Marketing Strategy: Masdar Report

Executive Summary

Masdar is a company that was established in Abu Dhabi, United Arab Emirates, in 2006. Since then, the company has grown in several directions, introducing Masdar Clean Energy that participates in the creation and maintenance of renewable energy projects, and Masdar City, an example of sustainability and innovation. The organization is state-owned, which gives it unique capabilities and access to rare and essential resources.

The analysis of renewable energy resources shows that it has many entrance barriers and has a low power of buyers. However, with the changing trends and the climate discussion becoming central to many governments, the risk of rivalry in the market is growing. The internal analysis demonstrates Masdar’s strengths and government support, vertical integration, brand image, and resources. The main threat is rooted in the changing environment and increasing competition, while the opportunities lie in unexplored markets and innovative energy sources. The main recommendation for Masdar is to focus on new markets, alternative renewable energy projects, collaboration, and education. Advice for implementing Masdar City’s ideas in existing communities is considered as well.

Organization’s Description

Masdar is a company established in 2006 in Abu Dhabi. It is state-owned, being a subsidiary of the Mubadala Development Company, a wealth fund governed by the United Arab Emirates (UAE). Masdar’s primary focus is renewable energy, but its main directions can be further divided into several branches – Masdar Clean Energy, Masdar City, and Masdar Capital, as well as a now-restructured Masdar Institute (“About Masdar”). Thus, it is challenging to estimate the total number of employees and projects of the organization since it involves several separate initiatives.

Masdar is primarily involved in the creation and maintenance of renewable energy projects locally and internationally. While the company is focused on the Middle East and North Africa (MENA) region, it has many programs in collaboration with European, Asian and other companies and governments (“About Masdar”). One of the projects situated in Abu Dhabi is Masdar City, a city with low carbon emissions and sustainable infrastructure.

The history of the organization shows that it has evolved from a local to an international company that disseminates knowledge about sustainability and promotes renewable energy production. In 2006, the company was created to increase the country’s research on clean energy. In 2010, the idea for Masdar City, a carbon-neutral initiative was introduced to the world.

Through the years, Masdar has diversified its impact on the field of renewable energy, collaborating with international companies to bring clean energy production to various developed and developing states. Moreover, it also created a separate entity, the Masdar Institute of Science and Technology, which later merged with other institutions and became a part of Khalifa University (“About Masdar”). The evolution of the company and its reorientation (including the entrance and exit from the educational sphere) shows the involvement of emergent strategies.

The vision of Masdar is to “make Abu Dhabi the world’s reference for knowledge and collaboration in the advancement of renewable energy, clean technologies and sustainable development” (“Building on Momentum”). The company’s website states that Masdar’s mission to “advance the development and adoption of commercially viable solutions in renewable energy … to address the sustainability challenges of the UAE, the Middle East and international markets” (“Vision, Mission & Values”).

Its latest annual report highlights the goal of maintaining UAE’s leading role in the sector of global energy, while also increasing diversification of energy sources (“Building on Momentum”). The company does not identify explicit goals but notes that its purpose is to ensure the country’s prosperity and move to a knowledge-based economy (“Building on Momentum”). Thus, one may see that Masdar pursues local economy-driven objectives.

External Analysis

As mentioned above, Masdar has a formal mission statement which, depending on the source, prioritizes either UAE’s role in clean energy solutions or the development of renewable energy commercial projects to address the current worldwide challenges. Both versions describe the business adequately as the company pursues local and international advancement in the industry. Moreover, the major goals of the firm become apparent from this statement – to improve the state of renewable energy development in the UAE and globally and support the UAE in holding a leadership position in the field of sustainability.

As Masdar also lists corporate values after presenting its mission and vision, one can see that the philosophy of the company is present in all statements – Masdar aims to be agile, commercial, sustainable, and grounded (“Vision, Mission & Values”). Thus, one can conclude that the mission statement is appropriate as it describes the primary goals of the organization, shows its commitment to the industry and its country, and aligns with the corporate philosophy.

Stakeholders

It is possible to identify several stakeholders of Masdar based on its goals and projects. First of all, the UAE is a significant stakeholder – Masdar is a state-owned entity, and its main aim is to advance the UAE’s sustainability development (“Vision, Mission & Values”). As the organization is governed by the country, the latter has claims to its financial performance and innovations. The next stakeholder group is Masdar’s partners – the company collaborates with a variety of technology businesses to deliver international solutions (Nader 3952). Depending on the project, the claims of these firms may be substantial or marginal.

