Emaar Company - Competitive Position, SWOT Analysis, Global Strategic Map, Means, and Tasks - Example

Executive summary Emaar Company is a Dubai based company that is the largest real estate developer in the gulf region, Africa and South America (recently). It was established in 1997 to engage in construction of housing communities, shopping centers, hotels, tourists’ attractions, palaces, offices and industrial buildings. Emaar Company has been able to revolutionize the real estate sector not only in Dubai but also in other parts of the world where it has set up its businesses. The company has been able to introduce its world class property development standards that have forced locals and regional competitors to adjust themselves with regard to payment facilities, price levels, quality standards and market approach strategies. Emaar in fact made history in the sector in 2001 when it offered Dubai residents long-term leasehold properties and in addition to this, it went ahead to convert its properties to freehold sales that would be open to all people irrespective of their nationalities. The company has been able to expand to other international countries through joint ventures and foreign direct investments. The main strengths for this company lie in the strong financial base it has with many banks in the Gulf region and a strong government support in Dubai. Its obvious opportunity is the diversification of products and services in China, India and Africa coupled with technological innovations in the industry. The threats available for this company is competition and harsh government polices that are unfavorable for the industry especially in Africa and China. Its weakness is the ability to handle its workforce very well and lack of good remuneration for resourceful employees. The company has developed a global strategy map which is inline with its vision of 2010 that outlines the plan of action for this company for the next three years. Table of contents 1.0 About Emaar Company 3 2.0 Industry analysis 4 3.0 Industry structure 5 4.0 Emaar’s competitive position 5 4.1 Competitors 6 5.0 SWOT analysis 7 5.1 Environmental scan 7 5.1.1 Opportunities 7 5.1.2 Threats 8 5.2 Organizational scan 8 5.2.1 Strengths 8 5.2.2 Weaknesses 10 6.0 Global strategic map 10 6.1 Goals and objectives 11 6.2 Means 11 6.2.1 Internet marketing strategy 11 6.2.2 Pricing strategies 12 6.2.3 Organizational management and planning 12 6.2.4 Ethical and corporate responsibility stance as a marketing strategy 13 6.3 Promotion 14 6.4 Distribution 14 6.5 Tasks 14 6.5.1 Foreign direct investment (FDI) 15 6.5.2 Joint ventures 15 6.6 Structure 16 7.0 Recommendations 17 8.0 Conclusion 18 9.0 References 18 1.0 About Emaar Company Emaar Company is a public joint stock company that is based in Dubai and it is currently the world’s leading real estate company. It was established in 1997 as a construction company to be owned by the government-3%, individuals-34%, and other floating shareholders, 34%. The company also has been developing several real estate projects in Dubai-its primary market- and some of them include; Arabian Ranches, The Meadows, emirates Hills, The Views, The Lakes, The Dubai Marina, The spring among others. Since its inception in 1997, the company has witnessed tremendous growth and has almost 15,000 homes occupied by satisfied customers and a continually growing tenant base. One of the world’s landmarks that were built by Emaar is the Dubai Mall which is the world’s largest shopping mall and an entertainment centre as well. Others include; the Dubai Lake Hotel, The Old Town Island, Burj Dubai among other apartments and buildings that are credited to the company. (Emaar Company Reports, 2007) By the end of December 31, 2006, Emaar Company had an improved financial growth with a record net profit of U.S Dollars, 1.735 billion. This is an increase of 3% compared to what has recorded over the same period by the end of 2005. Emaar is also listed in the Dubai financial market and the Dow Jones (Emaar Company Reports, 2007). The market value for the company has currently improved and this better signs for the future with the company predicting good returns (Emaar Company Reports, 2007) The company was also recognized for this impressive performance and was awarded the ‘Best Developer in the United Arab Emirates’ and received the Euromoney Real Estate Award for the second consecutive year running. In the African continent, Emaar received the Best Developer award in Egypt following its strategy to develop master-unsuited and luxury planned societies in some of the emerging markets around the continent and other parts of the world. All these awards are a culmination of years of hard work, innovation and expansion by the company. Industry peers in this field vote for these awards and recognize a company within the industry that consistently providers its customers with high quality real estate projects, as well as other individual projects that are either in the planning stage or have been completed. (Emaar Company Reports, 2007) 2.0 Industry analysis The real estate industry is one of the lucrative industries that have had its fair share of positive and negative criticism. Although the competition is not as tough as it is in other sectors, small upcoming real estate companies have emerged and they are making the industry more competitive. Given the expectations of the world population by the end of 2020, the real estate industry is poised to continue expanding for the next 15 years. Industry analysts also expect the current liberalization