Expert answer:Saudi Arabian Market Socio cultural Analysis

  

Solved by verified expert:Your organization has reviewed your country study and has decided to go with your recommendation for their initial international expansion.A complete a socio-cultural analysis needs to be completed to determine the entry strategy, financing, human resource needs, suppliers, marketing, pricing and distribution, and organizational structure. Assignment Criteria: Write a report (3 – 4 pages, font 12) outlining the socio-cultural factors and discuss any cross-cultural issues that will need to be considered, addressed and understood into for a successful international expansion. You need to use at least three outside sources to complete this assignment.PLEASE remember to cite all your sources; proper citation of your sources is a requirement for this course. Please support all recommendations with sound reasoning and research. Your report needs to include but not limited to: Demographic TrendsPopulation growthAge structure & median ageLife expectancyLiteracyCultural AnalysisLanguageCustoms and NormsTraditionsSocial InstitutionsWhere does the country lie within Hofstede’s dimensionsFamily structureReligious structureLabor organizationsInformal Trade BarriersBarriers that are created by social and cultural factorsCommunication stylesNegotiating tacticsMarketing concernsEthical concernsEmployment practicesHuman rightsBusiness practices
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Running head: ALLY FINANCIAL
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Ally Financial
Ally Financial is a US-based bank holding whose headquarters are in the Detroit
Michigan. The company provides financial services like online banking, credit facilities,
mortgage, corporate lending, vehicles insurance, and so on. Ally company is one of the
prominent banks in the USA that is performing well and is ranked the 19th largest bank in the
USA by assets. The bank was established in 1919 by the general motors company to provide
finances to the customers willing to purchase vehicles. Ally Financial has established various
branches in the United States. Later the company diversified where it began offering mortgage
services, accepting time deposits, insurance services, and so on, which increased its customer
base. Saudi Arabia is one of the fast-developing economies in the world and leading economy
among the Arabic countries. Currently, the rate of economic growth in Saudi Arabia is estimated
to be 7.5 % per annum. Also, the country is most industrialized in the Arab world. The country
is dependent on oil, and it’s the largest petroleum exporter. Saudi Arabia is among the fastest
growing countries in the manufacturing sector. Ironically, the more Saudi Arabian is doing well
economically, the more the industrial pollution it experiences. According to Ally Financial
(2019), the company is widely recognized for car auction services. For instance, Ally Financial
auctioned over five million vehicles through its online platform known as smart auction online
marketplace. Now, Ally company plans to move to Saudi Arabian Economy to offer its services.
The company plans to establish its branches in various urban centers in Saudi Arabia.
Overview of Saudi Arabia
Saudi Arabia is an Islamic dominated country located in the western region of Western
Asia. The country occupies approximately occupies over 830, 000 square miles. According to
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El Mallakh, (2015), Saudi Arabia is the largest country among other countries in the middle east,
and it borders with Iraq and Jordan in the north, Kuwait in the northeast, United Arab Emirates,
Qatar, and Bahrain in the east, Yemen in the south, Oman in the northeast. Saudi Arabia is
widely known to produce petroleum products.
Over several decades, most companies have been relocating or establishing their own
branches in the Saudi Arabia Economy. Since its independence, the Saudi Arabian regime has
been taking prominent steps to attract foreign investment and attracting foreign investment. Led
by King Abdullah bin Abdi al-Aziz Al Saud, the Saudi Arabian government several have made
economic and social initiatives to attract foreign investment. Currently, the role of the private
sector in the country is intensifying. The Saudi Arabian government has made several initiatives
to combat domestic extremism and make it a good place for businesses to thrive. Ally Financial
is planning to take advantage of a good political climate and economic growth to expand its
investment in the Saudi Arabia Economy. The bank is taking advantage of the increase
entrepreneurial in the entrepreneurial culture in Saudi Arabia. Therefore, Ally company is
planning to lend loans to the interests of the investors.
Findings of The Study of Any Potential Issues, Costs And Benefits
There are various advantages of Ally Financial to establish its branches in Saudi Arabia
Economy. Saudi Arabian Economy is steadily growing, and it grew by 2.3 percent in 2018.
Similarly, the per capita income in 2018 rose by about $2,885 (CIA, 2019). The government
projects that the economy will grow by approximately 4.0 percent in 2019. The Saudi Arabian
Economy is recovering after experiencing a recession in 2017, and the economic growth rate
decreased by around 0.7. The Saudi Arabian Economy started growing after the government
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implemented various policies to diversify its economy from petroleum products. The
government planned to intensify industrial and agricultural growth. Labor in Saudi Arabia is
readily available. There is a relatively high level of the unemployed people in Saudi Arabia
estimated around 11.9 percent of the total population is unemployed where most of them are
poor youths (CIA, 2019). Similarly, most of the Saudi Arabia citizens work in the industry and
service sector. For instance, 71.9 percent work in service, 21. 4 percent work industry and 6.9
percent work in agriculture. The petroleum sector in Saudi Arabia accounts for about 87 percent
of the budget revenues and 90 percent of the exports (Sillah, 2015).
Also, Saudi Arabia becomes is the best place for Ally Financial to investment because
there is a large market for company services. Currently, the Saudi Arabia population is
estimated to be over 34 million, with a population growth rate of 2.0 percent (CIA, 2019). This
provides a large market for bank services. Similarly, Saudi Arabia is strategically located
between the Red Sea and the Persian Gulf. This makes it easily accessible by commercial ships.
It makes it easier for transportation of bulky or heavy goods. Lastly, the political-legal
environment for Saudi Arabia promotes the entrepreneurial culture. The government began an
initiative of diversifying its economy due to the declining market of petroleum products and has
set easy procedures to approve foreign investors. The Saudi Arabian government has created
incentives for foreign investment (Boucek, 2008). To establish new a business in Saudi Arabia,
the investor is exempted from paying personal income tax, sales tax, value added tax, land tax,
and property tax. Secondly, the government permits the 100 percent on ownership on the foreign
investors and thus making easy for the foreign investors to own property. Also, the investors are
exempted from paying customs duty on imported goods, and there are few restrictions for the
conversion of currency.
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Conclusion
The Saudi Arabia government has promoted stability in the country. However, the
country encounters the challenge in terrorism, whereby the domestic extremism remains the
government concerns. Secondly, the company is likely to experience the cultural backlash as
American culture varies from that of Saudi Arabia. Also, the company needs to employ local
employees who are conversant with domestic cultural. Pollution is another issue that Saudi
Arabia is experiencing due to the extraction of petroleum.
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References
El Mallakh, R. (2015). Saudi Arabia: Rush to Development (RLE Economy of Middle East):
Profile of an energy economy and investment. Routledge.
CIA (2019). https://www.cia.gov/library/publications/resources/the-world-factbook/geos/sa.html
BOUCEK, S. A. C. (2008). Extremist re-education and rehabilitation in Saudi Arabia. In Leaving
terrorism behind (pp. 230-241). Routledge.
Sillah, B. M., (2015). Human capital, foreign direct investment stock, trade, and the technology
diffusion in Saudi Arabia 1974-2011. Journal of Economic Studies, 42(1), 101-116.
Ally Financial, (2019). Ally https://www.ally.com/

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