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Al-Futtaim Group: International Quality Management System Report

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Updated: Jun 22nd, 2020

Executive Summary

This report dwells upon the use of TQM principles and ISO standards at Al-Futtaim Group, one of the leading conglomerates in the Middle East. The company has divisions operating in many industries, including construction, real estate, automotive, general services, retail, to name a few. The organization also operates in countries of the Middle East, Asia, Africa, and the EU. The company is very successful, and it is steadily growing, expanding in local and international markets. This growth is due to the strong culture and philosophy of the company. The organization strives for being a partner of choice. Such values as flexibility, innovation, and sustainability are central to Al-Futtaim Group. Its customers and partners appreciate this philosophy. Nonetheless, one of the divisions lags behind, and the company is even shutting down a number of its facilities in Singapore.

This report provides a brief plan to address the issue and avoid such problems in the future. The plan includes such stages as the implementation of the research, efficient knowledge sharing, improvement of people involvement and sustainability as well as revisiting ISO standards. These steps will enable the organization to improve its performance and ensure compliance with its culture and major TQM principles.

Introduction

Total Quality Management (TQM) system has proved to be effective as it has enabled many companies to increase their profits through the improvement of the quality of their operations. These principles focus on precision that is achieved through the implementation of a particular plan involving research, development of innovative strategies, and rigorous control. At the same time, ISO 9000 is a newer strategy based on principles of TQM that is now utilized by many businesses across the world (Magd & Nabulsi, 2012). It is possible to identify the effectiveness of the use of this method and the way it can be applicable in a particular setting through an analysis of a company.

This report dwells upon the use of TQM and ISO 9000 at Al-Futtaim Group, the company based in the UAE. The organization is one of the leading companies in the UAE and the Middle East. It is rapidly growing through its expansion to the markets of the EU, Asia, and Africa. This is partially due to its effective use of TQM principles. This report includes a brief description of the company and its operations. It also contains data on the use of TQM and ISO standards as well as the way they affect the company’s performance. The report reveals the major challenge a company is facing and the plan to address this issue.

Company’s Background

Brief Description

Al-Futtaim Group is one of the leading companies in the UAE, as well as in the Middle East. The organization was founded in the 1930s “as a trading business” (Group profile, 2015, para. 1). At present, the organization is characterized by significant diversification as the Group operates in such spheres as engineering, electronics, automotive industry, financial services, real estate, retail, to name a few. The company employs around 20,000 people, and it operates in the UAE, many European counties, Kuwait, Saudi Arabia, Bahrain, Qatar, Singapore, Egypt, Oman, Sri Lanka, Pakistan, and Syria.

Al-Futtaim Group’s vision is to remain the partner of choice, as seen by its customers. In other words, the company strives to provide high-quality services, which will help it to retain its leading position in the Emirati market and to expand in the world market. The organization’s mission is to keep its focus on investments into state-of-the-art technologies and act in accordance with as well as promote such values as innovation, sustainability, mutual dependency, openness, and collaboration.

The organization’s major objective is to retain its dominance in the UAE market and continue its growth in the international market. The company’s strategic objectives are to satisfy and exceed customers’ needs and expectations, develop through the implementation of innovative solutions and sustainable growth.

SWOT Analysis

To evaluate the efficiency of the organization, it is possible to resort to the SWOT analysis (see figure 1). It is clear that the organization has high chances to achieve its goals and objectives.

Strengths

Thus, the company is well-established, and it is known in many regions. The company has earned the reputation of a reliable partner that utilizes a sustainable approach. It has loyal customers, and it has also developed proper relationships with partners. Clearly, this is the company’s strength, as it has its niche in the market and has the necessary resources for growth.

Another important strength of the organization is its diversification. As has been mentioned above, Al-Futtaim Group includes divisions operating in different industries. It is necessary to add that these are prospective spheres, as real estate is still booming in the region (Sambidge, 2014). Automotive industry and innovative technologies are also industries that are rapidly developing and attracting a lot of investment worldwide.

