Emerald Emerging Markets Case Studies

Market entry of a western company in the Middle East

Rupert A. Brandmeier Sebastian Hain Florian Rupp

Downloaded by SHAHEED ZULFIKAR ALI BHUTTO INST OF SCI & TECH KARACHI At 03:45 28 September 2016 (PT)

Article information:
To cite this document:
Rupert A. Brandmeier Sebastian Hain Florian Rupp, (2011),"Market entry of a western company in the Middle East", Emerald
Emerging Markets Case Studies, Vol. 1 Iss 1 pp. 1 - 8
Permanent link to this document:
http://dx.doi.org/10.1108/20450621111129663
Downloaded on: 28 September 2016, At: 03:45 (PT)
References: this document contains references to 16 other documents.
To copy this document: permissions@emeraldinsight.com
The fulltext of this document has been downloaded 1073 times since 2011*

Users who downloaded this article also downloaded:

(2011),"Al Ain Dairy: market expansion", Emerald Emerging Markets Case Studies, Vol. 1 Iss 1 pp. 1-8 http://
dx.doi.org/10.1108/20450621111097155
(2011),"Changing business culture: theory and practice in typical emerging markets", Emerald Emerging Markets Case
Studies, Vol. 1 Iss 4 pp. 1-24 http://dx.doi.org/10.1108/20450621111188578
(2011),"Cilantro Caf goes global: reflections on internationalization in Egypt 2.0", Emerald Emerging Markets Case Studies,
Vol. 1 Iss 4 pp. 1-8 http://dx.doi.org/10.1108/20450621111172403

Access to this document was granted through an Emerald subscription provided by emerald-srm:543736 []

For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service
information about how to choose which publication to write for and submission guidelines are available for all. Please
visit www.emeraldinsight.com/authors for more information.

About Emerald www.emeraldinsight.com

Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of
more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online
products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication
Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.
*Related content and download information correct at time of download.

Market entry of a western company

in the Middle East
Downloaded by SHAHEED ZULFIKAR ALI BHUTTO INST OF SCI & TECH KARACHI At 03:45 28 September 2016 (PT)

Rupert A. Brandmeier, Sebastian Hain and Florian Rupp

Rupert A. Brandmeier is
based at Transformation
Consulting International,
Mannheim, Germany.
Sebastian Hain is based at
Goethe Universitat
Frankfurt, Frankfurt,
Germany. Florian Rupp is
based at Zentrum
Mathematik, Lehrstuhl fur
Hohere Mathematik und
Analytische Mechanik
Technische Universitat
Munchen, Munich,
Germany.

Background
The following case incorporates our lessons learned during the process of formally
establishing a company in a Middle East country and supplements them with the experience
of many other mid-sized companies we have contacted. It may also serve as a general
blue-print for similar situations in emerging markets where strong governmental and cultural
differences exist, compared to western countries.
PM-Group (PMG) is a well-established western company active in the service sector which
has steadily grown over the last seven years in its home market. PMG offers project
management support holistically advising its customers on selling, executing and operating
large projects with a high degree of complexity and strategic importance. Thereby, the
added value of PMG is to accompany its customers through the complete project life cycle
and not stopping its support after the definition/project design phase. This is achieved by
using senior managers with over 20 years of project management experience. PMGs highly
qualified staff of approximately 60 employees is distributed over German, Canadian and
Australian offices. Throughout the last fiscal year PMG has created revenue of e16 million.
The call from the Middle East reached PMG three years ago: it started with the request to
perform high-level workshops and management training on project management. This
enabled PMGs business development to bond with local decision makers and convince
them on the necessity to train and develop others in their organization, not only senior
management. A hands-on training session for middle management was a great success.
Owing to this success, a small project was awarded to PMG to provide the local staff with
on-the-job training based on international project management standards. This resulted in
follow on larger projects focusing on organizational development and project management.

Disclaimer. This case is written

solely for educational purposes
and is not intended to represent
successful or unsuccessful
managerial decision making.
The author/s may have
disguised names; financial and
other recognizable information
to protect confidentiality.

