Term Project 4
Section Four; Setting Up Shop:
Setting Up Shop:
Assume your organization is going forward with entering into the country you discussed in your country
study. They are now in the process of determining the more specific details of setting up business in that
country.
They have asked you to write a report on your recommendations as to how they should enter the
country, staff the operation, the type of international strategy they should use, and the marketing and
distribution strategy.
You are to use at least three additional sources to complete this assignment. PLEASE remember to cite
all your sources; proper citation of your sources is a requirement for this course. This assignment is to be
a minimum of 3 - 4 pages typed, font 12, double-spaced.
Please support all recommendations with sound reasoning and research.
You report must cover but not limited the following areas:
•
•
•
•
Mode of Entry
o Pick the most appropriate mode of entry
o Discuss the pros and cons
o Support your decision with research
Human Resources
o Staffing Needs
▪ Management
▪ Lower-Level employees
o Staffing Approach
▪ Ethnocentric, Polycentric, or Geocentric
o Pay and Compensation
o Training and Development
o Union Concerns
Marketing
o Target Market & Market Segmentation
o Pricing
o Advertising
▪ Cultural Concerns & Barriers
▪ How will you address them
o Competitor Marketing Analysis
Distribution
o Distribution Strategy
o
o
o
Suppliers
▪ Use local, home country or a mix?
Production facilities (if needed)
Will you use outsourcing
Running head: INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
1
International strategy and organization structure
The Ally Financial need the best international strategy as well as an organizational
structure to thrive in a global market like Saudi Arabia. An international strategy is the
precalculated measures a company embarks on in its venture and growth in the international
market. An organizational structure defines the functional organization of the firm to ensure
smooth execution of conceived operational activities, locally or in international business
ventures (Loke, 2008). The formulation of a global strategy should be based on tested resultsdriven action path. One of the simplest approaches to coming up with a good international
strategy is reviewing the success of other global organization which has succeeded in a given
international market. The target market influences the formulation of an impactful
organizational structure (Zheng et al., 2010). The organizational structure of Ally Financial in
Saudi Arabia should be effective in organizing the functionality of the firm in the target
market.
Ally Financial can venture successfully in the Saudi Arabian market by embarking on
strategic alliances. Globalization is operationally, strategically, and financially challenging
(Simonin, 2004). The decisions made in globalization initiatives impact the overly
profitability and success of the organization (Heidtmann, 2011). One of the most impactful
decisions the Ally Financial needs to make is to come up with the most effective international
strategic alliance to smoothly enter into the Saudi Arabian market. International strategic
alliances will help Ally Financial in operations like marketing, development, and financial
decision making, and hence, it is a recommended business decision for the management.
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
2
I recommend that Ally Financial should partner with other banks in Saudi Arabia in
marketing its products and services. The financial institution should sign an agreement with
other banks to market it on their business premises. The strategic alliance between the Ally
Financial and the local banks is meant to increase the institution’s customer base in a shorter
time. Ally Financial should come into an agreement with the local banks operating in Saudi
Arabia to have them place materials advertising Ally Financial advertising materials in their
premises. The latter would ensure that many potential bankers are aware of the emergence of
the US-based bank in Saudi Arabian market (Heidtmann, 2011).
The second strategic alliance the Ally Financial can use in Saudi Arabia is striking a
deal with some banks to allow sharing of their facilities with the new international partner.
Banks require a lot of assets to start operating, which include banking halls and offices (Loke,
2008). The Ally Financial can strategically partner with some banks to use some of their
unutilized facilities. The latter would lower the bank’s operational cost and hence a smoother
market entry. The facility sharing initiative would ensure that the hosting banks get a profit
share from Ally Financial and hence diversified income. The other advantage of the joint
agreement on facility sharing is that it would cushion Ally Financial risk factor in the
globalization operation. Strategic alliances, like mutual agreements on marketing operations,
gave both organization synergy and shared expert knowledge (Heidtmann, 2011). Ally
Financial would, therefore, have a safer market entry into Saudi Arabia and hence capitalize
on its fast-paced entry process.
