Executive Summary
Effective supply chain management and logistics facilitate the growth of international trade; the opportunity to venture in logistics business offered by the growth in international trade has attracted a number of players. Multinational logistics companies are strengthening their market command by putting on barriers to entry in the industry. In Saudi Arabia, Amarex has dominated the market, however, as it is in different countries, the economy has many players in the industry.
High competition from international companies and domestics companies in Saudi Arabia, and in the international market calls for the adoption of strategic management tools. Amarex management team has the role of ensuring they have up-to-date strategies to fight the competition in the market. They should not assume that the future will be bright but they should work on the current strategies to improve the future.
Amarex Case Study
Despite the failure of Doha round of talks, international trade continues to prevail among different countries, tariff and non-tariff barriers continue to reduce and more people and companies are engaging in international trade. In international trade, the services offered by international supplies and logistics companies are crucial for smooth operation of the trade. The main task played by these companies is to facilitate the transportation of goods and services across different boundaries.
Amarex is an international transportation and logistics services provider with over 12,000 offices across major cities managed from its head quarters at Amman, Jordan; the company offers a number of services which include variety of express, freight forwarding, supplies/logistics, and domestic logistics services.
This report analysis the international business as operated by Amarex; it will use the company as a case study as it tries to discuss the challenges and prospects for international business and expansion of multinational corporation in foreign countries.
Brief background information of Amarex
Amarex was founded in the year 1982 to provide transports and logistics services in the wake of an increase globalization and growing international trade; in its initial operations, the company started as an express operator; however, its strategy development allowed the company to develop into the global logistics business.
Fadi Ghandour is credited as the founder of the company, he is also the current Chief Executive officer; the brand name Amarex is an acronym of “Arab American Express”. when the company was formed, the founder concentrated as a wholesale expresses company to North American express delivery companies like FedEx, Purolator, and Burlington Northern, but in 1990, it had enough financial base and strategies to venture into international business.
In January 1997, the company was listed at NASDAQ stock exchange as the first ever Arab originated company to be listed in the stock exchange. It did not stay long in the stock exchange but in February 2002, a decision was made to revert the company back to a private company so as it can concentrate on international expansions and alliances.
Three years of strategizing after the private ownership, another decision was made to make the company public again by and on June 2005, it sold its shares to the public through Dubai Financial Market (DFM) as Arab International Logistics (Aramex).
The company’s mission statement is “To be recognized as one of the top five global logistics and transportation companies,” where its vision statement is “To enable and facilitate regional and global trade and commerce”. To fulfill these mission and vision statements, the company embarks on massive innovation in processes and products.
Although there are a number of logistics companies in Saudi Arabia, Amarex has remained to be the domestic logistics company of choice; According to financial results released by the company’s Chief Executive investors reports of first quarter of 2011, he said “Aramex’s position here in the Middle East remains consistently strong”.
The company has started to expand to Hong Kong, Asia, and Africa and European countries. The main target markets that the company targets, other than in Europe, are countries that have high dominance of Muslims; the company chairs Global Distribution Alliance (GDA) and as a show of its dominance in Saudi Arabia, it represents the country.
Globally, the company has 12,000 offices, 33,000 vehicles and 66,000 employees; they are spread in over 240 countries; the offices are spread in main urban centers, and cities. In KSA, the company provides a number of services; they include express services, freight forwarding, supplies/logistics, transport service, courier, and domestic logistics services.
To maintain confidence in its customers, the company ensures that it has high quality services that can be predicted; it has highly invested in technology, innovation and strategic alliances. Aramex has a high technological base of a computerized operating system (DQMS (Documented Quality Management System), called Info Hub, the system made the company be awarded, ISO 9001:2008, the system is aimed at improving the company’s services.
The company ensures that it has high security systems that customers can trust that it has its products in place and secure. In its corporate objectives, the company has the customer as the main stakeholder; it aims at improving the services they offer to their customers in the efforts of developing and maintaining customer loyalty.
The chart below shows the international logistics supply chain system as adopted by Amarex:
Problem Statement
Although Amarex has had its presence in a number of countries, the company when making an international business is faced with a number of challenges. The main problem facing the company is how to deal with customs rules and legislations in different countries.
Although the World trade organization (W.T.O.) came up with a harmonized tariff classification code (HS. Code) which gives the rate of duty which countries should be changing on imports from other countries; there are changes that keep coming in different countries. The failure of Doha round of talks was a challenge to the company since it gave countries a margin to use tariff and non-tariff barriers to protect their customers.