In some cases, Masdar and its partner use their developments in equal measure. In other instances, Masdar acts as the leading supplier of innovative solutions, satisfying the partner’s claims by completing and maintaining the project. Furthermore, Masdar works with several resource and service providers, where it provides financial support and a stable long-term relationship.

The company’s customers constitute another stakeholder group – they can range from individuals to companies and government entities. For them, Masdar offers a variety of products and tailored solutions. The local community of the UAE, Abu Dhabi, and Masdar City, in particular, benefit from the business innovations through the introduction of new technologies and the financial prosperity of the organization. Finally, the board of directors is another stakeholder which is also concerned with the form’s profit as well as its recognition as a renewable energy industry leader.

CEO’s Impact Evaluation

The CEO of the company is Mohamed Jameel Al Ramahi, who has been leading Masdar since 2016. Before assuming this position, Al Ramahi served as Head of Internal Audit and Compliance, Director of Corporate Services and Financial Affairs, CFO, and Chief Operating Officer at Masdar (“About Masdar”). As a result, he gained significant experience working at different departments of the business and seeing its strengths and weaknesses over the years.

Apart from being the CEO of Masdar, Al Ramahi is also a member of the board of Masdar Investment Committee as well as a director of several Masdar-operated projects. Under his governance, the company accepted several prominent international and local projects, making his performance as a CEO beneficial to major stakeholders. From the view of stockholders, the CEO’s actions are advantageous – the focus on renewable energy is currently favorably viewed by all governments and organizations. Thus, the financial performance of the company is aligned with global trends.

Al Ramahi is committed to the principle of Emiratisation – the development of local resources and workforce instead of prioritizing foreign specialists and reliance on external innovations. Thus, the satisfaction of employees depends on their origin. Nonetheless, all workers undergo training and are supplied with sufficient resources for learning and comfortable living (“Building on Momentum”). The company is also focused on educating female employees, and the share of women occupying positions at the company remains high in comparison to other Emirati companies (“Building on Momentum”).

Suppliers’ view of the CEO also depends on their place of operation. As Masdar is a government-owned company, the UAE’s suppliers play a significant role in the development of the projects, and the CEO’s focus on Emiratisation further supports this relationship. However, Masdar does not close itself to international collaborations which positively reflects on its ability to satisfy foreign customers, suppliers, and partners.

Strategic Management

The structure of the company and its close relationship with other Emirati companies as well as the government help align the goals of the top management with the expectations of major stockholders. Moreover, the clear commitment to the advancement of the UAE in economic and technological aspects creates unifying objectives for all executives and managers. In recent years, Masdar made many strategic decisions that elevated the company in the eyes of local and international communities.

One of them was the establishment of WiSER in 2015 (“WiSER”). WiSER is a platform that is dedicated to promoting the professional education of women to play a role in developing and leading new sustainability initiatives (“WiSER”). This organization’s scope includes programs for female-focused training, partnerships with like-minded companies, forums for women in the world of sustainability and renewable energy, and opportunities for internships at Masdar and other businesses.

This strategic choice was made to help the UAE show itself as a progressive country and to establish the place of Masdar on the top as an innovative business with a strong commitment to diversification. Overall, this was the correct decision in terms of ethical implications. Giving women in the UAE an opportunity to receive high-quality education and integrate into the workforce benefits the company’s image, while also training professionals highly committed to the cause.

Industry Analysis

Using the Five Forces Model by Porter, one can identify the main aspects of the renewable energy industry (Lasserre 177). The threat of new entrants is rather low as a company would require sufficient resources (physical and intellectual) to develop new sustainable options. Moreover, the design, manufacturing, and maintenance of such projects require sufficient funds since the industry does not have cheap solutions or mass production (Nader 3955). Masdar is an initiative of the UAE government, which has these resources and can restructure its budget to prioritize sustainable initiatives. Therefore, it also limits the possibility of new entrants locally.

The bargaining power of buyers is low as well – sustainable technologies are not well integrated into society, and people do not have many options for choosing any specific products or innovations. Furthermore, the current trend towards eco-friendly options benefits Masdar and similar firms in that their’ image is positive in the view of customers. Companies’ position in the market and their collaboration also decrease the power of buyers.