Organizational structure is one of the most important aspects of determining
organizations efficiency in policy formulations, coordination, and implementation. There are
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
3
different forms of organizational structures which suit different organizations depending on
the nature of business activities. A manufacturing business is likely to have a different
organizational structure with a banking business like Ally Financial. Organizational
structures differ in aspects of design, identity, and influence on businesses (Zheng et al.,
2010). Companies like Lenovo, Samsung, Apple, British Airways, Kodak, Nissan USA,
among many others, have been successful in globalization due to their effective
organizational structures. Ally Financial structuring should be based on global functional
design that focuses on departmentalization of the distinct company activities like financing,
marketing, and others.
My recommendation on Ally Financial structuring is that the organization needs to
ensure area knowledge, functional knowledge, and service scope knowledge to choose the
best structural form. The area knowledge concept in structural organization puts into
consideration the already researched cultural, economic, and commercial status of the target
country; Saudi Arabia. The adopted organization structure must address the demographic and
cultural facts about the target market. The organizational structure used by Ally Financial in
the US is likely to differ with global area design requirements of the Saudi Arabian market.
An organizational structure design must also consider aspects of customer characteristics in
the area of interest (Zheng et al., 2010). Organizations operating in culturally, economically,
and strategically complex markets can adopt hybrid global organization structure design.
Ally Financial should use an organizational culture that is founded on functionality.
The advantage of a functional organizational structure is that it ensures improved
performance of the workers and hence better profits (Zheng et al., 2010). The Ally Financial
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
4
should employ a regional manager of the Saudi Arabian bank branches. The regional
manager should be reporting directly to the current bank CEO in the US. The regional
manager should oversee the bank’s’ activities in Saudi Arabia and the neighboring countries
in case of expansions near future. The regional manager should oversee the integrating of the
bank's policies into the Arabic culture and foster the growth of the bank in the new region.
The Saudi Arabian bank should have other key departmental officers coordinating the
banking activities. The Saudi Arabian Ally Financial banks should have a general counsel
post. The general counsel is tasked with the mandate of pointing out the possible legal
obligation in making and implementation of banking policies.
Ally Financial should also have a human resource officer in the country. The officer
would be responsible for hiring in a diverse pool. Globalization is a risky venture, and hence,
the new Ally Financial ventures should have a risk officer on the ground to assess and
recommend the right risk mitigation measures. The organization should also have an
insurance officer. Ally Financial was founded with insurance as one of its focus points, and
hence, it is pertinent to have the same office in the global operations. Ally Financial should
also have a chief financial officer in the Saudi Arabian market to coordinating all financing
activities. The other critical post in the Ally Financial organizational structure is
communication and information officer to facilitate information exchange between the bank
and its operating environment. All these offices should report directly to the regional manager
of the bank in Saudi Arabia.
Conclusively, the adopted organizational structure, headed by a regional manager in
Saudi Arabia, will ensure coordination of Ally Financial globalization activities in the region.
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
5
The banking institution will be able to link and integrate the activities in its various
departments and hence lead to the achievement of the planned goal. The various departmental
head in the organizational structure would enhance strategic control of the firm’s activities
and hence ensure business success (Zheng et al., 2010). The adopted organizational structure
will be able to achieve the three major roles of planning, organizational control, and
responsible decision-making. Organizational control will be critical in ensuring that the
business venture operates within its instituted objective and goals (Zheng et al., 2010). The
regional office would be responsible for the organization’s failures or success through
operations control and decision-making. The overall international strategy focusses on
establishing Ally Financial as a profitable entity in the fast-growing Saudi Arabian economy.
The integration suitable organizational structure in the international strategy will help reduce
resource wastage, reduce operational cost, and help the form to adapt faster in the new market
venture.
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
6
References
Heidtmann, D. (2011). International strategic alliances and cultural diversity - German
companies getting involved in Iran, India and China. Hamburg: Diplomica Verlag.
