International Supply Chain Design Economic Outlook for Dubai in 2004-2008 - Coursework Example

International Supply chain Design of Institute International Supply chain Design Economic Outlook for Dubai: 2004-2008 Introduction The UAE has been keen on investing, particularly from the last decade of the 20th century. The emirate has made commendable improvements especially in the first decade of the 21st century. That is to imply that the last 20 years have seen a lot of improvement in the overall economy of Dubai, with a lot of focus given to tourism. Although the emirate has been relying on the lucrative oil economy, the leadership has made it clear that he needs to secure the future of his emirate. Expansion of other sectors of the economy was informed by the belief that the future could be economically bleak when oil reserves run out. He desired a situation whereby should such an event come, then the emirate should be able to sustain itself. That explains the reason for marketing the emirate as a tourist destination as well as improving on other trades (Balasubramanian, 2010, p. 10). It was in that understanding that the emirate has been fast tracking the development of many sectors of the emirate. The most notable are the huge skyscrapers that have increasingly dotted the landscape. Such developments may be seen to be triple approach to economic sectors at the same time. By aiming to improve the tourism industry, there construction industry has been revolutionized with modern buildings that also serve as hotels. The consequences are that the construction industry and hotel industry have been revolutionized in an attempt to improve tourism. Although the above may be the most outstanding sectors, the economic plan adopted by the leadership has also been able to support other sub-sectors of the main industries (Govers, 2012, p. 55). Probably the reclamation of land from the sea to create a group of Islands was the best achievement of the leadership’s economic mitigation plans. Right now, Dubai stands tall side by side with many world economies such as New York as far as trade is concerned. Coupled with the fact that Dubai is also a free port, the emirate has poised to grow even further as more and more investors come into the emirate. It is important to highlight the growth of Dubai as a centre of trade in the Middle East. The emirate serves as one of the major centres in the Arabian Gulf, a position to which it has risen owing to the different reasons. The emirate thrives in trade owing to its strategic position. The position is almost midway between the East and the West, thereby serving as strategic maritime stopover. Dubai’s economic approach has also been such that it pursues a free and balanced economic policy, which has been seen as very reputable in the eyes of international, commercial partners. Besides, the emirate has also ensured that it has provided all the relevant support services that go hand in hand with a growing economy, for example infrastructure. It has also out in place measures for security and other social services that stimulate economic growth. Combined with other supporting factors, Dubai has witnessed a speeded economic growth and high approval rates from the international community. Economic Outlook of Dubai from 2004 to 2008 Having seen the economic background of Dubai, it would be easy to understand the different economic sectors and their contribution to the overall economy. The economic outlook would portray the way different sectors have performed over a 5-year period. It is important to point out in advance that direct foreign trade has been very critical in development and growth of Dubai’s economic sectors. As at 2011, the United Arabs Emirates, of which Dubai is a member, had a GDP per capita of $49, 500. As of the year 2007, Dubai had a GDP of AED 264, 174 billion (not computed in USD) and GDP of AED 301, 596 billion by the end of 2008. This is an indication that Dubai’s economic sectors have been growing quite steadily, especially when one factors in trends registered in other subsequent years and preceding years (Swiss Business Hub GCC., 2012, p. 2). Direct foreign trade has registered considerable growth. That is a fact that reflects that the nature of interaction between local trade and foreign trade. One should note that the Dubai majorly considers its foreign trade through the prisms of oil trade. Consequently, direct foreign trade is usually a pointer of oil trade. The Table below shows the exports, imports and re-exports for Dubai between the year 2004 to 2009. Total Foreign Trade from 2004 to 2009 Free zone trade excluded Value in Billions Dirhams Years Import Export Re-Export 2004 149.0 9.6 57.0 2005 190.4 11.2 78.8 2006 219.9 18.3 78.3 2007 297.7 27.1 100.6 2008 441.1 42.6 128.6 2009 315.5 52.4 117.6 Source: Dubai Customs DP World BP statistical analysis as at 2011 observed that the UAE has oil reserves of up to 97.8 billion barrels estimated to last 92 years at current production rate. The overall daily oil production was at 2.8 million barrels. Abu Dhabi is the largest producer with Dubai accounting for very little in terms of old production and export. In fact, Dubai is more of a consumer than an exporter. That is the main reasons the Gross Domestic Product does not really factor in oil production as far as the Dubai case is concerned. The