In the wake of global financial crisis, global trade is faced with challenges as countries protect their domestic economy with the aim of helping their domestic companies’ outcome the challenges. When the company has the products, boarded on their containers, and in case of changes in the country of delivery, then the company is left with a challenging task of what is good to do with the goods since they have not been cleared yet the company wants to take backwards logistics.
Another challenge facing the company is terrorism along water and airlines; in case of an attack, the company has its operating tools held by the terrorists and it cannot supply to its customers when required.
The following are the specific challenges facing the company:
- How to deal with changing customs rules and legislations in both exporting and importing countries
- How to deal with terrors attacks and ensure their customer get confidence with the company that they will have their products when required and as per the contact
- How to remain competitive and profitable amidst of high competition and global financial crisis
- How to maintain high security for products and information in the wake of high hackling and high use of computers
- How to hire People across the globe and efficiently manage them
Historical background of the problem or contributing factors
The problems noted above have resulted from a number of issues facing the world; the major course of the problems is global financial crisis that has made countries to keep changing their customs rule to cater for the challenges of the crisis. It has also seen some countries not cooperating with international legislations and conventions.
Today, the world is regaining from the world economic crisis that started in 2007; the crisis is believed to have originated from the United States, the country of origin makes the matters worse since it is the country with the highest trading volume in the world.
Every economy is trying to position its self to recover effectively; this has resulted for them to be enacting monetary and fiscal policies to protect their economies. The crisis has already affected economies with a large number of them having a negative economic growth, with negative economic growth, there is a reduced business among countries and companies; this leads to a reduced business for Amarex and other logistics companies.
There is hope that recovery will be attained; however the rate of recovery is alarming; in Saudi Arabia, the economy has oil as the main exporting product that supports the economy of the country; with the financial crisis, the countries reduced leading to a slowed economy.
The global financial crisis is thought to have been because of the collapse of the mortgage industries in the United States of America. The two major mortgage companies were the Freddie Mac and Fannie Mac .By the end of 2007 the two corporations had owned and guaranteed over 50% of the United States mortgage market.
During this time, the low earning people were unable to finance their mortgages. They claimed that the mortgages were expensive to service alongside other necessities and many decided to take the option of foreclosure of the contract. This led to an increased number of homes to mortgage. The banks’ lending rates were strict and thus an increased supply of mortgages but no corresponding demand.
In respect of the law of demand, the cost of houses reduced drastically and bank default rate was high. The mortgage corporations and banks suffered hefty losses. United State of America being a major player in the world economy suffered its own problems that spread to the entire world. This was the start of world economic crisis. There was the effect of trade among countries all over the world (international trade); different countries and regional markets adopted different mechanisms to come successfully out of the crisis.
The policies enacted are forming some blocks to the growth of international trade, thus the business of Amarex is hampered. International political environment has affected the company negatively; in search for power, different countries are engaging in wars and terrors attacks among them; this reduces the chances of business among such countries. A good example is the Muslims and Christian countries tension; neither of the countries feels free to trade with each other freely. This means that the company suffers a reduced business as countries shy off from trading.
Terrorism began in the 13th century during the time of the Jewish Zealots and Assassins. The Jewish Zealots can be said to be the ancient examples of terrorism. The Zealots attacked the Roman forces and the fellow Hebrews. The other example of ancients terrorists were the Assassins. They could send a lone man to murder a leader of their enemy at the expense of his own life. This continued to the 16th century that involved the use of barbarism and terror.
They used intimidation and assassination tactics on their victims. After the American Civil war, reconstruction was made and the Ku Klux Klan was established. Small revolutionary groups emerged in the late 19th century forming the anarchists.
These groups assassinated the heads of state from Spain, Russia, Italy, France and the United States. This paved way to the communism that became powerful in the 20th century. At the beginning of the 20th century, nationalism became a strong force in many colonial empires. People from Vietnam and Egypt used terrorism to rebel against the colonial regimes.
Of the recent past, the attack is one of the major attacks that made the biggest destruction. The United States is considered as one of the most powerful country in terms of economic power and military preparedness but despite this, the attack was made successful.
It was made in a way that the security team could not detect. It occurred on two buildings (World Trade Centre and Pentagon) that were prime attacks from the attacker’s point of view. After the attack were done by al-Qaeda. The wave of terrorism has resulted to reduced business across different countries in the globe.
