Global Standardization in Marketing - Emirates Global Aluminum - Case Study Example

Emirates Global Aluminum (EGA)

Introduction

The expansion of local companies all over the world has been as a result of markets’ globalization and the productions’ potential globalization. The Emirates Global Aluminum (EGA) is a UAE locally based firm with the potential to expand. This report will consider EGA in its market and country analysis. Additionally, the report will also be written to show the staffing policy, marketing mix, market entry strategy and the international business operations’ strategy that the company should use.

Company’s background

The Emirates Global Aluminum (EGA) began its operation in 1979 when one of its principal operating assets named Dubai Aluminum (DUBAL) was established. The Emirates Aluminum (EMAL), another principal operating asset of EGA was established in 2009. The ownership of EGA is equally held by Mubadala Development Company, which is based in Abu Dhabi and the Investment Corporation based in Dubai. EGA deals with bauxite/alumina and the smelting of aluminum. The company aims at having a substantial growth both locally and internationally (EGA, 2016). Both DUBAL and EMAL, the operating assets of EGA, together produced 2, 400,000 tpa which made the EGA be ranked among the largest primary producer of aluminum globally. The company produces aluminum products which have a wide range of uses. For example, the re-melt ingot is used in automobile among other uses. Other forms of the product include billet, liquid metal, and slab ingot. Some of the most significant markets for the company include Middle East, Northern Africa, America, and Europe. In addition to the DUBAL and EMAL as production facilities for EGA, the company also own additional facilities such as Guinea Alumina Corporation (GCA) and Al Taweelah Alumina (Ega, 2016).

Country and market analysis

Expansion in the US

One of the countries all over the world in which EGA can expand effectively and successfully is the US. This is based on various factors which make the US a good country and market in which EGA should expand in. The factors include;

A. External factors

i. Political stability

Comparatively, the US is a politically stable country. In the last about one hundred years, the country has not experienced coups or revolution or any other evidence of political instability. The World Bank indicated that the country had an average of 0.47 points in the political stability index. Statistics show an increasing trend in the political stability of the US (TheGlobalEconomy, 2016). The political stability in the US creates a good market for the EGA and a good country into which the company should expand.

ii. Free market systems

The US economy is characterized by a free market (Reich, 2013). Free markets are advantageous for the EGA since they create the freedom for innovation. This will assist the company to produce new products which will lead to increased productivity and profitability for the company (Hanks, 2016). Thus, the existence of free markets in the US makes the country a good market for EGA.

iii. Inflation rates

The US inflation rates are predicted to reach the target of the central bank at a faster rate. This will be beneficial since it leads to increased interest rates among other benefits (Raghuvanshi & Derby, 2016). The inflation rates in the country thus expose a company to less risk of inflation and hence making America a good market for the EGA.

iv. Private sector debt

Low private sector debt favors the growth of a company especially that in the private sector. The private sector debt in the US has been observed to have decreasing trend from around the year 1995 to present except for the period between the years 2007 and 2009 during the recession. Immediately after the recession, the private sector debt continued to decrease (Vague, 2014). Thus, the US is a good market for EGA and a good country for the expansion of EGA.

v. Corruption levels in the US

The US has relatively lower levels of corruption. It is ranked in the nineteenth position out of one hundred and seventy-seven countries all over the world to as being corruption-free (Chumley, 2013). Low levels of corruption in a country create a good market for EGA.

B. Customer/Competitor based factors

vi. Availability of the products in meeting consumers’ needs

EGA produces products that meet consumers’ tastes by having different forms of the product. For instance, some of the forms of the product can be used in automobile industry, aerospace, transport and other fields (Ega, 2016). The US has a wide range of industries, and thus the products of EGA meet the need of the customers in the country.

vii. Existing competition

Aluminum producers in the US have little competitive power as compared to other producers in other countries. The little competitive power of aluminum producers in the US will create a good market for EGA. The main competitors that EGA will face in the American market will be China (Cohen, 2015).

viii. Efficiency and the value of existing competitors

China, the existing competitors of EGA, is the top producers of aluminum in the American market. To remain competitive, the Chinese producers have avoided taxes on export by having wrong labels for their products among other methods which have called upon the US to start campaigns against the Chinese producers (Cohen, 2015). This makes the Chinese companies less effective and to have a declined value in their products which could make EGA rise above them in competitiveness.