Strengths
  • Al-Futtaim Group is well established and has a long history
  • Al-Futtaim Group is diversified
  • Al-Futtaim Group focuses on quality
Weaknesses
  • Al-Futtaim Group is not flexible enough
  • Al-Futtaim Group does not always has effective policy related to cultural peculiarities of other regions
Opportunities
  • Al-Futtaim Group can expand in the region
  • Al-Futtaim Group can enter new markets
  • Al-Futtaim Group can join new joint ventures
Threats
  • Entrance of international companies into the markets where Al-Futtaim Group operates
  • Further expansion without sustainable control over quality, operations, and so on

Figure 1. SWOT Analysis of Al-Futtaim Group.

The company’s attention to quality is another important strength as they pay attention to the quality of services provided as well as the quality of their operations, performance, management, leadership, and so on. It is possible to note that quality is one of the organization’s core competitive advantages.

Weaknesses

At the same time, there are certain weaknesses to take into account. Thus, the company lacks flexibility when it comes to adjusting to new environments and cultural peculiarities. For instance, the Group has to shut down a number of its retail facilities in Singapore, as they are unable to compete in a highly competitive Singapore market. The company’s officials note that retail stores in Singapore are too numerous and almost identical, which makes it difficult to operate in the region (“Dubai’s Al-Futtaim says to close three Singapore stores,” 2015). This shows the gap in the performance of the company’s subsidiaries in certain regions. It is clear that the company has not paid sufficient attention to the cultural and social peculiarities of the region when entering the market or lost the grab on peculiarities of the region in the course of its operations. The inability to develop effective strategies to remain competitive in the market is a hazardous weakness.

Opportunities

Irrespective of some challenges, the company has a number of opportunities. For instance, its diversification makes it possible to expand significantly in the region. As has been mentioned above, such spheres as real estate, automotive industry, retail, general services are most needed in the Middle East as well as Europe. The market is not saturated, and the Al-Futtaim Group can occupy many niches. Thus, the company invests in the development of retail facilities in Egypt, which has already proved to be effective (Reuters, 2014). Notably, African countries are seen as a very attractive market as they are developing at a considerable pace.

Another opportunity is the expansion to new markets. India and Russia can be the new markets for the organization. India is especially attractive with its immense population and growing interest in projects associated with such industries as construction, automotive industry, and retail.

Another opportunity closely connected with the two mentioned above is joining joint ventures. Sambidge (2014) notes that the company has entered a number of joint ventures in different regions, and this enabled it to penetrate new markets and gain a strong position in those regions. Clearly, new joint ventures will be favorable for the company.

Threats

As for challenges Al-Futtaim Group can face, it is possible to note that the appearance of new companies (especially international ones) can pose certain threats to the organization’s success. Even though the organization is well-established and has an excellent reputation, multinationals may undermine the company’s success, especially when entering new markets and expanding in such regions as Europe or Africa.

Al-Futtaim Group can also face certain challenges associated with its growth. As has been mentioned above, there are gaps in the company’s management, especially when it comes to subsidiaries in other countries. Unsustainable management and leadership may lead to deterioration of the quality, which will inevitably lead to significant losses.

The rationale for Adopting TQM

General Benefits

Adherence to the Total Quality Management system is beneficial for all companies, especially for multinationals operating in different markets and in different spheres. Notably, ISO 9000 is often seen as “the fundamentals and vocabulary” that set “the principles behind quality management” and, hence, these standards enable companies to implement TQM system effectively (Oakland, 2012, p. 209). There is an extensive bulk of research on the matter, and researchers stress that TQM strategies enable companies to be competitive and satisfy their customers’ needs (Albadran, 2014).

