Abu Dhabi Ship Building Company - Case Study Example

Abu Dhabi Ship Building Company Success Through Change Executive Summary Introduction and Background 2 The Nature of Change 3 The Outcomes of Change 6 Theory of Change 7 Conclusion 9 Works Cited 11 (Student) (Instructor) (Course) 12 June 2008 Abu Dhabi Ship Building Company Progress Through Change Executive Summary The city of Abu Dhabi is the principal gateway to the offshore market with the Arabian Gulf a well-established hub. At present the shipping industry is in a growth surge, which is expected to continue as high oil prices drive a thriving regional economy. Abu Dhabi Ship Building Company (ADSB) is benefiting from this, but they are a national company in competition with international companies such as Damen Shipyard Group of the Netherlands and Nico Craft, a subsidiary of Nico International (Gulf Shipyards). ADSB, however, specializes in the construction, repair and refit of naval and commercial vessels, rather than focusing on pleasure boats. Since the company began in 1995, it has formed strategic partnerships with leading ship designers and builders in ten countries. As a public joint stock company, it was registered in the UAE, established by Amiri Decree N.5 of 1995 on 12 July 1995. Most of the company's contracts have been with its home country's navy, but in 2001, it began to compete in the oil-fired market of other Gulf states (Kahwaji). It was owned 10 percent by Abu Dhabi's government, 40 percent UAE Mubadala Development Company and 50 percent by more than 6,000 UAE national shareholders. In 2002, a 50m expansion was undertaken, and by 2005 more than 800 people were employed by the company. In 2003, ADSB signed the Baynunah contract to design and construct four corvette class 70-metre naval vessels for the UAE Navy. Customers consist of companies involved in shipping, dredging, dry docking, and of course the country's naval forces (Abu Dhabi). The company competes with international shipyards to win major deals with Arab Gulf navies in Bahrain, Kuwait, Oman, Qatar and Saudi Arabia. ASDB was also hired to build a dozen 34-meter Al Saber patrol boats. ADSB has taken advantage of the information technology revolution to upgrade the company to include electronic developments. Introduction and Background The United States and Europe are suffering from major business downturns, while the oil-driven economy of the Middle East is benefiting from the demand for ships in the Arabian Gulf. Abu Dhabi Ship Building Company has been able to expand its market as well as to establish a positive brand image with the promotion of Bill Saltzer in 2006 from General Manager to CEO (ADSB). Saltzer has a clear vision of the need in the twenty-first century to communicate personally with management and staff, including construction workers, as they make up a major portion of the employee base. Since then, the company has shown continuous growth (Gulf Shipyards; Reuters; Bahrain; ADSB Starts). Aside from UAE new construction and modification work, ADSB is upgrading Bahraini, Qatari, and Yemeni ships while seeking contracts from Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia (Kahwaji). The opening of another hi-tech facility for building advanced composite vessels was the cover story for the company newsletter initiated in 2006 to celebrate the company's 10th year. This expansion will enable it to compete strongly in the rapidly expanding composite military and commercial market throughout the region (Abu Dhabi). ADSB has a low-key but attractive Web site that is introduced by a short video with a small amount of text describing the company. It offers viewers the opportunity to select areas of the company such as Products, Corporate, Media, Career, and Log In, if desired. It also gives prospective customers the opportunity to print out the copy of the first newsletter, which offers a comprehensive analysis of the company (Abu Dhabi). The Nature of Change Any company in this global economy that continues to follow past methods of marketing using straight product promotion that does not incorporate an emotional approach will find itself falling behind. Change has a different definition now than in the twentieth century. The global economy brought about by technological advances is mainly online with information technology changing day by day, moment by moment, and requiring leadership that recognizes and takes advantage of innovative new marketing methods, especially through the Internet. It is no longer the bottom line-profit and loss-that is the focus of business. Customer and employee satisfaction has become the priority. According to the president of the University of Maine at a recent conference, hosted by the Emirate's Center for Strategic Studies and Research (ECSSR), cultural diversity in the UAE has allowed for a concept of global community that could greatly benefit the United States (Kennedy). He goes on to say that because of its geography, the Middle East is especially reliant on communication technology, especially in business. The only way to form a bond between the brand and the customer is a firm's consumer insight into its targeted customers or discovery of its customer beliefs. The most positive responses are in tune with deeply rooted cultural insights (Suwanprakorn). Through most of the twentieth century, the World Wide Web was a futuristic idea that didn't seem to be useful for businesses. From the 1990s, however, the Internet quickly became the marketing method of choice, and reaching the customer online was the priority. One company that takes advantage of its positive high-performance reputation to target and receive