C. Industry and Business related factors

ix. Trade barriers

Currently, there are no or little trade barriers between the US and the UAE. This will allow EGA to export its products to the US easily. The lack of trade barriers between the two countries makes the US an ideal market for the EGA’s products.

x. Cost of establishment

The cost of establishing a market for the products of EGA in the US is low. This is because of the low rates of taxes imposed in exporting goods to the country. The lost cost of establishing a market for the products of EGA to the US makes the country a perfect market for the country.

Marketing mix and staffing policy

Marketing mix

Product

Standardization of the product is significant so that the product may fit in the new market. The features of the product should be such that they receive positive local and international responsiveness. The product has about 99.84 to 99.96 aluminum percentage. EGA ensures the best possible aluminum percentage since the products are used in some areas which require the best possible quality. That is an aluminum percentage of up to 99.9 percent. The standard aluminum percentages produced by DUBAL, one of the operating assets of EGA weighs exactly twenty-two kilograms and measures 736mm by 171 mm by 107mm. The standard ingots produced by EMAL weighs twenty –two just like that produced by DUBAL. However, the measurements differ since the standard product from EMAL measures 740mm by 170mm by 114 mm (Ega, 2016). The features in the standard ingots should be maintained in all the products for the new markets whereas those of the local market can have different features.

Place/Distribution

The products should be distributed around all the big cities in the US such as New York and Washington DC. This is because most of the customers use the product in their businesses which are located in the cities, such as in electronic industry, aerospace, automobile among other industries. Other than the distribution of the products in the cities, the production of the product should also be done in the big cities.

Promotion strategy

There are several strategies which can be used in promoting EGA’s products in the new market. Some of the promotion strategies which can be used in promoting the product include marketing the product through the social media, holding contests, branding promotional gifts, holding after-sale customer surveys among other strategies (Hose, 2016). The promotion strategies will assist in attracting customers in the new market.

Pricing strategy

In setting the price of the product in the new market, EGA should do it using three considerations. First, EGA should consider cost-based pricing in which the price set should be able to cater for the cost incurred in the production of the product. Secondly, EGA should consider customer-based pricing in which the price set should be such that the customers can pay. Finally, the competitor-based pricing is done such that the prices charged by competitors are used in determining the price for the product in the new market (Tutor2u, 2016).

Staffing policy

Polycentric policy approach

The best HRM staffing policy that should be used in the new market should be polycentric policy approach. In this approach, the top positions in the new market should be held by people from the new market, that is, Americans. The other positions can be held by people from the EGA’s country which is UAE or other countries (Whitehead, 2015). This approach is beneficial since people from the new market are more informed about the market.

Market Entry Strategy

To enter the new market, EGA can use several entry modes. First, EGA can enter the new market by acquiring an existing market. This might be advantageous since there are already skilled workers that are available for the company. However, this might be accompanied by outmoded technologies. Secondly, EGA can enter the new market through Greenfield investment whose benefit includes having more control over most of the company. It disadvantageous includes high expenses. Thirdly, the licensing mode can be used in entering the new market since it is quicker and easier. However, its license period is limited. Fourth, EGA can enter the market through foreign direct investment which is beneficial since it have a high degree in which its operations are controlled. Fifth, EGA can enter the new market through exporting which is beneficial since it reduces the rate at which the company will be dependent on the existing market. Finally, EGA can enter the new market through contract manufacturing which is beneficial in that in creates employment for the host country. Of all the six modes, foreign direct investment is the most recommendable. This is because it provides the ability to know better the consumers of the product and the competition in the market (Vintage, 2014).

Internal Business Operations

Global standardization

To compete internationally, the company should use global standardization. In this strategy, a product is set such that it conforms to various countries and cultures all over the world. This increases the marketability of the product because customers all over the world are presented with a product in which they are all comfortable with (Vogt, 2016).

Conclusion

Evidently, EGA has the ability to expand its market in the US. However, for it to expand its market in the US, various factors have to be considered such as external and competitors factors. The company can enter the new market using various modes and by the utilization of global standardization strategy for their international business operations.