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The focus of this paper is on the Dubai based organization known as the Dubai Airport Free Zone (DAFZ). The organization was established in 1996 as a government’s strategy of making the United Arab Emirates a global business hub driven by foreign investors as well as local investors. The aim of the paper is to analyze the business models applied by the organization. The paper will entail the explanation of the models, their critical analysis, and a conclusion. The business models applied by the organization are the differentiation of products, positioning, and Total Quality Management (TQM). As a result of its robust success in the application of these models, the organization has received various awards from various bodies and organizations such as the international organization for standardization (ISO).
A business model can be defined as a range of processes, procedures, and activities that are undertaken by an organization to enable it to establish a commercial opportunity. Generally speaking, business models comprise the strategy applied by a company to achieve its broad and specific objectives. It also comprises the planning and utilization of the available resources in an efficient and effective manner.
The business model of an organization is majorly informed by its structure and culture. The manner in which an organization is structured may determine the extent to which it achieves its objectives. The Culture of an organization, on the other hand, has to do with the social relationship within an organisation and the norms of the work place. As mentioned in the introduction, the business models used by DAFZ are differentiation, positioning as well as TQM.
Differentiation and positioning
In business strategy, differentiation is the process of distinguishing a product or service from the rest through describing its unique differences and or characteristics. It is done for competition purposes with a view of creating a market niche for that particular product or service. Differentiation seeks to create a good image about a particular product among the targeted consumers so as to ensure that they perceive it as unique and different from other similar products (Armstrong & Kotler, 2009).
Product differentiation makes the targeted consumers not compare a particular product with others; which gives that particular product a competitive advantage over the others. In doing differentiation, companies or product owners may rely on advertisement, promotions, improved product quality, lowering or increasing the prices as well as the lack of understanding on the part of the consumers regarding the price and quality of the product being differentiated (Armstrong & Kotler, 2009).
A company may engage itself in differentiation of several products at the same time. Doing this makes it have a certain number of customers for a product or service, a concept called positioning. Positioning entails using various strategies like promotion, distribution of products or services and production of unique products with unique pricing to build an identity of a particular company or organisation in the minds of consumers.
Positioning seeks to stabilize and retain the positions of the differentiated products so as to retain the competitive advantage of the company in regard to those products. For a company to create and maintain a particular position in a market, it needs to do a thorough research and consistent monitoring of market trends so as to modify or readjust the differentiation and positioning strategies for its products.
TQM is a business strategy employed by companies or profit making organisations to increase customer satisfaction as well as improve their internal processes (McNamara, 2011). The focus on quality is seen by many managers as a key success factor as well as a competitive strategy given that many customers are attracted by the quality of goods and services offered by a business. What this means is that if the quality is poor, then chances are that customers may lose interest but when the quality is good, then customers show great interest in the products and services. According to Mejía & Velasco, TQM comprises nine good practices and they include good and committed leadership, excellent product design, strategic planning, process management, customer involvement, employee involvement, dissemination of information and feedback, training and the management of supply quality (Mejía & Velasco, 2012).
The organisation DAFZ is strategically located proximal to the Dubai international airport, which provides access to more than 200 destinations across the globe, which makes it easy for investors to move to and from the zone without much difficulty. It also makes it easy for them to locate the zone. It is also located proximal to excellent cargo handling facilities and government facilities such as customs and immigration offices as well as the chambers of commerce.
In order to attract investors, the organisation provides some incentives such as 100% tax exemption as well as 100% foreign ownership. The tax exemption is aimed at ensuring that investors maximize on their profits. It also ensures that the process of business establishment is freed from the red tape which delays business establishment. The 100% foreign ownership ensures that organisations are free to employ the staff of their choice. It also ensures that companies are free to choose their shareholders, which also speeds up the process of business establishment because the investors do not need to go through rigorous audits of ascertaining employees’ and shareholders’countries of origin (International business publication, 2012).
The organisation also has in place a wide range of good practices such as customer satisfaction, care for the employees, team work, creativity and innovativeness, observation of business ethics and corporate social responsibility. It is a member of various quality focused bodies such as the Dubai quality group, the Emirates group and the European Foundation for Quality Management. Other good practices include ensuring a hazard free working environment for its employees, promotion of green and healthy environment, preservation of natural resources, employee training and development and prevention of pollution of the environment.
Due to its strategic location, the DAFZ currently hosts more than 1600 companies from various parts of the globe. The organisation has also received various awards from various organisations. In 2012, it received the top economic free zone award from the magazine called the financial times. In the same year, it received an award from Richard Goodman from the United States for strategic planning.
The organisation also received the Middle East Logistics Award (MELA) for three consecutive years from 2006 to 2008. It also received various other awards such as the Dubai Human Development Award and various fire awards. It is also an ISO certified in various fields such as energy management systems, information technology management, customer complains handling and occupational health and safety.
These ISO certifications and awards are a pointer of an excellent performance of the organisation. It has managed to establish a market niche for itself. The leaders of the organisation are committed to a course of maintaining the unrivaled competition in the region. They also aspire to make the organisation more customer oriented by focusing on finding better ways of improving customer satisfaction (Oxford Business Group, 2010).
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The paper was about the Dubai based company called Dubai Airport Free Zone. The organisation uses two business models namely differentiation and positioning and TQM. Its proximity to the Dubai international airport makes it easily accessible to foreign investors. It has a variety of good practices such as customer care, care of the environment and quality improvement. Through differentiation and positioning, it has managed to become a preferred business hub by more than 1600 companies from across the globe. Most of these companies are attracted by the business incentives such as 100% tax waiver and 100% foreign ownership and employment. As a result of its excellent performance, it has received various awards from various organisations across the globe.
For instance, it received the Middle East Logistics Award for three consecutive years from 2006 to 2008. It is also an ISO certified in various fields such as safety, information technology, energy management and environmental conservation. It is also a member of various quality management bodies such as the Dubai quality group, the emirates group and the European Foundation for Quality Management. Despite the progress made by the organisation, it is still being built. The leaders are planning to launch a comprehensive blue print for the organisation which will not only strengthen its position as a global business hub but also make it a preferred destination not only for business people but also for merry makers.
Armstrong,G., & Kotler, P.(2009). Marketing. An Introduction. (9th, Ed.). Prentice Hall: Pearson Education Company.
International Business Publication. (2012). United Arab Emirates Business Law Handbook Strategic Information and Laws. New York, NY: Intl Business Pubns.
Mejía, G & Velasco, N. (2012). Production systems and supply chain management in emerging countries: best practices : selected papers from the International Conference on Production Research (ICPR). London: Springer.
McNamara, C. (2011). 7 Important Principles of Total Quality Management. Web.
Oxford Business Group. (2010).The Report: Abu Dhabi.Oxford: Oxford press.