major players in the Dubai economic are as indicated in the table below. Table of Dubai Economic Outlook for Major Industries between 2004 and2008 Dubai Emirate Gross Domestic Product by Economic Activities (Value in Million Dirhams) Sectors 2004 2005 2006 2007 2008 The Non-Financial Corporations Sector 129, 570 168, 796 204, 600 243,882 279, 898 Agriculture, Fishing and Livestock 924 894 1,100 1,167 1,234 Mining and Quarrying 4,950 5,517 7,139 5,999 6,370 Manufacturing Industries 21, 210 29,046 34,855 38,400 42, 582 Electricity, Gas and Water 1,730 2,026 2,431 2,144 2,557 Construction 11,496 14,045 18,118 24,186 29,130 Wholesale Retail Trade and Repairing Services 46,240 65,509 77,301 98,492 116,310 Restaurants and Hotels 4,604 5,547 6,468 7,056 7,532 Transport, Storage and Communication 14,062 16,896 19,937 23, 234 25,445 Real Estate and Business Services 21, 779 26,436 33,944 39,228 44,419 Social and Personal Services 2,575 2,881 3,297 3,976 4,319 The Financial Corporate Sector 12,682 16,529 20,743 22,571 24,879 Government Services Sector 5,732 6,267 7,041 8,061 8,297 Domestic Services and Households 945 1,058 1,167 1,282 1,249 Less Imputed Bank Services 7,230 8,134 10,207 11,622 12,728 TOTAL 141,699 184, 516 223,344 264,174 301,596 Source: Dubai Customs DP World It is observable that there was a general economic improvement in terms of performance over the five-year period. Among some of the best performing sectors of the economy included wholesale, retail trade and repairing services; the manufacturing industry as well as the real estate and business services. Overall, the GDP improved steadily from 2004, 2005, 2006, 2007 and 2008. Comparison Graph of General GDP Growth versus Wholesale Retail Trade and Repairing Services Industry The Manner in Which Economic Factors is Likely to Impact on Supply Chains in Wholesale Retail Trade and Repairing Services It is observable that as the GDP grew, so did the wholesale retail trade and repairing services (WRTRS) sector. Therefore, one can argue that the WRTRS was also a core determinant in the overall GDP of UAE’s Dubai. From the trend registered, it is observable that trade boomed in the WRTRS steadily. By the time the manufacturing sectors barely doubled in 2008 at 42, 582 from 21,210 in 2004, WRTRS had almost tripled from 46,240 in 2004 to 116,310 in 2008. It is arguable that the fact that Dubai is also a free port served as an incentive to the sector. It is quite common that when a sector receives an incentive, it is likely to perform. The supply chains in Dubai wholesale retail trade and repairing services depict what one would call a hybrid system. Players in that sector of the economy are business people from within Dubai and outsiders. Many that fall in the category of the outsiders are merely business people who buy in bulk usually for the purposes of exporting back to various countries. Given its location, Dubai wholesale retain trade and repairing services sector serves the African market and other Middle East country more than the west (Govers, 2012, p. 51). Consequently, exporters make their own arrangements for their supply chains. Dubai only offers transportation and port facilities such as containerization and docking. Internally, the WRTRS sector also retails for the local Dubai market. In this case, many players operating as oligopolies define the industry. None single business firm can claim to be in control of the market or even a significant segment. As a result, the supply and chain management is largely regulated by trade policies. After licensing businesses, the trade and regulations authorities let the business environment operate freely depending on the forces of demand and supply. The government has played a key role by ensuring that there are reliable infrastructures to support business. Such include a reliable system of road networks, waterways and airfreight. Systems of communications are also in place to ensure that the players in the industry are in constant communication with suppliers as well as customers. The nature of the Dubai market as a free port and as emirate that does not so much manufacturing makes it rely heavily in supply chains management. It is a perfect example of a fully integrated global supply chains. That means that the supply chain also comes with risks and uncertainties despite the fact that a working relationship has been established among different players in her global supply chain (Govers, 2012, p. 53). Therefore, wholesale retail trade and repairing services (WRTRS) as a sector of the economy has to operate under many assumptions most of which have worked given the registered trends. Although the WRTRS sector has earned a good reputation in the past for supplying quality products, it is highly probable that the sector can occasionally experience problems to do with country of origin. Some consumers would be very particular about the origin of the products they intend to buy. The sector may face delays especially deliveries from countries that are unstable. The industry could be under-stocked in the event that their supply chain is affected by an act of aggression in the import country that supplied the market. Another factor that is also likely to affect the sector negatively could also include maritime security. Ships taking a shorter sea route using the Somalia coastline are at