Category: Emaar Properties

Executive Summary

Globalisation of trade continues to gain momentum all over the world. As a result, international companies remain steadfast in their quest to enjoy competitive advantage over their rivals across the globe. Such desires create a suitable avenue for mergers and take-over in the business sector. Mergers play significant roles in consolidating the customer base of the companies involved, while take-over translates to the control of customer bases of the dissolved companies.

This emerging trend among multinational firms comes with great challenges and experiences, such that if proper execution of the program fails, the businesses involved may incur great losses. This paper seeks to analyse various emerging issues that arise from the joint venture between Harrods (UK) and Emaar Properties (UAE). Harrods is departmental store in the UK providing a wide range of products and services, while Emaar is a business franchise running several shopping malls and shopping joints in the UAE. In addition, the paper seeks to develop the best human resource development and management strategy for the joint venture.

Introduction

Mergers come with great benefits in the human resource segment of company management. The resulting company that come into place after a merger obtain quality staff and additional staff with great array of expertise in the industry, thus increasing chances of productivity. Similarly, mergers come with diversification of products to the customers. This acts a customer base maintenance since wide variety products and services increases the number of consumers gaining services from the new entity.

In the diversification segment, mergers offer more space new target acquisition, thus producing a new ground for the new entity to access markets that the previous merger institutions failed to access (Torrington et al. 2011). Corporations continue to engage in mergers and acquisitions as a fast rising strategy for enhancing competitive advantage in order to increase the chances of maintaining relevance in the dynamic market. However, these mergers come with great challenges especially when executed across regional borders. The national, regional, cultural, as well as institutional strategies need harmonisation to ensure successful cooperation.

Emaar Group

Since inception in 1997, the company continues to shape landscapes and lifestyles of several individuals in the UAE. With a mission to transforms the shopping systems in UAE into one stop entities, Emaar provides global real estate solutions in home services, work, plays, retail chains, educations as well as industries. Some of the most outstanding outputs of Emaar include Burj Khalifa, the world’s tallest building and Dubai Mall, world’s largest shopping and entertainment centre among others.

With interest in hotel, leisure, shopping, and entertainment joints, the company adopts adequate strategy in business plans engaging in a wide variety of service provision to spread risks and increase profit margins (Mission, Vision, Strategy & Values n.d.). Increased growth within the company necessitates decisions to explore the international market with mergers and partnerships across the world.

Harrods Group

Started in 1824, the Harrods Group provides a wide range of products and services through subsidiaries in banking, estate management, and aviation. Harrods chain store boasts of more than 300 departments offering clothing, electronics, toys, foods and other consumables, stationery, furniture among other household products (Strategy and Values at Harrods n.d). The chain store also runs restaurants and leisure joints for the shoppers with specialised faculties for customers with children.

With the mission to become world’s number one departmental store for sophisticated merchandise, the shop strives to maintain the world admiration and respect as it provides services to the customers. Harrods ensure adequate strategy to achieve its mission by confining the workforce to the strict core values of maintaining the British heritage, ensuring luxury, innovation among the workforce, and adequate service delivery.

Pestle Analysis of UAE Business Factors

Political factors

Politics play a vital role in policy formulation and legislation of laws with direct bearing on the multinational businesses. Some of the greatest policies within the UAE include the Emiratisation of the workforce. In this program, the government developed a quota system responsible for ensuring the local population received high workforce percentage within the international companies establishing business within the country’s jurisdiction.

On the same note, the retailers must develop viable ways of utilising lower-paid and local based human resources as well the highly skilled higher paid workforce. The program also puts into place tiers in the job descriptions from the low-level inexperienced students, disabled workers as well as the elderly workers. These factors ensure that the productivity of the workforce remains rewarded based on the productivity (Balchin 1994).

Economic factors

Economic factors and policies influence demands, costs, and prices of goods and services. Unemployment rates decreases the effective demand for many good thus reducing the demand required to produce such goods (Torrington et al. 2011). In order to gain from establishment of international companies, economic policies within the UAE ensures proper mechanism in job distribution within local population with at least 51% of employees of any organisation coming from within the nation. This policy seeks to ensure that the local workforce remains engaged in the production sector resulting to high level of purchasing power. This translates to high demand for goods and services leading to growth (Alexandrides 1973).

Social factors

Customer shopping trends in the UAE continues to change slowly to “one-stop” and “bulk” shopping. For this reason, Emaar chains shifted to variety displays across the chain stores. Wider range of products available in the shelves ensures that the customers have the ability to get all the need in one chain store. Harrods on the other involved the great use of technology by the consumers.

Customers frequently made their orders from the homes thus charging the company with the responsibility of sorting and delivery. Understanding these two dynamics to come up with a “one-stop” shop as well as incorporating technology in the process is necessary to ensure the competitive advantage needed in the new venture.

Cultural factors

UAE as a country continue to embrace the role of the women in the service industry. Contrary to most Arab nations in which women play little role in the management, the country is slowly enabling women to take up management roles both in the private and the public sector. Emaar, as the native and entry point of the new entity point to market for the new venture already boasts of great number of women employees. Even though Harrods hails from a country with advanced gender empowerment, it must understand that the UAE is undergoing a transformational period in which women are getting the opportunities to serve in the management positions of different business.

National issues

Demographic dynamics such as the elderly and increased women workers create an opportunity for the chain distributor to provide more services and products as more women venture into shopping (Torrington et al. 2011). Since women in UAE for a long time have remained in the nest-fending and home making activities, the shopping culture in the UAE generally remain a woman-affair.

For this reason, the Harrods employees moving into the new systems must get enlightened on the national shopping trends in the country. Product and services within the shelves must consider the percentage of the gender attraction since most people going shopping in the UAE remain women.

Technological factors

Advancement in technology and globalisation of trade trends greatly influences growth and development of international companies. Consumers enjoy more personalised and convenient service such as online shopping and use of electronic money transfer services while the traders presents the services with low cost reducing production expenses. UAE is no exception. The country embraces technology in the provision of product and services.

Similarly, the availability of information on the trending products and service in the company websites enables consumers to carry out a background check on the needs in the internet before setting out for physical shopping. The adoption of electronic points of sales and funds transfer systems continues to revolutionise the sales volumes of international companies. Use of electronic scanners improves efficiency in distributions and stocking of the product and services with the suppliers getting orders in real times (Finch 2004).

Environmental factors

Environmental sustainability plays an important role in ensuring sustainable productivity in both manufacturing and industrial sectors (Tracey 1994). Natural resource base form the backbone of many production units with inputs coming from Mother Nature. UAE annual budget receives funding from the natural resources. The oil fields play a vital role in economic development of the country.

However, if the exploitation trends go unchecked, the wells stand chances of depletion leading to an economic turmoil. To counteract the problems associated with oil extraction and the environmental degradation caused, several multinational companies continue to develop environmental policies to ensure their products and services helps in the reducing the environmental degradation trends.

Legislative factors

Government policies, frameworks, and formulations have great influence on the business of multinational companies (Johnson & Scholes 2003). Government set out regulation relating to the production free zones as well as the minimum wages. Similarly, the government is responsible for imposition of tax and duties charged on business involved in the international trade. In the UAE, it is government policy for all international entity venturing locally in representative or branch capacity to reserve at least 51% of the employment opportunities to local residents.

Human resource management and organisation performance

Recruitment and selection

This forms the basic role of the human resource department of any organisation. In this role, the HR managers develop plans and strategies for hiring the most productive employees in line with the local regulations. For the new entity in UAE, 51% of the employment opportunities remained reserved for the local resident. In order to keep up with the rising need for dynamism in the production sector, this department is responsible for training of the employees on the emerging production trends that suit the customers (Scullion & Collings 2006).

Munro-Fraser System of recruitment

Impact on others physical make up

In this segment, the resultant organisation must put into consideration the interviewee’s appearance, speech, and manner. Inasmuch as the UAE remains liberal on dressing code of the local employees, necessary measures are necessary to assess the makeup behaviours of the recruits to ensure they are in line with the Muslim culture (Aberg & Diane 2004).

Acquired education standards

This section of the model assesses the academic and professional qualification of the employees. As a business, venturing into a relatively new setting under new structure the system the HR must develop ways of recruiting people with experience in multi business management within the UAE. Such an experience brings forth the understanding of the local regulation and business culture.

Innate abilities

A system of aptitude and psychometric tests are necessary to evaluate the quickness of comprehension and abilities to learn under duress. Such qualities are necessary in UAE environments since the new entity stands chances of facing great challenges and local rejections if proper marketing fails.

Motivation individual goals

UAE slowly generates stiff competition within the markets. International companies continue to explore her markets due to relatively low restriction and tax. In order achieve a competitive advantage over the rivals, HR in the new entity must develop ways of recruiting highly ambitious individual with wide experiences in specific goal realisation.