DOI 10.1108/20450621111129663

One project example was for a leading national Telecom provider (PMGs revenue share:
e1 million). PMG supported the business development program management including
technology infrastructure modernization, planning and implementation of the marketing
communication program and the sales program. Various customer conferences were
planned and conducted. The project management of the expansion program of the company
was actively supported by PMG. Another example was a country-wide modernization
program of a government division (PMGs revenue share: e1.5 million). PMG synchronized
all organizational development activities, conducted country-wide assessments of
organization, processes, roles and skills, developed the organizations vision for 2020 and
implemented the change management.
During the three years it became clear that PMGs scope had rapidly expanded. Staff
requirements increased from one part time project manager at the beginning to several
full-time teams including staff with in-country/on-site stat. In particular, the customers
requirement to have more steady on-site support underlines the urgency to establish a local
Middle East subsidiary of PMG.

VOL. 1 NO. 1 2011, pp. 1-8, Q Emerald Group Publishing Limited, ISSN 2045-0621

EMERALD EMERGING MARKETS CASE STUDIES

PAGE 1

This year PMG has decided to take an advantageous move: enter the Middle East market
and benefit from the tremendous business opportunities while leveraging a number of risk
factors. PMGs senior management has announced its special interest in having a local
subsidiary in the Kingdom of Saudi Arabia (KSA) since it represents the largest economy in
the Middle East and provides numerous growth opportunities. Table I gives a 4C-analysis
underlying the decision making of PMGs senior management to enter the Saudi Arabian
market.

Downloaded by SHAHEED ZULFIKAR ALI BHUTTO INST OF SCI & TECH KARACHI At 03:45 28 September 2016 (PT)

The remainder of this paper deals with the set-up of a legal entity in KSA. It also includes the
analysis of this decision with respect to the different mentality/way of conducting business in
KSA as compared to Western societies as well as from the economic point of view. First, the
economic and social backgrounds of the Middle East are presented with focus on KSA.
Second, the issue of establishing a legal entity in KSA is presented and two solutions are
studied:
1. company set-up with a partner, referred to as the joint venture (JV) option; and
2. company set-up without a partner, referred to as the independent direct investment (IDI)
option.
Finally, we wrap up, compare the advantages and disadvantages of the two options and
highlight the key learnings. Teaching notes complete the case.

Middle East and the KSA

Entering new markets requires an understanding of the economic background and the basic
data of the new economy. In particular, while entering the emerging markets of the
Table I 4C-analysis for the market entry of PMG in Saudi Arabia
Customer (community)

Customer (individual)

Competition

Capabilities

Costs

PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 1 NO. 1 2011

PMG already has a (small) network of business partners in the

Middle East, who support its business development and introduce
PMG to further clients
PMGs staff knows and respects the traditions and way of life in
Middle East
Management at clients are well educated (UK or US university degrees),
although PMG has to deal with a huge, under-educated, local and foreign
labor-force
Religious (prayer, Ramadan, etc.) and family restrictions (decisions are
triggered by family rather than business concerns) sometimes conflict
with the requirements of business
Customer requirements therefore include a strong on-site presence of
PMG throughout the whole year and the ability of PMGs staff to
compensate Middle East cultural roadblocks for western style business
Consultancies from nearly all western nations work in the Middle East and
there is a wide variety of expertise, professionalism and scope
To reduce costs some employ low-cost staff from Pakistan, India or
Lebanon as those are the countries from which low cost workers come.
Their consultants have a very hard standing at Middle East Senior
Management
Owing to deregulation, the rapid economic growth and continuous
demand for highly experienced project managers, competition appears
to be a minor problem for PMG
PMG has a long success record in the western market
PMG is valued by its clients in the Middle East (PMGs scope expanded
rapidly)
PMG has the professional expertise to deliver high-quality results and to
perform well within the context of the Middle East society
PMGs staff consist mostly of senior German/Canadian/Australian project
managers
PMG offers services in a segment were quality dominates cost
negotiations
PMGs staff seniority establishes prices in the upper market segment

Middle East investors have to be familiar with the cultural background, as these societies are
mainly context oriented in contrast to a western content orientation.
Economic background

Downloaded by SHAHEED ZULFIKAR ALI BHUTTO INST OF SCI & TECH KARACHI At 03:45 28 September 2016 (PT)

