2.31 Sikorsky Aircraft Corporation: overview
7.2.32 Sikorsky Aircraft Corporation: defense products
7.2.33 Sikorsky Aircraft Corporation: recent announcements and strategic initiatives
7.2.34 Sikorsky Aircraft Corporation: alliances
7.2.35 Sikorsky Aircraft: recent contract wins
7.2.36 Sikorsky Aircraft Corporation: financial analysis
7.2.37 Thales: overview
7.2.38 Thales: defense products
7.2.39 Thales: recent announcements and strategic initiatives
7.2.40 Thales: alliances
7.2.41 Thales: recent contract wins
7.2.42 Thales: financial analysis
7.2.43 Boeing: overview
7.2.44 Boeing: defense products
7.2.45 Boeing: recent announcements and strategic initiatives
7.2.46 Boeing: alliances
7.2.47 Boeing: recent contract wins
7.2.48 Boeing: financial analysis
7.2.49 Northrop Grumman Corporation: overview
7.2.50 Northrop Grumman Corporation: recent announcements and strategic initiatives
7.2.51 Northrop Grumman Corporation: defense products
7.2.52 Northrop Grumman Corporation: alliances
7.2.53 Northrop Grumman Corporation: recent contract wins
7.2.54 Northrop Grumman Corporation: financial analysis
7.2.55 Rolls Royce: overview
7.2.56 Rolls Royce: defense products
7.2.57 Rolls Royce: recent announcements and strategic initiatives
7.2.58 Rolls Royce: alliances
7.2.59 Rolls Royce: recent contract wins
7.2.60 Rolls Royce: financial analysis
7.3 Key Domestic Companies
7.3.1 Advanced Electronics Company: overview
7.3.2 Advanced Electronics Company: recent announcements and strategic initiatives
7.3.3 Advanced Electronics Company: defense products
7.3.4 Advanced Electronics Company: alliances
7.3.5 Advanced Electronics Company: recent contract wins
7.3.6 Advanced Electronics Company: financial analysis
7.3.7 Al Salam Aircraft Company: overview
7.3.8 Al Salam Aircraft Company: recent announcements and strategic initiatives
7.3.9 Al Salam Aircraft Company: defense products
7.3.10 Al Salam Aircraft Company: alliances
7.3.11 Al Salam Aircraft Company: recent contract wins
7.3.12 Al Salam Aircraft Company: financial analysis
8 Business Environment and Country Risk
8.1 Business Confidence
8.1.1 Business Confidence Index
8.1.2 Market Capitalization Trend – Saudi Stock Exchange, Saudi Arabia
8.1.3 FDI Inflows by Sector
8.1.4 Deployment of Credit by Sector
8.2 Economic Performance
8.2.1 GDP at Constant Prices
8.2.2 GDP per Capita at Constant Prices
8.2.3 GDP at Current Prices
8.2.4 GDP Per Capita at Current Prices
8.2.5 GDP Split by Key Segments
8.2.6 Agriculture – Agriculture Output Value at Current Prices (Local Currency)
8.2.7 Agriculture – Agriculture Output Value at Current Prices (US dollar)
8.2.8 Agriculture – Agriculture Output at Current Prices as Percentage of GDP
8.2.9 Manufacturing – Manufacturing Output at Current Prices (Local Currency)
8.2.10 Manufacturing – Manufacturing Output at Current Prices (US dollar)
8.2.11 Manufacturing – Manufacturing Output-Current Prices as Percentage of GDP
8.2.12 Manufacturing – Mining, Manufacturing, and Utilities at Current Prices (Local Currency)
8.2.13 Manufacturing – Mining, Manufacturing, Utilities at Current Prices (US dollars)
8.2.14 Manufacturing – Mining, Manufacturing, Utilities at Current Prices, as Percentage of GDP
8.2.15 Construction – Construction Output at Current Prices, (Local Currency)
8.2.16 Construction – Construction Output-Current Prices
8.2.17 Construction – Construction Output at Current Prices as a percentage of GDP
8.2.18 Industry - Crude Steel Production
8.2.19 Industry - Crude Oil Consumption
8.2.20 Inflation Rate
8.2.21 Fiscal Deficit as a Percentage of GDP
8.2.22 Exports as a Percentage of GDP
8.2.23 Imports as a Percentage of GDP
8.2.24 Exports Growth
8.2.25 Imports Growth
8.2.26 External Debt as Percentage of GDP
8.2.27 Exchange Rate US$-SAR (Annual Average)
8.2.28 Exchange Rate US$-SAR (End of Fiscal)
8.2.29 Debt Service Ratio
8.3 Infrastructure Quality and Availability
8.3.1 Transport – Highways and Railways
8.3.2 Transport - Automotive Components Export Trend
8.3.3 Transport - Automotive Products Import Trend
8.3.4 Utilities - Total Installed Capacity for Electricity Generation
8.3.5 Utilities - Installed Capacity for Conventional Thermal Electricity Generation
8.3.6 Utilities - Electricity Production
8.3.7 Utilities - Electric Power Consumption
8.3.8 Healthcare - Healthcare Expenditure
8.3.9 Healthcare - Healthcare Expenditure as percentage of GDP
8.3.10 Healthcare - Healthcare Expenditure Per Capita
8.3.11 Communication - Total Internet Subscribers
8.3.12 Communication - Broadband Internet Subscribers
8.3.13 Communication - Personal Computer penetration
8.3.14 Communication – Mobile Phone Penetration Rate
8.4 Labor Force
8.4.1 Labor Force
8.4.2 Unemployment Rate
8.5 Demographics
8.5.1 Annual Disposable Income
8.5.2 Annual Per Capita Disposable Income
8.5.3 Annual Consumer Expenditure on Food
8.5.4 Annual Per Capita Consumer Expenditure on Food
8.5.5 Urban and Rural Population
8.5.6 Females as Percentage of Population
8.5.7 Male as Percentage of Population
8.5.8 Mean Age of Population
8.5.9 Median Age of Population
8.5.10 Population Density
8.5.11 Age Distribution – Total Population
8.5.12 Age Distribution-Male Population
8.5.13 Age Distribution-Female Population
8.5.14 Number of Households
8.6 Political and Social Risk
8.6.1 Political Stability
8.6.2 Terrorism Index
8.6.3 Transparency Index
Companies Mentioned

- BAE Systems Plc
- General Dynamics Corporation
- Lockheed Martin
- Science Applications International Corporation
- Sikorsky Aircraft Corporation
- Thales
- Boeing
- Northrop Grumman Corporation
- Rolls Royce
- Advanced Electronics Company
- Al Salam Aircraft Company
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