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Dubai Refreshments Company Research Paper

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Updated: Jun 14th, 2019

Profile

Dubai Refreshments Company (DRC) was established in 1959 in the United Arab Emirates (UAE) refreshment industry. The firm is headquartered at Dubai in the UAE. Initially, the firm operated as a limited liability company. However, it was later restructured into a Public Shareholding Company in 1994 (Dubai Refreshments 2013). Over the years, the firm has managed to attain an optimal market position in the UAE.

Its operations entail production, canning, bottling, and distribution of different soft drinks and beverage products. Some of the branded soft drink products that the firm deals with include Pepsi Diet, Mirinda Green Apple, Mirinda Citrus, Pepsi Max, Mirinda Vit C, 7up Free, Pepsi, Shani, and Mountain Dew. The firm also markets different evervess brands [non-carbonated soft drinks], which include Lipton Ice and Lipton Ice Tea. The firm also deals with different brands of drinking water under the Aquafina brand name.

Mission and vision statement

DRC’s intends to position itself as the leading beverage company in the Gulf region. In a bid to achieve this mission, the firm is focused at developing a strong human capital, effective tools, and solid systems.

Objectives

DRC intends to achieve the following objectives in the course of its operation.

  1. To position itself as the market leader in the UAE soft drink industry. The firm intends to achieve this objective by investing in market growth strategies.
  2. To supply customers in the UAE with safe, healthy, and high quality soft drinks and beverages
  3. To develop a strong relationship amongst its clients and the employees

Strategies

The success of businesses is dependent on the type and quality of strategies that an organisation has implemented. An organisation can adopt three main levels of strategies and they include corporate, business, and functional level strategies. Dubai Refreshments has integrated the three levels of strategies as illustrated herein.

Corporate-level strategies

Corporate level strategies are aimed at developing a comprehensive definition of the business undertakings of an organisation. The corporate strategies are formulated in such a way that they contribute towards the improvement of the product lines and the business units of an organisation (Goold et al., 1994).

An organisation can adopt a number of corporate level strategies and some of these strategies include formation of mergers and acquisitions, creation of new business units, establishment of new plants or product lines, divesting some business units, and formation of joint ventures.

In the course of its operation, Dubai Refreshment Company has incorporated a number of corporate level strategies. One of these strategies includes the formation of merger and acquisition. In 2003, the firm acquired 7 Up from the National Refreshment Company.

The firm incurred $ 18 million during the acquisition. The acquisition has played a critical role in promoting the firm’s performance. For example, the acquisition led to improvement in the company’s level of profit from Dh 15.9 million in 2002 to Dh 22.9 million in 2003 (Nair, 2004). Moreover, the company’s market share increased from 46% to 65%, which represents a significant growth.

The firm’s growth has also emanated from the recognition of the importance of market growth. Consequently, the firm is committed towards establishing new plants in different parts of the UAE. In 2010, the firm announced its plan to establish a new state-of-the-art production facility that will be located at Dubai Investment Park (Zawya, 2010). The new facility will be the biggest in distribution outlet in the MENA region.

Therefore, the facility will enhance the firm’s effectiveness in distributing its products to local and international customers. The firm adopted this strategy in an effort to serve its growing number of local and international customers. The firm has also adopted diversification strategy as one of its corporate level strategies as evidenced by the broad product portfolio that the firm has developed over the years.

Business level strategies

These strategies outline how an organisation intends to compete. Business level strategies are applied to a particular product line or business unit. Therefore, they outline that a particular product line will attain competitive advantage in its market. Some of the strategies that an organisation can adopt in this level include advertising, research and development, new product development, equipment and facilities acquisition, and product changes amongst others.

Dubai Refreshment Company is committed towards achieving market dominance. Consequently, the firm has adopted the Integrated Marketing Communication concept in an effort to create sufficient market awareness regarding its products. For example, after acquiring 7 Up, the firm invested in an aggressive integrated marketing campaign, which played a critical role in promoting the beverage’s market position. Currently, 7 Up is ranked second in the soft drinks in the Northern Emirates, Dubai, and Sharjah.

The firm’s business level strategies also entail investing in new technologies. In 2005, the firm invested a substantial amount in an effort to improve its operating systems. Some of the technologies that the firm integrated include handheld terminals for sales and ERP implementations. Moreover, the firm also improved its infrastructure by establishing a new logistics and distribution facility at Sharjah. DRC has adopted the concept of new product development and continuous improvement.

Functional level strategies

These strategies outline how an organisation intends to augment the business level strategies. The functional strategies relate to the various functional departments in a particular business unit. Some of these departments relate to research and development, manufacturing, marketing, and finance.

In the course of its operation, DRC has established a number of functional units. The firm’s operations are divided into a number of departments, which include human resources, operations, finance, procurement, sales, Information Communication Technology, legal, and the projects’ departments. The company has outlined the roles and responsibilities of every department in an effort to achieve the desired level of synergy.

Business environment

The above objectives and strategies align effectively with the external and internal business environments. For example, the corporate level strategies adopted have enabled the firm to achieve high growth. As a result, the firm is in a position to deal with competition that is increasingly becoming intense.

On the other hand, the adoption of business level strategies such ad advertising has enabled the firm to achieve economies of scale. The firm has been in a position to create sufficient awareness regarding its products and services to a large number of customers hence developing a high level of customer loyalty.

The functional level objectives and strategies have played a critical role in improving the firm’s ability to deliver value to its clients by developing an effective value chain. By adopting the concept of new product development, the firm has aligned its operation with the changing consumer tastes and preferences. Consequently, the firm has developed a high level of customer loyalty.