There are a number of competitors in the global international market; they have their own way of remaining marketable and competitive; Amarex has to contend with the increased competition. Some of the main competitors that the company has to fight with include FedEx, DHL, UPS, and United States Postal Service.
Some of these companies are multinationals that offer Amarex competition in different countries. The increase in international companies in the logistics company has been facilitated by the growth in globalization. Globalization has favored the need for trade among countries as it brings numerous advantages economic of the world. Free trade is attained when countries remove trade and non-trade barriers among themselves and allow free flow of goods and factors of production.
Some countries has been accused for having non competitive strategies of competition, this is where it may offer some incentives to local players ; when such policies have been implemented, then Amarex suffers a reduced business. In developing countries, the industry is faced is high competition from public transports companies.
In the developing countries where transport industry is mostly on road, the vehicles have been used as an alternative means of sending parcels and letters in the domestic market and in neighboring countries. Countries trade the through economic policies of absolute and comparative advantage. For effectiveness and efficiency in the trade, transport and communication are important. There are international companies that have invested in global logistic service provision.
The world security situation is not stable, other than the terror attacks, the company has suffered losses from computer hacking and loss of products on board a vessel or when they are in the warehouse. This has hindered customer confidence with the company especially when it comes to the transportation of high value goods as if jewel s. sometimes the system has been hacked and money in transfer stolen. Mobile and internet use has created a threat to the company. This is because the number of letters that were previously sent through the company has been largely replaced by telephone and email communication.
Mobile and internet fund transfer has offered a different route to customers to transfer money across borders; a business that Amarex had invested. Such seems include PayPal, wire transfer and Mpesa.
Since Amarex is dealing in the international markets and have employees from different countries, the company is faced with the challenge of managing a global work force. To have an orchestrate team, the management needs to blend the staffs effectively, they also need to understand every employees cultural believes and motivational approach; this is a challenge to the company. Another challenge that the company has to fight with is complying with every countries it trades labor laws.
Main players to the problems
There exist a number of players contributing to the problem knowingly or unknowingly, they include:
Governments
Governments can be seen to contribute into the international supply chain and logistics business directly and indirectly; they do so sometimes for the good of their economies but in the end hurts players in the industry. For example, offer subsidies to domestic companies are a good method to nurture and grow domestic companies.
In countries like Egypt, the government has allowed public transport vehicles to venture in courier business; the vehicles are able to offer the service at far lower cost than the case of logistics companies. When doing so, the government is trying to make trade affordable however; it is injuring the international companies operating in their economies.
Another area that governments have interfered is in the use of monetary and fiscal policies to control their economies; when they use such tools, and then trade is sometimes hampered leading to reduced international business. When the international business is reduced, the Amarex suffers a reduced business.
When making international agreements that are likely to facilitate trade, the refusal by some governments to sign the agreements have lead to a reduced business, for example, different governments lead to the failure of Doha round of talks that could have benefited the growth of international trade without barriers, this lead to reduced international business.
When venturing into different countries, there are some national laws that Amarex is expected to fulfill, some companies have some taxes that they need international companies to pay as well as need for registrations. These conditions hinder the company’s operations and reduce its disposable income for investments in other areas of the economy.
Government of different countries also enacts labor laws and Amarex has no option other than respecting the laws in the country of venture. Different countries have different legislations, which define rights and relationship between employees and employers. They are contained in human rights as well as terms and conditions set by different companies regarding their employments contracts.
Knowledge of these rights and legislation is important to employee, employer and third parties who have an interest in an employment contract. External and internal laws should be in harmony at any one time; this is the only way that the company can develop an efficient team. Internal legislations and guiding principles are shaped by legal legislations; they must follow a legally accepted approach.
Competitors
Competitors are businesses in the same line of business (selling similar/same products) or businesses trading in substitute goods and/or services; they come in different shapes and have wide range of approaches to target the same customers, competition in the global supply chain and logistics comes from a wide range of competitors. They include other international companies in the same line, domestic companies in the home country and other transport companies that are getting licenses to venture in the business.
The main threat that is facing Amarex are the transport companies getting inform the supply and logistics company; these companies are able to offer services at a cheaper services as they cost share with passengers of cargo aboard a plane or ship. Some companies are also coming up with complete set of transport and container services; they are able to offer their customers a full package; it is becoming challenging Amarex to have such facilities.
