Emirates Steel

Brief overview of the company
Emirates steel company is located in abu dhabi and deals with production of large quantities of steel. The company is strategically in Abu Dhabi city which gives its easier accessibility for international importers. Steel has various use with the highest demand established on the construction industry. Building and development if infrastructure relies heavily on steel. The company utilizes latest technology in rolling mills to produce quality structural steel, wire rod and rebar. The company was established in 1998 and has grown from being a simple roller to manufacturing of integrated complex materials. The company largest market for its products is the united Arab emirates region where it sells more that 3 million tonnes of steel. Expansion in 2012 enabled the company to double its production capacity which is positive contribution towards possible market expansion.
The business goal that guides the operation of the company is producing efficient products that are acceptable to the customers. To achieve this the company is gradually investing in expansion in information technology and processing activities. The improvements has played role in boosting its ass5ociated environmental footprint. In addition it has ensured that there is a safe environment for its workers and customers get safe finished products. Corporate p[philosophical approach of the company is providing quality products, enhancing safety for workers nomad maximising returns for shareholders. The company core values are guided by continuous improvement in all aspects related to its business while upholding creativity, integrity and \innovation. The company is currently focusing on exploiting new markets in developing countries. The company has identified that there significant development of infrastructure in Africa and thus making it an attractive market for its expansion.
Brief description of current products/services, geographic markets, and production/service facilities.
Country and Market Analysis 20 marks (400)
External factors
Political stability in the Kenya is relatively peaceful which creates an environment for expansion of its activities. Following election that were carried towards end of 23017 in the country stability has been achieved and thus investing in the country is feasible. When there is peace the company the company can establish its operation and get a significant market share. The government has also promoted free market systems where it does not interfere with free running of companies. There are no pricing controls that are put by government and thus helping the company determine pricing of its commodities in the market. The inflation rates have been relatively stable due to fiscal intervention by the central bank. The impact is a market that has potential of purchasing power for the products produced by the company.
Customer/Competitor based factors
Customers in the country range from private developers to government institutions. The expansion in building industry results to demand to steel products. Many investors are going for storey buildings which require steel to erect their beams. The government is also investing in infrastructures such as railways and roads that require significant amount of steel. The level of competition is also relatively lower because there is no local industry producing steel. A significant of the steel used in the country is imported therefore introducing the steel in the market faces minimal competition. The existing competitors have not established an industry in the region and prefer importing their products. This creates an opportunity for Emirate steel to start a plant that will lower the cost and thus an incrusted demand for its products.
Industry and Business related factors
There are no trade barriers in the country and the government is encouraging foreign investors to invest in the country. The availability of both unskilled and skilled labour is also high due to government investing in artisan and colleges for human resource in the market. The core competency of producing quality products also influences the company success in the market segment. The bureau that looks at quality of product will have no reservation for offering the company with quality certificate test. The assurance will add to the trust customers have on the products. Transport cost of raw material tote country is also relatively lower due to its connection with a port that can connect directly to United Arab Emirates region. Lowered cost will make it easy for the company to offer products at competitive prices to customers. The country also offers a higher level of control that is centralised which can boost extension to other market in the region.
Justify why each chosen factor
The chosen factors are relevant to the establishment of operation in the company of choice because they affect directly cost of operation of the company. Further, the factors influence the security of the company in establishing its operation. In addition, the factors contribute to the possible exception of the products in the new market. Expansion and growth of the company also relies on the identified factors. Therefore, the company cannot ignore as oat makes decision to expand its operation in the country.
Marketing mix & Staffing policy 20 marks (350)
brief marketing mix
the company needs to embrace the 4Ps that guide marketing in a new environment. A balance of the factors makes oat easy for the company to survive and compete favourably with already established supplies of still products in the region. Products features requires that the company ensures that it first understand the needs of its customers. Interacting with p[potent customers and conducting a survey makes it easy t understand how t tailor make products that meet their expectoration. The product quality need to be unquestionable and assure of safety especially if it is to be used in building constructions. The product presented in the market should be able to allaying with expectation of the customers.
