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Introduction
The United Emirates has been in the recent past the destination of many businesspersons (Heiko 77). This is partially attributed the fast growth that is taking place in the nations of the United Arab Emirates. Additionally, the United Arab Emirates is located at the major crossroads of the Western and Eastern parts of the globe hence remaining the best investment option for most nations who would wish to expand their economies.
Among the seven Emirates of the UAE, Dubai seems to the most preferred choice for doing business. In fact, most of the graduates from the third world nations have resorted to seeking employment in Dubai as well as other nations of the UAE. In addition to this, Dubai now competes with the New York City in terms of the best shopping destination globally. This has in turn driven most organizations and companies to extend their services as well as products to Dubai (Heiko 98).
Among the endless list of companies that would wish to expand their business to Dubai is the USA based company known as Noode. Noode is a company in the line of beauty and skin care products manufactured for women. This paper is therefore of the strategic analysis that ought to be carried out throughout the internationalization of Noode skin care products to Dubai.
Brief description of the product to be internationalised
Noode is a company that deals with the manufacture of about a range of twelve skin care products largely based in the United States of America. The company was founded by Seth Ratner known for his vast appetite in entrepreneurship as well as handwork, which lead to his current success.
Mr. Ratner first worked in a male skin care company and later moved to another beauty products company before forming his own company in 2000, which he named Noode. This is given his vast experience in the field of beauty products.
During the initial times of the launching of the Noode skin and beauty care products, the company distributed its products through the local stores including the Bloomingdale’s and Henri Bendel just to mention a few. However, given the fact that the Noode skin and beauty care products have attracted much acceptance and loyalty from the customers within the United States of America, the company now wishes to expand internationally to other locations among them Dubai.
An Analysis of the Target Country
Before any entrepreneur decides to have their services and or products introduced in another country as a way of internationalizing their business, they have to put into considerations several factors in the target country. In this case, the target country of Noode is Dubai, which a nation in the United Arab Emirates.
The analysis is of great significance and it is important if it is done early enough before the introduction of the product or service. Some of the important factors to be considered include having adequate knowledge regarding the laws and regulations of the target country, environmental analysis, nature of customers and competition among other factors.
Environmental Analysis
Environmental analysis entails looking at the market segmentation in terms of the external and internal market of the target country (Baron 76). Looking at Dubai, just other nations within the United Arab Emirates is strongly endorsed with the Islamic religion, which is globally known for its strong cultural background. As such, the environment in which the desired product is to be introduced is one that has a strong Muslim religion.
It is therefore of great significance that the manufacturer of Noode skin and beauty care products makes an assessment as to whether his product fits well in the Islamic religion. However, the good news is that the beauty of a woman is highly encouraged in the Islam Religion thus, a big percentage of Muslim women spend so much in terms of money and time to have their bodies taken care of.
In this regard, the Noode beauty and skin care products are bound to get positive reception in the Dubai market. It has always been joked that an entrepreneur of beauty products will never go wrong with women’s products, as the latter are known to be adventurers when it comes to trying new products on their skin and bodies in a bid to get the best results.
In addition to this, the Dubai market is known to be characterized by potential risks such as the high level of demographic segmentation, a retail environment that is very competitive and the escalating inflation experienced in the recent past.
Nevertheless, the aforementioned challenges should not be hindering factors for any entrepreneur who would wish to do business within Dubai. It is therefore advisable that the market venture is well planned and the business properly executed in order to outweigh the challenges and penetrate the market segments.
In order to effectively determine whether the actual analysis of the market environment of Dubai is conducive for the introduction do the Noode beauty and skin care products, a market audit is to be conducted (Baron 65). The market audit is subdivided into the macro environment and the microenvironment.
The manufacturer of Noode products ought to understand that a perfect operating environment is one that allows him to take advantage of the opportunities while at the same time minimizing the threats. This eventually leads to the conduction of a pest analysis. Below is the pest analysis that gives an illustration of the environment of Dubai in which the Noode products will be introduced.
PEST analysis for Noode products in Dubai
Political and Legal
Dubai is known to be a peaceful nation, which is characterized by low crime levels and a politically stable economy. This is reason as to why most of the foreign investors have been attracted to the country. At the same time, the Dubai government has put so much effort in trade thus improving its business relations with most of the global countries.
Economical
The fact that Dubai lies within the United Arab Emirates it is obvious that it enjoys the high growth rate of the United Arab Emirates brought about by the increased oil prices as well as the non-oil based revenues. This has been attributed to the strategic location of the United Arab Emirates in the Middle East thus linking up about 120 nations through its shipping lines and airlines.