the UAE Federal Government's General Information Authority endorsement is Fujitsu Services and Fujitsu Siemens Computers to upgrade their systems. The company is one of the leading IT services companies in Europe, Middle East, and Africa, and therefore indicate the care the United Arab Amirates take to stay as up to date as possible in a time of unprecedented change (Marr). In a 2002 article, John Ross noted that predictions of change do not always meet the criteria on which the predictions of change are based. Who predicted in the twentieth century that the twenty-first century would be a time of revolutionary change involving the Internet Suwanprakorn predicted that traditional marketing methods were seriously out of date in much of the Asian market, and she suggested three components to build a strong brand platform-advertising to establish the core idea of a brand, promotion to bring the platform to life, and "grass-roots" marketing to connect emotionally with the customer (par. 4). She quotes Atichart Suntaros, vice-president of a major advertising firm that only brands that "offer distinctive, relevant and differentiated propositions to the target consumers will stand out and be successful (par. 16). A common sentiment at the seminar was the importance of brand image, or brand leverage, knowing who customers are and what they want, and most of all, how to connect with consumers emotionally. Applying these suggestions to ADSB, it is immediately evident that the company is well aware of who their customers are and are able to meet their needs, at least at present. This is the nature of change that companies who are aware of their customer base and how culture affects them will be able to meet customer needs. Certainly, ADSB has the benefit of being a local company, and it is obvious that they are meeting the criteria for the twenty-first century with attention to emotional aspects of both customers and employees. The Outcomes of Change "It has become the conviction and belief of H.H. President Sheikh Zayed that if the money is not utilized for the development of man it is of no use" (Abu Dhabi Economy, par. 1). This foresight encourages the personal development of the people of Abu Dhabi and therefore exhibits a stress on education and health care side by side with industrial, agricultural and infrastructural development, which is the formula for success in the city of Abu Dhabi. With such a far-reaching ruler, companies such as ADSB have the country's backing as it increases its ability to meet marketing needs. Tension in the Gulf continued to rise as a result of the face-off between the US and Iran over the latter's nuclear program. The UAE faced the task of navigating a path between its strategic ally, the US, and its close neighbor and trading partner, Iran. The UAE is said to be the most politically stable country in the Arab world. However, its geo-strategic location dictates a permanent state of insecurity. Instability in nearby Iraq continue to put a low-level security pressure on the Emirates. However, the security threats to the UAE in terms of insurgency and terrorism are thus far not significant. The UAE consciously aims to diversify its suppliers among the four main global suppliers of arms: the US, France, the UK and Russia. The UAE does not export arms to any significant degree. According to the report, "the Emirates have little to worry about for the time being-a stable political system, a strong economy, limited security threats and a military with technology that can, in some aspects, rival the best in the world (UAE Defence, par. 3, 4). Theory of Change One area that must be brought into play in any discussion of the Middle East and especially in the United Arab Emirate is Dubai. It has shown unprecedented growth in the last few years and shows no immediate signs of slowing down. The problem with such fast growth is that it will not suddenly lose momentum with resulting stoppage of construction. For this reason, Abu Dhabi Ship Building is in better shape than the international ship building companies such as Damen because they are not dependent on Dubai's ambitious growth plan and, in fact, have the benefit of government contracts. This offers the company the opportunity to make sure they have employee satisfaction at all levels of employment, unlike the construction workers in Dubai who are not receiving the salaries they need to meet rising prices (Constantine & Al Lawati). According to a recent report on the theory of change in the Arabian Gulf, the Gulf, the report claims, has a tendency to start work on projects before "the blueprints have been finalized" (Stanton, par. 1). For instance, while Dubai is building the tallest building in the world, plans for bus stops in Oman have been planned, but nothing has been done. The UAE, Qatar and Saudi Arabia have tended to allow their regulatory models to evolve as the industry develops. Even so, they may have to adapt to changing regulations later on. For instance, Abu Dhabi Ports Company (ADPC) and Masdar have agreed to work together on carbon dioxide capture and greenhouse gas reduction at Khalifa Port and Industrial Zone (Bowman). The focus in this first decade of the twenty-first century is on "greening the globe." Therefore, ADSB may want to evaluate their company in terms of the environment. ADSB would appear to be looking to the future in terms of environment with ships to be built in environmentally controlled conditions to ensure the highest quality in their composite workshop, which has been set up with the UK' s VT Halmatic as a preferred partner. In addition, extraction systems offer a healthy environment for