Magd and Nabulsi (2012) stress that ISO 9000 implementation facilitates the proper use of TQM strategies. More so, the researchers claim that the use of ISO 9000, which is widely used worldwide, is favorable for companies operating in different countries, as customers, as well as partners, are more likely to trust the company complying with the standards accepted by many companies (Magd & Nabulsi, 2012). Albadran (2014) identifies major aspects that are improved with the help of ISO 9000 and TQM strategies. These are improved customer service, increased market share, improved competitive advantage, greater customer satisfaction, expansion in the local and international markets, more favorable working environment, improved quality of products and services as well as procedures and increased profitability (Albadran, 2014). All these aspects are crucial for the success of any organization, especially if it operates in many industries and different countries.

Clearly, each industry has its peculiarities, and implementation of TQM strategies and ISO 9000 can vary depending on the industry a company is involved in. Thus, Hoonakker, Carayon, and Loushine (2010) note that TQM methods are beneficial in manufacturing as they enable companies to control the processes (production including development of new products, testing, quality control, as well as distribution and so on) and prevent possible defects, which translates into the decreasing losses and increasing profits. As for construction, implementation of TQM policies and ISO 9000 is also beneficial and helps companies to prevent defects and associated losses (El-Reedy, 2013).

However, the industry needs a specific approach and a more complex strategy due to peculiarities of the construction industry, which is “transient” in nature and is associated with “the lack of standardization and the many parties (occupations, professions, and organizations) involved” (Hoonakker et al., 2010, p. 955). Clearly, since Al-Futtaim Group is operating in various industries, including construction, manufacture, general services, the organization’s TQM should be diverse as well. Importantly, ISO 9000 makes the implementation of TQM principles easier as specific standards and procedures are provided.

Al-Futtaim Group’s Core Competencies

The efficient implementation of TQM involves the focus on the company’s core competencies. It is essential to identify these competencies of the organization in question to evaluate the effectiveness of its TQM strategies and provide a rationale for TQM implementation. Al-Futtaim Group focuses on such competency as customer service (Group profile, 2015). The organization tries to identify and meet the changing needs and aspirations of customers, which is an important competitive advantage. The company manages to trace the change in customers’ needs though sometimes it can be quite difficult.

Another core competency is quality, and the company emphasizes the quality of products and services provided. The customers, as well as partners, can be sure that they will always get the highest possible quality. Innovation is also seen as a core competency that helps the organization to retain its leading position, as it often provides innovative products and services that satisfy customers’ needs.

One of Al-Futtaim Group’s core competencies is employees’ (and divisions’) empowerment (Group profile, 2015). This contributes to the creation of a favorable working environment, and employees are more committed to perform well and ensure the profitability of the company. Finally, flexibility is another core competency that enables the organization in question to remain competitive. This flexibility is manifested in the empowerment of employees, product innovations, and so on.

Requirements for Improving Quality

Strategic Management, TQM and Leadership

When the rationale for TQM adoption is provided, and core competencies are identified, it is necessary to outline major requirements for improving quality. It is necessary to note that strategic management is closely connected with TQM as the latter enables the company to achieve its goals and aims. Oakland (2014, p. 67) states that strategic management is a lasting process that enables the company to “describe its destination,” to identify barriers that can arise and develop methods to overcome the barriers and challenges.

At the same time, TQM enables the organization to ensure the effectiveness of the three stages mentioned above. Thus, adherence to TQM methods and especially ISO 9000 principles help the company to implement efficient strategic management. Notably, ISO 9000 involves specific standards and particular strategies that are aimed at such spheres as leadership, customer service, the involvement of people, process approach, continual improvement, decision-making, and relationships with partners (Oakland, 2012). Companies can benefit from paying specific attention to these spheres.

It is possible to state that the company in question has a precise strategic plan that aims at continuing innovation, flexibility, responsibility, and empowerment (Group profile, 2015). It is noteworthy that each division also has its strategic plan that complies with major points of Al-Futtaim Group’s vision and mission but still has certain peculiarities to respond to the needs of a particular industry.