Adjustment and emotional stability

The UAE is a country with great multicultural work force due to the friendly business culture within the country. Despite these diversities providing a base for success due to various experiences and culture needs, it brings stress and conflicts in management. This segment of recruitment ensures employees of the new entity possess the ability to stand stress and engage with people from different cultural backgrounds.

Training and Development

Training and development of the workforce provides measures of optimising utilisation of work force (Lawrence & Weber 2014). It provides employees with opportunity to achieve individual and organisation’s goals. Development also helps the employees in career development especially on the technical and behavioural skills earned at work environments.

ASK model of training

The AKS model of training and development revolve around three segments namely, attitude of employees towards the job description, skills required for the job such as listening, observing and feedback, and prior knowledge (Torrington et al. 2011). This model generally uses peer learning and development systems in which experienced employees get time to share their experiences in the work force environment with the amateur employees.

The inexperienced employees receive adequate audience from the experienced peer on the necessary skills and knowledge necessary in production. To execute this program, the local entity employees with vast experience in business management within the UAE must engage in educative segment with the new recruits. Seeking and external expert in employee development in the business field is a good avenue to explore (Fitch & Semb 1993).

Rewards Strategy

Theory of reward systems

Armstrong and Stephens (2005) argue that as competition increases, the need for companies to adjust the business strategies to remain competitive rises. In order to maintain the competitive advantage in the market, employers seek to recruit and maintain the best work force available. In order to manage this, the employers engage in a series of rewards and motivation to employees for their exemplary performance as a way of ensuring employees remains in the organisation.

In this system, rewards cover a wide range of payment such as base compensation, bonuses, stock options, and cash, among others. Rewards theory ensures that managers reward employees in order to ensure they maintain a given behaviour in production. Most often, employees receive incentive according to the values appreciated by organisation as well as the values the employees adds to the organisation (Marchington & Wilkinson 2008).

Rewards and emoluments help build adequate employee engagement strategies necessary for long-term business goals. Equitable salaries and recognition for exemplary performance among the employees are some of the tools used for rewarding employees. These tools help in staff motivation towards hard work and achievement of goals within the entity.

The new entity must adhere to the minimum wage regulation set by the UAE government in the payment of the low-cadre employees. On the payment systems, the new entity should define the payment to the employees based on their experiences and skills as presented in their curriculum vitas and presentation during the recruitment process. Systems based only on skills have chances of failure since the entity has little experience on the business culture and behaviours in the UAE.

Employee Engagement

Employee engagement and involvement in work place decision-making ensure commitment to the business entity. It also increases the employees’ motivation towards an organisation’s goals and mission. When the HR engages the employees, they enhance their self-esteem leading to realisation of individual goals, which later translate to company’s goals and objectives. Proper rewards, healthy working condition, adequate work-life balance ensure that employees feel appreciated (Torrington et al. 2011). The resulting entity must put in place proper measures to ensure these systems exist.

Appreciating the Differences

Harrods and Emaar come from different set ups influenced by different strategies and policies. Acknowledging these differences helps the new entity to improve service delivery and product provision. Such appreciation enables the new business franchise to develop a strategy to maximise production with these diversities. The rationale in this strategy aims not only to target the operational strategies of harnessing the work force, but also seeks to identify and evaluate the uniqueness of each of the workforce from the previous entities.

Chawla & Renesch (1995) argue that for these two organisations, the disparities exist in value systems and corporate culture, leadership structures and organ grams, staff skill levels and qualifications thus steps to maintain productivity modules while ensuring an ample platform for homogeneity will allow the organisations to leverage each other and boost the production levels.

Knowing the People

Developing a strategy to understand identify and understand the key stakeholders in the new entity is necessary. Given UAE’s systems of instituting a company locally, the new entity must engage understand the legislative controls, local workforce behaviour, and organisational culture. Similarly, creating an integration team drawn from the diverse function of the previous entities is critical in the overall supervision and oversight of the merger process.

Such a team ensures the construction and tracing of integration process within the set timelines until the completion of all the post-merger arrangements (Harzing & Ruysseveldt 2004). Rapid restricting of the new organisation and identification of proper priorities is necessary to ensure the middle level management keeps to the pace of market demands.

Global approaches in human resource management:

Outsourcing

Noe in his work on management denotes that outsourcing allows business enterprises to focus on other issues in the management while having the employment and human resource management systems run by external experts (2012). For this reason, the burden of resources and attention that might fall managing the human resource passes to experts in human resource management and recruitment.

The cost and expenses that would otherwise arise from the management engaging in the recruitment and management of the human resource thus gets diversion to more essential and broader issues within the business enterprise. Even though outsourcing eliminates the direct contact and communication between the business franchise employees and the customers, it provides a necessary mechanism of cutting production costs.

Temporary human resource

Increasing need for employee to develop more flexible job opportunities creates the basis for this new system of human resource management. The use of contracts in employee engagement allows the business enterprise to make maximum and best use of the employee expertise within the short periods of engagement given the flexibility of the work conditions.

This augurs well with the current market cycles in which production and purchase of product and service tremendously changes with seasons of the year. The resulting advantage of this type of employments is the ability of firms to employ only a required number of employees at a given time depending on the market needs contrary to the permanent employment systems in which firms pay all employees even during low productivity seasons (Noe 2012).

Leasing human resource

In this kind of human resource management, an enterprise transfers its employees to another firm that specialises in human resource management, payroll accounting, and risk management (Truss & Mankin 2012). The entity that transfers its employees leases their human resource back as employees of the leasing firm.

The resulting effect on this system is the rise in payment in cases the firm wants to hire the services of the transferred work force. This system of human resource management is a way for enterprises to provide a body of highly skilled and well trained human resource that is capable of expanding in relations to the demands of the current world of production.

Issues influencing development and implementation of HRM strategy

Business growth is important in maintaining the dynamics, viability, and value-promotion of the product and services of any entity. A growth-focused organisation is capable of attracting and retaining the best customer base. As Goetz and Watkins (2008) denote, business growth lead to increased profits thus increases the shareholding values.

In order to increase the chances of achieving this, firm continues to engage in mergers and acquisitions as a fast rising strategy for enhancing competitive advantage. However, these mergers come with great challenges especially when executed across regional borders. The national, regional, cultural, as well as institutional strategies need harmonisation to ensure successful mergers.

Structuring and licensing

In spite of offering several free zones for transnational commerce to engage its local market, global entities with the aim of entering the UAE’s market must register a branch or enter into partnership with local business. This is a requirement under the company law. This means that Harrods stands a better chance of gaining entry into the UAE markets due to the partnership it enjoys with Emaar, a local entity within UAE. It is important to note local entities, in this case Emaar Group, must hold at least 51% of the shares in the business franchise as stipulated by the companies in the UAE.

Tax

UAE is proud of the liberalised market structures on international business. The country desists from levying federal and income tax on international business apart from those engage in the banking sector. The free zone business structures offered for international companies are subject to several tax concessions further improving the ability of the international companies to venture into the local markets. In this kind of environment, Harrods groups experience few hurdles in venturing into the UAE markets with the help of Emaar.

Law enforcement systems

Law enforcement strategies in UAE are strict. Government agencies controls and supervise carrying, consumption, buying, and selling of drugs. In this case, Harrods employees seeking residence in the UAE must declare their drugs at the airport. Contravention to this law results into incarceration, deportation, or heavy fines (Goetz & Watkins 2008).

Even though Dubai remains relatively moderate on religious issues, foreign employees must remain sensitive to the Muslim standards of dressing and behaviour. Employees from UK and other western nations find this conservative but must adherer to the regulations to avoid confrontation from the law enforcement agencies. It is important for the visiting employees to understand the Dubai code of conduct to ensure successful residence devoid of unlawful behaviours.

Organisational Culture

In the UAE, families own and run most local business and franchises. For this reason, chances of finding members of one family composing the directorate of an organisation are high. The local populations have intrinsic family values and always strive to keep the business within the family’s grasp. The older members of the families take up the most senior position in the entity while the young members take up the middle level and low-level sector. It is important to note that the top most management position occupied by the old members of a given family acts as the sole decision making entity within the business. There exists a developed system of hierarchy in which management identify apparent heir and train them on the business management skills.

Even though these systems seem to expose the local businesses into acts of nepotism and deny them the opportunity to acquire productive workforce, Emaar engages in a process of competitive employment with intensive recruitment processes. Harrods on the other hand recruits the workforce and compel the employee into intensive training and development to ensure that they remain productive (Goetz & Watkins 2008).

Combinations of these factors provide an avenue for the acquisition of the best productive workforce within the new entity. Despite the fact that several local citizens with the inclination towards nepotism as depicted in most family based companies coming to seek favours, adequate recruitment systems are necessary to ensure a productive workforce.