initiatives to overhaul the real industry for instance the legal framework that is currently being drafted to expatriate freehold ownership of property will significantly contribute to the growth in the industry. Emaar has especially positioned itself to capitalize on this especially within Dubai. (Lee and Carter, 2005) There is no doubt that the Dubai real estate sector has continued to become one of the driving economic sector for the United Arab Emirates, this is because it has been able to contribute 10% to the non-oil GDP for the UAE. This is one of the remarkable portions of the economy that is enjoyed by the country and a further 126% growth in the expansion of residential houses, commercial building s and industrial estates. There have been increased government initiatives that have promoted the industry in Dubai including the Dubai Media City and the Ali Free Zone that has generated opportunities for companies like Emaar to improve the industry. 3.0 Industry structure The real estate industry is performing poorly in terms of market performance in Africa and thus Emaar Company is faced with the challenge of going to Africa and capitalize on this fact. The company has utilized the concept of globalization and thus it has been able to survive and maintain its market share in the industry (Bell, 1980). The real estate industry is structured in manner that enables all players in the field to specialize either in small holder or large estate development. This industry is considered to be the least flooded market in terms of the products being produced and sold to people. Finally, there is the brisk economic growth for countries such as Chinas and the UAE, changing demographic characteristics, high population growth rate, etc that have helped revolutionized the real estate industry not only in Dubai but also in other parts of the world (Emaar Company Reports, 2007) 4.0 Emaar’s competitive position Emaar Company has a strong name which helps it to have a competitive advantage over the other real estate companies like the Estithmaar and Nakheel which are Emaar’s main competitors in the region. According to latest research, the company has investments nearly all over the world, which has led to the success of the company. Customers of the houses and other property related products make advance orders with this company. The company is said to be an overall low cost producer in the industry and it has competed well by gaining a large market share by lowering the prices of it housing units (Lee and Carter, 2005). Since Emaar Company is considered to be a market leader in the real estate industry, the company has used competitive strategies that have seen the company compete across the entire real estate market. Since the company has a well developed financial base it has also embarked on growth strategies that have kept its competitors inept in terms of competition. Emaar has also utilized the opportunities provided in favor of Arabic countries due to linkage with Saudi Arabia which is considered a powerhouse in energy products. Some markets in the U.S, U.K, and Australia have strict police regarding real estate development which has limited the operations of E With only 10 year in operation, Emaar is today the leading real estate company in the world and this can be attributed to regional positioning. (Emaar Company Reports, 2007) 4.1 Competitors Competition is real for Emaar Company just like any other company and its main competitors are; Nakheel- a domestic company fully owned by the government of Dubai- that has threatened Emaar with new innovative architectural ideas. Another competitor is the Estithmaar Company that is also Dubai based and offers services in technology, Media, Free Zone and electronic commerce in addition to property development. “Union properties” is another small property developer compared to Emaar but it is getting attention for its lucrative designs. It also has a financial advantage because it is a subsidiary of Emirates Bank Group thus able to gain access to instant loans. There are other small competitors such as the DAMAC Group which help the company develop properties in some way. (Emaar Company Reports, 2007) 5.0 SWOT analysis 5.1 Environmental scan 5.1.1 Opportunities Emaar, in the past has taken over, formed strategic alliances and merged with other companies in the sector to form strong competitive companies and it still has openings to further these opportunities. The main opportunities lie greatly in Asia and South America where tremendous opportunities for future business especially in expanding consumer markets in countries such as India and China are located. New locations offer Emaar huge chances for excellence as the different technologies apply to the different countries. Some countries have people ho are really wealthy enough to afford hotels and houses that are classic. This gives Emaar greater opportunities to meet the needs of such customers (Bell, 1980) As technologies become more complex and accessible, the real estate infrastructure market will increasingly change with technology and this will negatively and positively affect Emaar. There is great investment demand in Africa that Emaar Company can maximize on it. There is also significant increase in population and household income which creates a great opportunity for Emaar Company to expand their investments. Since Emaar has established itself as a market leader, its competitive advantage allows the company to penetrate to more new markets than its rivals. If the company can fully utilize this, it will have