The bargaining power of suppliers is somewhat higher than that of buyers, but it strongly depends on the relationship between the company and other members of the supply chain. Globally, resources for sustainable materials and technologies are rate, and suppliers have sufficient leverage to establish prices and regulate the market. However, Masdar’s influence and government support mean that resources are also negotiated among state-owned businesses or firms that find such a partnership profitable.

The threat of substitute products and services is high globally and low in the UAE. Inside the country, Masdar is responsible for all operations related to sustainability and renewable energy – the government’s commitment to self-sufficiency and Emiratisation increases the influence of state-owned businesses and their access to resources. In contrast, other nations are also actively engaged in developing new ways of producing clean energy as the need for environmental conservation grows each year (Cugurullo 2419). Therefore, there exists a high chance of new technologies being developed for the global market. These innovations may be cheaper and easier to implement, which can disrupt the market and lower the influence of Masdar on their international projects and future considerations.

Finally, the intensity of rivalry can be appraised similarly to the threat of substitutes. In the UAE, the competition is almost absent due to the nationalization of most major development projects. In the global market, the rivalry is greater, but companies often choose to enter into partnerships to deliver more complex solutions. Nonetheless, the competition is rather high in the field of education – many major colleges now offer courses in sustainability which prompted Masdar to cut its participation in the project of Masdar Institute. The increasing attention to this field may signify the expected growth in competition from new companies and innovations.

The industry of renewable energy is becoming more dynamic due to the shifting focus on environmental sustainability. Therefore, the macro factors in the sphere are changing as well – governments introduce new regulations and standards for businesses, while also trying to encourage enterprises to move towards sustainability (Cugurullo 2428).

The issue of climate change and people’s growing awareness of nature’s condition may further inspire corporate and government entities to review their policies and commitments, placing Masdar into a challenging position. On the one hand, Masdar’s modern ideas align with the growing trends, thus positively influencing its plans. On the other hand, the threat of increasing competition and market disruption becomes more viable than before. As the industry will become more global, Masdar will need to assess its current projects and see whether its local and global actions should change in priority.

Internal Analysis

At present, the organization has a tremendous competitive advantage in the industry of renewable energy. Following the SWOT analysis framework, Masdar’s main strengths are government support, its currently occupied position on the market, alignment with the growing trends, diversification of projects, and a focus on both local and international projects (Lasserre 330). For example, Masdar works on solar and wind projects in various countries, continues to build its sustainable city, Masdar City, invests in research and development of other alternative sources of energy, and pays great attention to continuous education in the field.

However, its weaknesses stem from the same roots – the reliance on governmental support limits the potential of Masdar to expand internationally due to potential conflicts or relationship strain. Furthermore, Masdar’s slow process of building Masdar City may lead to outdated technology and frequent change of plans. If the government of the UAE encounters financial problems or changes its direction, Masdar may lose a substantial portion of its budget.

Therefore, the opportunities for the company lie in new technologies and the implementation of projects both in the UAE and worldwide. New options of renewable energy can be tackled by the specialists employed at the company, including the recently introduced reuse of waste materials and water-powered solutions. Moreover, further collaborations with other businesses create additional opportunities for Masdar to innovate.

In contrast, the rising attention to climate change and sustainability creates a major threat for Masdar as they increase the rate of competition on the market. New entrants and the development of cheap solutions for renewable energy may lead to market disruption, which will displace Masdar from its leadership position. Political conflicts and possible misalignment of values may negatively reflect on international projects, but this threat depends on governments rather than individual companies.

Taking into account the discussed points, one may see that Masdar’s competitive advantage is connected to its access to resources. The first of the four aspects of value creation, quality, is present in the company. Masdar is recognized as one of the leaders in renewable energy. The business participates in significant projects and has an influence in most recognized efforts to introduce wind and solar energy to Europe and MENA (“About Masdar”).

However, its efficiency and quality as reliability remain obscure – the company is not as transparent in particularities of projects which does not show the production process. As for innovation, Masdar continues to invest in new technologies, while also pushing for increased commercialization of renewable energy. Thus, one can see that the marketing and research, and development sides of the business are closely tied, which enhances innovation and creates a positive image of the company. Finally, Masdar’s customer responsiveness is on par with its other operations – the company creates individual projects for each case. This implies a high level of attention to clients’ needs and a strong customer focus.