Conclusion

From the report, it is significant to note that formation of a new venture involves numerous logistic, especially if the two firms are in different countries. In the case of Harrods and Emaar Properties, the entire management must adjust to the new business environment in the UAE. Organisational culture and consumer behaviours in the two firms have been different. For successful operations of the joint venture, harmonisation of the management systems is unavoidable. Harmonising the recruitment and selection process, as well as the performance appraisal between the partners is a way of ensuring success of the partnership.

Recommendation

Putting in account employees’ needs during this crucial transition stage is necessary. The HR team of the new venture must develop viable ways of maintaining the productive employee base against all the insecurities that arise from the merger. Instilling discipline, rewarding hardworking employees, and employee development mechanisms are necessary for the success of this merger. Proper conflict resolution strategies are paramount since employees in the new set up come from different cultural backgrounds. If all these factors take priority in the human resource management roles, the success of the new entity becomes inevitable.

References

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Fitch, A., & Semb, G 1993, The ASK model of Peer Tutoring: theory and research, Navy Personnel Research and Development Center Publication, San Diego.

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Recommendation

The main problem that Emaar needs to address when it comes to expansion and development is related to the very source of its success, namely: Dubai. What must be understood is that from a development perspective, the Dubai Model (i.e., the model of development utilized to expand and develop Dubai) is not sustainable with the current way in which the global economic environment works. This model focuses on developing Dubai into a prime location for trade and tourism through real estate development as well as significant investment into the creation of a robust financial infrastructure.

While this has to lead to numerous projects for Emaar and its rivals, the fact remains that there is a significant role in economic fundamentals that the model does not address. First and foremost, what must be understood is that the global economy operates under a “boom and bust” cycle wherein periods of economic highs leads to periods of economic lows and vice versa. This was one of the main reasons behind the sudden issues with the property sector within the U.A.E from 2007 till 2010 that was mentioned in this analysis since the local real estate industry was adversely affected by the “boom and bust” cycle. Taking this into consideration and the cyclical nature of the global economic activity, it can be stated that the current period of recovery and growth will inevitably be followed by a time of economic inactivity and lackluster growth potential.

This is a problem that Emaar needs to focus on since it would definitely impact the viability of any of its construction projects within the region. Going back to the case of the Dubai Model for growth and development, what must be understood is that the “hole” in economic fundamentals that it fails to address is the presence of a substantial industrial base. The present-day economic infrastructure of Dubai is oriented towards tourism, real estate development, and financing, all of which are the first to be affected once the global economy enters into its “bust” cycle. A strong industrial base centered on the manufacture of certain consumer goods is a necessity so as to offset the decline in other local industries, yet this is not present within Dubai and in several of its surrounding regions. There is an overdependence on tourism, real estate, and the oil industry, which makes the region especially vulnerable to external shocks to its local economy.

What is needed in this particular case is to focus development into other sectors of the economy, which Emaar can help spearhead? The following is a recommendation entailing the possible route for development that Emaar can utilize in order to both contribute towards the company’s continued success as well as enable the region to sustain itself in the face of a period of decline in the global economy.

Development of Industrial Parks

As stated earlier, Emaar has the opportunity to diversify revenue streams by moving away from construction and more towards other developments. By doing so, Emaar increases the number of revenue streams available to them. An important benefit of this is that it protects Emaar from any industry-specific problems that crop up. It is within this context that this report recommends that Emaar focus on the development of industrial parks near Dubai within the current large areas of land that it currently owns. While the type of product that could be manufactured in such areas is still relatively unknown, what can be done is to create the necessary infrastructure that would make such areas viable locations for companies to establish new centers for manufacturing their products. First and foremost, what must be understood is that within the context of the current labor force within the U.A.E, only 20% of the total manpower originates from locals. The remaining 80% consists of the various contract laborers that come into the country that are seeking better lives for themselves via better salaries.

This one of the primary sources of labor for Emaar for its various construction projects and can also be the labor source for various blue-collar jobs that can be created through an industrial park. What must be understood is that the establishment of a large industrial manufacturing complex within certain areas can have a considerable “spillover” effect that creates numerous opportunities for companies.

For instance, if a large industrial park were to be created near Dubai, this would cause an influx of foreign workers from other regions. It would, of course, be necessary for such individuals to live in some sort of low-cost housing complex which Emaar could construct near to the industrial park. Not only does this allow the company to venture into different types of construction, but it also allows it to penetrate into different types of markets, whereas in the past, it used to focus on mid to high-level types of construction. This method of generating demand for housing enables the company to better estimate the amount of housing needed, which would create increased operational efficiency. The end result is that the company would be able to expend only the necessary amount of resources resulting in fewer operational losses when it comes to construction projects.

This differs significantly from its current method of operations wherein it cannot accurately determine the level of demand for particular mid to high-end projects given the considerable level of competition within Dubai and other regions within the U.A.E. It should also be noted that from a competitive standpoint, generating demand for low-cost housing through the creation of industrial parks is actually a very good way of entering into a new market where there is relatively little competition. An examination of the various competitors of Emaar within the local market of the U.A.E shows that they tend to focus on mid to high-end development projects rather than low-cost construction projects. It is due to this that if Emaar were to allocate resources for low-cost housing for workers for the various industrial parks, it would create, this would result in higher long term profits for the company. Other potential avenues of approach that could be utilized take the form of developing low-cost malls, grocery stores, and other similar infrastructure projects that are near to the planned industrial parks.

This would allow Emaar to maximize the amount of money that it would derive from foreign workers that would be arriving in the country. Another benefit that should be taken into consideration when it comes to the proposed plan is the fact that through the creation of numerous industrial parks, this would result in higher local demand for various goods and services that would enable the local economy to thrive despite declining trade and demand in the global economic market due to the downturn. One example that showcases the effectiveness of the proposed system can be seen within the context of China and its focus on developing the potential of both its manufacturing industries as well as its real estate infrastructure.

China and the U.A.E have a lot of similarities in that development in both regions have governments that have extensive influence over the development of real estate and industries within their local markets through state-owned enterprises. In the case of China, what occurred was concurrent development of both its real estate and manufacturing industry resulting in considerable gains. The end result was that when the 2008 financial recession hit, this enabled China to “ride” the lackluster demand for real estate through the robustness of its manufacturing industry. The same cannot be said within the case of the U.A.E., which experienced a considerable decline in local demand both for real estate as well as other products. Taking this into consideration, it can be seen that the proposed development of industrial parks that focus on manufacturing would be a great boon to both Emaar and the U.A.E region as a whole since this would enable a greater level of diversification resulting in a local economy that would not be as vulnerable to external shocks should a global economic downturn occur.

International Expansion

Another potential means of continued survival that Emaar could potentially pursue is to expand outside the current context of the U.A.E market and focus on expanding into other countries. The fact of the matter is, the current climate for real estate development within the U.A.E. is rife with a considerable amount of local competition, which is further complicated by the lackluster demand for real estate within the country that has yet to recover fully. There is an atmosphere of uncertainty that is surrounding the region at present, and, as such, it would be reasonable to think that expanding into other markets that are not as difficult would be the best route to take.

For example, the Jumeirah Group, which is one of the largest hotel and resort companies within the U.A.E has actually embarked on a strategy of international expansion wherein it has focused on developing new hotels and resorts in other countries such as Brazil and various parts of Europe. The reasoning behind this strategy is quite simple, they see better opportunities in these areas where the market is not as congested with developers and other hotels as seen within the case of the U.A.E. It is based on this that this paper recommends Emaar to expand into developing high-end apartment buildings or resorts in other countries where it can expand upon its brand and create a better means of brand position which would enable it to dominate other international markets.

In order to bring about such a scenario, it is recommended that the company attempt to expand into other countries where there is still a relatively small amount of local competition yet has a considerable level of potential, which would enable it to expand. Some potential areas where this becomes applicable can be seen within the case of various Southeast Asian countries such as the Philippines, Thailand, Malaysia, and Indonesia, where there has been a considerable level of growth as of late. Various news reports have been stating that such areas are prime locations for investment given the relatively young population as well as the fact that they have become relatively “cash-rich” as of late.

This can be seen within the context of the Philippines, wherein due to the influx of foreign direct investment into the country due to the outsourcing industry, there has been a considerable level of increased consumer demand for both high-end goods as well as luxury resorts. By entering into a joint development project with a local developer, Emaar could potentially expand into the Philippine and take advantage of the growth potential the country provides. The potential for high returns from investing is not limited to merely constructing apartment buildings, given the expansive level of beachfront property available within the country; Emaar could also expand into developing an assortment of resorts that would cater to both local and foreign clients. The expansion would not only be limited to South East Asia alone, but rather, Emaar could also expand into South America, which has also experienced a considerable degree of growth as of late.

