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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ALLY FINANCIAL
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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ALLY FINANCIAL
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/
Running Head: SOCIO-CULTURAL ANALYSIS
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Socio-cultural Analysis of the Saudi Arabian market
Globalization is an effective competitive advantage that organizations embrace to step
up business operations. However, the latter comes with its implications like cultural sensitivities
including cross-cultural differences, language barriers, the difference in labor terms, varying
ethical standards, traditional differences among other factors that affect a new organization in a
foreign country (Shoult and Shoult, 2005). The Ally Financial intents to venture into the Saudi
Arabian market as a globalization strategy. The business faces challenge the majority of the
listed challenges.
Demographic Trends
Saudi Arabia demographics data reveals that the country is one of the largest in acreage.
The Arabian Peninsula country has approximately 830, 000 square miles land mass and a
population of 34 million people according to 2019 estimates. The country is, therefore, sparsely
populated. Riyadh is the capital of Saudi Arabia, the city where Ally Financial is likely to start
its operations. The climatic conditions in the country are hostile, with over 30-degree centigrade
average yearly. The Arab tribe makes up to 90% of the population, with Afro-Asians
contributing approximately 10% of the country’s population. The populational growth rate stands
at 1.5%, and the life expectancy is approximately 75 years. The age distribution of the Saudi
population reveals that approximately half of the population aged between 25-53 years. A quarter
of the population comprises of 0-14 years children. The population above 55 years contribute the
smallest percentage of the national population; about 8% (Elamin and Omair, 2010). Ally
SOCIO-CULTURAL ANALYSIS
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Financial needs to understand the illustrated demographic trends of Saudi Arabia to formulate
the best market entry strategy. For instance, the country has a relatively high number of youths
and young children. The marketing strategy should, therefore, aim to tap clients to open accounts
with Ally Financial.
Cultural Analysis
The Ally Financial needs to put into considerations the cultural facts about Saudi Arabian
population to avoid cultural shock. Arabic is a widely spoken language in Saudi Arabia (Elamin
and Omair, 2010). The latter is the national language, with a considerably larger number of the
population conversant with the English language. The ally financial needs to implement the best
strategy to ensure its new business expansion to the company complies with the language culture
in the country. for instance, the Ally financial should employ Saudi Arabians who are conversant
with both English and Arabic languages to ensure good communicating between the business
owners and the locals, including the customers. Farsi, Urdu, and Turkish languages are also
spoken in Saudi Arabia (Shoult and Shoult, 2005). The latter therefore calls for the right
employees who can speak in such languages to make Ally Financial relevant in the diversified
language country.
Saudi Arabian customs are different from American customs. It is normal too great a
person in a long handshake in Arabian culture as opposed to the American culture. American
employees working in Saudi Arabia under Ally Financial need to acknowledge such norms.
Saudis take time to converse over general life things when they meet. Peers in this country
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converse and argue vigorously (Elamin and Omair, 2010). It is normal in Saudi Arabia’s to be
asked about personal m matters like family or lifestyle; foreigners should expect that. It is a
taboo to state at women in Saudi Arabia. Ladies in Saudi Arabia wear long attire’s covering the
entire body; heel shoes are not expected. Saudi Arabia has a lot of traditional practices, foods,
and beliefs. It is a traditional norm to stand when greeting elders, and when they enter a room.
The foreign workers working with Ally financial should make sure they observe these traditions
and minimize cultural conflicts.
Social Institutions
Saudi Arabia lies in extremes in some Hofstede’s dimensions. According to ("Country
Comparison - Hofstede Insights," 2019), Saudi Arabia scores 52% in indulgence, 95% in power
distance, 25% on individualism, 60% on masculinity, 36% on long term orientation and as high
as 80% on uncertainty avoidance. Ally Financial should be sensitive to Saudi’s alienation to
masculinity. The company is expected to recruit more men than women because Saudi Arabia
has strict gender role definitions. Women are mostly house based with very few working in the
corporate sector. Islam monopolizes Saudi Arabia's religious structure (Shoult and Shoult, 2005).
The population is religiously sensitive with very strict benefits on the religious. Some staunch
believers have turned to extremist behaviors. The US company should be aware of possible
terrorist attacks in its operations. There are migrant laborer organizations in Saudi Arabia. Ally
financial employees, especially from diaspora countries, can join the labor organizations in Saudi
SOCIO-CULTURAL ANALYSIS
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Arabia. Other local employees in Saudi, especially the local content, can join local labor
organizations.
Informal Trade Barriers
Lastly, Social and cultural factors in Saudi Arabia can limit Ally Financial progress in
Saudi Arabia. Some of the socio-cultural factors include inconsistent working hours citing
cultural differences. For instance, the Saudi working culture doesn’t allow working form more
than six hours during the month of Ramadhan; hence, the latter can affect the organization's
performance in Saudi Arabia (Elamin and Omair, 2010). Business negotiations are done slowly
and patiently in Saudi culture. Often, Saudi corporates are hierarchical; hence, the US firm needs
to implement a hierarchical business organization to look like a local company the locals can
work in.
Communication in Saudi Arabia follows cultural heritage. In the case of Ally Financial
business, all official communications are expected to be passed on in time. The latter is because
the Saudis do not work hastily like the western world who are very familiar with emergencies.
The nature of communication and conversation in Saudi Arabia is a different form of western
world culture. Saudis are very fond of rudeness in conversation; hence, as opposed to westerns
who tend to understand other people’s behaviors. Saudis are generally cooperative in
conversations agreeing to most of the subjects in a conversation, especially when talking to a
foreigner. The latter may not mean that they are generally in agreements (Shoult and Shoult,
2005). Emotional outbursts are rare in Saudi conversations, and little confrontations are
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imminent. The Ally financial employees, especially from the western world, would have a
challenge coping with Saudi communication methods and behavior. Saudi’s are aggressive
people; they can be aggressive against a foreign company that is not hiring the local population.
The populations consider it a right to get employment in any organization, something the Ally
financial should be keen about. The latter means that the company must incorporate the local
population into its workforce.
Conclusion
The Saudi Arabia country is a good country where Ally Financial can diversify its
operation. The company needs to study and implement the Saudi Arabian socio-cultural issues to
align its business strategy with the local corporate and social culture (Elamin and Omair, 2010).
The Saudi Arabia working schedule is different from the western working time, and hence, the
Aly company should be aware of the differences.
References
Commisceo Global Consulting Ltd. (2019, January 1) Afghanistan - Language, Culture, Customs
and Etiquette. Retrieved from https://commisceo-global.com/resources/country-
SOCIO-CULTURAL ANALYSIS
guides/afghanistan-guideclimate regarding ethics. Journal of business ethics, 55(3), 223241.
Elamin, A. M., & Omair, K. (2010). Males' attitudes towards working females in Saudi Arabia.
Personnel Review, 39(6), 746-766.
Shoult, A., & Shoult, A. (2005). Doing Business with Saudi Arabia. London: Blue Ibex Ltd.
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