Introduction
Purpose of the report
The report covers market entry issues concerning Bikers Café in Dubai, the United Arab Emirates. It presents brief information about the company, its current products and services, geographic markets, and production or service facilities. The report also covers country suitability based on ten factors most relevant to Bikers Café business identified from external factors that make the Dubai market attractive such as political stability, free market systems, inflation rates, private sector debt and corruption levels. In addition, the country suitability also covers customer and competition based factors that make the market attractive, including Product/service availability to meet consumer needs, level of existing competition, efficiency and value of existing competitors.
Finally, the country suitability also reflects the industry and business related factors such as trade barriers, suitable labor force availability, Business core competences, Rate of expansion required/company strategy, Transport costs, Costs of establishment/EoS, and level of centralized control required. The report also covers marketing mix and staffing policy used by Bikers Café, Dubai. Elements of the marketing mix accounts for both standardization and local responsiveness based product/service features, place/distribution strategy, promotion strategy; and pricing strategy. A justification for HRM staffing policy used by Bikers Café, Dubai is also provided. The final elements contained in the report are about market entry strategy. The report provides an evaluation of the potential suitability (advantages/disadvantages) of each of the six entry modes specifically for Bikers Café, as well as recommendations and justification of the best entry mode(s) for this company.
Summary of the main contents of the report
Bikers Café is a company founded in 2011 in Dubai to cater for unique taste of bikers, bike enthusiasts and other customers seeking for ambiance. The ‘hangout’ has thrived because of favorable external factors; customer/competition; and industry and business related factors that support startups. Today, Bikers Café can be found in three emirates across the UAE.
The marketing mix and staffing policy give Bikers Café strategic advantages over other ‘normal’ restaurants that do not have a specific target. In addition, the marketing entry strategy for the company is best considered when the majority ownership favors investors while helping to cut costs and overcome hurdles associated with the local market. Thus, it is recommended that joint ventures, strategic alliance and licensing are appropriate modes of entry for the company.
Company Background
Founded in Jumeirah, Dubai in 2011, Bikers Café has grown as the only motorbike-themed restaurant for motorbike riders. Khaled Bin Hadher, an ardent bike fan, founded the company after an inspiration by the London’s famous Ace Café (Gent 1). Hadher wanted to bring the same candor to the growing populations of bikers in the UAE. Bikers Café was specifically designed as ‘hangout’ place where bikers could just have some fun. Hence, it is the first of its kind in the region.
Bikers Café offers a wide range of cuisines consisting of British, Arabian, Mediterranean, European, Tex-Mex, and Italian. These are considered international dishes. Customers can get breakfast, dinner and lunch menus at any time. In fact, lovers of meat, fish and vegetables have plenty of choices at the Café. In addition, Bikers Club Sandwich, Bikers Beef Roll and Jumeirah Choppers are also served in the Café.
Bikers Café currently focuses on the UAE markets. It is now found in Dubai, Jumeirah Beach Road; Abu Dhabi, The Harbour Club; and Fujairah, Al Seef Village Mall.
The service facilities are designed as ‘hangout’ for bikers, which they can call their own. Bikers initially met at random places to meet other riders or plan their tours. Today, however, Bikers Café has provided solutions to bikers.
In short, riders are now proud to have a station of their own (Sankar 1).
Country and Market Analysis
External factors that make the market attractive
Political stability
The UAE is relatively stable compared to other Middle East and North African countries. However, threats from terrorist attacks are major risks for investors.
Score: 8/10 stable political environment allows businesses to thrive.
Free market systems
Foreign ownership is restricted at 49 percent. In addition, foreign firms are most likely not to qualify for government tenders. Nevertheless, the vibrant financial systems and capital markets promote growth. Government influences are rampant (Heritage Foundation 1).
Score: 4/10 while Emiratis are protected, the rule may curtain foreign investments.
Debts
Taxes are relatively low, about 7.2% of the domestic earnings because the government relies on oil and gas revenues to run its affairs. The country’s debt is about 12% of the gross domestic product (Heritage Foundation 1).
Score: 9/10: low taxes allow businesses to earn more.
Inflation rates
The inflation rate (CPI) is estimated at 1.1 percent alongside unemployment rate of 3.8 percent.
Score: 9/10 low inflation rates allow consumers to spend more on luxuries.
Corruption levels
The UAE is regarded as the least corrupt in the Gulf region. However, the ruling families are still responsible for critical decisions within the emirates. It is imperative to recognize that the judiciary receives orders from the ruling class and, therefore, lacks independence. The political class may consider rulings from the court to sustain the rule of law. Government owns the entire Abu Dhabi land.
Score 5/10 the UAE needs to do more to curb corruption.
Customer/Competitor based factors that make the market attractive
Product/service availability to meet consumer needs
In the past, the growing numbers of riders across the UAE have not had any ‘hangout place’. Thus, Bikers Café is the first of its kind for this unique segment of consumers.