Taking all these factors into consideration, it can be seen that expansion into new markets would be one of the ideal methods by which the company could continue to thrive as compared to having to deal with the considerable level of competition within its local markets.

Utility developer for the U.A.E local consumers

The last recommendation that this report will make would be to focus on attempting to become a utility developer for the various local consumers within the U.A.E. While it is true that at the moment the U.A.E has one of the lowest energy prices in the world brought on by its considerable oil deposits, the fact remains that oil is a finite resource and, as such, it is bound to “dry up” eventually.

Taking this into consideration, one of the primary methods of operation that Emaar could get into would be to become a utility developer that focuses on the use of renewable energy resources. One of the advantages that the U.A.E region has over other locations in the world is the fact that it has vast areas of the desert that are prime locations for the creation of various solar power arrays. By diversifying into renewable energy development, which has yet to catch on within the U.A.E, this would enable the company to become a market pioneer into a particular industry that would enable it to create a dominant position within the U.A.E energy market in the foreseeable future.

Concluding Remarks

Going back to the case of the Dubai Model for growth and development, what must be understood is that the “hole” in economic fundamentals that it fails to address creates numerous problems that local developers such as Emaar need to take into consideration when it comes to planning out the creation of their future real estate projects. The present-day economic infrastructure of Dubai is oriented towards tourism, real estate development, and financing, all of which are the first to be affected once the global economy enters into its “bust” cycle. It is based on this that through the various recommendations presented in this section, Emaar would be able to avoid the potential pitfalls of such a scenario and emerge as a much stronger company.

Introduction

Emaar Company is a fast-growing global property developer, credited for executive lifestyle in its property development services. The public joint venture based in Dubai is listed in the Dubai Stock exchange market, occupying its premier position in the Dow Jones Arabia Titans Index. After its establishment in 1997, Emaar has experienced a mercurial growth in the last ten years, where it has been credited with shaping landscapes as well as people’s lives in the Emirates region. This rapid growth is attributed to the fast growth of Dubai. Other construction of the home, the company has also been credited for the construction of value-added as well as master-planned establishments to fit the demands of various home buyers, considering their varied lifestyles. As the first-ever company to conceive the idea of the community-living concept, Emaar Properties leads the pack in the property development business sector in the United Arabs Emirates (Emaar 2).

Their success in the Emirates region has seen them extend their desire to reach the international market with their integrated approach to business. This approach is based on the model of business segmentation, with various ventures in hospitality and leisure construction, education sector development, healthcare and financial sectors, mainly focusing their business on customer-oriented approaches. This is why they have segmented their business into six sectors, merged into over 60 active companies (Emaar 3). The company has a huge and integrated presence in global markets, represented by the Middle East, America, Asia, Europe and Africa.

Despite its large scale activities and heavy presence in the global building market in Middle East, Africa, Asia, Europe and America, the availability of other barriers are visible. The company’s objectives and recommendation is to expand and extend its operations in order to continue enjoying large economy of scale through increased presence and size worldwide. Considering the increased demand for housing in Saudi Arabia, the region is for sure an attractive market. The economic city has proved to be one of the biggest projects that Emaar has carried out in the region, with a lot of expectation among the projects stakeholders. Furthermore, the company has gained international recognition with the completion of Burj Dubai, the second tallest tower in the world today. This is a clear indicator of the company’s technical ability. Additionally, Burj Dubai is rated the only building with vertical concrete pumping with the highest number of storeys in the world.

Emaar’s presence in Saudi Arabia has been conspicuous in the recent past, having been the master developer of King Abdullah Economic City. Working in close association with the Saudi Arabian General Investment Authority, the organization in charge of inward investments into the Kingdom and the facilitator of the City’s development (Arabian Business.com 4), Emaar has been tasked with developing a state-of-the-art City. This development is highly regarded by the Kingdom, considering the strategic location of the City; being north of commercially active Jeddah and provision of easy accessibility to the Holy Cities of Makkah as well as Madina (Arabian Business.com 4). This association and other collaborations will see Emaar accomplish various projects in Saudi Arabia such as Jeddah Gate and Al Khobar Lakes.

Emaar in Asia, China

Emaar became the first Middle East property developer to make forays into the Chinese market, through their international expansion program. This interest and venture into the World’s second largest economy was seen as a target into the county’s stable economy despite the global recession. Experts argued that the entry that kicked off in 2006 was as a result of the Country’s previous year, 2005 economic growth of approximately 10% (Ameinfo.com 1). This kind of growth is said to have increased the interest in modern, community-centric lifestyle development in China’s major cities spearheaded by Beijing and Shanghai.

According to Ameinfo.com, the residential projects were meant to take care of the spiraling new urban lifestyle that required facilities like fitness centers, retail malls, modern schools facilities and hotels and restaurants (8). It is argued that China’s 2001 entry into the World Trade Organization has changed its market structure, boosting the marketability of the world’s most populous nation to the outside world (Ameinfo.com 9). This has subsequently spearheaded the Chinese rapid economic growth in the recent years. In fact, the Chinese global economic growth and contribution to the global GDP had surpassed that of United States, and even those of largest emerging economies of India, Brazil and Russia combined. The only drawback to this growth and development momentum was the property sector that was seen to have had the slowest growth among all sectors of the country’s economy (Ameinfo.com 9).

The other development that pushed up Emaar’s interest in China was the Beijing’s hosting of Olympics in the year 2008 and the Shanghai’s 2010 world Expo, in addition to the developments of other emerging cities’ real estate projects, with strategic investments in both healthcare as well as education (Arabian Business.com 4). According to Arabian Business.com, any investment in China must be long-term focused as the county’s development prospect is long-term and is supported by a strong pull of skilled workforce. No wonder Emaar saw this growth as an open opportunity to emerge as one of the most valuable companies in the property development.

Emaar India

Emaar has developed the spirit of collaboration and partnerships in the recent past. In 2005, the company formed a partnership with MGF Development Limited of India, giving way to the largest projects development agreements amounting to a capital totaling to US$4 billion. These projects are to be carried out in Delhi, Punjab, Haryana, Andhra Pradesh, Karnataka, Tamil Nadu, Kerala and Maharashtra. The plan is laid out such that residential plots, urban houses and villas, shopping malls, gardens, leisure and civic facilities form the major development features. The other areas focused on are the possibility of developing international standardized offices and parks, and the development of hospitality facilities such as the recently acquired space for the construction of seven-star hotels. The hotels, scheduled to be located in Delhi and Kolkata are joint venture between the two firms.

Why has Emaar taken such growth approach in India? According to Emaar Property Vice Chairman, Hussein Al Quemzi, India is one of the major emerging economies that have experienced exponential growth, giving room for the rapid growth and expansion of retail sector. This belief is backed by the fact that Indian retail market, estimated at US$300 billion is projected to continue with growth of more than 10% annually up to the year 2015’s estimated US$427, gaining market share of US$637 billion (Arabian Business.com 6). This could explain the strategic partnerships that Emaar has adopted in the Indian market, with a lot of focus on retail business sector.

Emaar Indonesia

Emaar’s entry into Indonesia’s property development business was basically initiated as a result of booming tourism sector in the country (Emaar 8). It was developed with the interest of tourism in mind, which began with signing of a joint venture with the Government of Indonesia to kick-start the Lombok project that would see the construction of state-of-the-art residential and resort communities as well as hotels (Ameinfo.com 6). This is in line with the growing appeal of the region as a preferred tourism destination. According to Ameinfo.com, Bali Tourism Development Corporation is one of the major movers of the economy of Indonesia; where infrastructure is highly needed to make it prosper further.

The main attention is to ensure the projects that drive tourism boom such as leisure sports (e.g. diving, hiking and surfing) in Lombok are boosted and redefined to instill the idea of Lombok as a prime tourist destination (Ameinfo.com 7).

Emaar in Africa

Morocco

Emaar has established its presence in North Africa just like in Asia and Middle East. One of the countries is Morocco, which has proved a successful venture to the company. With its subsidiary company, Emaar Morocco, the company finalized its entry into the country with its initial master-plan for the Tinja resort community project (Arabian Business.com 5). It was through a memorandum of understanding that the company signed in conjunction with the Moroccan government (Arabian Business.com 6).

Tinja is situated in a 300-hectare land next to Tangiers, a historic city proximate to a forest land and an estuary (Arabian Business.com 6). With its 2,500 residences located around a conspicuous beachfront supported with numerous amenities such as beach club, hotels, sports centers as well as retail outlets. The project was drawn in line with the Moroccan government’s strategic tourism project that would ensure the country gets maximum benefits from the foreign direct investments that would see increased revenue for the country’s already vibrant tourism sector. One of its goals is to create a self-sustained project with the neighborhood, after the company ordered an environmental impact assessment to reveal any threat to the environment for mitigation. In order to accomplish this goal, the company established various elements like greenways and forests club to help promote environment-friendly enterprises and practices (Arabian Business.com 7).