risk of being hijacked by pirates. Such are possible risks that Dubai’s wholesale retail trade and repairing services sector face as far as supply chain management’s security is concerned. Although Dubai’s case has never experienced a case of delayed supplies due to insecurity in the supply chain, it is not entirely shielded from such risks (Thomas, 2013, p. 61). However, there are ways through which supply chain can be revolutionized for improved economic performance. Many scholars recommend a systems approach where the supply chain complexities are assessed, analysed or premeditated and a working strategy adopted. For firms operating in this sector (wholesale retail trade and repairing services), a logical and systematic approach such as systems approach would help them in the following manner. First, such a system would help firms make contingency plans for any eventuality such as insecurity in countries of origin. It would also guide planners put in place measures for relevant system optimizations measures as opposed to mere component optimization (Thomas, 2013, p. 48). Besides, implementation is a systems approach by all firms in Dubai supply chain management in wholesale retail trade and repairing services sector would make tackling of complex tasks easy. Introducing a range of changes aimed at responding to the problems experienced by firms in the sectors supply chain would help increase supplies. Integrating proper communications in such a line is one way of improving the supply chain (Laeequddin, 2009, p. 24). It is important to note that although the existing system may be working just well, systems approach also help to maximize the existing systems in for improved productivity. Firms in Dubai’s wholesale retail trade and repairing services stand to benefit from the implementation of such a system. Part 2 Report on Stanley Evans Limited Company Stanley Evans Limited Company (SEL) was started back in the aftermath of WWI. The company had started as a family business before going public later. The company originally dealt in assortment of toys and playing cards. It manufactured and sold tinplate toys in the initial period and later diecast toys in the mid-1930s. The company grew commendably, expanding into countries such as France and Germany through subsidiaries. It also sought to capture Italian and Belgium market through agents. The 1960s saw Stanley Evans Limited Company establish three companies, two of them through direct acquisition. The latter part of the 1970s saw the company make losses, prompting it to venture into dolls and soft toys. That barely restored the company to stay afloat. While under a new management headed by George Heath as the new MD in the 21st century, the company was poised for many changes. A piece of advice from Harry Whyte, the Lyles plc. MD, convinced Heath that Stanley Evans Limited Company would do even better if the company implemented an overhaul in the operations and organization of the company. Heath also advised for a redesign of the supply chains. To implement the change, the Games Division of the Company was preferred to pilot the change. The operations of the Gamed Division are currently co-ordinated from two divisions. Those are SEL Games in Wednesbury and Cardews, which operate from Coventry. The Games division at Wednesbury makes products, which include a range of card and board games as well as other cardboard jigsaws. On the other hand, Coventry handles a wider model of jigsaws and playtrays amongst others. The Coventry site also targets children’s market. In terms of design, packaging and delivery, the company has adopted a number of approaches. The jigsaws, which are made in a range of over 75 products, are packed in rigid cardboard boxes. The lid of the box is shows the pattern of the jigsaw packed as well as the company logo. As pertains to card, the company produces cards of different patterns and sizes. The company packs the cards in special box sets that also contain rules for each game. Card games are also packaged in transparent film covering or in rigid boxes. Other games that Stanley Evans Limited Company makes are also packed each in a unique way and together with rules for each game. As pertains to delivery, the company does not prefer any single means. The preferred means of delivery largely depends on what is being dispatched. In many cases, the company use contractors to do deliveries. The only times when the company does not make use of contractors is when the company has to deliver small orders, in which case it prefers to do deliveries by post. Once all products have been finished from the factories, they are first stored in the warehouse before being dispatched. The company has increasingly preferred packaging in wooden pallets for larger deliveries. Financial books in the Games Division of SEL indicate the following. Balance sheet as at 31 December 2008 indicates that the division has been growing with tangible assets improving in 2008 when compared to the previous year 2007. Fixed asset moved from 1.10 in 2007 to 1.20 in 2008. Although the growth was almost insignificant, it is positive. Net current assets also register an improvement in during the same period. However, the future of the toy market may not be very lucrative for Stanley Evans Limited Company. Market report on toys, and games in the UK market