Loke, C. S. (2008). International management. Aberdeen: Aberdeen Univ. Press Services.
Simonin, B. L. (2004). An empirical investigation of the process of knowledge transfer in
international strategic alliances. Journal of international business studies, 35(5), 407427.
Zheng, W., Yang, B., & McLean, G. N. (2010). Linking organizational culture, structure,
strategy, and organizational effectiveness: Mediating role of knowledge management.
Journal of Business research, 63(7), 763-771.
Running head: ALLY FINANCIAL
1
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
ALLY FINANCIAL
2
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
ALLY FINANCIAL
3
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.
4
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.
5
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
1
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
2
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
SOCIO-CULTURAL ANALYSIS
3
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
4
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
SOCIO-CULTURAL ANALYSIS
5
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.
6
Running head: INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
1
International strategy and organization structure
The Ally Financial need the best international strategy as well as an organizational
structure to thrive in a global market like Saudi Arabia. An international strategy is the
precalculated measures a company embarks on in its venture and growth in the international
market. An organizational structure defines the functional organization of the firm to ensure
smooth execution of conceived operational activities, locally or in international business
ventures (Loke, 2008). The formulation of a global strategy should be based on tested resultsdriven action path. One of the simplest approaches to coming up with a good international
strategy is reviewing the success of other global organization which has succeeded in a given
international market. The target market influences the formulation of an impactful
organizational structure (Zheng et al., 2010). The organizational structure of Ally Financial in
Saudi Arabia should be effective in organizing the functionality of the firm in the target
market.
Ally Financial can venture successfully in the Saudi Arabian market by embarking on
strategic alliances. Globalization is operationally, strategically, and financially challenging
(Simonin, 2004). The decisions made in globalization initiatives impact the overly
profitability and success of the organization (Heidtmann, 2011). One of the most impactful
decisions the Ally Financial needs to make is to come up with the most effective international
strategic alliance to smoothly enter into the Saudi Arabian market. International strategic
alliances will help Ally Financial in operations like marketing, development, and financial
decision making, and hence, it is a recommended business decision for the management.
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
2
I recommend that Ally Financial should partner with other banks in Saudi Arabia in
marketing its products and services. The financial institution should sign an agreement with
other banks to market it on their business premises. The strategic alliance between the Ally
Financial and the local banks is meant to increase the institution’s customer base in a shorter
time. Ally Financial should come into an agreement with the local banks operating in Saudi
Arabia to have them place materials advertising Ally Financial advertising materials in their
premises. The latter would ensure that many potential bankers are aware of the emergence of
the US-based bank in Saudi Arabian market (Heidtmann, 2011).
The second strategic alliance the Ally Financial can use in Saudi Arabia is striking a
deal with some banks to allow sharing of their facilities with the new international partner.
Banks require a lot of assets to start operating, which include banking halls and offices (Loke,
2008). The Ally Financial can strategically partner with some banks to use some of their
unutilized facilities. The latter would lower the bank’s operational cost and hence a smoother
market entry. The facility sharing initiative would ensure that the hosting banks get a profit
share from Ally Financial and hence diversified income. The other advantage of the joint
agreement on facility sharing is that it would cushion Ally Financial risk factor in the
globalization operation. Strategic alliances, like mutual agreements on marketing operations,
gave both organization synergy and shared expert knowledge (Heidtmann, 2011). Ally
Financial would, therefore, have a safer market entry into Saudi Arabia and hence capitalize
on its fast-paced entry process.
Organizational structure is one of the most important aspects of determining
organizations efficiency in policy formulations, coordination, and implementation. There are
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
3
different forms of organizational structures which suit different organizations depending on
the nature of business activities. A manufacturing business is likely to have a different
organizational structure with a banking business like Ally Financial. Organizational
structures differ in aspects of design, identity, and influence on businesses (Zheng et al.,
2010). Companies like Lenovo, Samsung, Apple, British Airways, Kodak, Nissan USA,
among many others, have been successful in globalization due to their effective
organizational structures. Ally Financial structuring should be based on global functional
design that focuses on departmentalization of the distinct company activities like financing,
marketing, and others.
