LewisGlobalwork Saudi Arabia
For the LewisGlobalworks board, the current proposal for expansion into Saudi Arabia has been extrapolated into government/laws, economy, culture and technology considerations. This breakdown emphasizes the strategic issues if action is needed to push forward or reject the current Saudi Arabia proposal.
At LewisGlobalwork, we strive to maintain integrity of our production facilities. As a leading manufactuer of textiles, computers, and auto parts it is imperative to maintain our dependable global brand image while minimizing costs and risks, therefore the advantages and potential threats of expansion will center around the corporation strengths, regional threats, while suggesting risk hedging possibilites.
Government and Laws:
The political enviroment of Saudi Arabia has several key considerations mostly in regards to Islam. Because Islam is tightly bound to both the government and legal system, LewisGlobalwork will need to consider carefully the needed adjustments to operate in Saudia Arabia.
1) Foreign Policy
"Saudi foreign policy objectives are to maintain its security and its paramount position on the Arabian Peninsula, defend general Arab and Islamic interests, promote solidarity among Islamic governments, and maintain cooperative relations with other oil-producing and major oil-consuming countries."1 . Due to America's large oil consumption, US based companies have enhanced political influence in Saudia Arabia, despite being softend by the Islamic non-affiliation. In addition, there have been continued efforts by the US trade department to improve relationships with Saudi Arabia which is a distinct advantage for LewisGlobalworks: "During the Council meeting, held on January 15 in Riyadh, Saudi Arabia, officials from the United States and Saudi Arabia pursued various mechanisms for expanding their trade and investment relationship, such as actions to increase the protection and enforcement of intellectual property rights, open opportunities for government procurement, and improve stakeholder engagement in the development of standards and regulations" 2 Being a US based corporation and a major oil consuming nation in conjunction with the autoparts division provides some advantages in regards to political influence. LewisGlobalwork's may be able to potentially leverage the autoparts division with Saudi Arabia's positve bias towards oil producers/consumers. Despite this, if textile and computer manufacturing facilites, are created in seperate manufacturing plants, there is potentially less leverage for those divisions.
The Saudi Arabian Monarch system has key advantages and disadvantages."The king has broad powers with limitations coming from a need to observe Shari'a and other Saudi traditions." 3This affects the company in several ways. First, while the monarchy does not have a direct influence, it does imply that the corporation will have little to no power in cases the King decides to reject laws or propals in favor of LewisGlobalwork. This also implies that any confiscation or seizure of corporate holdings are vulnerable to the government's absolute power. In addition, because of the Saudi traditions are so pertinent to the government and political system, laws need to be observed carefully.
Furthermore, "Legislation is by resolution of the Council of Ministers and the Consultative Council, ratified by royal decree, and must be compatible with Shari'a. " 4 Shari'a being the code of moral codes by which is dictated by Islam has the largest impact for potential expats who may have moral or religious objections to beliefs such as polygamy. Expats may also have issues with strict anti-homosexuality policies. One solution may be to hire domestic managers or labor. Despite this, it is still necessary to be strictly follow laws and Shari'a code, thus...
Cited: 1) CIA information on Saudi Arabia https://www.cia.gov/library/publications/the-world-factbook/geos/sa.html
2) Cultural information on Saudi Arabia http://globaledge.msu.edu/countries/Saudi-Arabia
3) Improved relationships between Saudi Arabia and United States http://www.ustr.gov/about-us/press-office/press-releases/2012/january/united-states-and-saudi-arabia-work-strengthen-tie
4) FEMA related risks working in Saudi Arabia http://training.fema.gov/EMIWeb/edu/Comparative%20EM%20Book%20-%20EM%20in%20Saudi%20Arabia.pdf
5) Cultural and general information. http://fulbright.state.gov/uploads/02/02/020247f83b6af04c12a098e8c5a67e7a/NEA_Saudi-Arabia.pdf
6) General and business etiquette of Sadi Arabia. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2446421/
7) Politcal and financial risks working in Saudi Arabiahttps://new.edu/resources/financial-management-in-international-business
8) A large compilation of Saudi Arabia http://export.gov/saudiarabia/static/CCG_Latest_eg_sa_042616.pdf
9) Information about the fixed exchange rates of Saudi Arabia pegged to US dollar. http://lcweb2.loc.gov/frd/cs/oman/om_glos.html
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