Amarex undertakes numerous competitors’ analysis: competitors’ analysis is a strategic management tool, which assists a company analyze strengths and weaknesses of its competitors; the main objective of undertaking a competitors’ analysis is to seek for sound information that can assist a company in effective strategy formulation, implementation, monitoring, and adjustment.
When it has taken the analysis, many are the time they find new challenges facing the industry. The following chart shows the line of operation that the company follows when making a competitor analysis.
The company always aims to be along the fair value line. Sometimes the industry faces some price wars, these wars make the prices charged in the market to be lower than the way the case should have been; this reduces the amount of gain that the company derives from the business.
Some companies like DHL have been able to build a stronger brand name and delivers their products in door-to-door, although even Amarex in time-sensitive documents and parcels it has door-to-door; the strength of these companies is a weak point of Amarex since competing with some players becomes an issue. In some small business countries, such companies have managed to get a warehouse while it still is not profitable for Amarex to venture in one. Competing in such countries is a major threat to the company.
Technology can be interpolated as a competitor to some extent; some services that are nowadays being transferred via the internet, phones and fax systems but they initially were transferred supply chain and logistics companies. Such products include letters, short written messages that were being written money among others.
The departments of document express and parcel express is the one largely affected by the shift to technology; currently If someone was to apply for an international job opportunity, the era of sending letters is far much gone, he only need to send an email and the case is closed; this leads to marginal loss of business.
Despite this loss of business, numerous benefits that technology has brought to the company; they include automation of services for better customer case, the services automated include real time cargo tracking, real-time tracking information, the ability to request delivery notification by Email or Short message service or calling option, and confirmation of prove of delivery via computers.
Although the above services has been facilitated, they are sometimes hindered by high seas and on plane network losses; sometimes the company cannot track where exactly their cargo is when in the network fails.
Terrorism
Although terrorism is as old as the 13th century, of late the kind of terrorism that is taking place include that of taking hostage some ships, planes and such transporting vessels. Different countries have embarked on highly integrating the war against terrorism with other countries by the use of computers. This has enabled a free and reliable sharing of information and data about a probable attack; however the trend and the approach taken by hostages is different and can circumvented the set hampering gears.
Of late, the volatile Somalia has been the country that is producing terrorists to hold some vessels hostage, the country has high-speed boats that they use to get hold of a vessel and demand for high compensation rates. When such issues occur, the company is prone to lose massive investments in the form of materials used; the cargo that is being transported may get stale if it was perishable.
To avoid any loss and liability, the company has put on measures that ensure it is covered when such cases occur for example; incase some things get stale because of air and temperature changes, the company does not take responsibility. however when such a rule is interpolated, it is a selfish move since it may mean that even if the delay was on their side then they will not take responsibility, this is likely to erode customer confidence and loyalty.
Managing the effects of terror attacks is the most difficult challenge although it occurs less often; there are systems that are shared by some countries with logistics companies to assist them track their cargo; such systems include Saab’s Widely Integrated Systems Environment (WISE).
A system can get information from other countries database and use it to plan against terrorism. The investment has a huge budget in terms of money and the personnel that are employed are highly learned. The system also gives information to other integrated countries and reason together to get a solution to a possible attack; when Amarex adopts such services; it is an extra cost that has to be passed to the consumer of services. It becomes a challenge.
As a risk management move, the company has insisted on insurance payment on all its goods when aboard a vessel, although the move benefits both the trader and the company, it makes the service offered by the company relatively higher.
Fraudsters and criminals
There are times that systems of the company have been hacked and some data about customers stolen, interfered with the normal business operation or there have been stealing of money in transit.
People of high computer literacy who uses their wisdom and knowledge to corrupt the system, they are a threat that the company has to deal with. Another angle that the people take especially in foreign countries is the believe that the company when delivering door-to-door has some variables; they then attack the people delivering the commodities before they get to their final destination.
The company payment rates are flexible, it allows for cash on delivery services and unpaid return services; when this happens there are times that parcels delivered are not paid in time thus the company has to start dealing with other waiting logistics, this may not be profitable to the company.
Environment conservation bodies and conventions
Amarex has to manage over 33,000 vehicles, all the company’s’ vehicles use diesel fuels; the challenge that the company is facing is how to comply with new sets of environmental conservation. Vehicles have been singled among the main emitters of green house gasses.
The vehicles maintained by Amarex are well maintained so it is easy to find a twenty years old vehicle still transporting effectively; however its rate of green house emission sis high. On 11 December 1997, 37 industrialized countries and the European Union signed the Kyoto protocol in Japan.
