Sharaf GD Competitors Comparing Their Price - Essay Example

Sharaf DG Electronic Retail Business in UAE Name: Institution: Date: Table of Contents Table of Contents 2 Introduction 3 Sharaf GD competitors comparing their price 4 Three possible costs incurred and their importance 5 Promotional Costs 5 Cost related to Sharaf Dg Human Resource 6 Computer Installation and other Support services costs 6 Choose one product Identified in the list above discuss demand and supply 7 Nokia mobile handset demand Trend 8 UAE Demography and Economic Set up 10 Part 2 11 Increase Sales by charging lower price 13 Part 3 15 Characteristics of Electronic Retailing in UAE market 16 Free entry of market players 16 A fairly larger competing Business in the market 16 Products Differentiation under Imperfect Competition 17 References 18 Introduction Sharaf DG Company started in 2003 with a mission to change the face of electronics retail in the UAE region providing services to consumers at a better and cost efficient manner than it had been experienced before. Sharaf DG an electronic retailing business, the business practices, is arguably known to have changed the face of consumer expectation in the UAE region (Mahmood, 2004). The firm has a knowledgeable and friendly workforce providing ideal services necessary for customers to make informed decisions. Sharaf retail business is open to intense and inviting touch and feels concept which allows customers to have a hand on experience in reaching the end decision. At the Sharaf DG, consumers have access to a wider range of brands produced from over 25,000 different electronic goods and accessories that are supplied from reputed international brands available both in store and online. Currently, the business is operated in over 20 locations part of them being Times Square Center, Bahrain City Mall, the Abu Dhabi Mall and so forth. The business prime focus is on boosting the lifestyle of customers by addressing all their electronic needs through a range of leading edge of high-tech products which include TV, Audio, IT, Telecom, home appliance, global positioning system among many other electronic products. Sharaf DG business believes in serving customers, through the provision of complete solutions in computer and home theatre packages. For instance, the business service in helping customers, DG aid by offering installation, support and services for audio, video components and computers. In less than six years, Sharaf DG stores have grown rapidly becoming one of the most preferred destinations for electronic products within the UAE region and Bahrain (Advani, 2004). The business has pioneered real time inventory and purchases and supply in collaboration with potential suppliers of electronics aimed at ensuring that customers get products at the right time and at the right price. Since its initiation, the business has increased partnership with its primary brands and suppliers in ensuring quality and product value are delivered to the end customer. This remains evident in the business practices, as more emphasis is directed towards improvement and innovation. In 2007, the business created historic moment by opening the biggest electronics store in UAE at time square Centre in Dubai occupying an area that is estimated to be 100,000 Sq. ft. the store provided everything of electronics under the one roof and it are believed to be one of the kinds in the region. Within a year of business operations become the largest and most preferred destination for electronics, in the same year the firm launched its tech service wing, DG essentially to help boost on the provision of its professional assistance to customers. DG was a major boost considering the service it offered on helped on specializes in audio and video installations, computer setup and servicing and mobile handset repairs. This has since seen an overwhelming response from customers, with the business responding through reinforcing its commitment of easy and fast accessibility of stores to its customers (Advani, 2004). Sharaf GD competitors comparing their price Jumbo and Emax electronics are two potential retailers fighting the raise of other channels in particularly Sharaf DG. By contrast, in the recent years the hypermarkets and the internet vending has increased its presence in the UAE market with consumers reported having turned to these channels more than it was witnessed in the later years. Competition in UAE electronic industry is driven by global leading brands; the brands use this market as a gateway to Middle East. Nearly, new and old product launches and promotional efforts that happen in the region, with most of consumer electronics manufacturer’s have their main offices located in either Dubai or Abu Dhabi. Across the UAE market, the major players include Nokia, Acer and Apple. Nokia mobile phone sector is arguably the leading supplier in the region, while the Apple reported being the leads in the portable media players the Acer leads in regard to computer sector. Sharaf DG competitors in order to fight Three possible costs incurred and their importance Promotional Costs Promotional costs, with the business commitment to widest choice, best value and trusted service the firm invests in a mix of traditional communication channels for product advertisement. These include use of newspapers, magazines, Television, radio among other forms of advertising. Sharaf Dg believes in dedicating significant resources in creating fun