Foreign direct investment (FDI) to the West Asia region increased in 2008 for the sixth
consecutive year with a total of $90 billion, which represents 15 per cent of FDIs to the
developing world (UNCTAD, 2009). This development was largely due to soaring flows to the
KSA, which is the largest recipient of direct investments in this region. FDI rose by 57 per cent
to $38 billion in 2008, with real estate, petrochemicals and oil refining accounting for most of
the growth. Table II shows additional information on the economic development of the Middle
East and Saudi Arabia including European Union (EU) data as reference.
Owing to various opportunities, the investment-friendly environment and the bright prospects
for the economy, PMG management decided to focus its Middle East activities on Saudi
Arabia. Saudi Arabias economy is petroleum based, owning about one-quarter of the worlds
oil reserves. The government employs the oil revenues from its state-owned enterprises to
fund the creation of a modern economy that engages in international trade, finance and
manufacturing. In fact, the development strategies incorporate a very high level of state
involvement in the economy. There are more Saudis employed by the state than by the private
sector.
Saudi Arabia imports a large number of workers from other Muslim nations in Asia. It is
estimated that about 60 per cent of the private workforce is foreign. Although oil revenue has
made this possible, the government regards the resulting unemployment among young
citizens as a problem. It has launched a program of Saudization to replace white-collar
foreign workers with local employees. According to Saudi Labor Law, the official Saudization
percentage applicable to private sector companies is 75 per cent. However, the Labor Office
applies a weakened form of this law and only requires corporations, employing 20 persons or
more, to target a quota of 35 per cent.
The Gulf Cooperation Council (GCC) represents a regional economic and security
organization including KSA and five other Arab states of the Arabian Peninsula. The GCC
members, to a large extent, require the inclusion of a domestic partner for foreign investment
and selling activities in the region. Some sectors are fully protected from foreigners. This
practice curtails foreign access to the GCC economies and allows for a large degree of local
control of foreign investments. However, to an investment law known as the Foreign
Investment Regulations, signed in 2000, and its entry into the World Trade Organization the
Saudi economy is opening up to foreign investment. Foreign investors are allowed to invest in
all sectors of the economy, except for ones protected by a negative list. For instance, the
list contains the upstream sector of the oil industry including the activities of oil exploration,
drilling and production. In an increasing number of sectors foreign investors are no longer
Table II Economic data on Middle East and Saudi Arabia (in US$)

GDP (current prices)

GDP per capita (current prices)

Real growth in GDP (%)

Inflation rate (%)

Middle East (billion)

Saudi Arabia (billion)
EU (billion)
Middle East
Saudi Arabia
EU
Middle East
Saudi Arabia
EU
Middle East
Saudi Arabia
EU

2006

2007

2008

2009

2010

1,257
357
14,672
9,049
15,050
28,397
5.77
3.16
3.43
8.3
2.3
2.3

1,462
386
16,943
9,620
15,825
29,974
6.15
3.31
3.09
11.2
4.1
2.4

1,885
476
18,388
10,110
19,105
30,743
5.38
4.45
0.95
15.0
9.9
3.7

1,673
370
16,447
10,246
14,486
29,729
2.03
0.15
24.08
8.3
5.1
1.0

1,922
438
16,543
10,601
16,778
30,157
4.25
3.70
1.02
6.6
5.2
1.8

Source: IMF (2009)

VOL. 1 NO. 1 2011 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3

required to take local joint venture partners and may own plants and the associated real
estate to 100 per cent. Recently, the insurance market, banking sector, wholesale and retail
trade sector were further liberalized by means of reducing the upper capital limits for
foreigner investors.
Cultural background

Downloaded by SHAHEED ZULFIKAR ALI BHUTTO INST OF SCI & TECH KARACHI At 03:45 28 September 2016 (PT)