Tinja homes is also comprised of several beaches and homes, which hosts six separate communities, surrounded by natural features, schools, health facilities, sports facilities and many more facilities to accomplish the integrated lifestyle advocated by the government of Morocco.

Emaar in Egypt

One of the countries that have embraced Emaar’s real estate expertise is Egypt. With its US$4 billion facility located at the higher point of Cairo downtown, the area has been transformed into a residential, commercial as well as a recreational facility for the community (Emaar 8). More plans are underway to ensure that all the Cairo’s seven communities in the Heights District are made to provide a wide range of residential buildings that ranges from low-rise to high-rise (Emaar 8).

Other than the above highlighted case, the collaboration between Emaar and Egyptian government is meant to establish an integrated community that is located in the newly established Smart Village. This form of development is planned to have a highly regarded state of technology on a friendly environment that integrate both commercial and social life together, as well as corporate lifestyle. One of the main facilities, convention center, was established to promote corporate business together with leisure services with the support of its ‘Smart Village’ apartments (Emaar 6). This grand establishment has a shopping village of 15,000 m² for retail space that ranges from Boutique shops to a fine conference spaces, making it look like a village-model feel with few number of buildings, strong network of streets and a state-of-the-art grand square with a model similar way as the old Egyptian town (Emaar 9). Its location is also strategic, 10 km off the pyramids and easy accessibility from the Cairo International Airport and a few minutes drive from Cairo City center.

Another project that was developed under this MoU is the Waterfront redevelopment project for Alexandria Library, which contained components such as conference and exhibition facilities, hotels, apartments that are fully furnished, exhibition space, office parks, cultural sites, and retail center. This is one of the major establishments that Emaar has constructed after being given a 60-year lease to run the project (Emaar 9).

Emaar in United States

In order to make its entry into the tricky American market, Emaar properties adopted acquisition strategy. Historically, experts have argued in the past that American market is one of the most competitive business environments due to the legal and immeasurable red tapes for foreign investment (Gorrill 29). In order to navigate this challenge, Emaar adopted what most foreign firms do to succeed in this market, acquisition of the already established American firm. The company therefore acquired John Laing Homes, which is the second in command of the American market share, subsequently creating one of the biggest developers of real estate in the global world, with US$1.05 billion cash flow.

Emaar in Saudi Arabia

As highlighted earlier, Saudi Arabia is one of the foreign countries that have seen Emaar succeed in their planned development of their international networks of projects. In collaboration with the governmental body, Saudi Arabian General Investment Authority, the company was given the contract to establish a facility to act as the prime government investment for the city, which is strategic to the Holy Cities of Makkah and Madina (Arabian Business.com 4). With integrated components like residential suites, Industrial areas, financial centers, healthcare facilities, educational facilities, resort, and the city center facilities such as Mosque, parks, recreational space, commercial centers as well as schools, the project is a fully integrated center that comprises the modern community lifestyle (Arabian Business.com 4). It has been estimated that the project created an approximated 500,000 employment opportunities in several sectors of the economy led by tourism and infrastructure (BISWorld 44).

Under the banner of Emaaar Middle East, the venture has brought together Emaar Properties and Al Oula Real Estate Development Company to carry out the development of several highly valued construction projects in Saudi Arabia (BISWorld 45).

A. Jeddah Gate

After drawing a state-of-the-art master plan for Jeddah Gate, Emaar launched its construction that would see the facility built in a 500,000 m² land, on the downtown City. The facility has two major areas: The first with approximately 41,000 m² is situated along King Abdullah Road, and the second one of 140,000 m² is situated along Abdullah Al Suleiman Street (Arabian Business.com 11). An added advantage is that the facility is proximate to the major railroad that links the Holy Cities of Makkah and Madina, all the way to Jeddah (Arabian Business.com 11). In summery, the project will accomplish both the social and commercial needs of the people and the government of Saudi Arabia, with complete residential, fully serviced apartments, office space and shopping spaces to be leased for small scale traders.

The other aspect of the project is to ensure it carries the Smart City philosophy, with highly developed telecommunication infrastructure, which is supported by the most modern fibre optics technology. In fact, this development is supported by the project’s general architectural philosophy of going in line with Arabesque traditions, blended with up-to-date modern architectural techniques to come up with a very unique and ‘easy’ lifestyle (Arabian Business.com 12).

Jeddah Gate had the following phases:

• Abraj Al Hilal

This first phase was designed by SB Architects, with 3 high-rise residential houses in the range of between 19 and 22 storeys (Arabian Business.com 12). The design is elegantly posing with the integration of the most modern techniques and old style of constructions, making up to over 270 modern apartments, penthouses, and duplex penthouses that ranges between one-bedroom to 4-bedrooms, and standard unit sizes that ranges from approximately 50 m² to 600 m² (Arabian Business.com 12).

Other components include amenities such as: internal facilities (e.g. double outdoor swimming pools, fitness center, multipurpose room, etc.); Technical Facilities (e.g. split ducted A/C system for units, television and telephone services, internet facilities, door entry system, emergency generator, CCTV surveillance camera, and many more (Arabian Business.com 12). Additionally, there are other facilities that are critical and important for the modern lifestyle that have been established, i.e. each tenant allocated 3 parking lots, waste removal facility, common area landscaping, etc.

• Burj Al Aamal

This has been described as the pioneer business tower in Jeddah Gate, with its over 25 storey offering most modern luxury office space for lease or sale (Arabian Business.com 13). Its location in the commercial center adjacent to King Abdullah Road and its proximity to JCC, governmental organizations, banks and the Port (Jeddah Islamic Port) is strategic enough to serve its intended purpose (Arabian Business.com 12).

It’s comprised of internal facilities such as office spaces covering an area of 50200 m² and approximately 1,000 m², big spaced with luxuriously decorated area full of flowers and water surfaces, business center fitted with highly complex telecommunication infrastructure, food-court, smart tower fitted with appropriate technologies, etc (Emaar 11). Other modern facilities that have been constructed include; CCTV security surveillance system, emergency network system for exists in case if disaster, the most modern environmental management technologies, office space, and over 700 parking lots (Emaar 11).

• Al Khobar Lakes

Emaar Property has also developed another modern integrated community through their master plan, occupying a space of approximately 2,643 m². Its location is strategic since it’s constructed at about 12 Km east of Al Khobar and 43 Km from the airport (King Fahd International Airport) (Emaar 12). With this kind of development, the facility is the first gated community facility to be sold as villas to private ownership (Emaar 11).

Emaar’s Strategic Entry into Saudi Market

Over the past decade, regional real estate markets have grown to a bigger proportion, especially in the Asian region where markets have tripled or quadrupled thereby increasing investment volume. In practice, opportunistic approach to direct real estate business has dominated the region since the players have adopted capital intensive entry into the region, especially the Saudi market. However, the maturity of the Saudi market over the last five years has changed the landscape for developers since it experiences the features of a more established market, where developers give a new portfolio-approach to the development process (IBISWorld 31). This is strategically aligned to secure the value of the business in the future through growth and sustainability.

Emaar’s portfolio strategy is meant to outline where and how capital should be distributed as well as defining the factors influencing any ‘decision to enter, retain and/or exit investments’ (IBISWorld 30). In other words, as one begins to examine the future portfolio of a company, several criteria is looked at in a more strategic manner. In this perspective, Emaar developed a portfolio growth strategy in Saudi Arabia by looking at its capabilities as well as objectives of the key stakeholders in the country. The company then launched a strategic research to establish the facts in areas such as corporate requirements and strategic partnerships (IBISWorld 31).

Emaar’s approach to the portfolio strategy was designed into a multiple portfolio assets, which are eventually lamped under one overall corporate strategy for investment. They also show how they are measured and their uniqueness to each other in terms of approach and implementation process.

What triggered the Entry?

Before Emaar’s entry into the Saudi market, a survey was conducted to establish the trend and perception of the real estate business and its prospects in the country. The sentiments from the respondents illustrated that the prospect is positive, with many more buyers to come out in number and exceed the sellers’ ability to provide to the demand (Emaar 6). The findings also reveled that the Saudi people put a lot of preference in buying the finished product of a real estate than building or developing on their own. Furthermore, there is a lot of interest in establishing new real estate projects in less mature markets that have indicated strong interest in the development opportunities. The anticipation is that as the Saudi market matures, there would be increased transactions, with increased yield among the assets available. By doing this, Emaar had foreseen the possibility of global recession that would affect more international investors in developed markets than in low or developing markets.

