The Physical Environment and Geographical Location of Iran

Country: Iran

Geographical Location and the Physical Environment

The Islamic Republic of Iran is situated in the Middle East. It covers 1, 48,195 km2. Iraq shares its border with Iran on a stretch of 1 458 Km. Iran shares its shortest border with Armenia. On the Armenian side, Iran shares a stretch of only 22 kilometers. The country is endowed with three water bodies, which it shares with other states too. These water bodies are the Caspian Sea, the Persian Gulf, and the Oman Gulf. The country is also endowed with many mountains and hills (Afary, 2021). The Zagros Mountains are the major mountain thread sprawling its western stretch. These mountains have peaks of up to 3000 meters above sea level. The highest peak is on Mt. Damavand. It is elevated at 18,403 feet above sea level. It is also known to be Asia’s highest volcanic mountain.

Iran hosts two huge salt deserts situated right at its central part. The salty desserts, the Dasht-e Lut and the Dasht-e Kavir, are found in the Central Plateau towards the eastern part. There is an important wetland that hosts birds in winter, called the Ramsar Convention site. It is located between Rud-e-Gaz and Rud-e-Hara River deltas. The largest water body in Iran is called Lake Umia. It once covered a whopping 5 200 Km2 (Afary, 2021). The demand for water on the lake and the desert conditions have reduced the water by 80%. Recent rains in 2018 and 2019 have increased the lake’s water level to significant levels at 3000 Km2.

Economic environment

The Iranian business model is different from the western model because Iranians prefer to trade with familiar people. Therefore, they make friends with such people before engaging in business with them. Thus, investors need to build strong relations with potential partners before pursuing business in Iran. You establish a relationship by inviting a friend or a partner in business to share a meal. This provides a chance for people to interact and get to know each other better. The other option is to become a member of a trading group.

The culture of business in Iran is that it is determined by senior management. Responsibility is rarely delegated to lower cadre workers. The senior management consults widely before reaching any decisions for the business to continue. The implications of such a bureaucratic red tape are rather obvious. The lines between business, personal, and community are rather vague (Coville, 2020). Family members are commonly invited to take part in the decision-making process in business. Iranians’ collectivist lifestyle is obvious in business, but one must acknowledge it as long as they operate within Iran. That part of business reality can be a real barrier to business pursuit if it is not carefully handled.

Local Currency/US Exchange Rate

Several foreign exchange regimes have controlled the country over time. The current arrangement is that the central bank’s official rate for importing goods is regarded as essential. These are mostly medicine and food. The open market rate is way higher than the central bank allotted rates. There is another rate: NIMA meant for the importation of non-essential commodities. There, exporters must redirect their export revenues into the Iranian economy to anchor the country’s currency needs, especially the needs of importers of non-essential commodities through the NIMA program. The supply and demand determine the NIMA rates. The prevailing forex exchange rates regime was established in 2018. The development was born of the devaluation of the Iranian rial. The regime remains in flux. Therefore, it will not be surprising if there is yet another transformation soon (Khatami, Salimi & Massihi, 2020). The need for businesses to follow closely and respond to the variations in forex exchange cannot be overemphasized.

In Iran, it is not uncommon for companies to wait for days to access foreign currency to be enabled to import commodities. It is unlikely that the situation will improve any time soon, owing to a lack of access to the US financial system (Spivack, 2016). The problem will also be exacerbated because the country is unifying a dual currency while protecting the local producers against volatile market prices.

The Political Atmosphere

Iran is based on parliamentary democracy anchored on Islamic values, beliefs, and culture. The country is led by a supreme leader, i.e., Ayatollah Ali Hoseini Khamenei. He took over power in June of 1989. There is a president: Hassan Rhouhani, who has been on the seat since reelection in August 2013 and May 2017. The supreme leader of the Islamic Revolution is the Chief of State. The Assembly Experts appointed the latter unit to last a lifetime (Export Enterprises SA, 2021). The armed forces’ Commander in Chief is the Supreme Leader. The Supreme Leader is in charge of the military’s matters, including its intelligence and security drills. It is only the Supreme Leader who can declare war. The president is the head of government. He is elected by popular vote. His term lasts four years. The president is additionally charged with the responsibility to appoint cabinet ministers. The president is granted executive powers unless it is a matter that is in the direct mandate of the Supreme Leader. The legislative wing is unicameral, meaning there is only one house of parliament. The parliament is made of Islamic Consultative Assembly with 290 seats. The assembly members are elected by popular vote for a serving period of four years.