In Saudi Arabia and the other Arab states, thinking and work ethics is strongly influenced by
religious beliefs and long-standing cultural values that date back to Bedouin traditions
(Sidani and Thornberry, 2009). Prime importance is given by Arabian employees to the
values dominant in the society: generosity, honor, cohesiveness and self-respect.
In particular, personal relationships and trust are very important factors for people in
business. Time is given a lower priority compared to other societies, which can lead to some
frustration for westerners.
Arab individuals are loyal to the circle to which they belong. Therefore, the family is the central
institution for most Arabian employees. The traditional emphasis of the educational system is
on the Arabic language, religion and regional history. This approach fails to impart students
with the knowledge and skills of joining the modern workforce. The Saudi Government is
aware of this and introduced a long-term modernization of the kingdoms educational system
(Royal Embassy of Saudi Arabia, 2009).
Moreover, more drastic signs of change can be seen: market deregulation, increased
competition, work-related migration from one part of the country to another and the
introduction of western work-effectiveness and efficiency metrics. This forces Saudi Arabian
employees to catch-up with western work standards, e.g. English commutation and
presentation skills, flat hierarchies, on time execution of tasks, etc. It is becoming more and
more difficult for Saudi Arabian employees to balance work and family life.
General risk aspects in KSA
According to the International Monetary Fund (IMF) (Chan and Gemayel, 2004), the level of
risk for investing in the Middle East and North Africa region has historically been higher than
in developed countries. Small- and medium-sized companies are often more prone to risk, as
a single significant loss could jeopardize business continuity. However, large-scale
enterprises will have more complex financial and organizational arrangements, resulting in
the need to manage hazards in a proactive way. On account of this, there is a need for
organizations to identify, estimate and assess the relevant risk of their planned or existing
foreign activities and respond to it.
A recent survey by Hain (2010) investigated the risk perception and risk management
strategies of multinational enterprises in the Middle East. A total of 49 German companies
operating in Saudi Arabia as standalone operations or as part of joint ventures were asked to
specify the five most important sources of risk (Figure 1). Moreover, further details were
provided for the highest ranked hazards.
Bureaucracy was described as a risk because of the ambiguity of government decisions,
problems with applications processed by Saudi authorities, and unreliable government
personnel. Therefore, dealing with government institutions and officials, in conjunction with
administrative decisions or government orders, involves high uncertainty for foreign firms.
For instance, PMG faced huge difficulties with the application process for establishing a legal
entity, due to very unclear communication of the Saudi Arabian General Investment Authority
(SAGIA). Even the local lawyers were, at many points of the establishment process, unable to
advise us whether the requirements were satisfied or if there were further documents to
deliver. The risk factor terms of payment refer to unreliable payment schedules or defaults of
payment by local customers for delivered goods or services, which impedes the calculation
of future cash flows. Risk related to working morale is linked to the educational level. Despite
some good experiences with professional Saudi staff, many local employees face problems
in the work environment in terms of quality, time and motivation. The risk of relationship
orientation appears to have its main source for western enterprises in the reality that trust is
highly important for Arabs in the business world. Trust-building takes a long time.

PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 1 NO. 1 2011

Figure 1 Risk factors rated in the top 5 by 49 Western multinational enterprises in Saudi
Arabia
27

24

12 11

Political risk

13

Economic risk

10

Financial risk

Family orientation

Payment morale

Religious tradition

Corruption

Educational level

Working morale

0
Relationship orientation

FDI restrictions

2
Taxation

Capital availability

2
Capital requirements

Sales cycle

Currency convertibility

0
Term of payment

Economic growth

Government deficits

Inflation

Competition

Expropriation

State involvement

Instability & social unrest

Legal system

Saudization policy

18 17

6
2

Bureaucracy

Downloaded by SHAHEED ZULFIKAR ALI BHUTTO INST OF SCI & TECH KARACHI At 03:45 28 September 2016 (PT)

20

11

10

Technological level

14

23

Cultural risk

Source: Hain (2010)

Verbal agreements between Arabs appear to be common in contrast to the general western
understanding that companies abide by written agreements. Enterprises face unclear and
sudden decision making of their Saudi clients, which makes advance planning much more
difficult.