Proper leadership is an integral part of efficient strategic management and implementation of TQM. Clearly, the ability to identify strategic aims, core competencies as well as challenges, and the ability to come up with successful strategies are important. However, strong and efficient leadership is what makes the strategic plan effective (Madu, 2012). Leaders at different levels have to ensure that the plan is followed and employees comply with the company’s culture and standards. At the same time, the proper type of leadership has to be employed.

A number of leadership factors are important for the effective development of the organization. Hence, efficient leadership should be based on strategic thinking, as leaders should remain focused on strategic goals and ways to achieve them (Madu, 2012). Collaborative skills can be seen as another important factor. Leaders should be able to collaborate with each other and their subordinates. This will ensure adherence to the strategic plan as well as innovation necessary for change and development.

Sustainable collaboration is seen as one of the major competitive advantages as it ensures proper relationships with partners, fine reputation, and loyalty of customers as well as a favorable atmosphere at the workplace (Mascarenhas, 2011). Finally, setting professional standards is also an important factor. There should be a set of qualities each employee should have. The qualities should comply with the culture of the organizations as well as their strategic goals. TQM and ISO 9000 can help to achieve the implementation of this factor.

As for Al-Futtaim Group, its leadership is based on the principle of flexibility since employees, as well as divisions, have a significant amount of freedom. As has been mentioned above, there are several challenges the company is facing, and some of its procedures and strategies have proved to be unsuccessful. Therefore, the company needs certain changes.

Al-Futtaim Group’s Philosophy

It is possible to note that all successful companies have a specific philosophy that is the basis of the company’s development. Bevan and Werhane (2011) stress that the philosophy defines the company’s values and goals as well as the choice of strategies to achieve the strategic aims. When it comes to Al-Futtaim Group, its philosophy can be formulated as follows: Al-Futtaim Group is a partner of choice (Group profile, 2015). In other words, the company aims at providing diverse and high-quality products and services to its customers and partners. Innovation and flexibility are core principles accepted by the organization. Importantly, the company strives for further diversification of its range of products and services, as well as its procedures. Al-Futtaim Group is eager to predict the way customers’ needs and desires develop to be able to satisfy them.

It is necessary to note that the company’s culture is consistent with the principles of TQM and can ensure the organization’s success. Admittedly, the ability to satisfy customers’ needs and to develop sustainable collaboration with partners are core competitive advantages (Ochieng, Price & Moore, 2013). The organization that is based on such principles is able to develop the necessary methods and strategies to achieve these major aims.

Al-Futtaim Group’s Culture and Ethical Approach

It is also necessary to add that Al-Futtaim Group’s culture is also consistent with TQM and can be facilitated by the implementation of ISO 9000. As has been mentioned above, the primary attention is paid to the quality, which is seen as one of the core competencies. Quality is an integral part of the organization’s culture as it is present in its operations and values. For instance, apart from the quality of products and services, the company strives for quality in communication, leadership, and management. It is noteworthy that each division has a significant amount of freedom, which is another manifestation of the organization’s culture, its focus on empowerment. Employees are also encouraged to come up with innovative ideas. Nonetheless, they are all expected to comply with the standards adopted at the company.

Al-Futtaim Group’s culture also affects the ethical approach of the company. Al-Futtaim Group promotes sustainable development and collaboration (Group profile, 2015). For instance, respect and assistance are important values shared by the company’s employees. Importantly, these principles are applied in interactions between the company’s employees and between the company and its partners. Of course, quality and compliance with regulations are also important for sustainable development as there are ethical norms that can also be found in ISO 9000 (Oakland, 2012). It is important to add that the company’s employees are willing to share the core values of the organization, and they adhere to the ethical rules and norms (Your future, 2015).