The continuous US sanctions on Iran over the years have made matters worse for Iran. Many other countries sympathetic to the US have also been hesitant to trade with Iran (Spivack, 2016). There are many sanctions relating to financial trade and general business. These sanctions are reported to be in place because of Iran’s poor human rights record, development of conventional weapons, terrorism, and programs to develop ballistic missiles. Qassem Soleimani was killed by a powerful drone strike planned by the US. Qassam was an influential Iranian Commander. The incident only served to worsen the already poor relations between the two countries

Demographic and Socio-Cultural Environment

The population of Iran exceeds 85 million. This number is comparable to but slightly larger than Germany. Two-thirds of Iran’s population is below 30 years old. The county’s population increased drastically in the latter part of the 20th C. The latter statistics, however, show that the birth rate has reduced significantly. The number of households in Iran in 2009 stood at 15.3 million. This translated to about 4.8 individuals per household (Cincotta&Sadjadpour, 2017). The Iranian families earn approximately 960 US dollars each every month (2012). One-quarter of the Iranian population has university-level education. 60% of the people who have attained university age are attending university. The level of literacy in Iran in 2002 stood at 80%. It rose to 85% in 2016. The Iranian languages constitute the largest linguistic group in the country. 99% of Iran subscribes to Islam. 90% of the Muslims are Shia, which is the official version of Islam there. 9% of Iranians are Sunni Muslims. The unemployment rate in Iran increased from 10.7% in 2019 to 12.2% in 2020. This rise in unemployment is linked to the COVID 19 pandemic (Export Enterprises SA, 2021).

The family is the main indicator of the social status of a person in Iran. Indeed, wealth, education, and ethnicity can also affect one’s standing in society. It is regarded as prestigious if one knows their background from a long time in the past. One of the major emerging social advantages is to rise to political power. It is an indication of privilege. The revolution of 1979 saw Iranian women gain more access in some sectors while still being restricted more in others. The revolution saw a lot of women take part in demonstrations against the then leader, the Shah. Education for women took root from the time the revolution took place. Indeed, Iran saw many women participate in civil service activities and higher education (Roudi-Fahimi&Moghadam, 2006). Another notable development regarding women is that 14 women were elected to be part of the Islamic consultative assembly.

Specific information regarding the country

Iranians are typically proud of their country. They are always conscious about their country’s history, what legacy they have culturally, and their traditions. Their culture encourages being polite. It may outwardly appear cosmetic. The population of Iran is heterogeneous. They speak several languages, including Semitic, Turkic, and Indo-Iranian. Most Iranians practice Islam. Hence, their behavior, socially, economically, and politically, is largely influenced by Islamic values and principles. The populace observes a religious day every Friday. The country almost literally shuts down for worship on Fridays. During Ramadan, every Muslim is required to fast from morning to evening. People are required to work for six hours every day (Commisceo Global Consulting Ltd., 2020). The fasting process includes restraining from drinking, eating, chewing, and smoking. People who are not from Iran and are not Muslims are not obligated to fast. However, they are not allowed to eat or do any of the things restricted during Ramadan in public.

Interactions and introductions are only allowed among members of the same gender. The two genders socialize separately. The people greet each other in affectionate ways. The men are allowed to kiss fellow men as women kiss women while greeting. Shaking hands is more common if the meeting happens in public places. They say salaam Aleikum, or just salaam (peace), for a greeting (Commisceo Global Consulting Ltd., 2020). Business people also tend to have a dress code, which is commonly a tie and a jacket. Save for their feet, face, and hands; women must cover the whole rest of the body.

The people of Iran appreciate each other on various occasions with gifts. They also commonly give monetary gifts to people who have rendered service during a given year on No Ruz, their New Year. Such cash should be new notes from the bank or coins of gold. Visitors should know that when an Iranian invites you, they will appreciate it if you bring them flowers or pastry. It is their decorum that you apologize for its inadequacy (Commisceo Global Consulting Ltd., 2020). Find out if your host is wearing shoes when invited to an Iranian house. If they are not wearing shoes, remove yours too, at the door. You will likely be offered several helpings. Refusal, at first, is considered a polite gesture but is not heeded. You should also leave some food on your plate after eating.

Business and Social Etiquette

Citizens of Iran regard themselves to have two clear and separate identities, i.e., `Zaher,` which means public, and `Batin` for private. When Iranians are in the public fora, they align to the accepted behavior modes. They only become free or even carefree when they are within their circles and family. The inner circle, basically, one’s family, constitutes one’s social and business links (Commisceo Global Consulting Ltd., 2020). Friendship spreads into business. The inner circle is a reliable source of advice in finding employment or penetrating bureaucracies. Exchanging business cards is only a common practice among senior executives.

Process of Negotiating In Business, and Strategies

It should be noted that in Iran, business is more of personal activity. Families own most businesses. Even government officials operate within friendship and family networks. Once a friend or relative has helped you out on government issues, you should also prepare to return the kindness someday. Establishing good relations with your Iranian counterpart is critical to not only your ventures but business-wise too (Neil,2016). It should also be noted that Iranian are astute as they come in business matters. They relish bargaining and haggling, so they get their way. Making decisions in Iran is relatively slow. You are likely to meet fewer senior officials or senior family members at the onset. However, when they decide that you can be trusted, you will soon meet the senior lot.