experience for their customers. Sponsorship of grand opening sales events, vender and community partnerships create an engaging experience for customers. This is therefore responsible in driving traffic to the stores. The firm has ever remained ahead in creating innovative and engaging promotions. Some of their in-store customer engagement activities, this is considered key to the success of the business. Similarly, the promotional activities not only target the adult but also pay attention to young customers. This is evident considering that the firm provides events gaming completion, painting completion and so forth. Cost related to Sharaf Dg Human Resource Human resource, the firm has human workforce in support and sustainability of the business functions. This is a cost that is non-avoidable at whatever expense. The human resource is responsible in realizing the firm’s objectives. For an enterprise driven by market pressures there is a need to include in their goals improved quality and productivity, increased flexibility and a continuous innovation while responding promptly to the market needs and demands. An effective human resource management is important for Sharaf DG, and this has been expressed through continuous achievement of the organizational goals, improved quality and productivity which is linked to motivation that is achieved through training, employee involvement and material rewards. Sharif DG business management critical aspect has been to achieve its business objectives at the same time minimize of the cost that regards labor, but aim at achieving an ultimate increase in the firm’s earnings. The cost invested in the human resource can be justified by the exemplary services delivered to customers for them to reach an informed decision. This has been fundamental to the continuous success to this business. Computer Installation and other Support services costs The firm introduced the DG help service responsible in the provision of professional assistance to customers. This involved specializes in audio and video installations, computer setup and servicing and mobile handset repairs. The services are provided either inside the stare or customers call a zero rate who is then receiving services from the business. The service is available to the customer comes at a cost which is fully covered with the business (Economist Intelligence Unit, 2010). Choose one product Identified in the list above discuss demand and supply Sharaf DG’s Nokia mobile products are part of the goods held in the Sharaf DG stores. Among other brands, the Nokia brand has attracted a massive demand within the UAE region. While Sharaf aims to attract a wider range of consumers, the firm’s core target demographic was directed at the UAE middle class families. Sharaf has continuously focused on maximizing store’s ensuring that the entire mall covers the entire family, demands. Male consumers with families remain the key target in the UAE region. In addition, the telecom industry is the perfect communication associate for a number of sectors in the UAE particularly oil and gas, explorers, administration and media that are in need of MSS services. Additional of Nokia to the Sharaf portfolio of the products enhances leadership in telecom communications solutions market. The firm anticipates increased demand for the products in light to the fact that consumers are supplied with these products to many of their outlets (Economist Intelligence Unit, 2010). Nokia mobile handset demand Trend Source: Economist Intelligence Unit, 2010 In any market, levels of income determine the supply and demand of products. Increased income makes it possible for buyers to increase their spending. However, there are other circumstances such as the presence of price of related products or even substitute products that are offered with rival competitors. The UAE middle class target market as any other market would prefer spending on alternative fairly cheaper products rather than expensive ones. Sharaf business has remained innovative with the recent development in the technology as it remain confusing for consumers as the firm has continuously provided a complete shopping experience with more emphasis directed on product availability, fairly best prices and provision of end to end solutions necessary for all round decisions. As prices rise, suppliers offer more for sale indicating that both price and quantity supplied are positively related. The major influence comes from input a price such as labor; raw materials tend to lower profitability. Technology on the other side takes on the methods applied to transform the product input to the needed output. A gain the UAE economy and demography explain the demand and supply of Sharaf’s electronic products (Oxford Business Group, 2008). The supply curve explains how many producers are willing to avail their products a particular price. Similarly, demand curve indicates how many consumers are willing to buy products at a given price. Drawing the two curves together makes it possible to identify the clear Source: Rubinfeld and Pindyck, 2009 Equilibrium occurs at the point of interaction of the demand curve and the supply curve indicating no allocation inefficiency. At this point, the Nokia handset price is indicated by point P* while quantity remaining at Q*. However, it can only be realized in theory, prices of goods and products in this market are ever changing in relation to fluctuation on demand and