Kingdom Tower, Jeddah

Emaar Properties stroke a deal with Kingdom Holdings of Saudi Arabia to construct the world’s tallest building. This agreement saw the two representatives, Prince Alwaleed (Jeddah Economic Company) and Mohamed Ali Alabbar (Emaar Chairman) sign a deal that would see the country host the world’s tallest building (one kilometer). Before this deal, Emaar had been credited with constructing the world’s tallest man-made structure in Dubai (Emaar 7). This is one of the strategic advantages that the Kingdom used to select Emaar, considering their international reputation and asset base that have seen them contribute to the overall global economy. This project is part of Kingdom City development, considered to become one of the biggest and most comprehensive projects to be carried out in Saudi Arabia’s real estate business.

The Business and Economic Environment (Pest) Analysis

Political Environment

The political environment of Saudi Arabia is relatively stable, considering its monarchy kind of government (Gorrill 17). The following issues related to politics and real estate industry that have proved very critical for Emaar Saudi Arabian entry and success:

• Environmental and Social Awareness Issues

There is an overall global increase on environmental and social issues awareness, Saudi Arabia included. In a survey conducted before the entry, many Saudi Arabians expressed concern on the activities of some specific firms that they deemed were not keen to conserve environment. The recent data may not be available but considering the increased awareness, customers, suppliers as well as the general public are increasingly demanding that every business, particularly manufacturing firms, reduce any negative impact of their products and operations in the natural environment and preserve the existing resource for sustainability. This means that any new product and its production process must be environmentally friendly in order to cut into such a market market. However, Emaar has proved itself through its environmental conservation techniques that have seen them pass several tests in many countries.

• The general Labor Trend

Jones Lang LaSalle conducted survey and compiled Labor Force Survey data that showed that employment in manufacturing industry has steadily declined in the past two decades. This was attributed to the increasing use of additional capital per unit capital per unit of labor inputs and improvement in multifactor productivity (IBISWorld 9). Again, an increase in average hours of work per persons employed in manufacturing and the relocation of labor to more capital intensive activities have also reduced employment requirements in the construction industry (IBISWorld 9). However, a reverse trend has emerged especially in the last two years, when the construction companies have seen an increase in labor demand.

• Safety, quality and Standards

In every government and region, there are specific safety and quality standards that guide the process of manufacturing and distribution (Gorrill 34). This belief gives Emaar a competive advantage over other firms in the similar line of business.

Economic Environment

Economic stability

Saudi Arabian economy has experience continuous steady growth, and at this moment, the economy is steady and strong (IBISWorld 10). It is thus worth noting that the purchasing power of real estates has increased as much as the living standards have continued to improve. Economic projections indicate that the country’s economy will continue to prosper, with many seeking comfortable shelters as part of their basic needs (IBISWorld 10).

Growth in Service Industry

The service industry has grown in the past two decades. The growth in wholesale and retail trade, accommodation, cultural, transport, media, recreational services and many more is projected to continue due to the growth in the capital inputs in the past decade (Gorrill 39). This has created a favorable environment for Emaar through: first use the expanded media to advertise their products, targeting the increased number of service industry players in need of housing product, and secondly to use the new increased tourism activities to create more demand and make impact on the people’s lifestyle.

Collaboration and partnerships

One of Emaar’s strongest areas is its ability to form partnerships and/or collaborations with either local firms or the government of the day. The Saudi Arabian business is quite unique as many businesses prefer collaboration to gain competitive advantage. This has been perpetuated by the Saudis consumer trend of preferring to a one-stop shop to fragmented products, hence giving way for establishments of shopping mall complexes (Gorrill 44).

Socio-Cultural

Past studies have indicated that Saudis give preference to products associated with royalty, hence the government’s association with Emaar to sort out the increased housing demand (Human Rights Watch 1). The fact that the country is predominantly an Islamic state gives Emaar an added advantage in all aspects. Such is the level of culture of patriotism among Saudis that it is virtually impossible to penetrate the market if you are not part of their religious belief. In other words, the national pride is reflected through preference of religiously inclined projects.

Technology

Although Saudi Arabia is not among the developed countries, trend shows that technology is highly consumed among the locals. Saudis consider good architectural work as part of their daily work, hence the need for complex architectural products that blends traditional and modern skills. Many construction companies in Australia have invested heavily on research and development of new technology. Every other effort is made to improve the technological advancement to escalate productivity for highly sophisticated building materials. It is in this front that Emaar has taken the lead; knowing what the target customer needs most that has led them to develop fact-based information to support the claim of strength and uniqueness of their real estate and construction business.

Threats

Although Emaar has direct access to high quality, innovation building facilities and construction know-how as compared to their competitors who bid for the same projects, the threats that relate to decreasing housing demand may take a toll in their desire to continue their good work in the country. However, with the company’s diversification strategy, the company has established a way of making more forays in the country that has made them favorites in many housing business fronts. Their R&D team has also developed unique products to meet these varied demands.

Conclusion

Emaar Properties has proved to be one of the most primed companies in property development; considering its executive lifestyle in its buildings and other developed properties. Its mercurial growth in the last ten years is a clear manifestation of how it has been credited with shaping of landscapes as well as people’s lives the world. Additionally, the fact that the company is enjoying pioneering status for its the community-living concepts, it is the dominant occupier of real estate and construction service sector in most of the Arabic states (IBISWorld 11).

The company’s global presence is huge and Middle East, America, Asia, Europe and Africa. It has fully established operations in Asia, Middle East, Africa, Europe and America (IBISWorld 12). Its objective is to expand and extend its operations in many countries around the world in order to continue to enjoy large economy of scale. Saudi Arabia’s young real estate business provides the company with an opportunity for further expansion. The company’s activities in Saudi Arabia are conspicuous, having been the master developers of King Abdullah Economic City. They have found away of working in close association with the Saudi Arabian General Investment Authority, where the plan is underway to develop a state-of-the-art City. This association and other collaborations forms part of the Emaar’s strategies in its global forays and will see Emaar accomplish various projects in Saudi Arabia such as Jeddah Gate and Al Khobar Lakes.

Works Cited

Ameinfo.com. Bali Tourism Development Corporation signs joint venture with Emaar for Lombok mega-tourism project. Middle East Business Resource. 2009. Web.

Arabian Business.com. Arabtec strike deal raises costs. 2009. Web.

Emaar. Emaar International USA. 2010. Web.

Gorrill, R, Doing business in Saudi Arabia: Australian social and business culture. CIA World. 2007. Print.

Human Rights Watch. Building Towers, Cheating Workers: Exploitation of Migrant Construction Workers in the United Arabs Emirates. 2008. Web.

IBISWorld. Real Estate Business in Arab World. Saudi Arabia Industry Report. 2009. Print.

Executive Summary

Emaar Properties has an advantage in the Dubai real estate market, which is also its domestic market. As a UAE company that has government affiliations, it enjoys a favorable brand reputation and has adequate experience in hotel, office, residential, and retail space development in Dubai.

The opportunities that it can capitalize on include the development of a one-stop-shop for foreign investors keen on entering various industries in Dubai. The main marketing plan for Emaar is to enhance its brand reputation by continuing to take part in art, culture, sport, and leisure event sponsorships, branding, as well as maintaining its environmental policy on green development. This marketing plan highlights the present demand for real estate in Dubai and places Emaar in the context of the competition.

Introduction

Emaar Properties is a real estate company in the Middle East, with its headquarters and operations based in Dubai, United Arab Emirates (UAE). The Dubai government, through its ownership, has affiliations with Emaar Properties. However, Emaar Properties operates as a wholly private company. It is a profit-making organization with short-term and long-term business goals.

The company started operations in 1997. It is now responsible for many iconic and large-scale projects in the UAE, with most of them being in Dubai. The company had a net operating profit of AED 3.35 billion in 2014, which was a 30 percent improvement on its AED 2.56 billion made in 2013 (Bloomberg Business, 2015).

Company Analysis

Emaar has been working to satisfy the housing demand in Dubai since its inception. In the last few years, the company has expanded its scope to include other markets in the UAE, as well as foreign markets in the Middle East and North Africa.

The company includes several subsidiaries that operate in real estate, leasing, and related activities, as well as hospitality. It develops properties, leases, and manages properties, including malls and residential spaces. Some properties are sold as whole units, while others are sold as subunits (Blythe, 2013).

Market definition

The real estate market in Dubai consists of residential and commercial properties. The market for Emaar Properties is the high-end income group segment for residential properties and corporate office supply and management of the business segment (Halaf, 2011).