The protocol was target to have been fully implemented by 16 February 2005. United Nations Framework Convention on Climate Change developed it. The main aim of the protocol was to ensure that emission of green house gasses was reduced by 5% below their level in 1990 by the end of 2010. Such conventions targeted individual companies to enact policies that will reduce the rate of emission; the challenge that Amarex has is how it will dispose the old vehicles can get new ones.
Disposing the vehicles, which forms the largest asset base of the company, is challenging since no one can buy fuel inefficient vehicles. The protocol targeted the major greenhouse emitters and developed measures to be implemented.
Of late in 2010, there were talks in Copenhagen aimed at devising measures to protect the environment; despite the failure of the talks, some environmental conservation issues that emanated from the talks, at least all the players agreed that they have the role of protecting the environment and called upon all players to enact policies. The policies adopted are different in different countries.
Challenges, issues, and prospects
The international global industry is faced with a number of challenges and issues; however, there are prospects of growth and continued strengthening. Let us discuss the three situations separately:
Challenges
The major challenge facing Amarex is how to cope with the increasing competition in the industry as well as how to manage diversity. The industry is sensitive to international trade operations and a micro change in international trade can lead to huge loss of business. Some challenges that the company is facing are beyond what it can control and thus left with the main task as risk managing.
In most cases, risk managing are costly to the business and the customer. In the wake of environmental conservation campaigners, the company is left at deadlock because the main asset and machinery that it has, the vehicles, are points of target the campaigners. The company also wants to have ethical code of conduct where it is seen to protect the environment.
The human capital that the company has to manage is huge and the challenge is widened by the fact that they are form different nationalities, cultures and operate under different labor laws, managing such people is a challenge to the human resources management.
Another issue that the company is facing is devaluation of the dollar and changes in exchange rate; when operating in the international market, the company uses dollar as the currency to charge for services; however, the value of dollar is different in different countries and keeps changing. To predict such moves is a challenge to the company.
Issues
The issues facing the company are the factors that can be managed using some adjustments here and there; there are some countries that the company is facing challenges of high operating costs because of its inflow of customers. They are mostly those companies that it has not been able to break even so they cannot even be able to make a reliable warehouse. In such cases, the company has the option of developing strategic alliances; they are likely to reduce the operating cost and assist the company meet its operation goals and objectives,
Another issue that is facing the company is custom management issues; to manage effectively this issue, the company can have set of taxation experts in different countries to manage its people in the diversity. The issue with fuels inefficient vehicles will have to be managed with time where the company will endeavor to get fuel-efficient vehicles with time.
Prospects
The global logistics and supply chain management business has a bright future; this is due to the increasing collaboration among countries and development of trading blocs.
Amarex has the advantage that it is well known and has a bas in some countries; when the global trade increases, it services will be on high demand; the challenge of global crisis is also coming to an end, there is high recovery rate in countries like Saudi Arabia thus promising the company an increased job opportunities. With the increased globalization, there is high rates of culture diversity, thus managing diversity is becoming an easier task; countries are accepting similar labor policies.
Literature review on the issues facing Amarex
International integration, globalization and free movement of labor and factors of production among countries have resulted to a wider labor market, where companies can employ from countries different from their country of incorporation (home country); when they diversify they create a business opportunity for logistics companies’ when logistics companies venture in trade, they are taken as multinationals.
Managing of such companies may be through a central point, head office, or/and at the foreign country level. Multinationals should manage their resources, both physical and human, effectively so that they can gain from the advantage that attracted them in the foreign country. Human resources are the driving force of an organization, thus they need to be well managed to develop an orchestrate team and tap their intellectual knowledge effectively.
In MNCs, they are some experts imported from different countries to a country of operation to assist in different function; in the case of Amarex, when it has established a branch, it sends some of its experienced employees as expatriates in the foreign country to assist in an effective venture. They may come for pre-establishment preparations like engineering and legal functions or may be involved in day-to-day management of a foreign branch at different levels.
When an expert is deployed on a foreign mission, there is physical relocation of the expatriate, probably his or her family, and if the expatriate has a team of operation, they may go together. To ensure that the expatriate adjust effectively and fast, there are some human resources management strategic functions that need to be undertaken. Other than him adjusting, there are some challenges that the companies have to face when managing the foreign employees.
