Resources and Capabilities of Talabia - Case Study Example

First and International Business Resources and capabilities of Talabia The startup landscape in the Middle East isnot that noticeable than in the well developed countries. However, that does not mean that there are no talented developers who work on numerous services, applications and websites and who serve not only to Middle Eastern population, but also to the whole world. Their projects, starting with the sites built on the Groupon model and to video sharing sites there are many opportunities that Middle Eastern companies have worked out and developed. With the great potential to become leading region with its talents, Middle East is now searching for its opportunities to become second Silicon Valley, which will bring a considerable interest of its region and the rest of the world. However, in the present time, that number of enterprises is slowly increasing, along with the number of awesome startups in the region (15 Middle East startups you should know about, 2015). Such tendency is with the sustainable food startups that more and more often are popping up in the sustainable food sector. It is still in its infant stage. That is why, it brings an incredible opportunity for startups to offer their innovative sustainable food practices to numerous chefs, consumers and farmers. In order to build enough resources and influence to make an impact for these startups, they should fine-tune their operations, develop and implement so important strategies to obtain more secure financial investments. Without the aid of the consulting firms, negotiating the ins-and-outs of business can become a real challenge for aspiring startups, who at the beginning of their careers have no business experience or connections so far (Nathanson, 2014). If to take Kuweit with its opportunities for startups, the most vivid example wil be the Talabia online home delivery company launched in 2007 and which initially uses offline call center services. Its objective is to provide a free home delivery service for the leading food products in Kuwait. Moreover, the company strives to make it more convenient for consumers to order fresh and frozen food products being at home and have possibility to obtain delivered goods to their doorstep. In 2008, Talabia took their service online using its website with the language opportunities in both Arabic and English. Such opportunity made it possible to bring their home shopping experience to all connected households in Kuwait. The well-thought design of website with its simple and easy to use capability incorporated a well- organized and categorized product catalog. Moreover, it made it straightforward to the consumers to find the products they were looking for, the option to add them to the shopping cart and place one’s order. Also, Talabia website gave consumers the possibility to specify their preferred delivery time (About us, n.d.). In the present time, Talabia, as one the fastest growing home delivery companies in Kuwait, delivers products from leading food brands such as Sadia, Hilal, Lamb Weston, Gulfa, Hana and Hayat and also plans to continue adding more quality brands and products to attract more consumers and satisfy their needs (Meddah, 2008). Before the food reaches the final destinations, the consumer, it passes the entire food supply chain that starts with the primary production of food. In Kuwait there are many distributors of food, such as Jassim Alwazzan and Sons Company, the largest nation-wide distribution network for foodstuff in Kuwait, AL EID Food Company that is importing, selling, packaging and distributing food and consumer goods. After that food products are processing by Talabia and delieved to the final consumer. Talabia has organized its customer data base where it collects online orders and then uses such information in making it reach its customers anywhere in Kuwait within just minutes. Barriers to trade Thousands of customers who use Talabia have already experienced the easy option of Shopping at Home. That is why Talabia is committed to innovate and integrate more technologies to make Shopping at Home availability more effective and convenient for its buyers. However, to enter the new markets of such countries as India or Turkey, Talabia can face certain barriers to trade if it has a lack of infrastructure, policies and services that should facilitate the free flow of products over borders. The main problem is in the domestic and foreign market access with their quotas, import fees, local content requirements. Besides, there may appear certain issues concerning border administration that lead to the efficiency of customs administration. In order to enter Indian or Turkey market, Talabia should think over establishing convenient telecommunication and transportation infrastructure with the availability to transport goods remaining their high quality at the same time. Regulatory environment is another barrier to enter new market, since the investment policy in the foreign country differs from that in Kuwait. Besides, enlargement of services to other countries demands hiring foreign workers (Description of Supply Chain Barriers to Trade, n.d.). VRIO framework While the vision of Talabia is to deliver its goods and services to the consumer at a high quality, it can be considered as the basic strategic view. For that reason, the process of developing and successful implementation of strategic choices should lead the competitive edge. A special framework VRIO enables the company to evaluate the resources and capabilities of the company. The Value question is whether the organization uses its sources and capabilities fully? As the result of such question, the company will gain the increase in revenues or a decrease in costs. According to the VRIO framework, Rarity responds the uniqueness of the products or the services that the