My recommendation on Ally Financial structuring is that the organization needs to
ensure area knowledge, functional knowledge, and service scope knowledge to choose the
best structural form. The area knowledge concept in structural organization puts into
consideration the already researched cultural, economic, and commercial status of the target
country; Saudi Arabia. The adopted organization structure must address the demographic and
cultural facts about the target market. The organizational structure used by Ally Financial in
the US is likely to differ with global area design requirements of the Saudi Arabian market.
An organizational structure design must also consider aspects of customer characteristics in
the area of interest (Zheng et al., 2010). Organizations operating in culturally, economically,
and strategically complex markets can adopt hybrid global organization structure design.
Ally Financial should use an organizational culture that is founded on functionality.
The advantage of a functional organizational structure is that it ensures improved
performance of the workers and hence better profits (Zheng et al., 2010). The Ally Financial
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
4
should employ a regional manager of the Saudi Arabian bank branches. The regional
manager should be reporting directly to the current bank CEO in the US. The regional
manager should oversee the bank’s’ activities in Saudi Arabia and the neighboring countries
in case of expansions near future. The regional manager should oversee the integrating of the
bank's policies into the Arabic culture and foster the growth of the bank in the new region.
The Saudi Arabian bank should have other key departmental officers coordinating the
banking activities. The Saudi Arabian Ally Financial banks should have a general counsel
post. The general counsel is tasked with the mandate of pointing out the possible legal
obligation in making and implementation of banking policies.
Ally Financial should also have a human resource officer in the country. The officer
would be responsible for hiring in a diverse pool. Globalization is a risky venture, and hence,
the new Ally Financial ventures should have a risk officer on the ground to assess and
recommend the right risk mitigation measures. The organization should also have an
insurance officer. Ally Financial was founded with insurance as one of its focus points, and
hence, it is pertinent to have the same office in the global operations. Ally Financial should
also have a chief financial officer in the Saudi Arabian market to coordinating all financing
activities. The other critical post in the Ally Financial organizational structure is
communication and information officer to facilitate information exchange between the bank
and its operating environment. All these offices should report directly to the regional manager
of the bank in Saudi Arabia.
Conclusively, the adopted organizational structure, headed by a regional manager in
Saudi Arabia, will ensure coordination of Ally Financial globalization activities in the region.
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
5
The banking institution will be able to link and integrate the activities in its various
departments and hence lead to the achievement of the planned goal. The various departmental
head in the organizational structure would enhance strategic control of the firm’s activities
and hence ensure business success (Zheng et al., 2010). The adopted organizational structure
will be able to achieve the three major roles of planning, organizational control, and
responsible decision-making. Organizational control will be critical in ensuring that the
business venture operates within its instituted objective and goals (Zheng et al., 2010). The
regional office would be responsible for the organization’s failures or success through
operations control and decision-making. The overall international strategy focusses on
establishing Ally Financial as a profitable entity in the fast-growing Saudi Arabian economy.
The integration suitable organizational structure in the international strategy will help reduce
resource wastage, reduce operational cost, and help the form to adapt faster in the new market
venture.
INTERNATIONAL STRATEGY AND ORGANIZATION STRUCTURE
6
References
Heidtmann, D. (2011). International strategic alliances and cultural diversity - German
companies getting involved in Iran, India and China. Hamburg: Diplomica Verlag.
Loke, C. S. (2008). International management. Aberdeen: Aberdeen Univ. Press Services.
Simonin, B. L. (2004). An empirical investigation of the process of knowledge transfer in
international strategic alliances. Journal of international business studies, 35(5), 407427.
Zheng, W., Yang, B., & McLean, G. N. (2010). Linking organizational culture, structure,
strategy, and organizational effectiveness: Mediating role of knowledge management.
Journal of Business research, 63(7), 763-771.
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