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International Business and Saudi Arabia Evaluation Essay


One international company that has remained on the successful path is Wal-Mart. Wal-Mart had set out different strategies that enabled it to succeed in numerous fronts. For instance, the company has edged its competitors by producing several brands of all its products.

As a result, customers have been able to choose products from a wide range of substitutes hence satisfying their needs.

This strategy has attracted and maintained customers in the premises as there are minimal chances of missing to purchase a product (What makes Wal-Mart successful?, 2013). A customer who wants to purchase a luxury watch has varieties like Omega, Rolex, Rado, and Cartier.

From this scenario, a customer can choose a watch from the different brands of watches. In addition, Wal-Mart has adopted the cost-cutting strategy in order to offer consumers products of low prices as compared to their competitors in the market.

The Company’s ability to provide customers with low prices has made it realize the value for their money. The move has also made the company gain massive buying power.

The low costs have made Wal-Mart gain competitive advantage over its competitors. The cutting of costs on products has also assisted the company to save on expenses.

Moreover, its employees think outside the box on service provision to customers. The culture has facilitated the building of strong relations between customers and employees. Organizations that have adopted this culture have realized success in their operations.

The logistics and distribution networks at Wal-Mart have been strong. The Company has ensured that it brings its products close to the customers as possible.

The Company believes that effective management and strong creative decisions are the essential cornerstones it requires in strengthening its foundation and place as a chief actor in the business environment (What makes Wal-Mart successful?, 2013).

A clear supply chain strategy improves customer service, increases profits, and continues to minimize the reduced costs of production and operation.

According to Hill & McKaig (2012), a right logistic strategy facilitates achievement of business goals by engaging the management team in meeting the strategic objectives of a firm.

In free trade, participants are able to export or import products without tariffs. The idea where participating countries do not meet extra costs when receiving or sending products to their members has numerous benefits. Increased free trade has enhanced customer satisfaction.

The globalized market increases stiff competition among the member countries hence lowering the final consumer prices (Edge, n.d.). Additionally, the free trade increases innovations and competition among companies hence improving their innovative ideas.

Companies have to create comparative advantage over their competitors by coming up with new products in their fields. From this perspective, consumers continue to get better products all the time. Free trade has also increased efficiency and production levels of countries.

For example, countries specialize on producing products in areas where they enjoy comparative advantage instead of focusing on areas where they have little competitive advantage.

When the production level of a country increases, its efficiency also increases through purchase of cheaper resources from other member nations.

The continued free trade increases the economy of participating nations, as they are able to export and import large volumes of products at reduced costs (Edge, n.d.).

When this trend increases, the productivity goes up thereby raising the wages and salaries that employees in these countries receive. For instance, when US lowered its trade restrictions, the GDP went up since consumers are able to purchase quality products at cheaper rates than before.

This reveals that consumers’ expendable income increases with continuous trend of free trade. Moreover, free trade is beneficial as it reduces poverty and assures nations gains in foreign exchange.

Countries that buy products from other nations using cash clearly send non-interest IOUs in exchange for the real products. For example, Japan can purchase steel from UK at the present market value.

Later, UK can use the Japan’s funds to purchase vehicles from Japan at the future market price. Again, nations that open their borders to free trade increase their income levels.

An example is in 1990 when developing nations that removed trade restrictions across their borders realized income growth three folds than the countries that continued to lay restrictions.

Additionally, the trade minimizes conflicts world over since participating members learn to understand, appreciate, and respect the cultures of their partners. The mutual respect that exists among nations minimizes chances of the countries from going to war with each other.

Even though the trade increases unemployment and stiff competition to some level, the benefits that accompany the entire processes are greater than the demerits (Edge, n.d.).

Saudi Aramco has been operating in Saudi Arabia since 1933 as a global petroleum and chemical enterprise. The Company has been producing, refining, distributing, and marketing petroleum products.

In a bid to expand its presence in the global market, the company ought to consider some factors that may assist its smooth operations in the global and dynamic market.

First, the company should study the business environment in order to understand the legal conditions in other nations since business laws and regulations differ across nations.

Saudi Aramco should prefer business environments that levy low business fees as a way of reducing costs and enhancing growth. This factor assists in preventing scenarios where excess fee and regulatory fees can bog down the services of the oil producing company.