Market potential

The Dubai real estate market has a lot of potentials. The region has been on a recovery path since the 2009 financial crisis that affected property demand and capital inflows negatively. Currently, many previously stalled developments are complete or near completion and ready to take in new occupants. The market is maturing; thus, an increase in the niche management of properties is emerging. Therefore, companies can either develop or manage properties and still be able to meet their growth prospects in the Dubai market.

With the increased relevance of Dubai as a destination for capital inflows in the global real estate industry, many companies are opting to enter or expand their portfolios in the country. They grow the industry in the process, thereby allowing companies like Emaar to enjoy distributed economies of scale and gain quickly from value-added services (JIL, 2014).

At the same time, the UAE government is taking measures to improve businesses by providing capital for establishment and expansion under different state schemes, mostly in partnership with private organizations. The support assists local, small, and medium companies to afford office spaces and other facilities needed for their growth. Meanwhile, real estate companies continue to experience a boom as the flow of funds into Dubai increases the overall demand for their products (Jobber & Fahy, 2009).

Market demand

The commercial retail segment in Dubai has been experiencing a surge in demand in the last year. It is expected to keep on improving in the coming few years. Lower oil prices that have a significant adverse effect on petroleum export earnings for the UAE have not caused a significant impact on the Dubai real estate sector.

Experts expected the Dubai residential market to have an additional demand of 15,000 at the beginning of 2015, which would grow to reach 17,000 units by the end of the year (JIL, 2014). The apartment-style of residency has seen a considerable increase in demand in the residential market, with a year-on-year sales increase of 40 percent and retails increase of 27 percent.

At the same time, the residential villa segment has a year-on-year sales increase of 23 percent and a retails increase of 11 percent (JIL, 2014). Dubai currently supplies about 7.4 million square meters of office space. Moreover, it is expected that there will be an additional demand for 0.7 million square meters in 2015. The office segment of the real estate market has been showing positive signs that encourage investment. Its vacancy rate has been on a consistent decline since 2013.

The vacancy rate was 31 percent in 2013. It was expected to reduce to 25 percent by the end of 2014 (JIL, 2014). The rental income that companies are earning from their properties in prime locations around Dubai, especially in the central business district, has been on the increase. The average rent per square meter was AED 1,720 in the second quarter of 2013. It had risen to AED 1,860 a year later (JIL, 2014).

In addition to commercial space and residential space, there is an extraordinary demand for retail space, which is a sub-segment of the commercial real estate that deals with the provision of facilities for shopping. It includes the construction and management of shopping malls. The segment had a vacancy rate decrease of 5 percent between 2013 and 2014, while rents for primary retail space were AED 5000 in 2013 and AED 7,700 in 2014 (JIL, 2014).

Meanwhile, secondary retail space attracted rent rates of AED 1724 in 2013, which increased to AED 2,360 in 2014. Growth in demand was also experienced in the hotel segment, where the occupancy rate remained the same in 2014 as it was in 2013, but the average daily rate increased marginally from USD 267 in 2013 to USD 276 in 2014 (JIL, 2014).

Vacancy rates are falling in many preferred locations and buildings in Dubai, as companies position themselves to take advantage of the growing economy. On the other hand, the residents are taking up mortgages and other financial products to purchase or rent.

Competitor analysis

The main competitors of Emaar Properties are the Majid Al Futtain Group, Nakheel PJSC Company, and the Saudi Binladin Group (Bloomberg Business, 2015). They are Emirati companies with enough capital to take on Emaar, but they focus on different states and markets to provide healthy competition to Emaar, without being too threatening to its market share (JIL, 2014).

Customer analysis

The primary customers of Emaar Properties are businesses seeking to establish hotels in Dubai, school operators looking for appropriate infrastructure in high-income population areas in Dubai, businesses seeking prime office locations, and sport and leisure service companies seeking development partners for their attractions throughout Dubai. The Dubai City population has conservative Muslims, who are mainly UAE citizens.

There are also non-conservative people of other different religions, who are mainly foreigners living and working or visiting Dubai (Festivals, 2011). In the first segment, there is a high demand for prime offerings in real estate because of higher disposable incomes.

On the other hand, the foreigner population in Dubai has mixed-income fortunes. Some expatriates and businesspersons have high incomes and drive the real estate market demand, while others are factory and construction industry workers moving to Dubai to look for jobs (Halaf, 2011).

Emaar Properties is keen on availing real estate solutions to the wealthy Emiratis and expats and provide adequate office and other commercial spaces for their business operations at the same time. It also serves real estate demand for the Dubai and UAE governments. Thus, customers are both individuals and corporate clients.

Dubai continues to attract a high population of expatriate workers, who have contributed significantly to the Westernization of the Dubai social lifestyle. The social environment makes it appropriate for more travelers and business people from around the world to stay longer and contribute to real estate demand (Emaar, 2015).

SWOT Analysis

Strengths

Emaar has a strong government backing that allows it to expedite land deals for development. The option to work with less stringent regulations compared to its rivals and the optional support of the government as a client for new projects gives Emaar an upper hand in marketing (Paliwoda & Thomas, 2011).

Emaar’s business model has been a source of success for the company, allowing it to create a lifestyle that makes its products unique and easy to differentiate from other market offerings. The company is also eyeing foreign markets and learning from its challenges to enhance its local strategy. The presence in foreign markets is also a boon for Emaar, which is looking to have worldwide recognition for the highly internationalized real estate market in Dubai (Jobber & Fahy, 2009).

Another high point for Emaar is the solid partnerships that the company maintains with a range of public and private partners to grow its business.

Weaknesses

The main weakness of the company is its overexposure to the Dubai market, which makes it vulnerable to any negative factors affecting the market. At the same time, the operations and funding strategy employed by Emaar can be a hindrance to its marketing success. The company relies on its parent corporation and its global financial rating to acquire affordable credit (Felix, 2012).

Any negative effect on the rating will affect its ability to fund its operations directly and jeopardize its prospects of succeeding (Hulbert, Capon, & Piercy, 2010). Lastly, the real estate sector faces environmental challenges, as it inherently upsets landscapes and cultural scenarios. The nature of the business presents many avenues for conflict with special interest groups. These conflicts can cause unwanted attention to the company’s brand (Kotler, Keller, Brady, Goodman, & Hansen, 2009).

Opportunities

Emaar has a chance of consolidating its presence in the Dubai market to provide a one-stop-shop for its current different offerings. It can go on to replicate its app offering into a real-world business strategy, where clients have to deal with one sales point only to get all their needs. This will enhance its reputation for timely delivery and a few nuisances to customers.

The company can also use the internationalization efforts to grow cultural diversification in Dubai to position itself as the most preferred provider of real estate development and management solutions to foreign businesses that are set up in Dubai (Peter & Donnelly, 2004).

Threats

Economic protectionism that the UAE government may practice on local companies to shield them from the competition can cause them to be less innovative and lose their market appeal. At the same time, Dubai remains connected to the global economy. Any slump in demand in the emerging countries’ real estate markets can lead to reduced demand for Dubai’s offerings. This can affect Emaar Properties negatively (Pride, Ferrell, Lukas, Schembri, & Niininen, 2012).

Product and brand management

Emaar Properties takes a comprehensive approach to manage its brand reputation. It implements an environmental policy that seeks to make it compliant with local and global environmental regulations. At the same time, it uses the policy to come up with value-added services in its real estate developments to entice its customers into choosing it over the competitors’ offerings.

Emaar establishes itself as a pro-environment company through the inclusion of micro wetlands, recycling facilities, greenery, and other landscaped facilities. It also relies on environmentally friendly designs and materials whenever it is undertaking new projects, thereby impacting the company’s image positively. The company wants to sustain communities and has a corporate approach to managing environmental risks. The method also works as a corporate social responsibility strategy (Emaar, 2015).

Emaar is also a recipient of various awards for excelling in different areas. The company is proud of its achievements and uses the recognition to elaborate its brand value to potential and existing customers.

In 2014, its Emaar Community Management (ECM) received the first Green Facility Management Organization award, while one of its hotel developments, the Address Downtown, received the best business hotel award from Travel & Leisure Awards India. Another hotel development, the Armani Hotel Dubai, was also a recipient of the “world’s leading landmark hotel” award at the World Travel Awards ceremony.

Meanwhile, direct placement of the brand in the market happens through sponsoring events around the UAE. Emaar has a renowned reputation for being a patron of art, culture, sports, fashion, and talent. The brand has earned a reputation by supporting events that celebrate beautiful aspects of life.

The company connects with the local communities in Dubai closely, both in the business and social levels. Dubai has many events that attract tourists and other travelers from all over the world. It also hosts globally televised events that provide Emaar with advertising opportunities. An example is the combination of Emaar and Lotus Formula1 team as an official partner, allowing the company to have a branding stake at the most popular Motorsport in the world.