supply (Rubinfeld and Pindyck, 2009). UAE Demography and Economic Set up UAE population is predominantly young. According to the US government estimates reports, based on a population of 4.4 million, over 75% of the entire population consists of 15 to 65 years of age and approximately 20% of the population is reported to consist individuals with less than 14 years of age, while less than 1% are those aged 65 years and older. The population is male dominant with males reported to be 3 million while women estimated to be 1.4 million. By 2007, the birth rate and death rate were estimated to be higher for a male which is reported to be about 16 deaths for every 1000 when compared to that of women which stood at 13 deaths at every 1000 live birth. The country fertility rate is greater which is reported to be approximately 2.4 children per women. Several decades since oil was first discovered and exported, the UAE region has undergone a transformation, from small traditional business setup to a large and modernized retail outlet. Currently, Dubai is reported to be the second largest emirate, thrives from on wealthy which derived from service based economy tourism, construction, telecommunications, media and real estate. Both Dubai and Abu Dhabi provides more than 80% of the UAE’s income. Improved income generation creates has placed the region well placed to spend as the population earns a frequent reliable income due to increased employment opportunity (Economist Intelligence Unit, 2010). Part 2 Sharaf DG’s Nokia handset product consumers are influenced by various factors in deciding what to buy and one of the factors behind these is price. The firm offers a lower price compared to other substitute products. Law of demand defines the typical relationship between price and quality demanded outlines that consumer will often demand more of a particular product sold at a lower price than those sold at a higher price (Rubinfeld and Pindyck, 2009). By contrast, the price elasticity of demand extends this while examining the extent of such changes in demand in relation to price. Circumstances under which demand contracts or expands in response to price change are of importance to the business. Product price elasticity signifies an increase in price at the sometime a higher drop in demand. Elastic products suggest competitive market and therefore, making it difficult to make profits considering that Sharaf is placed in an imperfectly competitive market allowing free entry of other substitute products. Source: Rubinfeld and Pindyck, 2009 In the figure above the unitary elasticity relationship reveals that when the product price decreases by from a higher value of $ 1.5 at point A to a lower figure at point A1, in both cases the revenue generated equals $150. In the diagram it is also evident that price increase from $(1.5 to 3) has no impact on revenue generated since the product demand drops to 50 units at the point were product price is $3. Here the Nokia handset demand is characterized to have a unitary elastic demand, since product demand changes in response to product price changes in a manner that does not alter total revenue earned. Under this circumstance, the percentage increase in the prices only works to offset an increase achieved in the product demand. In a case, were Sharaf reduces the Nokia handset products by an estimated half price it then remains evident that the firm will attract 200% increase in the overall sales. Either way the firm will bring in the same revenue (Economist Intelligence Unit, 2010). Increase Sales by charging lower price Sticking to our previous diagram above, if a response to a 50% decrease on the Nokia handset the demand is likely to triple within a very short time. Similarly, if the price this brand doubles only a third of the units will be sold to generating a similar amount in both cases. This can be illiustrated in the table below. Price Quantity Revenue Original case $1.5 100 units $150 Price dropped by 50% $0.75 300 units $225 Price doubles $3 25 units $75 In this case, the, product is characterized to take elasticity of demand. In contrast to the unitary elasticity, an elastic demand in this case take place when a decrease in price leads to a rise in the amount demanded in increasing Sharaf’s revenue. Although this may work in either way, Sharaf will lose on revenue if an increase product price. With an elastic demand increased price calls for a decrease in product quantity demanded, ultimately decreasing revenue. Source: Rubinfeld and Pindyck, 2009 The diagram above explains benefits achieved in price elastic products. In our case, the Nokia handset as one of products sold in Sharaf DG stores. In case the firm increases market share while increasing sales this means that price cuts will boost increased sales. However, this might not be the case considering if market rivals products prices are also reduced the demand will probably remain inelastic with a price war causing a slight sales increase. Since the product develops an inelastic demand (Rubinfeld and Pindyck, 2009). On the contrary, having inelastic product’s demand does not mean the firm will end up in unprofitable activities, just like in an elastic product demand situation the key point remains that revenue earned is above the costs. The product price remains in elastic, but individual brand prices remains elastic considering choice of customers in the market. Part 3 The UAE retail industry is divided in to