Establishing a legal entity in KSA

Keeping in mind the economic and cultural background, we will discuss the next options for
PMG to set-up a legal entity in KSA.
Market entry options
The decision of how to enter a foreign market can have a significant impact on the business
results. In general, PMG has the option to open new markets by exporting, licensing, joint
venture or IDI. Exporting means the direct sale of domestically produced goods and services
to another country. Licensing essentially authorizes a firm in the target country (licensee) to
use the property of PMG (licensor). However, due to its nature of business, PMG
management excluded these options of exporting and licensing from further analysis.
Therefore, PMG well considered the following two options: first, it might form a joint venture
(JV option) with one or more Saudi partners to undertake the business activity together, which
involves the creation of a specific enterprise. Second, completely own a foreign subsidiary in
Saudi Arabia without the incorporation of partners (IDI option).
PMGs senior management brainstormed the pros and cons of both options. The results are
given in Tables III-V. When considering this case for lecture purposes, the task for the
students will be to consolidate this analysis and to provide tangible decision criteria for senior
management.
Furthermore, the accounting department delivered the figures for each entry option provided
in Tables IV and VI. The revenues and costs differ in the two options. The JV option requires
a lower investment and promises higher revenues in the beginning because the partner

VOL. 1 NO. 1 2011 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5

Downloaded by SHAHEED ZULFIKAR ALI BHUTTO INST OF SCI & TECH KARACHI At 03:45 28 September 2016 (PT)

Table III Summary of pros and cons for the JV option

Option

Pros

Cons

JV option

Overcomes ownership restrictions and automatically

includes sponsor
Registration will be not an issue due to local contacts to
SAGIA
Mitigates risks due to cultural distance (e.g. bureaucracy,
term of payment, working morale)
Company is stronger perceived as insider in KSA
Less investment required
Expenses are shared among partners

Difficult to manage local business partners

Loss of control
In case of essential financial issues with local business
partners, it is difficult to take court action
Local business partner may have conflicting interests
Revenues are shared among partners

Table IV Figures for the JV option

JV option
Item
Initial investment
Yearly operating costs
Scenario 1 speculative(50%)

Scenario 2 cautious (50%)

Expected revenue 2010

Expected revenue 2011
Expected revenue 2012
Expected revenue 2010
Expected revenue 2011
Expected revenue 2012

Yearly revenue share from JV partner (%)

Interest rate (%)

Amount
e350,000
e750,000
e600,000
e900,000
e1,300,000
e400,000
e700,000
e1,000,000
25
5

Table V Summary of pros and cons for the IDI option

Option

Pros

Cons

IDI option

No local business partner to be managed

Entire control of business
Perceived as foreign company with high-quality
services according to western standards
Revenue totally stays with the company

Possible ownership restrictions and the need to

involve a local sponsor who just receives money
with absence of consideration
Higher investment and resources required
Company has to stand its ground in the market
with low or no local support
Risks have to be managed with low or no local
support involving a higher degree of uncertainty

supports PMG to enter the new market in a faster way. This option, however, requires sharing
the generated revenue. In contrast, PMG has to pay a yearly fee for the mandatory sponsor in
case it enters the market as standalone operation. In both cases, the accounting department
differentiates a speculative scenario (Scenario 1) and a cautious scenario (Scenario 2).
Both are given a probability of 50 per cent. Beginning 2012, the revenues are assumed to be
in perpetuity, i.e. a constant stream that continues forever. Because PMG is exposed to
higher risk in the case of the IDI option, the variance of the revenues is larger. The yearly
operational costs are assumed to be constant for a long time.
Comparing the net present value (NPV) of both options PMG decided to opt for the IDI option.
However, there have been difficult discussions inside PMGs management as the IDI option is
considered more risky.

Resume and key learning

Throughout this case the situation of a western service sector company (PM-Group (PMG))
with some experience in the Middle East was discussed. Concerning intercultural and

PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 1 NO. 1 2011

Table VI Figures for the IDI option

IDI option
Item
Initial investment
Yearly operating costs
Scenario 1 speculative (50%)

Downloaded by SHAHEED ZULFIKAR ALI BHUTTO INST OF SCI & TECH KARACHI At 03:45 28 September 2016 (PT)

Scenario 2 cautious (50%)

Amount

Expected revenue 2010

Expected revenue 2011
Expected revenue 2012
Expected revenue 2010
Expected revenue 2011
Expected revenue 2012

Yearly sponsor fee

Interest rate (%)

e600,000
e800,000
e200,000
e800,000
e1,500,000
e100,000
e400,000
e900,000
e150,000
5

economic backgrounds of the Middle East the main goal was to discuss the market entry
strategy for PMG and balance the pros and cons for a:

Keywords:
Market entry,
Decision making,
Risk management,
Middle East,
Saudi Arabia

company set-up with partner (joint venture); and

IDI.

