Environments
International Dairy Queen Stores’ decision to open a subsidiary in Dubai presents challenges and opportunities to the company. Before developing any strategy plans International Dairy Queen should perform a SLEPT analysis which is a critical look into social, legal, economic, political and technological influences. This is because it will not operate in a vacuum and these environments indirectly affect business activities. In the Middle East, Dubai particularly stands out as the ideal location because it has numerous opportunities. The population is large and diverse plus the hot climate and tourist attractions attract restaurants business.
Political/ legal framework in Dubai lays out the regulations and laws governing trade. Particularly, there are rules governing registration of companies import tariffs, ownership, trade registrations, customs payment and so on. International Dairy Queen Stores will have to comply with these laws and regulations if it is to trade in Dubai. The government policy prohibits creation of pollution, or any culture that contravenes moral standards. International Dairy Queen is a well established company whose activities are eco friendly. Laws regarding registration of foreign companies are stiff but not impossible. The government permits wholly owned foreign companies. However, restricts on the importing products from parent company are imposed. Laws regarding employment stipulate the number of employees who must be sponsors from the local community. Licensing is easy as the government stretches good will to foreign investors. International Dairy Queen has to critically look into these laws and rules and their impact to its operation before proceeding any further.
Social factors and cultural factors are equally important. The vast population largely comprises of young and aged fun loving people. The number of foreigner who visit the country, make the setting ideal for International Dairy Queens products. Citizens of Dubai love the good things in life. They have an expensive taste and International Dairy Queen Stores’ products match this standard. Although the change in customers’ tastes and preferences differ across different age groups, International Dairy Queen Range of products caters for all.
The economy of any country tends to fluctuate from time to time. This characterized by periods of inflation depressions etc. The direct impact of these changes is price increase. Currently Dubai’s economic condition is stable. Interest rates are low and demand high. People are willing to spend more on luxuries as dining out and International Dairy Queen comes in. International Dairy Queen can take advantage of this situation to expand to the Middle East (Dubai).
Technology in Dubai can be described simply as state of the Art. Their transportation and communication system is highly advanced and the people are highly skilled. International Dairy Queen being a company involved in mass production is particularly keen on acquiring fast and efficient technologies. Total quality management is also of great importance to International Dairy Queen Inc. This is because its dairy products are very sensitive to quality. IDQ inc is dedicated to satisfying customers expectations and the technological advances in Dubai facilitate this. Dubai has all the facilities the company needs thus setting a part Dubai as the country of choice in the Middle East.
Markets
The pricing of International Dairy Queens products will greatly depend on the presence of competition, economic conditions cost of production and laws regulating prices in the new market (Dubai). Most countries impose laws which regulate prices of goods such that prices don’t fall below a predetermined level. This is meant to prevent dumping. In this case International Dairy Queen is not affected; however, the economic conditions will influence pricing of International Dairy Queen Products. How so? Inflation causes increase in prices of virtually everything; raw materials, wages, interest rates hike. The cost of production reflects on final cost of a product. If the technology used to produce a product is costly then final cost of a product is also high. International Dairy Queen has invested greatly in modern facilities and state of the art technology. Most of the processes are automated. This will play a significant role in minimizing cost of production. In addition, costs of acquiring raw materials increases during inflation which eventually translates to high price of goods.
The force of demand and supply influence pricing in the sense that, if demand for a product increases prices will also increase. This is the theory. However, this is not always the case. In the presence of competitors firms react by reducing their prices so as to retain customers to competitors. International Dairy Queen being a new company in Dubai should consider to competitors and it’s comparative. The goal of International Dairy Queen seems to be penetrating the market in Dubai. This in itself will influence pricing. For instance a penetration strategy whereby it lowers prices of its products as a promotional strategy, price skimming if the goal is to recover used up capital. Alternatively, the intention or desire to appeal and identify its product with the high class group should influence pricing. This is called premium pricing and a company using this strategy will price its products expensively as an indicator of quality.
The graph below shows the effect of demand on price of goods in the absence of competitors.
Organization
The organizational structure International Dairy Queen Inc has both formal and informal structure. The formal structure shows the flow of hierarchy from the top level management to the lowest level. An organizational chart has been used to show the level of hierarchy in International Dairy Queen.
International Dairy Queen has a centralized system and all the subsidiaries follow the same centralized system. That is all the department report to the director and all the employees report to their respective managers in the various departments. The informal structures within the company although not written on paper has strong presence within this company. Staff groupings are productive because they improve level of motivation and sharing of information. The company encourages productive groupings. The concept behind International Dairy Queen having this organization structure is to clearly show the relationship among the people in the organization. It also gives little of different position. The departments also have their own department organization structures.
The purpose behind having this organizational structure is that flow of information is enhanced. This is especially so true for a big company such as International Dairy Queen. Absence of such a structure would cause distortion of information, and inefficiency. The structure shows a diagrammatic illustration of how departments should relate and the hierarchy of authority. The organizational structure allows free flow of information which enables the company to coordinate its various activities. This in turn increases the efficiency of services.
Process
Understanding the business process assists in gauging the success of a company in terms of higher profit gains, physical expansion, better quality products, increased market share and accumulation of assets. The success of International Dairy Queen Store’s investment depends a lot on how much consumers get value for their money. Consumers of the company’s dairy products should perceive that they get the best their money can buy. Therefore, value adding should start right from the suppliers, production and packaging to distribution and selling process. At each stage, the product should be improved without adversely hiking price of the final product. Consumers should get best quality at minimal cost.
Customer process analysis focuses mainly on acquiring and retaining customers as well as satisfying their need. Adding value to customers requires in depth study into impacts of pricing, timely distribution, variety and so on. Time and cost is essential and should be analyzed so that it is cost effective.
In the case of International dairy Queen Stores, its success in Dubai depends greatly on the strategy the company will employ in attaining its goals. The marketing program should anticipate customers’ needs and cater to them. A modernized system of informing customers and getting feedback is essential. Relationship marketing, where customers’ queries and suggestions are personally addressed needs to be analyzed. Furthermore, the efficiency of implementing market programs and the dedication of employees to quality service delivery needs to be analyzed. Production process can be enhanced through the use of modern technology so the time needed to produce on product is reduced.
In summary the decision to venture in the Middle East is timely. Consideration and implementation of the issues discussed plus IDQ’s vast experience trading in foreign countries will come in handy in building a successful subsidiary in Dubai.
Bibliography
- Barnes, W. ed. (2001) Understanding Business: Process. London: Routledge.
- Lucas, M. ed. (2000) Understanding Business: Environments. London: Routledge.
- Salaman, G. ed. (2001) Understanding Business: Organizations. London: Routledge.
- Suneja, V. ed. (2000) Understanding Business: A Multidimensional Approach to the Market Economy. London: Routledge.