Companies employing from different countries, communities and societies, enjoys advantages brought about by diversity; however, there are also some challenges that comes with managing a diverse human capital.
Workplace diversity is about creating an inclusive working environment, which incorporates people of different caste, gender, skin color and ethnicity among other differences that define human beings. Other than the social and physical diversity, workplace diversity also incorporates differences in ideas, skills, perspectives and backgrounds
There are growing concerns on the need to conserve the environment at national and international level. The world has undertaken numerous environmental conservation measures.
The effects of global warming are increasingly affecting people, plants, and animals negatively. One of the major emitter of green house gasses is burning of fossil fuel. The automobile industry is one industry that largely depends on fossil fuels for production and running of its products. Every situation or opportunity has its own unique potential that an entrepreneur must capture if he will be successful.
This will be in consideration of business risk; business risk is the uncertainty on to whether the kind of business that the one has engaged in will be of success. This is in both existing business when they want to extend their business to other areas of a start up business. Businesses are driven by market for good produced; thus an entrepreneur must ensure that there is potential in the choose location.
When investing in some kind of a business there is the initial and subsequent running expenses. In a business environment, the proceeds from the business should cover all this and the profit of the investor. Competition is a good element in the business arena since it ensures that quality of goods and services provided; it is the one that keeps the businesspersons on their toes to ensure that they develop and maintain customer loyalty. This calls for continuous improvements of its products and services.
Two things must be considered then, whether the entrepreneur will be able to enter the market and whether he is capable to improve his products always. However, there are areas that competition is so high that an entrant will risk so highly and possibility of entering the market effectively becomes a problem, all this are factors that should be considered before making the go-ahead decision.
It is not always the case that a business set up will be successful, there are times that it may fail; when starting a business this should be taken into consideration. Business dynamics cannot be predicted with a 100% certainty. If the treads fails to favor a business, then the business is more likely not to meet its obligation.
It may be a failure in the market, change of fashion, calamities or negative goodwill created; they may hinder continuity of a business. To cater for this in eventuality, there is need to have an exit plan. Mitigating any loss that is likely to result from loss of business is one of the common ways to have an exit strategy that will not hurt the entrepreneur.
Alternative solutions as to how this problem can be alleviated
The issues facing Amarex can be solved in a number of ways, the approaches to the management of the issues will be dependent on the specific issue that the company is dealing with, and the following are the ways of dealing with the issues:
Risk management
The supplies and logistics business is faced with various risks; the main types of risks in the global business are strategic risks, foreign exchange risks, terror risks, and business risks. When managing strategy risk, the company before committing transportation to a certain country, the management should ensure that there is an in-depth survey undertaken in the country to gauge the rate of risk and the potential of the country.
For example, if an investment in a certain country seems to be challenging and likely to be faced with unfair competition, it is advisable for the company to shame away from the investment. To ensure that it does not suffer from foreign exchange losses, it should use hedging approaches of managing fluctuation of the international currency. When deciding the country to venture, then Amarex shouul follow the stages presented by the diagram below.
Managing diversity through policies like culture intelligence and root managements
To ensure that the company has managed the diverse workforce, the company should implement culture intelligence and root management policies. These policies can be implemented to ensure there is harmonized management of people from different backgrounds.
With the meaning and the range at which diversity means clear, the next crucial step is managing of the human resources, the human resource department has the role of establishing the differences of beliefs, races, intellectualism and ideas among the team and aim at creating a team that incorporates the strength of the diverse human capital in teams. An effective human resource manager should be able to combine the strengths and weak-points offered by diversity in a team such that they will reinforce each other and have a winning team.
This calls for a wide human resources research and putting on measures that can assist in determining what is best for the team. Some of the factors to consider when making efforts to know ones employees include their motivation, the way they handle situations, some cultural beliefs and the values that they uphold.
Strategic allowances
Strategic alliances should be developed with companies in the same line of business so that they can jointly benefit from each other. The policies include having the same warehouse in countries that they record low turnout of business; the alliances should be beneficial to both firms. Strategic alliances are the best way that the company can fight competition in the international markets.
Use of expatriates and information use
Sometimes the changes in custom laws in different countries offer a challenge to the company; however, there is little that the company can do about them. To work harmoniously with such changes, the company should use expatriates to get advice on the way forward. When a change has occurred, the company should ensure that it is not gotten off guard by the changes but should be prepared for the changes and have time to adjust its systems accordingly.