Within this complex framework, the students should have learned some differences between
the content driven western society and the context oriented Middle East society. They
should be aware of current economic key figures and in particular risks connected to
business in emerging markets. Throughout these discussions they should have refined their
abilities to read, interpret and prioritize economic data provided in tables and graphs.
Moreover, they should have a deeper understanding on how to design business cases and
calculate and compare relevant financial indices like the net present value (NPV). Having
analyzed a complex real life business situation the students should also be more familiar with
simultaneously dealing with a huge number of relevant information and select those pieces
that are most essential for a solid business decision.

References
Chan, K.K. and Gemayel, E.R. (2004), Risk Instability and the Pattern of Foreign Direct Investment in the
Middle East and North Africa Region, IMF Working Paper: WP/04/139, IMF, Washington, DC.
Hain, S. (2010), Risk Perception and Risk management of Foreign Companies in the Middle East Market:
An Empirical Study of Saudi Arabia, working paper, Goethe University, Frankfurt.
IMF (2009), World economic outlook database, available at: www.imf.org (accessed 5 January 2010).
Royal Embassy of Saudi Arabia (2009), The Kingdom of Saudi Arabia political, social and economic
initiatives, Royal Embassy of Saudi Arabia, Washington, DC, available at: www.saudiembassy.net/files/
PDF/Reports/Development_November_2009.pdf (accessed 3 October 2010).
Sidani, Y.M. and Thornberry, J. (2009), The current arab work ethic: antecedents, implications, and
potential remedies, Journal of Business Ethics, Vol. 91 No. 1, pp. 35-49.
UNCTAD (2009), World Investment Report 2009, available at: www.unctad.org (accessed 16 October
2009).

Further reading
Further information on doing business in Saudi Arabia may be
Anwar H. Doing Business with Saudi Arabia 4th ed. 2009 Global Market Briefings.
Bayliss Associates2009Business Guides to the Arab Gulf The Kingdom of Saudi ArabiaCouncil for
Australian-Arab Relations (CAAR), Australia Arab Chamber of Commerce and Industry (AACCI), Bayliss
Associates Pty LimitedWatsons Bay.

VOL. 1 NO. 1 2011 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7

IFC Doing Business 2010: Saudi Arabia2009The International Bank for Reconstruction and
Development/The World BankWashington, DC.
Latham & Watkins Doing Business in Saudi Arabia 2010 Latham & Watkins LLD New York, NY.
Further exercises on general case studies can be found in the following books
Hartenstein M. Billing F. Schawel C., and Grein M. 2002 Die Consulting-Praxis 66 Fallstudien fur
Bewerbung und Berufseinstieg, 2. uberarbeitete und erweiterte AuflageEcon VerlagMunchen.
Hartenstein M. Billing F. Schawel C., and Grein M. 2006Karriere machen: Der Weg in die
Unternehmensberatung

Consulting
Case
Studies
erfolgreich
bearbeiten,
5.
AuflageGablerWiesbaden.

Downloaded by SHAHEED ZULFIKAR ALI BHUTTO INST OF SCI & TECH KARACHI At 03:45 28 September 2016 (PT)

Harvard Business School Management Consulting ClubCase Interview Guide(n.d.)114available at:

http://web.iitd.ac.in/ , ces/new/papers/HBS%20Case%20Study%20Guide.pdf
MendenS.Das Insider Dossier: Bewerbung bei Unternehmensberatungen Consulting Cases meistern,
3. vollstandig uberarbeitete Auflage2009squeaker.net GmbH, Cologne.

Corresponding author
Sebastian Hain can be contacted at:sebastian.hain@gmx.de

PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES VOL. 1 NO. 1 2011