Pricing

Emaar will continue to embrace a premium business model, where it quotes above-market prices for its properties and management services. In return, it will offer excellent solutions that allow clients to obtain value for their money and return on investments in the shortest time possible.

Emaar also cultivates strong long-term relationships with clients seeking to spread the shock of the initial high pricing to other business offerings that differentiate its primary offerings. The company also moves into lucrative locations or develops some sites to become profitable so that it can enjoy first-mover advantages. This allows it to charge higher prices because of the lack of competition (Youseff & Piane, 2013).

Distribution

Emaar does not deal with distributable commodities, as seen with fast consumer goods or other consumer products. Instead, it offers services and non-movable assets. Nevertheless, it still relies on some aspects of distribution to ensure that clients get what they want in their preferred locations. The company actively scouts for real estate locations and enters into exclusive development deals, which may increase leasing and purchasing land for development.

It enters into lease-and-operate agreements in the case of established buildings and other facilities. Consequently, the company will continue to build a broad portfolio of office, hotel, leisure, sporting, and residential properties for letting and selling to satisfy different clientele demands. It works in close collaboration with its development partners to provide the necessary infrastructure that allows it to charge higher prices for its offerings.

Communication

Emaar recently launched an app for use on smartphones and tablets. Its customers and potential clients can navigate the app to get an office or residential quotes and financing arrangement details of the various properties they are searching for. As a result, the company does not have to rely on brochures and other traditional marketing communication methods to reach out to potential clients.

All it currently does is to promote the Emaar app on a variety of online and mainstream media channels to get as many people as possible to work with the app on their phones. As a result, Emaar is also able to collect client intelligence on demand and interest in its properties, which inform its other marketing strategies (Smith & Taylor, 2006).

Emaar is also a major participant in industry-related exhibitions around the world, mostly in Dubai. It also takes sponsorship titles for some events to cement its position as a leading player in the Dubai real estate market (Piercy & Rich, 2009). The company should continue being a major user of exhibitions and trade shows to reach out to expatriates, business leaders, luxury clients, and other potential customers who are living in the UAE and those who are visiting (Festivals, 2011).

Implementation and control

Implementing the marketing plan will require tightening the present strategies to make sure the organization does not incur unnecessary costs due to the planned improvements. Emaar will aim to have a better focus on its high-end market, where it derives most of its business. However, given that the competition is likely to toughen as more entrants join the Dubai real estate industry, Emaar will be looking to identify the new avenues of building close relationships with customers to avoid recurrent marketing costs.

The company will rely on its budgeting process to allocate funds for marketing. Moreover, it will be measuring profit margins in relation to the overall revenues and costs as a way of influencing management and employee decisions on prioritizing campaign programs (Piercy & Rich, 2009). Eventually, the company should be able to retain a marginal increase in marketing costs, even as it takes on more opportunities for brand image enhancement.

Conclusion

The Dubai real estate market is booming; thus, Emaar Properties is in a good market position to enhance its offerings. This report evaluated the current condition of the company and its market. It then made proposals on how to improve the business through marketing. Emaar needs exposure to stakeholders, where it can cultivate healthy client relations to improve its brand and increase the occupancy of its prime properties.

References

Bloomberg Business. (2015). Emaar Properties PJSC. Bloomberg Business. Web.

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Emaar. (2015). Environmental policy: Upholding the highest standards in environmental policy. Web.

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Piercy, N., & Rich, N. (2009). High quality and low cost: the lean service centre. European Journal of Marketing, 43(11/12), 1477-1497.

Pride, W. A., Ferrell, O. C., Lukas, B. A., Schembri, S., & Niininen, O. (2012). Marketing principles. Victoria, Australia: Cengage Learning Australia.

Smith, P. R., & Taylor, J. (2006). Marketing communications: An integrated approach (4th ed.). London, UK: Kogan Page.

Youseff, J., & Piane, K. (2013). Opportunities and challenges in the Middle East and North Africa media production market. Dubai Film and TV Commision, Doha: Oliver Wyman.

Introduction

Emaar Properties is “a leading real estate development firm based in the United Arab Emirates” (“Emaar Properties,” 2017, para. 2). The company provides managerial services, property development, and construction services across the world. The completion of Burj Khalifa is a clear indication that Emaar Properties is a successful real estate development firm. This essay gives an analysis of the internal and external aspects impacting the company’s performance.

SWOT Analysis

This framework gives a detailed description of the firm’s external and internal factors. The managers at Emaar Properties should consider these aspects whenever developing new business strategies.

PESTEL Analysis

Political

Emaar Properties operates in different parts of the world. This strategy dictates the political factors affecting its business performance. Its presence in the United Arab Emirates supports its goals. The UAE is politically stable. The Middle East has been characterized by politically stable governments. This is also the same case for Europe and North America. Unfortunately, its operations in North Africa are met by different political obstacles (“Emaar Properties,” 2017). The political climate experienced in the UAE promotes business practices and investments. These attributes explain why the real estate sector is growing rapidly.

Economic

The economic performance of the Middle East is attracting many businesses and investors. The government of the UAE has been implementing powerful policies to support economic growth and sustainability. Emaar Properties capitalizes on such economic aspects in order to achieve the targeted goals (“Emaar Properties,” 2017). The current growth experienced in the global economy is expected to support the firm’s performance in the future. However, the declining interest rates in the UAE will affect the real estate sector.

Social

Many people are currently in need of better or premier living standards. This is the case because such people are earning better salaries. Lifestyle changes have encouraged many companies in the industry to come up with innovative housing solutions (“Emaar Properties,” 2017). The social changes experienced in different parts of the world such as housing and shopping have been supporting Emaar Properties’ business model.

Technological

Technology is one of the driving forces behind Emaar Properties’ success. The firm embraces the use of modern technologies in order to meet the changing demands of the targeted customers. The use of LED lights in different buildings, sustainable technologies, and the provision of green solutions to housing problems are driven by this factor (Salihovic, 2014). Modern technologies influence every research and development (R&D) process in the industry (Hanieh, 2016). Emaar Properties must consider the technological changes experienced in the world today in order to emerge successfully.

Environmental

This factor should never be ignored by companies that want to emerge successfully. Many nations including the United Arab Emirates (UAE) have implemented stringent laws to ensure every firm engages in sustainable business practices (“Emaar Properties,” 2017). The changing global climate is encouraging governments to conserve the natural environment. Emaar Properties has always been required to consider the environmental issues facing its clients. The firm conducts environmental impact assessments (EIAs) before initiating every massive product. New laws focusing on the needs of the natural environment have emerged in the recent past. Protection of aquatic animals and natural habitats are critical issues that might be addressed by the leaders at the firm.

Legal

Emaar Properties operates in different regions characterized by numerous laws and policies. For instance, there are policies focusing on workplace safety, environmental protection, and integrity. There are urban planning laws that are considered in order to ensure every project is sustainable. These laws dictate the business initiatives and development processes implemented by different companies such as Emaar Properties (Hanieh, 2016). The company should also meet specific requirements for the safety and sustainability of different buildings. These factors will definitely impact the firm’s performance in the future.

Impacts of External and Internal Environments

The internal environment should be taken seriously by companies that want to realize their business goals. At Emaar Properties, the internal environment is what dictates performance. To begin with, the leaders at the company have managed to promote a powerful organizational culture. This culture dictates the behaviors, goals, and strategies undertaken by different followers in an attempt to deliver projects in a timely manner. The workforce is usually guided and empowered using appropriate leadership models. The approach has promoted positive practices such as R&D, teamwork, decision-making, and problem-solving (Salihovic, 2014). The use of a vision, mission, and core values explain why the internal environment supports the firm’s performance. However, the emergence of misunderstandings at the company affects the competition of various projects. However, such conflicts are addressed in a timely manner in order to ensure the targeted goals are realized within the shortest time possible. The actions undertaken by the human resource (HR) department support the targeted business objectives.

The external environment, on the other hand, offers both obstacles and opportunities to Emaar Properties. The political and economic situations experienced in different countries such as the UAE support the firm’s business model. The changing social dynamics and lifestyles encourage the firm to come up with superior buildings that can meet the needs of the targeted clients. Globalization presents stringent laws that dictate the performance of Emaar Properties in each and every nation. In order to emerge successfully, the leaders at the company should be aware of such legal requirements (Hanieh, 2016). External forces such as changing technologies have the potential to transform the firm’s business strategy. A clear understanding of the external environment can guide the company to implement adequate strategies to address the changing needs of targeted customers across the world.

References

Emaar Properties. (2017). Web.

Hanieh, A. (2016). Capitalism and class in the Gulf Arab states. New York, NY: Palgrave Macmillan.

Salihovic, E. (2014). Major players in the Muslim business world. Boca Raton, FL: Universal Publishers.