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Saudi Arabia Oil Companies: Global Strategy

To go global, companies should take into account cultural differences and perceptions, unique values and demands of consumers. Globalization changes the nature of traditional business relations and creates new opportunities and threats for companies. Companies consider the life-style factors influencing product development. Urbanization, leisure, competition, discretionary income, travel, styles, tastes, informality, and convenience have led to the emphasis on product form, readiness, packaging, combination, and selection convenience. Only with a mass market can the necessary conformity result that assures the success of the global strategy.

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Global strategy suits best multinational corporations because great similarities between buyers and products are existing. The rational for this strategy is that the very perceptions and interpretations of environmental developments by consumers create product opportunities (Doyle & Stern 2006). This strategy is effective because significant demand for personal computers exist in all countries (Kotabe and Helsen, 2003). Since products are basically means of solving problems for buyers and sellers, physical environment, technological, and cultural forces influence perception of them. It is not merely individualism or the willingness to accept something new that supports innovation; conformity plays a large part. In Saudi Arabia, people may enjoy purchasing, especially where new items are concerned, demand does not exist automatically. Liberal economists suppose that it is necessary to utilize efficiently such marketing tools as advertising, personal selling, pricing, sales promotion, and channels of distribution to create demand. Manufacturers and distributors must learn how to create and extend demands (Paley, 2006).

Outsourcing decisions help Saudi Arabia oil companies to reduce costs of product development and attract top talents. The outsourcing is effective because it will help companies to concentrate on competitive advantage and compete with national and domestic companies (Lucas. 2000). In Saudi Arabia, reliance on habit is especially evident in many purchases of convenience products. Here the expectations are based on past experience and learning, and circumvent the decision process. However, in situations involving important decisions, where there is less experience available, buyers will go through a more intensive process of information gathering and decision making (Paley, 2006). During the period of globalization, the main indicators of economic health are stable and favorable taxation, government investments, low interest rates, favorable legislation favorable exchange rates, trade restrictions or subsidies and capital flow restrictions. Where incentives are strong enough and the expectations are high or great, the buyer does not act habitually and is willing to put some effort into solving his consumption problems. Markets have been greatly interested in the role of habit, impulse, and drives in buyer selections and decision making. There are many situations in which each consumer choice does not involve a new decision process but becomes rather habitual (Kotabe and Helsen, 2003). The main factors of globalization in the UK and macroeconomic processes are stable employment, high living standards and price stability.

Companies in Saudi Arabia should take into account that buyers are not totally inept or irrational in making purchases, particularly household purchases. The main areas of globalization are oil industry and oil modernization, and telecommunication industry. Actually, consumers have become quite professional in some areas of consumption. In order to globalize, plants and factors in Saudi Arabia introduced assembly line and quality circles. Veritable purchasing agents, they often plan their purchases, especially of high-priced durable goods such as automobiles and washers and dryers. Information is important to them about the advantages and limitations of various types of items (Kotabe & Helsen 2003). However, for many products it should be noted that even given the technical information, consumers do not have the background necessary to interpret the data and make the wisest purchasing decisions. The household that shapes the learning of tastes and preferences is a very influential force in personal consumption. As a result of past experience, customers have preconceived notions or attitudes that shape their view of reality and hence their decisions (Kotabe and Helsen, 2003). In order open its markets to other companies, Saudi Arabia joined the World Trade Organization.

There is great volatility in international marketing. A political coup or a dramatic change in Saudi Arabia’s legal environments can produce the need to change both business practices and marketing practices overnight (Lucas. 2000). The lesson for the marketing practitioner is that nothing is done until it is done and that things constantly change. For example, the delivery of a planned route sales training program in Eastern Europe was interrupted because of local political unrest (Paley, 2006). The economic lesson is not that an intervention is inappropriate but that the establishment of systems and processes requires a series of small steps taken over time. Any business practitioner who aspires to work globally must not be thrown off stride when circumstances or business necessities change dramatically. One of the great frustrations for global, field-based executives is that international headquarters may not have a complete picture of what is happening locally. In other words, corporate policy making, measurement, and enforcement often do not take adequate account of local practices or circumstances. This is particularly true in developing markets where basic infrastructure, such as phone service, makes regular contact with policy makers difficult. For example, a decision driven by a U.S. headquarters to initiate performance management practices in a subsidiary unit in Italy did not fully recognize the militancy of a local union or its potential for delaying or even halting implementation of the new work rules. Headquarters staff needs to be more patient, and local personnel need to communicate their circumstances much more concisely. In particular, greater clarity is required on what outcomes are expected and greater patience is required to allow local operations to find the most effective way to achieve an end result (Lucas. 2000).

Marketing practices are tailored to the sophistication of the market and the employees working in those markets. Balance of payment crisis demanded new ways of economic management. Direct government investments in certain industries and inflated wages helped the UK to overcome economic problems and globalize its trade. A comparison of almost any practice common in the United States with one in a developing market such as India or Vietnam will show great differences. In developing markets, practices must be slimmed down and given greater sophistication only as the workforce and management become more adept. Merely starting up a production line for soft drinks is a Herculean chore for individuals who have had limited exposure to modern manufacturing technology. An American company had developed standards for business conduct and planned to apply them to its business in Japan by means of a training program (Lucas. 2000). The company did not fully consider how its standards would be interpreted by the Japanese and ultimately had to redesign the training program to fit the Japanese learning style. The American company had erroneously assumed that its specific standards of behavior would apply to all people in all situations. The American culture is characterized by principles and legal codes that are assumed to have broad application, but the Japanese are much more situational. If a production line must run in a certain way and at a certain speed, that very fact will guide and focus the behavior of those ensuring that line speed. Although culture is important in determining how the workforce will organize to achieve that line speed, it will have very little to do with the speed of the equipment. Start with what must be accomplished and then be ready for cultural consequences, but do not assume that cultural consequences come first.

Insider trading involves the use of nonpublic information likely to be important to a reasonable investor. This confidential business information belongs to the corporation, to its shareholders. securities laws dictate the time and method that certain important information can be released to the public (Bishop 79). The disclosure of information, however, lies within the discretion of a firm’s executive management. Nonetheless, the firm’s executives must exercise that discretion in conformity with the obligations prescribed by reason of their fiduciary relationship with the firm and its shareholders. A classic example of insider trading involved Paul Thayer, then chairman and chief executive officer of LTV Corporation. As a director of Anheuser-Busch and Allied Corporation, Thayer learned that LTV would make a tender offer for Grumman Corporation stock, and, further, that Allied would tender takeover bids for Supron Energy Corporation and for Bendix. The firm’s employees are also prohibited from selling or giving away inside information to someone who is likely to use it (Kotabe and Helsen, 2003). A multicountry strategy helps companies to reach target audience and inform potential consumers about this service. This strategy is selected because market conditions differ in all countries. A reaction may be influenced by opinions and preferences which, in fact, shape consumption. Both opinions and preferences are acquired and not inherited-they must be learned.

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References

Kotabe, M., Helsen, K. 2003. Global Marketing Management. Wiley.

Lucas. M. 2000. Understanding Business Behavior. Routledge; 1 edition.

Paley, N. 2006. The Manager’s Guide to Competitive Marketing Strategies. Thorogood.

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