company represents. With the possibility of Talabia to deiver good right to the consumers’ home, its uniqueness is in providing shopping availabilities at home. While the VRIO framework of imitability illustrates the company whose services and products should have advantage over its competitors, for Talabia such analysis will enable the company to see and analyze the existing rivals on the market if such appear and find new approaches in conducting business to gain competitive advantage. Once the company realizes its value, rarity and imitability, the next step in reaching competitive edge is to use the available sources and capabilities, such as organizational structure, management systems and different policies (Cardeal & António, 2012). Financial and reputational resources in Kuwait For the country where Talabia is located, the financial and reputational resources are vital for the business to successfully run its activities. Thus, Kuwait is a relatively small country with open economy. It has approximately ten percent of world’s oil reserves which is positively reflected on its fiscal situation and relationship between authorities of power. However, for the country with which others may want to have business with the rank of eighty-sixth place in the world rank, it has all the possibilities for that. Besides, for the country that deals with the oil industry, Kuwait uses its reputational resources of desirable and socially-responsible behaviors for earning position of trusted for business country. On the contrary, countries with a reputation for not upholding contracts receive less investment for the development of their well-being. Through collaboration with numerous oil companies, the country earns the high level of trust. Sustainable environment means more than achieving economic growth for the country. Kuwait government strives to balance the economic growth and social development along with the environmental protection. It is working toward meeting the world’s growing energy needs and it also knows that its future depends on the well-being of the community and the environment. Resources in India With the establishment of economic and trade ties with other countries, it is important for the organizations to analyze what resources, know-how, natural and physical are available for the best cooperation. Thus, India is full of natural resources that are derived from the environment and contain multitude types of resource valuable for its economy. Besides, they are very heavily dependent on their consumption and export. India is a well-known country with its rare spices and herbs which are in a wide variety in the Indian forestry. Indian latest technical know-how and engineering advancements are also well-known for the world. Technological know-how are the important resources of success, which businesses find successful for producing primary foods, IT, intermediate products and pharmaceuticals. These know-how resources are essential mostly to small firms across India. The economic cooperation between India and Kuwait is rooted deeply and consists of bilateral trade. These relations have always been essential for trade dimension, because India has consistently been among the top ten trading partners of Kuwait. Kuwait has been a reliable and third largest supplier of oil to India and earned a great portion of trust for setting further business connections. During 2013-2014 the total bilateral trade of India and Kuwait constitute eighteen billion dollar, reflecting a marginal increase over trade. India’s imports from Kuwait were estimated in seventeen billion dollars. The last years, major items exported from India to Kuwait included food items, cereals, textiles, garments, electrical and engineering equipment (India-Kuwait Relations, n.d.). That is why for such startup company as Talabia that specializes on delivering fresh and frozen food to Kuwaiti homes, it is a unique opportunity to have closer relations with India and a great opportunity to open new market for the firm. Resources in Turkey Another country which has a wide range of its resources is Turkey, the country which water resources make the country the strategic item and a good place to conduct business with. With the main resources such as steel and iron, Turkey exports its products to many countries of the world, including Kuwait and thus increases the level of export significantly. If to take Turkish- Kuwaiti trade relations, the bilateral trade between the two countries is around two hundred and seventy five million dollars. Key competitors for Talabia With the development of technologies across the globe, for most countries it is not a surprise that online services have become the integral part of the local economy. Using different computer technologies, for food delivery in particular have earned great popularity in the recent decades. India is not the exception with its wide variety firms and companies of home delivered goods. For Kuwait it will be really great problem to enter the market of India with the intention to offer such home- delivered food. The convenience packaged foods business is already facing great competition from the rival-home-delivered food. With the well-organized business of home deliveries in the food service market, the main and larger share of the consumers’ mind space is covered by the foods delivered just straight home (Singh, 2014). While every single restaurant in India makes home delivery today, for Kuwaiti Talabia to enter this market will be extremely risky. If to take into account the other country with which Kuwait has set good relationship, Turkey, the situation is not even better there. “Denet Gida”, “Nourish Istanbul”, “Kedocay” and many others are the competitors of food delivery service to each other inside the country and definitely outside of it. Most of them deliver prepared meals or sell half ready food in