Asset allocation is a critical factor that determines growth of small businesses across the world due to the volatility in the competitive business environment. The allocation of assets determines the amount of investments of a country and its asset classes. Investors who have wealth for allocation can be individuals or companies who want to mobilize their resources in various countries and asset classes, and are subject to market forces in a liberalized economy according to Porter’s model. For instance, retail industries in Saudi Arabia are subject to oil prices, stock markets, political and economic factors, and market forces according to Porter’s model. Abdullah Al Othaim Markets Company, Aldrees Petroleum and Transport Service Company, National Agricultural Marketing Company, and the Saudi Automotive Services Company are retail companies in Saudi Arabia that face similar political, economic, and social issues.
Asset allocation has significant benefits to retail industries for they have high returns but they are subject to volatile market conditions that affect their lucrative activities. Macro-analysis of Abdullah Al Othaim Markets Company using Porter’s model shows that the company is very lucrative because it enjoys large market share due to high demands and supply of its goods. However, the company experiences the threat of entry and substitute products due to liberalized trade, which is severely affecting expansion of business and stability of prices in the market. Moreover, there is stiffer competition from other companies that offer same commodities such as National Agricultural Marketing Company, Saudi Fisheries Company, and Penn Traffic Company. High oil prices due to local and international policies have affected the growth of the company thus overpricing estimated stock value in the market. Therefore, as part of recommendations, investors should sell their stock with the assumption that prices are going to fall and asset allocation favors small investments.
Macro-analysis of Aldrees Petroleum and Transport Services Company shows that Saudi Arabia’s large population provides a huge market for petroleum products and transport services. The company has also expanded its infrastructure hence reaching out to many customers and ensuring constant supply of its commodities and services. The company experiences threat of entry, threat of substitutes, and competitive business environment from other companies with related products and services like Natural Gas and Industrialization, and the United International Transportation Company. Political and economic environments have favored progress of the company in the stock market since microanalysis of estimated stock value is undervalued. Undervalued stock value needs overweight and thus attracts potential investors to buy the stock with the assumption that prices are going to rise and this favors huge investments in assets allocation.
National Agriculture Marketing Company macro-analysis portrays that the company has fluctuating demands of its commodities, which peak in the months of religious festivities and decline in other months. The company has established various strategies of selling its products including online booking and selling of its commodities to reach out to great deal of customers and provide constant flow of supplies. However, the company faces great threats such as competition, threat of entry and threat of substitutes from other related companies. In addition to market forces according to Porter’s model, high oil prices, political and economic environment influence growth of the company through stock market and formulation of policies. Microanalysis shows that estimated stock sale is undervalued hence attract investors to buy with the assumption that these stocks will rise. Undervalued stock value also needs overweight by allocating huge investments.
Macro-analysis of the Saudi Automotive Service Company depicts that it has a large market share given that Saudi Arabia’s population is also large. To reach out to its customers, the company has established strategic restaurants and transport services in various places with the objective of targeting influx of people during the month of Ramadan. Liberalization of market, competition and the substitute commodities and services threatens lucrative growth of the company. In addition, political and economic environments have influenced oil prices, policies, and stock market trends, thus the company has estimated stock undervalued. Undervalued stock value requires overweighting by floating more stock into the market for investors to buy and allowing huge investments with the assumption that prices are going to rise. Therefore, the key issues that affect retail industries in Saudi Arabia revolve around the Porter’s model as well as the oil prices, political and economic environment.