In addition to this, Dubai is known to have a low custom duty of only 4% with no corporate and income tax on commodities and products. Unlike other nations, Dubai does not charge any foreign exchange controls thus attracting the highest number of foreign investors. In this case, Noode will not be any exception since the deal is obviously good (Jobber 198).
However, the high rates of inflation together with the high chances of de-pegging exchange rates against the United States’ Dollar are factors that hinder foreign investors from investing hugely in the Dubai Economy.
Social
Dubai is highly endorsed by the Islamic traditions and cultures. The people therefore are strong followers of the Islam religion, which advocates for things like the Sukuks and the Islamic Banking that have to be Sharia compliant. Additionally, a workforce of multinationals that practice a cosmopolitan lifestyle hence encouraging foreign investors characterizes the economy.
Technology
The Dubai government has invested heavily on technological development by implementing good infrastructure, internet and telecommunication systems that are advanced. Other developments in this category include the modern banking systems, which make business easier for foreigners.
Below is a summary of the PEST Analysis of the Dubai Market environment.
Table 1 – Pest Analysis (Jobber 213).
From the above PEST Analysis, it can be affirmed that the market environment in Dubai minimizes the threats while increasing the opportunities of the investors. This is clearly described in the table below
The Micro Environmental Analysis
The analysis of the microenvironment is of great significance when it comes to determining the prevailing competition of the Noode products in the Dubai market. This is normally done in the context of the ‘Porter’s five forces. The latter are bound to highlight the forces’ strengths and weakness and hence their impact on the new entrant.
Threats of New Entrants
All the countries in the United Arab Emirates including Dubai have put in place strict regulations for the importation of cosmetics and toiletries. This has been a major threat for the manufactures and business people dealing with such products. However, the Dubai Shopping festival and The Gulf Beauty Expo have been a major step towards the opening of more openings in the cosmetic and toiletries industry.
Another threat in this category is the high degree of selectivity of personal care products by the citizens of Dubai. Research done has indicated that most consumers of beauty and skin care products in Dubai normally opt for brands that are recognized and trusted internationally.
Competition
“According to a recent survey, consumption of cosmetics and fragrances in the Gulf States is among one of the highest per capita in the world with the average purchase estimated in the region of AED 1,229 per head,“ said, Mr. Eckhard Pruy, CEO of Epoc MesseFrankfurt toi (Pennington 1).
It is because of this reason that most nations in the United Arab Emirates such as Dubai have become the target destinations for most of the cosmetic products and toiletries manufactured globally.
The fact the Noode manufacturer wishes to launch the product in a high competition zone, it is important that he develop a good name for the brand in order to ensure its success and sustainability in the Dubai market (Pennington 1).
Suppliers’ bargaining power
The main aim of Noode’s products supplier is to have a fast expansion within Dubai and be able to obtain a retail space within the market. The opportunity seems to favour the Noode supplier since there are fewer risks in the targeted zone.
Buyers bargaining power
The buyers are important factors in business as they form the consumers of a product or service. As such, in the case of Noode product launching, they pose a high threat because they are always looking for better prices for products (Keegan and Green 326).
Given the fact that Dubai has many companies in the beauty and skin care industry, the buyers will be looking for high quality products offered at considerable prices (Lindley 102). As such, the manufacturer and supplier of the Noode products must ensure that their products are of high quality offered at attractive prices to the customers.
Threat of Substitutes
The cosmetic industry is among the highly invaded industries in terms of many substitutes. This is because of the many brands of the cosmetics found in the market being offered at prices that are affordable to most of the consumers and still offer quality results on usage. Dubai for example has in the recent past exhibited a high expansion in the shopping malls dealing with cosmetics. This in turn poses as a big threat to the Noode manufacturer / supplier thus requiring that they put their game up.
Strategic issues analysis
Each and every company whether intended for local or international market has to have a vision and mission. In the case of Noode, its vision is “to be one of the leading skin care product distributor and manufacturer in cosmetic industry for Generation ME” ().
As such, Noode has embarked on ensuring that it provides skin and beauty care products of high quality in order to meet the market standards. This has been largely contributed by the numerous workshops and skin care programs that Noode has conducted in order to assist their customers who are suffering from any skin ailments. As a result, Noode has slowly gained the trust of their consumers as well as potential byers thus increasing their sales.