Chinese, Japanese, Indian and other cuisines. Besides, local food delivery services are competing with the world-known corporations such as Asda, which represent their operations worldwide and are ready to fight for every single customer. Competition among Kuwaiti companies The market of home delivery company in Kuwait is not limited with one firm, whose services are unique or serve particular group of people. Thus, Alyasra, a Kuwaiti based firm that operates foods distribution and fashion retailing with such leadership positions in Frozen Foods is a strong rival to most of firms of the same industry. Beside the comprehensive distribution and trade marketing services for international and regional brands, Alyasra is the leader in selling, marketing and distributing food products as for consumers at home as for healthcare and educational establishments and restaurants. Talabat.com is also one of the largest food delivery portals in Kuwait with the availability to order its products online. A chain of services, Talabat.com is operating Kuwait, Bahrain, UAE, Qatar and Oman. United agricultural production company The agricultural sector in Kuwait is well developed and its significant member is the United Agricultural Production Company, established in 1976. It provides the major part of fodder for agriculture industry in Kuwait. The UAPCO provides all important agricultural materials and equipment for governmental and private sectors as well as for individuals. These are clay, forage, honey. Also, the UAPCO gives Kuwait the most important symbol, the dates fruit. UAPCO represented production of natural honey in its facilities, it now produces high quality forages of all types, which are nutritious for all classes of livestock. Besides, it is proud for clay for all types of pots and decorative pieces to be manufactured. Beside the wide range of products, UAPCO executes main works in landscape and irrigation projects. With such a broad range of products and services that company performs, it earns the competitive advantage over its competitors in Kuwait and other countries it serves for. If to compare activities and the organizational approach of United Agricultural Production Company, there is a lot that small firms of not only agricultural but also other spheres could take into account. It is that broad amount of services that one company is able to represent and stay on the leading position of its area. For such young companies as Talabia, it is important to be able to learn the best from the well-organized and established companies like UAPCO. The more services and products the company is able to represent, the more achievement –oriented it may become. Strategy for entering new markets in India and Turkey The range of the effect of foreign direct investment inflows or FDI on growth depends on how home investment is impacted. FDI has a crowding-in effect if it enhances the stock of physical capital and gives technology to improve the productivity of domestic companies. In addition, the positive external effects from FDI result from transmission of new ideas, skills of entrepreneurs and other knowledge to be possible in domestic investment. Besides, FDI substitutes domestic investment if it competes with home producers and enhances average fixed costs of entry. Foreign direct investment is critical for the development of many countries, especially in period of economic crisis. First of all, it brings new capital and introduces new technologies and management styles. Further, it helps to create jobs and stimulates competition that in turn brings down local prices and improves people’s access to goods and services. While Canada, Georgia, France, Afghanistan and Egypt the fastest start-up countries, which require ten days only, nearly ninety percent of countries restrict foreign companies from entering in some sectors of their economies. Thus, Sub-Saharan Africa and the Middle East as well as North Africa are restricted from completion of procedures by foreign companies (Besta, 2010). For the company to enter the new market, it is important to vary with cost, risk and the degree of control that will be exercised over the firm. The easiest way to enter the new market is exporting while using direct or indirect method. Other form can include the global operations or joint ventures in the countries where the company wishes to enter. For instance, agricultural products use agents or distributors or even involve government of other country for establishing cooperation. For Talabia method of exporting is impossible due to the specter of its activities, such as home delivery of products. With the advantages of exporting to be able to learn overseas markets before investing and reduction of potential risks of operating overseas, there are more perspectives for such small enterprise as Talabia to think over joint venture in India and Turkey, the markets of which it wants to enter. Sharing ownership and control over the property of Talabian firm by means of property right and well-organized operations, the company will have more advantages, which are sharing the risk and ability to combine the local in-depth knowledge with the foreign partner. Besides, joint venture would have joint financial strength and would be possible to be a source of supply for the third country (Market entry strategies, n.d.). Joint venture in India While the company wishes to invest in the Indian company through signing a joint venture, the whole process will be governed by the Foreign Direct Investment policy and the Foreign Exchange Management Act. Indian Investment Centre is the only one window agency for creating joint ventures that advises foreign investors how to set up industrial projects and it also provides information regarding investment environment and opportunities for both sides of the process. While Talabia is the company, it is the most preferred structure