International Business - An Expansion Strategy for Emmar into the South African Economy - Case Study Example

Introduction

This report will develop an expansion strategy for Emmar into the South African economy. Affirmatively this will ensure a sustainable market as well as the growth of the company. Through the articulation of this report, I will focus on particular features in the South African economy that are essential for the development of the company. The paper will tackle the entry strategy into the market, sustainability of the company, formulation for the staffing procedure, operational strategies of the company as well as investment opportunities. The articulation of this will depend on the test and preferences of the locals, policies, and bureaucracies involved in the development of a company in the country.

Company background

Brief overview of the company

Emaar is a real estate development company that is located in the United Arab Emirates. Being public-joint stock company, it is listed on the Dubai financial market as DFM: EMAAR. The operations of the company are international thus providing management as well as development services to its consumers. The company has 60 active companies with six business segments. Affirmatively the company has collectively emerged in 36 markets across North Africa, The Middle East, Pan-Asia, Europe as well as North America. Emaar as a property development company has developed the most iconic structures of the world such as Burj Khalifa the tallest building on earth.

Projects of the company

A recent project that the company has undertaken is the Downtown Dubai. This is an opera district within the confines of Dubai. Another strategic partner of the company is the Meraas Holding. Together they are developing the Dubai Hills Estate. On the other hand, Emaar Properties launched the Dubai Creek residence. Through the hospitality section of the company, a lifestyle boutique hotel was started at the Manzil Downtown Dubai. Affirmatively the management of the hotel is the Vida Hotels and resort. Through the insights of its strategic development partners Emaar rolled out their first hop-on–hop transit system in the world with the Dubai trolley. The trolley is powered by hydrogen allowing for zero emissions.

Considerably, the company is involved in the provision of particular products and services. They are inclusive of.

• Infrastructure – this is inclusive of Hotels and resorts, malls, offices, retail centers and leisure destinations.
• Technologies – the company technological solutions for finance management, ERP solutions, business intelligence, intranet portals and Microsoft applications
• Management services – the company has invested heavily in a management team for service provision, hospitality, and infrastructural management.
• IT governance- the company provides quality assurance through policies and processes, change management, incident handling, change management as well as documentation standards.
• Project management – the company provides Quality consulting and advisory in design and architecture, technological evaluation and selection, performance assessment as well as custom and technical development.

Country and market analysis

African has always been considered a burden to the global community. However, it always remained untouched with the largest virgin land, coastal areas as well as tourist attraction sites. Considerably an expansion of the Emaar company into African as whole would mean great investment opportunities. The investment of the company can be initiated into the eastern region such as Tanzania, Kenya, and South Africa. These countries have the largest coastal lines and significant rapport from the host governments. Imperatively I will consider South Africa as an investment destination for the company.

Factors of the South African economy that make it an attractive destination for investment in the real estate business

• It is the second largest economy in Africa after Nigeria
• It is ranked as an upper-middle economy based on the World Bank.
• It has a gross domestic product of 400 billion us dollars and foreign exchange reserves of about 50 billion dollars
• It has got two decades of an established democracy and putting an end to the apartheid

The geographical and strategic positioning of the country are significant for the global community. The country hosted the last world cup while it is the last country to become independent in Africa. Affirmatively it has formulated the best democracy within the last two years. Considerably the country has the largest population of whites in Africa. With a large middle class in the economy, it has the best political and relational policies for development.

In the South African economy, the level of competition is relatively small for a real estate company like Emaar. Considerably this is due to the enormous resources at its disposal and experience acquire over the years. South Africa does not have substantial trade barriers on the investment opportunities available. Affirmatively this provides significant rapport for the growth of the company. South Africa has a strong culture, affirmatively localization as an entry strategy into the market will ensure best results for the company. Due to the localization of the company the staffing procedure will require locals for the development of the local taste.