The Company’s motto, which is ‘Generate Me’, has been of significant help to the company since it has made the company obtain a positive image in the market. This has in turn made the product gain a competitive advantage over other related products in the market. It is by no doubt that, the ‘Generate Me’ motto will get the same positive reception in Dubai as it has done in the United States of America.
Below is a list of the core competencies of Noode:
- “Wide range of quality products designed to meet the needs of young consumers.
- Experienced and loyal stuff.
- Countrywide reputation.
- Conservatively priced.
- Innovative style of pack” (Hill 143).
Like any other company in the manufacturing sector, Noode is expected to practice corporate social responsibility and environmental sustainability. Corporate social responsibility entails taking care of the society in which the company is situated. This could involve development practices such as upgrading of the social amenities or offering jobs to the people in the society among other duties (Crane, Matten, and Spence 102).
In other words, CSR is a way of a company or organization giving back to the society. On the other hand, sustainability normally entails producing products that are safe for the environment as well as carrying out processes that are not harmful to the environment. Noode has been practicing corporate social responsibility and sustainability during its operations in the United States of America and it is by no doubt that, this will be extended to the target country, Dubai.
In terms of the channels of distribution, it is advisable that Noode approaches some of the renowned distributors and cosmetic shops who could assist in the distribution of their product (Coughlan et al. 82). Since it is a new product in the Dubai market, Noode ought to follow the product life cycle in the introduction of their products.
Below is a diagram showing the product life cycle.
The Company is expected to embark on a seroius advertising strategy to make their products known to the Dubai citizens. His could ential giving of free smaples among other advaertsing methods such as the use of media. When it comes to human resources, it is advisable that the company recruits its staff among the citizens of Dubai and trains them to meet their demands. This will not only make it easy to advertise their products within Dubai, but it will also be one way of practicing corporate social responsibilty.
Additionally, just like any other company that wishes to carry out their business within Dubai, it is expected that Noode obtains a licence from the appropriate athourizing institutions (Masons 1). Once it gets the licence, the company will now be registrered under the laws governing all other companies in Dubai.
An analysis of the potential Economic benefits to the target country
Various benefits are bound to come about after the introduction of Noode within the market of Dubai. The benefits can be largely classified into economical as well as social benefits (Hill 176). First, the citizens of Dubai who decide to use the Noode skin and beauty care products, which are of the American origin, will be embracing the American culture indirectly.
Despite the fact that the product is not only meant for the American national who have ‘white skin’ type, the citizens of Dubai will have a glimpse of a product from the United States of America.
This could in turn have slight effects on the social classes since those who use the Noode products will have placed themselves in a certain class above the rest. Finally, it is agreeable that the sales of the Noode products will have significant impact on the economy of Dubai. This is because the manufacturer will pay taxes as well as the buyers/ consumers of the products.
Conclusion
From the above discussion, it is clear that internationalization of any product is not an easy venture, as most people would think. This is attributable to the many requirements to be fulfilled in order to have a product or service succeed in a foreign nation. Apart from the different regulations and laws put in place, there are other obstacles such as the cultures of the people in the target nation among other hindering factors (Masons 1).
However, as mentioned earlier in the paper, it is of great significance that the supplier/ manufacturer of the new product minimize the threats of penetration while increasing the opportunities of the product in the target market. Given the above analysis done on the Noode skin and beauty care products, it can be deduced that the chances of the product doing well in the Dubai market are high.
Works Cited
Baron, David, Business and its environment. Upper Saddle River: Prentice Hall, 2000. Print.
Coughlan, Ann. et al. Marketing Channels (7th ed). New Jersey: Prentice Hall, 2006. Print.
Crane Adam, Daniel Matten, and Laura Spence. Corporate social responsibility. London: Routledge, 2008. Print.
Heiko Schmid. Economy of Fascination: Dubai and Chicago as Themed Urban Landscapes. Berlin: Stuttgart, 2009. Print.
Hill, Calvin. International Business: Competing in the Global Marketplace. Irwin: McGraw-Hill, 2007. Print.
Jobber David. Principles and Practice of Marketing, 5th edition. McGraw –Hill Companies: London, 2007. Print.
Keegan John, and Mathew Green. Global Marketing. New Jersey: Pearson Prentice Hall, 2010. Print.
Lindley Tony. Marketing Management, Bradford Study Guide. Dubai: U.A.E., 2007. Print.
Masons Pinsent. Doing business in the United Arab Emirates: key considerations. 2009. Web.
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