for the joint venture that will be opened in India. The government encourages investment to be in the form of equity capital. For private limited companies in India the prescribed share capital will constitute approximately a thousand and six hundred dollars (Guide to Guide to Joint Ventures in India, 2014). Direct export in Turkey Turkey represents the wide range of excellent immediate and long-term opportunities for firms that wish to make investment in different industries across Turkey or have business relationship with this country. The modern Turkey is a growing economy with lots of favorable conditions such as geographical and demographical, growing consumer middle class, strong banking sector and a growing market for exporters all around the world. When the export level was at two billion dollars in 1980, in 2002 it rose to thirty five billion dollar. Just like in all developing countries, export is the key to economic growth for Turkey. To maintain such rate, it demands the country to increase the export. For 2023, its export target is five hundred billion dollars and in order to achieve this goal, Turkey needs foreign companies, which would produce within it and the sell goods abroad. Foreign Direct Investment in Turkey decreased in 2012. For this reason, establishing new relationship with this country will be beneficial for such startup as Talabia and for Turkey itself. Marketing mix used in India and Turkey While the marketing mix is defined as “putting the right product in the right place, at the right place and at the right time” it needs a lot of entrepreneurial skills to go into setting (Understanding the Marketing Mix Concept – 4Ps, n.d.). Even if the mix is realized and understood, it does not guarantee the product or service to be fully successful. However, marketing mix is important tool in the company ability to understand what its product or service can offer and how to plan a successful offering. In India marketers constantly should think how to adapt to changing markets and require the consumers’ demands in order to bring their products to people. These challenges stand out from the crowd in India’s dynamic and rapidly changing business environment. Whether the country or a company wishes to entry the Indian market, it should use similar marketing mix which it used in other global markets. When planning the strategies in distribution across India, the marketers should apply different approaches of how to achieve the positive results. They should know what their customers want and what features do they have to meet. Besides, not the last place in the representing of products is the brand and how it will be called. The price should comply with the quality of goods and services and be reasonable regarding the consumer availability to pay for. In the age of technology, the important feature will be the place where the buyers will be able to look at the product or services. Thus, using special application will bring more effect than just make the paper advertising of certain services. All these elements will enable the product or service to vary itself over competitors. In Turkey, traditional marketing mix is used so the companies to be enforced to use different tools to gain competitive advantage in global markets. Recommendations While the aim of most companies and investors is to maximize their profit, both sides need to understand the importance of plant location for their enterprises and also significance of choosing of the right location for a holding in international investments. However, for startups, it is quite hard to enter new market while being on the stage of attracting local consumers. The first task of the young company is to develop own strategy in attracting and retaining customers. When the company feels itself strong enough to enter new market, it should consider that either their core markets start declining or they have outgrown these core markets and continue to grow into new direction. Notwithstanding the size of the company and its history of existing, there are many risks and challenges that can appear. However, with the certain best practices for mitigating such risks, the company is able to achieve desired business results in the most effective way. These practices can include making a commitment to dominate the core market, identify the best entry point and define certain entry market strategy along with the validation of one’s assumptions and have an exit plain in case if something does not work properly. Works cited About us, n.d. The official web site of Talabia, Available from http://www.talabia.com/page.aspx?id=4 [Assessed on 16 January, 2015]. Besta, S., 2010. FDI restrictions stifle start ups: World Bank report, International Business Times, Available from http://www.ibtimes.com/fdi-restrictions-stifle-start-ups-world-bank-report-246564 [Assessed on 16 January, 2015]. Cardeal, N. & António, N., 2012. Valuable, rare, inimitable resources and organization (VRIO) resources or valuable, rare, inimitable resources (VRI) capabilities: What leads to competitive advantage? Journal of Business Management Vol. 6(37) Description of Supply Chain Barriers to Trade, n.d. 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How sustainable food startups can thrive, The Christian Science Monitor, Available from http://www.csmonitor.com/Business/The-Bite/2014/0804/How-sustainable-food-startups-can-thrive [Assessed on 16 January, 2015]. Singh, N., 2014. Home deliveries bite instant foods, The Times of India, Available from http://timesofindia.indiatimes.com/business/india-business/Home-deliveries-bite-instant-foods/articleshow/38772931.cms [Assessed on 16 January, 2015]. Understanding the Marketing Mix Concept – 4Ps, n.d. Entrepreneurial insights, Available form http://www.entrepreneurial-insights.com/understanding-marketing-mix-concept-4ps/ [Assessed on 16 January, 2015]. Read More