The management at Saudi Aramco can visit The World Bank’s website to put side-by-side regulations that exist in over 170 nations (Lister, 2011). The Company should also lay out a strategic plan of how it intends to operate in the global arena.

Saudi Aramco Company should minimize risks and enhance success by choosing foreign nations that have favorable business environments and a few legal restrictions since many legal restrictions imply high regulatory fees and massive taxes that can derail the establishment of the company in the global markets.

Saudi Aramco Company has to screen its distributors and suppliers before going global in order enhance success in its operations in the international market.

The Company must carry out a vivid analysis of its supply and delivery chains to be certain that they treat employees fairly, use proper health and safety standards, and use non-toxic manufacturing options.

This move can assist Saudi Aramco Company to save on billions of Riyal that could have risen from rejected goods due to unsafe practices of the foreign producers. In addition, Saudi Aramco Company should understand the global shipping logistics as a way of avoiding delays and unnecessary costs.

The management at the company must understand how they will move their products from one point to another in order to record success. The Company will be able to understand the custom laws and associated costs from all their shipping points (Lister, 2011).

The firm can minimize risks by approaching freight-forwarder companies since they specialize on logistics in the global commerce. These companies can help Saudi Aramco Company to plan on its shipping needs and evaluate the shipping prerequisites for the target countries for business.

Saudi Aramco Company should choose a country that has less global shipping requirements, as this will cut the overall costs of delivering products to their destined locations.

The reduced costs also lower the final prices of the products hence enabling Saudi Aramco Company to gain competitive advantage over its competitors in the foreign market.

Moreover, the company ought to understand the languages and cultural practices of the countries in which it plans to set its branches (Lister, 2011). It can be a suicidal move if the company can ignore these factors and decides to go global.

The business may fail to develop connections that can be beneficial in long-term perspectives. Saudi Aramco Company can overcome this factor by employing foreign consultants in all its branches in the foreign nations.

The foreign consultant will minimize risks by assisting with diplomatic needs that local Saudis cannot solve. Alternatively, Saudi Aramco Company can train its all-time managers and consultants on how to approach the foreign market by learning the foreign languages and cultures.

In this situation, the Saudi Aramco Company should hire a foreign consultant to assist in the services of language translation and diplomatic needs since the other option of training staff to understand the language and culture of the foreign countries is expensive and even delays the entire process of going global.

Saudi Aramco Company should consider countries that have simple cultures, which are easy to understand and hire foreign consultants who are natives of these nations.

References

Edge, K. (n.d.). Free trade and protection: advantages and disadvantages of free trade. NSW HSC Online.

Hill, C. W., & McKaig, T. (2012). Global Business Today (3rd ed.). Boston: McGraw-Hill Ryerson.

Lister, J. (2011, August 5). What Should a Company Consider Before Going Global?. eHow | How to Videos, Articles & More – Discover the expert in you. Web.

What makes Wal-Mart successful?. (2013, May 21). HubPages. Web.

This evaluation essay on International Business and Saudi Arabia was written and submitted by your fellow student.
This paper has been submitted by user Eleanor Rutledge who studied at Nova Southeastern University, USA, with average GPA 3.64 out of 4.0.
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Rutledge, E. (2019, July 19). International Business and Saudi Arabia [Blog post]. Retrieved from https://ivypanda.com/essays/international-business-and-saudi-arabia/

Work Cited

Rutledge, Eleanor. "International Business and Saudi Arabia." IvyPanda, 19 July 2019, ivypanda.com/essays/international-business-and-saudi-arabia/.

1. Eleanor Rutledge. "International Business and Saudi Arabia." IvyPanda (blog), July 19, 2019. https://ivypanda.com/essays/international-business-and-saudi-arabia/.


Bibliography


Rutledge, Eleanor. "International Business and Saudi Arabia." IvyPanda (blog), July 19, 2019. https://ivypanda.com/essays/international-business-and-saudi-arabia/.

References

Rutledge, Eleanor. 2019. "International Business and Saudi Arabia." IvyPanda (blog), July 19, 2019. https://ivypanda.com/essays/international-business-and-saudi-arabia/.

References

Rutledge, E. (2019) 'International Business and Saudi Arabia'. IvyPanda, 19 July.

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