Soft Drinks Sector
The firm to be established falls under the soft drinks sector, which is within the food industry. The industry has gone through a number of challenges in the recent years owing to the economic downturn experienced in the country, which is a result of the global financial crisis.
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A critical review of the industry suggests that companies in the sector were not affected since they registered good returns. This implies that many individuals, both the middle and high class, consumed soft drinks. This could be due to environmental demands since temperatures are always very high, forcing people to take cold drinks, irrespective of whether they are rich or poor.
Industry review reveals that the sector could not have witnessed economic downturn that hit the nation because of the health concerns and the desire to be well among consumers. An individual would prefer using bottled water and fruit juices instead of consuming untreated water because of health issues. The report of the review conducted recently proved that people preferred using fruit juice, which is claimed to reduce the cases of obesity and overweight.
The report underscored the fact that the desire to prevent obesity and overweight boosted the soft drinks sector. Drinks containing high rates of chemicals witnessed a fall in their sales while natural soft drinks and bottled water witnessed an increase in the volume of sales. Recently, the government of the United Arab Emirates banned the sale of sugary drinks in schools, which boosted the sale of natural fruit juices.
From the above analysis, it is projected that the new company would perform well in the market. However, it must observe labor laws and other laws touching on copyright. As the company enters the market, it must be aware of the soft drink giant companies, such as Coca Cola and Pepsi Co, which have adequate technologies and capital.
These firms have the ability of crushing the new firm in the market through heavy advertisement and offering low competitive prices. In 2011, the two soft drinks multinational companies accounted for a third off-trade value in the entire sector. In the subsequent years, these companies failed to replicate the previous figures in terms of sales because of the shift from carbonated drinks to natural drinks.
Therefore, the new company has the ability of penetrating the market because it does not produce chemical related drinks. The firm intends to produce natural fruit juices that would meet the health issues of many people in the country. To be successful in the market, the company will have to be careful when handling labor laws and issues related to copyright. Non-observance of the law might bring down the firm, given the fact that competitors have adequate capital.
Labor Laws: General Provisions
As the new company aspires to introduce the new product in the market, it has to comply with the labor and intellectual property laws. Compliance to the law is extremely important because it gives the company an advantage over others in the market.
The company that respects labor laws is always perceived positively while the one that neglects the plight of employees is always viewed negatively. Public image has a direct impact on the sales of any product. A company with a good public image regarding the treatment of employees will always perform well in the market.
The organization must observe the laws of the land regarding employment (Burk and Mark 89). The constitution instructs that all firms operating in the country must observe the labor laws in case they want to operate without legal tussles. The labor laws demands that all workers in the agricultural sector should be covered amicably in terms of wages, working hours, leave, safety, social and medical care, penalties, and termination of contracts.
The firm will have to employ the services of the consultant to establish whether all laws are being adhered to in order to prevent legal suits. The first provision of the law suggests that the organization will have to apply for the permit for each person working in the organization in case he or she is not the United Arab Emirates national. In other words, the ministry in charge of labor must approve the appointment of any foreigner into any position in the organization.
Without a permit, the employee cannot access a residence visa, which is an important document regarding in the United Arab Emirates. Apart from seeking verification from the ministry, the organization will have to enter into contractual terms with individual employee. The two parties will have to sign the employment contract referred to as the labor contract.
The contract is always critical as far as the relationship between the employee and the employer is concerned. It specifies the terms of the contract, such as the rights and the duties of each party. The document will describe the wages that the employee will be receiving each month, as well as any other benefit.
Moreover, it also specifies the period in which the employee will be a member of the organization and the description of the job. The law provides that United Arab Emirates nationals can be involved in any contract at any time without necessarily putting it in writing. However, the case is different for foreigners who are expected to fill the form from the ministry. The organization will have to observe all these regulations when hiring its staff.
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When hiring employees, the organization will observe the regulations guiding the tenure of the contract. In legal terms, tenure refers to the period for which the contract is considered valid. Since there are two types of labor contracts, the organization will ensure that all employees are given relevant contracts based on their skills and expertise.
Limited employment contract is used to refer to a contract with a specified term, with specific date of starting the job and the exact date of ending it. The term of the employee expires naturally at the end of the agreed period. Unlimited contract does not specify the termination date since either the party has the power to terminate the contract when deemed necessary.
Intellectual Property Laws
The new company to be established faces several challenges regarding intellectual property and patent because the skills involved in making soft drinks are highly guarded. For instance, Coca Cola Company has always engaged in legal suits with a number of companies over its technology. In fact, the formula used in the making of its soft drinks is unknown to many. It is claimed that only two owners of the company know the formula.
