A one-page Executive Briefing that was one of the deliverables required for my International Business final group project: "The Apparel Market of Saudi Arabia: An Untapped and Growing Opportunity for US Firms." Other deliverables included a presentation and a more in-depth Executive Briefing report.

1. Saks Off Fifth is primed for expansion into Saudi Arabia. Supporting evidence stems
from both current characteristics of the rapidly modernizing country, and the specificities of your
company itself. The synergy between the two, then, justifies the international venture now.
From a global comparative standpoint, both Saudi Arabia and the region it belongs to
have undergone significant changes which have made them more attractive for international
apparel companies than parts of the world. When it comes to economics, not only is the Middle
East enjoying stable GDP growth, but the region is also diversifying into other industries outside
of oil. Saudi Arabia, in particular, is focusing on developing its apparel, technology, and
hospitality sectors - three realms of commerce which are not only supportive to one another, but
to the desires and tastes of two important target customer segments: global travelers and native
Saudis. In contrast, other countries, such as China, may not continue to avidly participate in
international business as they instead channel their energies and resources to only domestic
consumption.
Demographic and psychological shifts in the Middle East also support the introduction of
Saks Off Fifth. Such trends include overall population growth (with substantial growth coming
from the youth segment), heightened consumer interest in joining the global conversation via
foreign brand patronage, and an increasing of the population’s tech-savviness. On the other hand,
countries in Europe are seeing their population numbers decline, and the citizens of nations such
as Bangladesh are still struggling with their country’s backwardness. Markedly, Saudi Arabia’s
female population - Saks Off Fifth’s main target customer - is enjoying more freedom, and, as
they increasingly participate in the public sphere of society, they will continue to shed
traditional, restrictive values in favor of experimenting with personal style and self-expression.
Infrastructure developments ranging from road improvements and the establishment of
better school curricula, to the creation of FDI-supportive institutions and new laws which make
setting up foreign entities even easier, reveal that Saudi Arabia’s government itself would
support a Saks Off Fifth entry.
Now of course, no opportunity comes without risk. Foreign firms may still hold a
negative perception of Saudi Arabia, due to the country’s corruption-riddled history. But
significant improvements - in counterterrorism, information transparency, banking safety, etc. -
have been made, thus equipping MNEs with the necessary instruments for effective risk
management. Saks will therefore be able to cut costs not only through taking advantage of Saudi
Arabia’s cheap real estate and vacant malls, but also through cementing protection from future
problems from the get-go. For example, although continuing cultural and religious differences
between Americans and Saudis differ will require Saks employees to modify certain aspects of
behavioral conduct, an increasing number of Saudi business people are learning English,
obtaining degrees from US institutions, and, in general, are simply more culturally open and
accepting than ever. Establishing an honest and sustainable joint partnership, then, has never
been easier, though initial partner selection should still be carefully undergone.
In short, the specific characteristics of Saudi Arabia which perfectly fit into Saks Off
Fifth’s existing strengths and brand position are (a) its substantial market of tech-savvy and
image-conscious citizens who can be primed to be both avid customers as well as loyal
employees; (b) the low rents and high vacancies of its malls; (c) the modernizing of
infrastructures which not only support foreign firm entry, but permanent success; and (d) the
modernizing of Saudi mindset, as evident from the government’s avid utilization of funds in
pursuit of securing a strong place as the global business arena for its country.
PUDM4050 Spring 2014 Executive Brief: Business Recommendation for Saudi Arabia by Anne Chen