indicate that a fluctuation in the toy market income. The fluctuation in the toy market could be an indication that technology supported toys are increasing becoming popular at the expense of traditional toys. Cheaper toys are also becoming popular. Even so, jigsaw market in UK was steady than board games which had negative fluctuations between 2007 and 2008. Other games such as scrabble, monopoly and trivial pursuit are some of the games that survived in the market despite a general decline. From that trend, one can observe that given that scrabble and monopoly are game of all ages, it would appear that specializing in children’s games is losing viability particularly in this age of technology. Although the old model is being threatened presumable by emerging technology games and other games considered all-ages game, SEL Games has a chance to counter this threat. Market analysis indicates that jigsaw, scrabble, monopoly and trivial pursuit are doing well. Therefore, Stanley Evans Limited Company only needs to revolutionize its processes. That would include manufacturing, labelling, packaging. An Integrated Set of Recommendations: Corporate and Divisional Strategy for SEL Group and SEL Games Department Corporate Strategy for SEL Group One may observe that there is a general decline in demand for toys except for a steady market for jigsaw. Card and board games have registered worrisome fluctuations in the whole UK market, an indicator that that there is a shift to some preferred substitutes. Although market analysis attributes that decline to the possibility that children are maturing too fast, therefore there is little interest in toys, which may not be so. The market analysis has not assessed the extent to which technology is contributing to the decline. The 21st century has been marked with rapid technological developments, most of which are simplified for easy manipulation. It would appear that when children reach the age at which they have refined motor skills and substantive cognitive development, many prefer to play computer games. That may be because computer games offer them rich graphics that are interesting. Therefore, Stanley Evans Limited Company should adopt a corporate strategy where it improves on the graphics and colouring of the toys. Decision-makers should move away from the traditional design that paid little attention to graphics and design. For instance, many card games manufacturers now use stars and celebrities at the back of the cards. That is just an example of a strategy that the company may adopt. While doing so, the cards games and others should be varied. Occasionally, the company can also conduct an affordable symposium for children with the aim of interacting them through play to get a feedback on contemporary preferences of growing children. That would also help solve the problem of adult perspective on children’s preferences based on developmental theories. It is also possible to come up with new ideas for designing a new game from such interactions. Divisional Strategy for SEL Games Department Having noted that the jigsaw games were selling more than card games and other toys, the division need to develop various approaches. To begin with, Coventry and Wednesbury should not all produce jigsaw and merely vary them by size. One division should specialize in that so that the two divisions can each benefit from the economies of scales. Determining which division does what is a matter that the management may only determine properly after conducting market assessment and factoring in other factors such as raw materials access. However, having noted that scrabble, monopoly and trivial pursuit have market, Stanley Evans’ Games department should assess its capability to shift a significant portion of its manufacture to improving its advertisements on such. However, as a long-term measure, the Games department should make plans for regular market analysis on the changing trends with a view to implementing changes as may be necessary for the division’s profitability. Given the current technology, the company can also improve the existing games graphically by introducing an accompanying city map for toys and plastic bricks for construction of a practical 3-D city section to give the same experience as online or computer games. Doing so opens up the games to possible manipulations as opposed to the traditional method of having a toy and that is all. The division should also conduct a systems approach from manufacturing to deliveries with a view to improving quality since the market has become very competitive. All the processes of production, packaging and delivery should be done efficiently while maintaining quality of products. Bibliography Balasubramanian, A., 2010. Rebuilding Dubai. Harvard International Review, 31, 4, pp. 10-11. Govers, R., 2012. Brand Dubai and its competitors in the Middle East: An image and reputation analysis. Place Branding & Public Diplomacy, 8, 1, pp. 48-57. Laeequddin, Md., 2009. Supply Chain Partners Selection Criterion in United Arab Emirates: A Study of Packaged Food Products Supply Chain. Paradigm (Institute Of Management Technology), 13, 1, pp. 20-27. Swiss Business Hub GCC., 2012. United Arab Emirates Business Sectors: Dubai. Business Network Switzerland, June. Thomas, G., 2013. The Rough Guide to Dubai. London: Rough Guides. Read More