The owners acquired a patent for the technology to prevent its usage. Another firm can easily find itself in court in case it does not exercise restraint in the soft drinks sector because manufacturing technologies have slight differences. The new firm will ensure that every technology employed in the manufacturing of goods is original. In fact, it will seek patents over some of the technologies to avoid duplication and copying. Just like other forms of properties, technology is considered a valued property because it brings about wealth.
Unlike the works of scientists, which are always made public, technology is highly safeguarded because it is used in manufacturing wealth. The law in the United Arab Emirates defines intellectual property as a creative work that originates from the mind. Kinsella defines it as valuable imaginative and industrial information and knowledge (21). Laws touching on intellectual property aim at protecting and regulating the ownership and the utilization of creative works, which entails the use of trademarks, copyright, and patents.
Copyright is another legal requirement that the company will have to comply with before establishing the new company. Lai noted that it plays a critical role in commercial activities (22). Some of the materials that can be copyrighted include magazines, newspapers, books and paintings.
The company will ensure that its computer software is safe since competitors can easily use it to bring down the organization. The globally agreed symbol for copyright is ©. The ministry of information is charged with the task of ensuring that all works of authors are safe. It should be noted that the organization would not be concerned so much with copyright, as the products it handles are safe from copyright fraudsters (Beckman and Christa 217).
Since the country is the member of the World Trade Organization, it is a signatory to the Agreement on Trade –Related Aspects of Intellectual Property Rights. The global agency in charge of regulating intellectual property law is in charge of setting the minimum standards that all member states should follow strictly.
As already mentioned in the previous section, the ministry of economy and commerce manages trademark law. Trademark is defined as the idiosyncratic mark, catchphrase, emblem, product name, pictogram, design slogan, or any other word or phrase utilized by any firm to label its goods and distinguish its products from those of others in the market.
In the soft drinks sector, Pepsi and Coca Cola are some of the trademarks that represent the distinctive products of companies. Once an organization registers a trademark, it is illegal for any other person to utilize it in advertising goods and services. In the global market, it is agreed among various stakeholders that a symbol for trademark would always be ™.
Some countries, including the United Arab Emirates, encouraged the sale of fake or counterfeit products since it boosted economic development. Those companies with trademarks operated with difficulties since other small companies could easily use their symbols without restrictions. However, the state of affairs in the global society is different since each country is expected to protect company symbols and logos.
- In the UAE market, an individual found utilizing the symbol or the logo of a different firm without permission is always subjected to the full force of the law since this is considered infringement. This is often considered infringing mark meaning that the sign of the owner has been used without his or her authorization. Based on this, the new organization should respect the trademarks of other existing companies in order to prevent legal tussles, which might spoil the image of the organization.
- The company should design a trademark and deposit it at the ministry of economy, as per the legal requirements (Mazzone 1033). Once the trademark is published in the national gazette, the company will now be free to use it without any restriction. However, any other person using the trademark without permission will be eligible for prosecution since he or she will be violating the law. Since the law is strict on the types of trademarks to be registered, the company will respect the culture of the nation in designing the trademark.
- The organization should be concerned with issues to do with patents because it has brought down many organizations in the soft drinks industry. The mixing of contents and preservation techniques need some specialized skills meaning that an expert will have to be hired to be in charge of the process. If a patent is not obtained to protect the formula, competitors or even fraudsters can use the technology to spoil the image of the company.
- Since patents touch on technology and innovation, the ministry of finance is directly involved in registering them. The new company will seek patent on the production of soft drinks for at least five years. During this time, no other firm or individual will be allowed to make the same products similar to those of the firm. In the United Arab Emirates, patents are granted to all innovations and invention processes meaning that only an original idea is registered as patent. With the help of a legal expert, it is reported that the company is prepared to establish the new business since all legal requirements will be observed.
Beckman, Katherine, and Christa, Pletcher. “Expanding Global Trademark Regulation.” Wake Forest Intellectual Property Law Journal, 10.2 (2009): 215–239.Print.
Burk, Dan, and Mark, Lemley. The Patent Crisis and How the Courts Can Solve It. Chicago: University of Chicago Press, 2009. Print.
Kinsella, Stephan. “Against Intellectual Property”. Journal of Libertarian Studies, 15.2 (2001): 1–53. Print.
Lai, Edwin. The Economics of Intellectual Property Protection in the Global Economy. Princeton: Princeton University, 2001. Print.
Mazzone, Jason. “Copy fraud: Brooklyn Law School, Legal Studies Paper No. 40. New York University Law Review, 81.2, (2006): 1027-1054. Print.