organized and unorganized sectors. The organized sector retailing refers to trading activities undertaken by licensed re retailers who are registered for sales tax, income tax. The Sharaf DG retail store is part of this retail stores in the region. The unorganized retailing on the other hand represents the traditional formats of low-cost retailing shops (Terterov, 2006). The UAE retailing sector is highly fragmented with an over 90% of its business being run by the unorganized retailers like the traditional family runs stores. Over the last decade, the industry is revealed to be growing at an estimated rate of 46.64%, which is identified to be among the fastest growing sector in the UAE economy. The large market players such as the Sharaf DG and Jumbo electronic stores have made a significant investment in the industry leading to the emergence of bigger possible bargain with suppliers to reap from economies of scale (Mahmood, 2004). To many of these forms of business discounting has become an accepted practice. Proper infrastructure has become pro-requisite in retailing responsible in modernizing UAE electronic retailing industry which, could help, in facilitating rapid economic growth. This not only help the business plan for business expansion but also assist in well-organized delivery of both goods as well as value added services meant for the end user contribute to the regional GDP. Characteristics of Electronic Retailing in UAE market Free entry of market players The electronic industry retailing market allows for a free entry of business. With many firms entering the market, the international retailers see UAE as the last cutting edge left considering that the regions serves as trading link to Middle East among other regions on the globe. However, the government lately has placed a restriction on the international players creating ripples among the international players for instance Tesco and Walmart chain stores (Terterov, 2006). A fairly larger competing Business in the market The number of businesses in an imperfect competition is fairly large. The circumstances are that each business sells products that are close substitutes of other competing firms in the market. It is this set of circumstances that product differentiation is seen to be the main element adopted in the market. It is critical for businesses in the market to be able to position the business products above the competitors substitute products or service. Sharaf’s main market rivals are Jumbo and Emax electronics among other product providers in the UAE electronic product industry (Mahmood, 2004). Products Differentiation under Imperfect Competition In cases of imperfect competition, firms sell differentiated products. Product differentiation can be real or invented. Real differentiation is done through differences in materials used, color, and design among other factors. An invented deference’s is created through advertisement, brand name and trade marks. In this form, of market the firms producing substitute products in this form of imperfect competitive segment does not trigger increased prices on the products (Pradhan, 2006). According to the Pradhan (2006), comparing the UAE retail electronic industry set up the industry with the European, USA and Japan the region’s performance is still below the three established regions. However, the industry has recently registered a massive growth considering the UAE is a trading herb linking trading activates from Europe, Middle East among other regions. Over the last years, the firm has earned increased economic growth. Conclusion Sharaf DG in Dubai retail business was well received and has continued to providing exemplary services to the UAE market. The firm strategically builds responsible workforces who are knowledgeable and friendly in their service. The chain store has continuously made available a range of consumer electronics. The Sharaf group of business is a reliable business, which has been operational for over 25 years during this time the firm has gained extraordinary experience through delivery of excellent services and products in a well organized way. The business has the right of entering into extensive diversity of financial and rational capital facilitating clients in support of the group to depend upon the long-lasting services to customers. The business has integrated social and environmental priorities into their dealings with business buddies. In doing this the company creates a superior and extremely successful and competitive in the industry. The business has invested in an enthusiastic and accountable workforce creating a superior and extreme assistance to customers and employees. References Advani, A. (2004). Business India, Issues 687-693. New York: the University of Virginia. Economist Intelligence Unit. (2010). Quarterly economic review of United Arab Emirates, Issue 1. London: Economist Intelligence Unit Ltd. Mahmood, M. A. (2004). Advanced Topics in End User Computing, Volume 3. London: Idea Group Inc (IGI). Oxford Business Group. (2008). The Report: Dubai 2008. London: Oxford Business Group. Pradhan, S. (2006). Retailing Management 2E. New York: Tata McGraw-Hill Education. Publications, E. &. (2005). Economic review, Volume 36. Michigan: Economic & Industrial Publications. Rubinfeld, D.L and Pindyck, S.R. (2009). Microeconomics. London: Pearson/Prentice Hall. Terterov, M. (2006). Doing Business with the United Arab Emirates. London: GMB Publisher Ltd. Read More