the upper hand in terms of competition and explore new markets and profit margins will shoot up thus gaining more power to compete internationally. (Emaar Company Reports, 2007) 5.1.2 Threats Emaar Company is now facing stiff competition from its main rivals such as the Nakheel Company thus there has been a drop in the market share thus a reduction of their profits. In fact, between 2005 and 2007, the company recorded a 75% drop in market capitalization. Another threat inline with this issue of finance is the low pay that the company has been awarding its employee. Many trade unions in the region have accused Emaar of neglecting its worker. This has had a negative image on the company. (Emaar Company Reports, 2007) Emaar Company over the last few years in some countries has been experiencing challenging times whereby these countries have passed laws that do not favor the development of lo cot housing. A good example is in Africa particularly Morocco whereby the government required real estate companies to obtain license from the local government, architectural association and the ministry of public works. Such processes are not only tedious but also costly to the company 5.2 Organizational scan 5.2.1 Strengths The company has developed in business since 1997 and its technology has been changing since that time. Emaar is currently a powerful player in the real estate market in the world. It has a good reputation for value for money going by the quality of products and services it offers such as quality houses, killed workers, better designers and low costs (Lee and Carter, 2005). The company is also accredited with the best marketing network that have made the company to do well globally. Emaar Company has opened many subsidiaries in many countries for example; it has one hundred and eighty projects all over the world which are currently in progress. It operates branches in Africa, Australia, Asia, Australia, Latin America and the Middle East among other countries. The company has the best marketing channels in the industry which has been a strength that has significantly helped the company to dominate the market for a long time. (Bell, 1980) This company has got core operating units that have helped it to have a very firm structure. Because of this well build financial base- that is because it is the biggest shareholder in the leading Islamic bank in Dubai that can finance its operations- the company has embarked on product differentiation process where the housing units, hotels, and other buildings of the company have been viewed to be unique and that is the main reason why there has been constant increase in sales. (Emaar Company Reports, 2007) The company has experienced global expansion as its ability to adapt to technological -computer based-strategies have been appreciated both domestically and internationally in term of quality designs and building techniques that take into consideration culture, value, social class and other specific customer needs. It also developed new technological approaches and strategies to support its international logistic systems i.e. to see how the subsidiaries in other countries are performing in other parts of the world. The company also trains people in its human resource development strategy to meet with the technology changes that need people to have hands on experience on the way new building are designed, constructed and maintained The company’s assets make it one of the richest companies in the Asia and it is growing day in day out. Most of these assets which are part of the company’s unique marketing approaches are in the financial sector, education and health 5.2.2 Weaknesses Emaar company is faced with few weaknesses which if not taken care of it may hinder the company’s success. The company’s rules, procedures, and policies are said to be weak as in some markets they have started to perform poorly. Its human resources, that is, the workers and the management have been quarrelling over payments and this can be attributed to poor leadership. Even if employees are given low pay, this should be on time. (Bell, 1980) Laxity on the side of the marketing managers has been pointed out and reports suggest that they have not come up with suitable marketing strategies to cope with the ever increasing competition in the industry. Many people have questioned the Emaar’s culture of doing things and more importantly the selective approach of expanding first to Arab countries then other countries later. 6.0 Global strategic map The company has adopted a strategy for global expansion and market competitiveness in order to improve its global presence and remain focused in service provision. This means that this company would need to employ international marketing strategies to conquer the already flooded real estate market. Coupled with the increase in costs of production and international tariffs this task may be very challenging but the company’s management is up to it. The company has therefore developed a strategic map that will see its international expansion and domestic domination approaches apply (Lee and Carter, 2005). The company has been able to employ the use of joint ventures inline with its international expansion strategy. Some of the countries that have developed strong joint ventures with Emaar in terms of projects and property development are; Morocco, Pakistan, Saudi Arabia, Turkey, Tunisia and Egypt. The most recent international venture for Emaar is the 55 million meters square ‘King Abdullah Economic City’ in Saudi Arabia worth U.S Dollars 26.6 billion. In figure 1 of this term paper, there is a global strategy map that has been utilized by Emaar as a mean of meeting its goals and objectives and more so the 2010 vision developed in 2001. 