Place strategy require that the company identify a reliable location to establish its company for production. A place near the port is feasible because of its convenience when importing raw materials through the ocean route. The location also gives the company the opportunity to export extra products to other countries via the sea. In addition, the location enable easy access of water that is significantly needed to cool the systems during production. Production of steel uses allot of heat and adequate water make it easy to control the heat released at a lower cost.
Promotion is also a strategy that the company needs to invest on by ensuring that targeted customers are aware of the new product. The promotion can be carried through of media and posters that highlight the uniqueness of the steel product from the company. The promotion should further focus on giving presents to target consumers who show understanding of the product. This can be achieved by asking targeted customer to highlight specific features that make Emirate Steel the brand if choice.
The pricing of the products need also to be affordable and comparable to the existing price from the competitor. Customer need to feel that they get value for the money they pay and this will influence their repeat purchase. During the launch of the products discount need to be given t customers to encourage them to buy more and develop loyalty. The strategy is also necessary in ensuring that many customers get an opportunity to try the product to influence their future purchase choices.
HRM staffing policy the company should use
The company needs to employ staffing approach that is guided by geocentric policy. The policy is important for the company because it ensure that top management in a company are chosen based in their expertise. The location or the background of such individuals is not important to the human resource department. Embarking this policy will make it easy for the company to get the right person qualified for the job and understands factors needed to make the company a success. In addition, the policy makes it easy for an international company to integrate its culture with the locals and penetrate the market easily. The strategy is also important in enhancing understanding of how to deal with competition and how to place the new products in the new market segment.
Market Entry Strategy 25 marks (400)
Evaluate the potential suitability (advantages/disadvantages) of each of the six Market Entry Modes applied specifically for this company.20
One of the marketing entry used by Emirates Steel company is exporting where goods produced in the country are exported to another for sale. The strategy is less costly and helps sale of surplus products and the company has total control of markets it wishes to explore. The disadvantage of the method is high Costas to start direct exports. Another strategy used by the company is upholding joining ventures where it joins with local company in another company to expand international market. The strategy allows maximum utilization of available resources and technological competence. However, the strategy suffers from constant management conflict poses threat of political instability in some countries.
Franchising entry is also used by the company where it is paid some fees by some companies to allow them use their trade mark in their products. The method is beneficial in that it highly motivates workers and also less risky. The limitation that it poses is ability of the franchisee becoming competitor for the franchiser. It also becomes to keep secrets of trade from competitors. Foreign direct investment method is also relied upon through buying assets or shares in a given company in a different company. The advantage of this mode is relatively approach to penetrate a given market. However, return on investment may be relatively low.
Licensing further plays arose in entry of Emirates Steel company in international market where it gives an organisation rights to use its products for an agreed period. The method is associated with lowered cost related to labour and there is easy appointment. The limitation is that declining quality of products has direct implication of harming the licensor’s reputation. Contract manufacturing on the other hand involves hiring of local firm to produce products on behalf of parent company. The method has the advantage of ensuring that cost of production is lowered. In addition, it ensures that there is development of small scale and medium size industries. The limitation is limited control on the quality of products produced.
Recommend & justify the best entry mode(s) for this company. 5
The recommended entry mode in the Kenyan market is through joint venture. The method will ensure that the company saves on cost on total establishment for a production plant. The method will also ensure that the company utilises the already instilled technological advancement of the company of choice. The result of ability to produce high quality products in the foreign country at relatively cost. Further, the opportunities the company will get a chance to run different things including attractiveness of the market from the local partner. Understanding marketing strategies to use in the new market will be ease due to contribution of eth local partner.
Strategy for international business operations 10 marks (300)
Select and briefly justify the most appropriate of the 4 Strategies that the company could use to compete internationally