Score: 9/10 an innovative idea to cater for unique, unidentified market
Level of existing competition
There is no direct competition for Bikers Café because riders could just meet at random places initially. Nevertheless, other restaurants present competition for other potential customers who are also target consumers for Bikers Café.
Score: 9/10 – limited competition exists
Efficiency and value of existing competitors
As mentioned above, no direct competition faces Bikers Café because existing competitors did not specifically target riders. As such, they failed to account for their unique tastes of riders.
Score: 9/10 – limited competition exists
Industry and Business related factors
Trade barriers
Bikers Café faces no trade barriers because it is a local company and can rapidly expand to other emirates.
Score: 9/10 – limited trade barriers are noted for local firms
Business core competences
Bikers Café offers candor that attracts riders across the UAE. Large parking spaces and outside lounge for riders are unique to the business.
Score: 9/10 – the business understands what riders want
Marketing Mix and Staffing Policy
Standardization vs. Local Responsiveness
Product/Service features
The dining experience is positive because the food is considered competent and inoffensive. However, customers recommend much more such as a pool table to make the experience more memorable (Robinson 1).
Place/Distribution strategy
With three locations in the UAE, Bikers Café has become a favorite among riders who frequent the place during weekends and evenings. Nearly all riders are known to make reservation.
Promotion strategy
Bikers Café used an inaugural day to attract over 220 riders from all across emirates.
Riders can proudly refer to the fan themed café as their own.
The promotional strategy targets the growing community of riders across the UAE. The café is described as an exclusive hotspot meeting point for riders and enthusiasts.
The theme depicts an adrenaline-high life experienced by bikers. There are “vintage photos and memorabilia of legendary bikers and clubs from all over the globe” (Sankar 1) can be found on the white wall of the Café.
Pricing strategy
The premium pricing strategy appeals to bike enthusiasts, bikers and families that look for ambience.
HRM staffing policy the company should use
The ethnocentric policy staffing would ensure that qualified Emiratis occupy major positions in the company. Thus, experienced staff will provide their expertise to run the business in the UAE. At the same time, Bikers Café may also consider polycentric staffing policy to ensure that Emiratis occupy top positions. This strategy helps an organization to learn local market practices and cultures (Whitehead 1).
Marketing Entry Strategy
The potential suitability of each of the six Entry Modes
Licensing
Under licensing, Bikers Café can use franchising to offer branding, local expertise, concepts and other requirements needed for the UAE market. Licensing is ideal for marketing entry.
Strategic Alliance
Strategic alliance would be based on marketing agreements. However, Bikers Café would remain independent and separate from any external controls.
Joint Venture
A foreign firm would only own up to 49 percent of the stake in Bikers Café. Nevertheless, the strategy would offer three critical advantages. First, Bikers Café would get core competences and management skills from other investors (Chon and Yu 136). Second, a local partner would offer the best entry mode because of deeper knowledge of local practices among riders and other target consumers. Finally, Bikers Café would offer several distribution channels found in Abu Dhabi, Dubai, and Fujairah.
Direct investment
This mode of entry is suitable when the investor understands the local market, wants to protect its core competencies, brand and skills. However, it will require massive resources, and it is considered riskier.
Exporting
This mode of entry is not suitable for a theme fan Café because there are no goods to export.
The Internet
Bikers Café is not an online firm and, therefore, it cannot use this mode of entry rather than promoting its services and products across the globe.
Recommendation and justification for the best entry mode(s) for this company
Three modes of market entry have been recommended for the company. They include licensing, strategic alliance and joint venture.
Licensing is recommended because it offers minimal trade barriers, high returns on investments and legal protection based on the UAE laws. As a local venture, the company would enjoy the same protection given to Emiratis, including low taxes. Strategic alliance would offer the best marketing and promotional opportunities for investors. Finally, the joint venture can facilitate entry by relying on a local firm to offer the required resources, local expertise, distribution network, brand name, as well as low investment. In addition, it is the best approach to overcome potential cultural barriers noted in the UAE market.
Conclusion
The report has presented market entry issues concerning Bikers Café in Dubai, the UAE. Given the stable, supportive business environment and minimal competition, Bikers Café can rely on appropriate marketing mix and polycentric staffing policy to advance the business using licensing, strategic alliance and joint venture as the most effective market entry strategies.
Works Cited
Chon, Kaye Sung and Larry Yu. The International Hospitality Business: Management and Operations. Binghamton, NY: The Haworth press, Inc, 1999. Print.
Gent, James. The Biker’s Cafe. Dubai, UAE. The Spark. 2014. Web.
Heritage Foundation. United Arab Emirates: 2015 Index of Economic Freedom. 2015. Web.
Robinson, Oliver. Bikers Café. TimeOut Dubai. 2011. Web.
Sankar, Anjana. “Bikers Cafe revs up Abu Dhabi riders.” Gulf News. 2015. Web.
Whitehead, Suzanne. Staffing Policy & HRM Issues in International Business. 2015. Web.