6.1 Goals and objectives The main goal for this company is to increase its market share in the next five years that will automatically push its revenue and asset base to double the current financial figure. The company has drafted its 2010 vision that will mainly target the international community in North America, Middle East, the Indian Subcontinent and Africa. According to this vision, Emaar aims to diversify into other business ventures that include; hospitality, education, leisure, finance, retail markets and health care facility development. In the recent past, the company has announced plan to actively expand it retail sector that seem to be growing very fast with an initial investment injection of 4 billion U.S dollars. (Emaar Company Reports, 2007) 6.2 Means The mean to achieve this global strategy map will lie on the marketing strategies, foreign direct investment, joint ventures, promotion, advertisements and pricings strategies. 6.2.1 Internet marketing strategy The old day’s ways of marketing was not only time consuming but also costly especially to a wide range of clients. The current internet technology is the best as it is currently being employed by many consumers. The internet is a bi-directional communication tool which is ironically the least expensive way of advertising compared to other types of advertising such as radio, television, magazines and news papers. Internet marketing offers great benefits for businesses in this century; increased effectiveness, wide range of audiences, reduced advertising, marketing, and transportation costs, improved exposure, increased popularity, among others. Emaar is planning to effectively develop marketing blocs offer the internet to meet the needs of individual customers hence diversify their production. (Fletcher & Brown, 2005) 6.2.2 Pricing strategies Emaar utilizes the following types of pricing strategies to set prices for its products. The pricing strategy varies with the type of product, quality and the market or customer information. Marketers and pricing specialists argue that there is no practical and right way to calculate the pricing for the product or the services. The following are pricing strategies employed by Emaar. This company begun with the application of the penetration pricing whereby, once the company achieves its market share, it increases the price of its product especially in market where the competition level is highest 6.2.3 Organizational management and planning This is one of the changes that Emaar Company does in order to meet the challenges of the intended market. It also goes inline with the issue of how approaches can affect organizational performance (Fletcher & Brown, 2005). The planned organization will comprise of a structure that will provide a confident management team, sales force, technical team and the company directors. The use of a scorecard to control and monitor the company’s performance is very important scorecard concept is very simple; all factors that influence the organization’s overall performance are taken into account and analyzed mathematically. Typically, a scorecard measures across four key areas; a) Financial perspective- how shareholders perceive the company b) Customer perspective-customer’s view towards the company c) Internal process perspective- the efficiency and effectiveness the processes in the company d) Learning and growth perspective-the company’s agility level. (Lee and Carter, 2005). 6.2.4 Ethical and corporate responsibility stance as a marketing strategy Shared responsibility is the obligations that consider the interests of all customers, employees and shareholders, communities and other ecological considerations in the majority of all their operations in the company. This obligation will extend beyond their legal obligations to factors such as profits and dividends. But it should also consider immediate and long-term social, cultural and environmental consequences of their operations (Kotare and Helena M., 2004). Today’s heightened role of businesses in the society has been enhanced by increased sensitivity and awareness of urgent ethical and environmental issues. These issues include. I. Improper treatment of workers II. Faulty production that inconveniences or endangers customers III. Environmental damage As part of international commitment to conduct business with integrity and comply all applicable laws, Emaar strives to maintain a strict code of conduct that will see its social responsibility in France increase through the following; fund raising, community assistance, project funding etc. ethical behavior is an individual responsibility regardless of position or location, it will reflect the highest ethical standard expected of employees, directors and all people bound by it. (Fletcher & Brown, 2005) 6.3 Promotion In India, for example, Emaar has been able to utilize advertisements and outdoor campaigns for its promotional strategies and more recently the internet. The company has also brought up a promotion where governments that order the construction of more than 100 building unit will get a discount for that. 6.4 Distribution The distribution channel employed by Emaar Company depends on the market and location of the customer. This company has come up with various channels of distribution to enable their services to reach the targeted market. When it receives orders from any country, the company travels with some of its expert employees to start work there and also employ local employees to do manual jobs 6.5 Tasks Emaar has responded to globalization by opening up some branches around the globe especially in China and India but this have not been enough as it still faces competition from domestic companies in these countries. This company requires restructuring of the entire workforce structure such that it is able to withstand the pace of growth in the industry. 