workers. The second phase of the facility is an outfitting shop that will be used to fit interiors and components to client specification, utilizing the present focus on what the customer wants and how personal needs can be met. ADSB Composite offers the following fact sheet (Abu Dhabi): Two twenty-ton synchronous lift gantry cranes. Facilities for working with all hi-tech composite materials. Fully air-conditioned environment. Positive internal pressure to maximize AC efficiency. Fully independent styrene extraction system. Integrated resin deployment system. Four fully-separate workshops. Separate materials storing facilities. One other area that should be considered is terrorist threats in the Middle East. Six Gulf States-Saudi Arabia, Kuwait, the UAE, Oman, Qatar, and Bahrain-make up the Gulf Cooperation Council and was formed in 1981 to guard against any threat from Islamic extremism. The GCC's common market came into existence early 2008 and plans to adapt a single currency in 2010. Conclusion There is an increasing demand for ships in the Arabian Gulf and ADSB is in an excellent position to take advantage of this demand. The company is listed and has expanded its reach throughout the world as a dependable and up-to-date organization. The factors that insure success in the present marketplace can be applied to ADSB as follows: The Need to Be More Competitive: ADSB has invested in hi-tech facilities to build the most advanced composite vessels. The company has strategic partnerships with ship designers and builders in ten countries. The Need to Expand and Capture New Products: ADSB has military contacts with UAE that allows them to take chances with new products such as a 16m Sea Keeper 715 workboat. In addition, improvements have allowed upgrading to be undertaken on completed crafts after two years of drydocking its vessels with ADSB. The Need to Incorporate Organizational Learning: ADSB, in collaboration with the Abu Dhabi Higher College of Technology (HCT) sponsored a three-year course in ship building for 20 Emirati students (Abu Dhabi). The company assisted HCT in developing a specific curriculum. This is the first time a course of this nature has been established for the marine industry. The Need to Develop New Products and Services One thing the company has done is to make Damen Shipyards of the Netherlands a strategic partner and will work with them to design two vessels for Emirates Dredging Company (EDC) or Abu Dhabi. The six Baynunah corvettes being produced by ADSB constitute the Middle East's largest Naval contruction project. Abu Dhabi Ship Building and Selex Sistemi Integrati S.p.A. of Italy have set up a new company, Abu Dhabi Systems Integration (ADSI) to provide a broad range of electronic systems integration, products and services for military and commercial platforms. ADSB has shown itself to be a successful company that has adapted to change in a global society, and it has established itself as a dependable and innovative organization. If there is a recommendation for improvement it would be access to information as to whether employees at all levels are sufficiently reimbursed and have the needed health care and opportunities for advancement. Works Cited Abu Dhabi Economy. Looking Forward magazine online. March 1999. 9 June 2008. http://www.adcci.gov.ae:90/public/media/magazines/march_99/looking_forward.htm Abu Dhabi Ship Building (ADSB) Home Page. 2005. 6 June 2008. http://www.adsb.net/ ADSB - Abu Dhabi Ship Building. Share Wadi.com. 5 June 2008. 7 June 2008. http://www.sharewadi.com/uae-company-details.phpcompany_ticker=ADSB ADSB Starts Corvette Construction. Marine Log. 6 July 2006. 7 June 2008. http://www.marinelog.com/DOCS/NEWSMMVI/2006jul00064.html Bahrain Coast Guard Boats Arrive at ADSB. Marine Log. 5 February 2008. 7 June 2008. http://www.marinelog.com/DOCS/NEWSMMVII/2008feb00051.html Bowman, D. Abu Dhabi Looks to Cut Port Emission. Construction & Industry News. 11 June 2008. 11 June 2008. http://www.arabianbusiness.com/521837-abu-dhabi-ports-signs-green-initiativeln=en Constantine, Zoi, and Al Lawati, Abbas. "Worker Hails Minimum Wage." Gulf News, 23 January 2007. 11 June 2008. http://archive.gulfnews.com/indepth/labour/main_story/10098730.html Gulf Shipyards on the Crest of a Wave. PR-Inside.com. 17 April 2008. 7 June 2008. http://www.pr-inside.com/gulf-shipyards-on-the-crest-of-r542894.htm Kahwaji, Riad. ADSB Maintains Growth, Winning More Deals. Defense News. 11 February 2008. 7 June 2008. http://dfn.dnmediagroup.com/story.phpF=3362234&C=navwar Kennedy, Robert A. UAE Talk #2: Business Roundtable. University of Maine. 24 April 2007. 9 June 2008. http://www.umaine.edu/president/speeches/042407-ua.htm Marr, Gerry. GIA Selects Fujitsu Services and Fujitsu Siemens Computers to Upgrade Oracle 10g RAC. Fujitsu: United Arab Emirates. 27 July 2007. 9 June 2008. http://www.fujitsu-services.ae/news/pr/fs_20061227.html Reuters. Abu Dhabi Ship Building's Naval Deal to Top $860mln. 9 January 2007. Thomas Reuters. 6 June 2008. http://uk.reuters.com/article/oilRpt/idUKL0991148820070109 Ross, John W. The Inevitable, Imperceptible Nature of Change. BNET. http://findarticles.com/p/articles/mi_m0JDE/is_4_7/ai_n25060132 Suwanprakorn, Natalie. Obsolete Marketing Strategies Hinder Asian Brands. Bangkok Post. 14 October 2002. 9 June 2008. http://www.accessmylibrary.com/coms2/summary_0286-8768408_ITM The UAE Defence & Security Report 2008. Business Monitor International. 2008. 7 June 2008. http://www.businessmonitor.com/defence/uae.html Stanton, D. Oman Bus Stop Theory. Arabian Business.com. 1 June 2008. 11 June 2008. http://www.arabianbusiness.com/520390-oman-bus-stop-theory Read More