Al-Futtaim Group’s HR Strategies

Al-Futtaim Group can also be characterized by its sustainable HR management, which ensures the loyalty and commitment of its employees. Again, quality is one of the central principles in this area. Clearly, TQM, as well as ISO 9000, are utilized at Al-Futtaim Group. Thus, employees are motivated to comply with the high standards the company sets. First, working for a company having such a fine reputation is one of the privileges many people are eager to gain. Thus, many employees are committed to working for the company having such culture and values.

Apart from that, employees are often promoted if they have contributed to the development of the organization (Your future, 2015). Clearly, employees are interested in performing properly and complying with the organization’s quality standards, as this translates into their promotion and financial rewards as well as bigger salaries. Notably, the long history of the company’s operations is also associated with a characteristic feature of Al-Futtaim Group. There are second-generation employees working for the organization. Admittedly, these people know a lot about the company and its culture. They are also brought up in families where principles accepted at the organization are valued and shared.

Of course, Al-Futtaim Group pays a lot of attention to the training and development of its staff. This contributes to quality improvement at all levels. It is also an effective motivation strategy. Employees are loyal and committed to contributing to the development of the company as they feel that the company invests in their development and empowerment.

Al-Futtaim Group and Its Customers

As has been mentioned above, the organization in question is focused on the delivery of high-quality products and services to its customers. The satisfaction of customers’ needs is one of the key priorities of the Al-Futtaim Group (Group profile, 2015). Clearly, the company employs different methods and strategies to identify and meet customers’ needs as it operates in quite different industries. Research and analysis of customers’ behavior and their anticipations enable the organization to achieve this aim. It is necessary to stress that implementation of ISO 9000 helps the company to reach this aim as the standard has a section devoted to customers’ needs.

At the same time, some of the methods employed or rather decisions made by some divisions have proved to be ineffective. The failure of stores in Singapore can be regarded as an illustration of these inefficient strategies. The company failed to properly identify the change in customers’ preferences and decided to close the stores rather than to change certain methods. It is clear that this gap should be filled as it can be a sign of a flaw in strategic planning.

Al-Futtaim Group and Its Partners

When it comes to collaboration with partners, the company is much more successful. The focus on mutual sustainable profitability and development is an important competitive advantage of the organization (Group profile, 2015). The effectiveness of such an approach is apparent, as many companies are willing to collaborate with the Al-Futtaim Group. For instance, Abbas (2013) reports about the expansion of one of the divisions of the Al-Futtaim Group and the way it collaborates with its partners. The organization in question has gained a fine reputation for a company that provides quality and makes a difference. Therefore, the Group easily finds new partners and manages to maintain effective relationships with existing ones.

Implementation Plan and Its Justification

In view of the aforesaid, it is possible to develop an implementation plan that will improve the company’s operations. As has been mentioned above, the quality of products and services provided is at a high level. This is especially true for the construction and manufacturing industries. However, the company lacks precision when it comes to retail in different regions. The case with Singapore stores reveals the existing problem (“Dubai’s Al-Futtaim says to close three Singapore stores,” 2015). If the company starts shutting down facilities that face challenges, it risks losing a significant market share, as the competition in this sphere is fierce, and losing one market or niche can lead to other losses in other markets globally and locally. Of course, it is crucial to identify particular mistakes that led to the situation and develop an appropriate plan to address the issue.

Research

To avoid further issues associated with ineffective management in the sphere of retail, the company should implement thorough research and start an audit of the division. The audit should focus on adherence to ISO 9000 and TQM strategies utilized by the Group. There are high chances that the division failed to comply with the standards, especially when it comes to such parts as customer focus, the involvement of people, leadership and system approach to management (Oakland, 2012). It is also important to implement performance measurement of all departments and leaders or teams to analyze the effectiveness of their decisions.

Meantime, the research on customers’ needs will be implemented. It is important to identify the needs and expectations of customers in Singapore. Officials of the organization in question stress that malls and stores in Singapore are too numerous and too similar (“Dubai’s Al-Futtaim says to close three Singapore stores,” 2015). Hence, it is crucial to identify possible areas of innovation. It has been acknowledged that a company should provide an added value to attract more customers. Since the leaders were unable to find the feature that can make their stores stand out, the stores became inefficient.