Current Strategy and Recommendations

The current strategy of Masdar is outlined in the analysis above. In particular, it is clearly stated in the mission and vision of the company – to maintain the UAE’s leadership position in the field of renewable energy and contribute to this industry both locally and globally. Currently, Masdar is focused on developing two directions – Masdar Clean energy and Masdar City. Masdar Clean Energy is responsible for the development, installation, and management of clean energy systems around the world.

Masdar City is being built to become an example of an area with sustainable infrastructure and a center for other businesses and non-commercial organizations interested in furthering the research in the sphere of renewable energy. Apart from these central objectives, Masdar also has several strategic platforms that are responsible for education and research.

It is clear that the current strategy values international projects, but places attention on Emiratisation and vertical integration of resources. The analysis of the industry reveals Masdar’s secure position in the local market and increasing threats globally. Notably, businesses require sufficient funds to enter the competition, but the increasing need to address climate issues will lead to new rivalry and innovation. Therefore, Masdar’s place, while stable now, may change with time if the company does not evolve with the technology.

As a result, one can propose an innovation-driven plan that will also diversify the field of activities and broaden the scope of territories where Masdar could complete projects. First of all, the company needs to continue researching new alternative renewable energy solutions. It is recommended to increase the funding of the waste to energy project since its objectives align with the current trend of waste management and sustainability (Reiche 279). Here, Masdar Clean Energy is the central focus since Masdar City is not yet populated enough to implement this program. However, it is possible to use Masdar City as a platform for testing new ways of producing energy as the city’s plan is continuously changing (Cugurullo 2425). This particular advice can help the company to expand the scope of its project.

Following the previous recommendation, the company should revaluate its balance between Emiratisation and international projects. While reliance on its resources is beneficial for staying self-sufficient, close partnerships with other firms can open new research opportunities and lead to projects that will bring revenue and strengthen the brand’s image further. Another idea is to introduce renewable energy to other regions. Currently, Masdar mostly operates in MENA and Europe, while other areas such as North and South America and Asia are not considered (“About Masdar”). Broadening their reach may yield positive results in increasing growth and improving the rate of innovation.

Apart from new projects, Masdar should also review its operations in Masdar City. The initiative was launched in 2010, and the city’s completion has been pushed back to 2030. In the next ten years, climate concerns may increase significantly, calling for increased efforts in development and research (Cugurullo 2419). Moreover, other countries may consider designing and implementing solutions that will not be tested in new cities but existing ecosystems. Therefore, the position of Masdar City as an example of sustainability may be lost in foreign governments’ efforts to minimize the damage of the existing communities (Cugurullo 2420).

The current role of Masdar City is to market Masdar and the UAE rather than deliver real solutions, which places the company in a challenging position when distributing resources (Cugurullo 2427). Here, the recommendation is to review the scope of the project and see whether it agrees with the current industry trends.

Masdar City’s ideas may positively influence the company’s image, and it will be considered as an example of sustainability when finished. However, the pushback and the rapid evolution of the industry suggest that innovation should also be introduced to all territories, not just artificially create areas (Cugurullo 2430). The current potential of Masdar City as an example is losing its importance due to the present environmental crises, although it still has many ideas that have to be preserved. Thus, the action plan includes the restructuration of resources towards technology improvement and broad implementation of renewable energy solutions in the UAE and worldwide.

Works Cited

“About Masdar.” Masdar. Web.

“Building on Momentum: Interactive Sustainability Report 2018.” Masdar, 2018. Web.

Cugurullo, Federico. “Urban Eco-Modernisation and the Policy Context of New Eco-City Projects: Where Masdar City Fails and Why.” Urban Studies, vol. 53, no. 11, 2016, pp. 2417-2433.

Lasserre, Philippe. Global Strategic Management. 4th ed., Macmillan International Higher Education, 2017.

Nader, Sam. “Paths to a Low-Carbon Economy—The Masdar Example.” Energy Procedia, vol. 1, no. 1, 2009, pp. 3951-3958.

Reiche, Danyel. “Renewable Energy Policies in the Gulf Countries: A Case Study of the Carbon-Neutral ‘Masdar City in Abu Dhabi.” Energy Policy, vol. 38, no. 1, 2010, pp. 378-382.

“Vision, Mission & Values.” Masdar. Web.

“WiSER.” Masdar. Web.