6.5.1 Foreign direct investment (FDI) MGF development of India and Emaar in 2005 announced one of the world’s largest real estate foreign direct investment deals. The deal amounted to over 4 billion U.S dollars making it one of the biggest achievements for Emaar. FDI is the direct ownership of processing, manufacturing or assembling facilities in a target country by a mother company. The company such as Nike Inc. can transfer resources to developing country which has a good customer base and then set up branches in any other regions or areas of the country. The resources include; technology, personnel and capital. The company will be able utilize the resources in the target country including in the human resources. (Kotare and Helena M., 2004) 6.5.2 Joint ventures The joint ventures are forms of market entry that allows for technology sharing and joint product development. The main advantage of joint ventures is to get proper political connections that will allow for favors to be achieved. It is usually suitable when; the market power, resources and size of the partner is small compared to the industry leaders. Emaar Company has utilized this international expansion strategy to expand its provision of services. Some of the main joint ventures adopted by Emaar are the UK-based Carillion Company to provide energy management, sanitation services and mechanical engineering services. It ha also acquired share of 30% equity with Dubai bank Another joint venture is between Emaar and Armani Plc that was required to develop luxury hotels in Paris, Dubai , London and Milan. (Emaar Company Reports, 2007) 6.6 Structure The global strategy map below is a conventional map that has been applied by many companies to meet its international objectives. It is applicable to manufacturing, technology, commerce and allied industry sector. Emaar Company has been able to apply the same model to meet its international market needs. Figure 1. Global strategic map Source: Lee, K and Carter, S., (2005), Global Marketing: Changes, New Challenges and Strategies. 1st Edition, Oxford Press 7.0 Recommendations New product development especially when it comes to adopting new technologies i.e. beautiful modern units is one of the areas that need to be improved. The company can also improve on its leadership structure. It is now time to have managers and leaders to be technologically oriented with what is happening in the industry. The current crops of leaders in this company are management oriented and thus the combination of the two approaches will ensure that the company propels further. The company’s strategy that is required to meet the core principles of the objectives is to fully exploit the real estate industry market through the potential technology it currently offers. The company needs to improve on in its response to globalization. For instance Emaar has responded to globalization by opening up some branches around the globe but this have not been enough as it still faces competition from other domestic companies. Emaar Company should explore more new markets and try to be the dominant market leader in order cope with change and competition in the industry. This company requires restructuring of the entire company structure such that it is able to withstand the pace of growth in the industry. (Kotare and Helena ., 2004) Organization structures of Emaar Company should be clearly outlined such that the employees will know what they are expected from them in the course of their duties. This will lead to reduction of conflicts between management and the workers because there will be no vague policies. The Emaar Company structures should be in such a way that it fits the modern world and should be adaptable by the employees. Groups’ dynamics should also be encouraged in order to enhance cooperation among the workforce. Workers should be left to join groups of their choice to avoid conflicts that may arise. Also motivation of employees should be encouraged and offering of fringe benefits, house, medical, hardship allowances and other social services for example swimming pools, televisions sets will make the employees feel respected and recognized in the work place. (Lee and Carter, 2005) 8.0 Conclusion It is evident that Emaar Company has a lot to be proud of but there is also other problems including threats from trade unions, hostile government policies and trade tariffs. According to latest research, the company has investments nearly all over the world with major subsidiaries in India, North Africa, Turkey and China. The company has experienced global expansion as its ability to adapt to new strategies has been appreciated both domestically and internationally especially when it embraced luxury-like real estate development in 2001. The company also has an excellent reputation of quality buildings and services which has helped it meet its market target and especially within Dubai. Since the company has the advantage of a strong government support, it needs to capitalize on this and out-do its customers. 9.0 References References in a separate sheet Read More