Policies on the development of companies are necessary for any foreign investment. However, corruption is one of the most important factors of consideration for the elaboration of a company. The Transparency International ranked South Africa 69 out of 176 countries. Imperatively based on this the company has a fair share of best performance. Based on the above factors I will consider this as a sustainable economy that will assure a sustainable creation of business giving it 8/10.

Company initiation in South Africa

The entry model into the South African market is fundamental to the success of the firm. Affirmatively a joint venture with an existing company in the home country is crucial. A joint venture with another company will reduce bureaucracies involved with the country while at the same time will ascertain a direct access to the market. The company will as well acquire free consultation services from the company on best investment opportunities.

Registration of a company and joint venture

The South African government has developed strategic steps in the development of a company. There are two fundamental processes of starting a company.

• The first is the application of a name reserve for the company
• Progressively closure of the corporations founding statement

The application of a name involves comparison for similar names, elimination of offensive names and comparative names. The closure of corporations founding statements involves the final registration process of the company. Fundamentally, the accounting officer ought to register with a certified accounting organization.

Marketing mix and staffing of the company

The initial development of the company will require strategic staffing. Employees of the company will provide the much-needed strategy for the elaboration of a successful firm. The staffing of company will subsequently involve locals as well as expertise foreign brains. The current staffing structure in Emaar is developed to ensure efficiency. However, the creation of a subsidiary company in another country will require them to develop a polycentric approach to staffing. Fundamentally, once the host countries national are in the management of the company they will ensure success for the company. Effectively they have knowledge on the trends as well as business strategies in their country. The choice of a manager will effectively be done through self-orientation, others- orientation, cultural toughness as well as perceptual ability.

The structure above is developed for the new subsidiary company. Imperatively key positions in the audit committees, board of directors and chief executive officer require foreign strategic individuals with the Knowledge on strategic management of a real estate company. Considerably the finance, planning, as well as production units, calls for globalized leaders with knowledge on trends and best practice in the market. However, the rest of the position can be awarded to the locals to ensure enough knowledge on the local market.

A strategic outlook on the South African coastline will assure adequate land as well best sandy beaches for the construction of hotels, restaurants, and resorts. The development of an Ecocity along the coast like Dubai downtown is a strategic tourist attraction. A global online approach to advertisement of the creation will assure enough strategic investors and consumers. Similar to Dubai city it will act as a tourist attraction.

Market entry strategy

There are six modules of entry strategies into the South African market by Emaar. However some of the disadvantages associated with them outweigh the advantages.

• Exporting- Emaar requires a market where it can grow and develop into an international brand. Exportation will only result in avoidance of establishment in the local country, therefore, reducing its ability for expansion.
• Turnkeys are used by companies that have no long-term interest in a country. Affirmatively they have a reduced operation cost. However, Emaar on the application of this will lose credibility as a global brand that intends to expand in the South African market.
• Licensing attracts numerous risk and liabilities. This is because the company does not have the necessary control of the trade while its reputation and trademark are in the hands of others.
• Franchising results to inhibition to take profits out of the investment country and develop in another country. This will henceforth inhibit the growth and expansion of Emaar as a company.
• Wholly owned subsidiary - the development of a wholly owned subsidiary by Emaar will result in increased operational cost and lack of knowledge on the market.

A joint venture is the best market entry strategy. Considerably the market strategy provides the company with particular advantages. The benefits are inclusive of:

I. Distribution of risk with the partner company

II. There is direct access to the new markets as well as distribution networks

III. An advantage of increased capacity

IV. A reduction in the operation cost due to the lower number of staff members required

V. Affirms access to better resources like technology, finance, and specialized staff

Strategy for international business operation

The development of a company like Emaar will demand the assimilation of two different business operation strategies. The strategies are Global standardization and localization. At the first phase of the company, I will use localization as a strategy to develop products for the taste of the locals. This will ensure acceptance and growth of the company in the local economy. However, the global community provides a large market for the profitability of the enterprise. Imperatively I will use globalization at the second phase, 10 years after the inception of the company.