Wang (2008) notes that the use of technology and social networks can be beneficial when implementing the research aimed at identifying customers’ needs. Surveys and focus groups will help to understand customers’ anticipations and preferences when it comes to retail facilities and the very process of shopping. Analysis of social networks (especially blogs) can also provide valuable insights into the matter. People are now eager to share their dissatisfaction with something or some aspirations with the online community. Companies should be able to use this feature of contemporary society to improve the quality of their products and services. The digital world is also a good platform for promoting products and services by paying attention to such qualities as sustainability and innovation.

Knowledge Sharing

As has been mentioned above, other divisions are successful, and they manage to operate in different regions. Clearly, the industries are different, but it can be effective to share knowledge to develop some universal strategies that will be later included in the company’s TQM system (Keen & Tan, 2008). It is clear that the weakest aspect of the division in Singapore is innovation or rather the lack of it. Hence, strategies aimed at developing innovative ideas, and bringing them to life should be shared in the first place.

People Involvement and Sustainability

The inability to cope with the challenges that occurred may also be associated with improper policies concerning people’s involvement, which is an integral part of ISO standards. Efficient TQM depends on the ability of leaders to motivate employees and encourage them to come up with innovative strategies (Bugdol & Jedynak, 2014). It is necessary to identify reasons why the staff was not involved to the necessary extent.

This can be the lack of proper leadership or inappropriate leadership style (too autocratic). This can also be a result of the use of inefficient motivation strategies (lack of training, promotion, financial rewards). To find answers to these questions, it is important to implement a survey and analyze employees’ ideas on the matter as well as their satisfaction. Flexibility should be an integral part of leadership, as this is one of the main core values in the organization.

It also seems that the division fails to comply with an important standard accepted at Al-Futtaim Group: sustainability. It is necessary to analyze whether the division managed to articulate the proper message to customers. It is clear that the organization’s competitors try to stress their sustainable approach to operations. However, Al-Futtaim Group, with its resources and reputation, has a competitive advantage as the organization has made sustainability a part of its culture and philosophy.

Revisiting ISO 9000 Standards

Apart from the extensive research, it is also important to revisit ISO 9000 standards in the division as well as in the entire company. Iyer (2008) stresses that implementation is not confined to following certain rules identified in ISO 9000 standards but the inclusion of the focus on excellence and quality into the company’s culture. Even though an organization can have such a focus, the culture may undergo certain changes (Iyer, 2008). This can be the case with the Al-Futtaim Group. It is important to check whether employees still share the values mentioned above or whether the values are seen as some unnecessary slogans. The company should launch certain training aimed at promoting the use of TQM principles and ISO 9000 standards.

This comprehensive plan can improve the division’s (as well as the entire company’s) operations and performance. It addresses all major aspects of ISO 9000 and TQM standards. It is also consistent with the organization’s culture, which is crucial as it will be effective and will have a lasting effect.

Conclusion

On balance, it is possible to note that Al-Futtaim Group retains its leading position in the international and regional markets as it has a strong culture that is consistent with the TQM system and ISO 9000 standards. These standards have proved to be effective, and more and more companies are choosing to follow the principles of TQM. Al-Futtaim Group has consistently followed TQM, which has become one of its core competitive advantages.

At the same time, it is clear that the standards have to be revisited regularly as the environment is changing, and some divisions (or entire companies) can lack the flexibility to address the changes. Al-Futtaim Group is facing such a challenge since one of its divisions seems to lose its grab on TQM.

Hence, the company has to implement thorough research of the Singapore market and the division’s operations. The focus should be made on customers’ needs and aspirations, knowledge sharing, people involvement, and sustainability. It can also be beneficial to revisit ISO standards through the implementation of certain training.

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