Special recommendations for Amarex in Saudi Arabia
The situation in Saudi Arabia is slightly different than the case is in other international countries; this is so because of the dominance of the company in the economy; the approach that should be taken is that of creating customer loyalty and increasing the quality of services they offer.
Different supplies and Logistics Company has the standards and the kind of services that they aim at offering. In the service industry, the services offered has some similarity, thus a customer getting into a company has some basic expectation. Amarex should aim at improving the services higher; the customer should be the focus of all efforts made by the company.
For example, to maintain customers’ loyalty, the company can give a guarantee that the products will be getting their destination in time and allow shouldering some responsibilities if it does not. This is possible since the environmental conditions and risks in Saudi Arabia can easily be predicted.
In both the international markets and Saudi Arabia, the company should embark on the use of innovative business practices; they should come-up with products that meet the needs of the people and look into their welfare. For example, instead of renting a whole container, the company should develop some mini-container approaches that are then put in the main container for transport.
When making strategies, the company should look into four areas of an effective business; the diagram below represents the areas:
Diagram 2
If each of the areas above is working effectively, then the company will be able to tap the new businesses as they come by.
How to implement the above solutions
The issues raising challenges to the company are more on strategic risks; to manage them one thing stands out, training, coaching and mentoring of managers within the organization. The following are the tools that need to be implemented to change the business approach:
Implemented culture intelligence and root management classes
The human resources management team should be in the forefront in training and mentoring other staffs on how they should deal with people of diverse culture.
Since it may not be fully possible for a central human resources team to effectively manage the huge number of staffs, the company should adopt a regional human resources management teams, this are team that manage a certain locality that is likely to have similar labor laws. For example, the same personnel management team can manage the company’s employees in European Union while those in Asia have their own management team.
This is a strategic management parameter so should be reached by the board as soon as possible.
Implement more secure information technology tools and keep improving them
To avoid security risks, the company should embark on massive computer systems development. The company should implement an internal information and technology department with the aim of coming up with customized computer applications. This should take time and ensure that the right people are given this mandate
Strategic management tools
To interpolate effectively the changes in the market, the company should engage in use of strategic management tools; the tools the company should implement are Business intelligence tools and data mining tools. The management approach that the company should implement should be strategic and ensure that the tools will be responsive to the needs of the industry. The main reason to implement these strategies is to put information in use and interpolate them in different way.
Integrated Research and development department
Although the company has a research and development team, the team should be integrated with the marketing department to effectively advice the company on the right approach to the issues facing the industry. For example, when it comes to making strategic alliances, the department should be the one to advice on which company and why the company. This will assist the company in making the right decisions.
Implications for future use
The future of the logistics company is bright, there are a number of opportunities that the industry is facing; the only challenge hat Amarex is having is how to strategically keep changing and adjusting its service to take advantage of the growing industry. In the future, Amarex has the opportunity of diversifying its services to other countries; the recent venture in Hong Kong is seen as the countries efforts to diversify its business.
Amarex has the opportunity of preparing for future ventures and developments, its current situation should provide the required resources to develop the future operating strategies. Its success in the future is dependent with the decisions that its management will make. To make market responsive decisions, the company should endeavor on training, mentoring and coaching current managers on the developments in the industry so that they can make decisions that re responsive to the needs of the market.
There are numerous scholars managed seminars and coaching that are occasionally taking place discussing certain issues, the company should take it as its responsibility to have its managers in such meetings, as they will sharpen their management skills.
On the other hand, the managers should enroll in virtual teams, they are teams that work across space and geographical areas, when they enroll, and they will get business ideas and know how they can manage their business well. When the right decisions are made when necessary, Amarex is likely to grow and expand its business to all countries that have profitable business.
Conclusion
Amarex has been in the supplies and logistics industry for almost thirty years; the company has been growing from strength to strength however, current changes in the industry have posed numerous challenges to the company. The main challenge facing the company is how to remain competitive despite an influx of players in the industry.
The global logistics industry is highly dependent on international trade operations, thus it faces issues with global human capital management among other global issues. The future of the logistics industry is promising; Amarex has the potential of tapping the opportunities brought by the industry; however, some strategic decisions will have to be made.
In the challenging business environment, Amarex management team should be strategic with the decisions they make, it is a high time that they recognize the benefits that can be derived from use of information analysis and interpolation tools like business intelligence and data mining. When the tools are implemented, the company is likely to remain competitive in the domestic and international business arenas.
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