Corporate Governance

The firm appreciates the importance of effective corporate governance in its success. Consequently, the firm has adopted a number of corporate governance strategies. One of these strategies includes providing full disclosure of its operations to the employees and other clients. For example, the firm discloses the reports by the Board of Directors and annual reports. These reports are issued to the public in an effort to develop a high level of transparency.

Board of Directors

The firm’s Board of Directors include

  1. Mr. Muhannad Saif Abdul Rahman Al Ashram
  2. Mr. Mana Mohammed S. Al Mulla-Managing Director
  3. Mr. Mohammed AbdulAziz Al Owais-Director
  4. Mr. Ibrahim AbdulRazaq Mohad Ustadi-Director
  5. Mr. Ahmad Bin Eisa Al Serkal, Chairman
  6. Mr. Muhammad Hadi Ahmed Al Hussain- Director
  7. Bin Abdullatif Al Serkal (Dubai Refreshments, 2013).

The various board members play a critical role in the operation of the firm, which arises from the view that they have developed varying level of relationships with other external stakeholders. As a result, the board members enable the firm to develop a strong connection with the other stakeholders. The board of directors has a voting right on some strategic issues affecting the firm. However, the board of directors does not hold shares in the company and this decision is informed by the need to eliminate conflict of interest.

Moreover, the board members have vast knowledge and experience on various business issues. The board members advise the firm’s top management on various strategic management issues such as acquisition, research, and coupled with how to achieve the desired level of growth.

However, there is complete separation of power between the top management and the board members. The top managers have the discretion to implement the recommendations proposed by the board members. Thus, they do not merely rubber-stamp the top management’s proposals.

Top Management

In addition to the board of directors, the company’s corporate governance structure is comprised of a number of top managers who include

  1. Mr. Tarek Elsakka – The General Manager
  2. Neeraj Vohra- Chief Financial Officer
  3. Wael Nehme-Assistant General Manager
  4. Sherif ElMeligy – Director and Manager of Marketing and Sales (Dubai Refreshments, 2013)

The top management has been very effective with regard to strategic management. Consequently, they have assisted the firm in formulating and implementing different corporate, business, and functional strategies. The strategies formulated by the top managers have played a critical role in enhancing the firm’s ability to deal with changes emanating from the external business environment. For example, the managers have assisted the firm to acquire other firms successfully.

The top management team has implemented the concept of social corporate responsibly, which has enabled the firm to operate in a social responsible manner. The top managers have sufficient knowledge in different fields such as accounting, finance, marketing, procurement, human resource, and sales. All the above managers have held their current position for over 3 years.

Analysis of the external environment

Opportunities

Political stability – Firms operating in the UAE soft drink and beverage industry are experiencing a supportive business environment due to the effective legal system in the country. The country is characterised by a relatively low level of political instability. Consequently, firms such as DRC can expand their operations in different parts of the UAE by establishing retail outlets.

Health conscious characteristics of consumers – Consumers are increasingly becoming health conscious in their consumption process, which presents an opportunity for DRC to produce and market high quality and healthy beverage products. The UAE is experiencing an increment in demand for organic food and soft drink products. By investing in the production of such soft drinks, DRC will be in a position to attract health conscious consumers.

Threats

Regulations – The firm might experience a challenge in maximising its sales revenue if the UAE government institutes price controls on basic food and beverage products. The UAE government has adopted a fixed exchange rate regime by pegging its currency on the US dollar (International Business Publications, 2012).

Consequently, the country does not have sufficient control over its monetary policy. For example, the country may not be in a position to cope with inflationary pressures that might occur, which presents a major challenge to the firm’s competitiveness.

PESTLE analysis

Politico-legal – The UAE has formulated broad intellectual property rights rules and regulations such as patents, copyrights, and trademark laws. These laws have led to the creation of an environment suitable for research and development.

The country has adopted an effective governance structure, hence enhancing its relationship with other economies.

Economic – the UAE has a relatively high Gross Domestic Product compared to other countries in the Gulf region. Thus, the consumers’ purchasing power is relatively high.

Social-cultural analysis – the UAE has experienced a rampant social transformation with regard to consumption of soft drinks. This change has arisen from the high temperatures that characterise the country. Consequently, consumers prefer taking soft drinks in order to quench their thirst.

Technological analysis – the high rate of investment in research and development has led to the emergence of different technologies. Some of these technologies relate to e-commerce and social networks. Moreover, consumers have appreciated the emerging technologies in their purchasing process. In a bid to remain competitive, businesses are forced to integrate the emerging technologies in their operation.

Environmental analysis – The UAE government is conscious of the environmental issues. Consequently, businesses are required to operate in an environmentally responsible manner in order to minimise the occurrence of climate change.

The above forces differ from one country to another as every country is characterised by different conditions and situations.

Reference List

Dubai Refreshments. (2013). Company Overview. Retrieved from

Goold, M., Campell, A., & Alexander, M. (1994). Corporate-Level Strategy: Creating Value in the Multibusiness Company. Hoboken, NJ: Wiley.

International Business Publications. (2012). Dubai Company Laws and Regulations Handbook. Washington, DC: International Business Publications, 2012.

Nair, M. (2004). Dubai Refreshments posts Dh22.9m profit. Web.

Zawya. (2010). Dubai Refreshments Company to build AED 400 million soft drinks factory at Dubai Investments Park. Retrieved from

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