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The Number 1 General Trading: Company Analysis Report


Introduction

‘The Number 1 General Trading’ is a multidimensional commercial house of Dubai, a limited liability company involved in sales, marketing, investment, business network development, technology transfer, and industrial supplies, along with a strategic partnership with global organizations. This company was foundered in 2000 and its headquarters in Dubai and started its operation as an SME with strong accord with its global partners and high-end consumer along with industrial and consumer products ensuring the best quality, reasonable price, durability, and trustworthiness. The company has already tagged with various foreign companies especially China, Europe, and the USA; in 2009, it merged with an US telecom company and introduced HD video streaming technology in the Middle East market that generated tremendous market respond for live channels broadcast its product and service to the prospective customers.

From the beginning, the company also emphasized strategic alliances and joint venture to provide service to the overseas companies to get entry in the UAE market in order to export locally produced products in the global market through collaboration with major fashion designers to explore ultramodern fashions in the GCC region. Meanwhile, the company also acts as an exclusive agent of various foreign companies for different product and services and due to its strong connection with the ruling Sheikh families; it has turned into a vital source for governmental purchase of the UAE. The product line of the company integrated with airlines in-flight materials including foods and beverages, hospitality equipment and products, kitchen appliances, merchandising equipment such as shelving system, trolley, and carts, office supplies, corporate uniform, fast moving consumer goods along with different services like marketing, distribution and market research.

Mission Statement, Vision, Goals, & Objectives

Vision

The company settled its vision to embark with incomparable excellence in every project that delivers highest customer’s satisfaction that brings ultimate accomplishment for the company.

Mission

To deliver superior quality of product and services with affordable price in order to meet the current needs of the society that would finally serve the prospects of the future generation to establish a competent nation.

Corporate Governance

Rashid (2012, p.5) defined corporate governance as a process that coordinates several relationships of company and guides how the company would go ahead to attain its ultimate objectives through clarifying the power of the board, role of management and their relationship with the shareholders along with other stakeholders. The core competence of corporate governance has based on the openness, reliability, accountability, and transparency those the board of directors and management would uphold to ensure all the shareholders interest by conducting the business in right track to maximize profitability for all stakeholders with stick maintenance of corporate social responsibility. A well-defined practice of corporate governance would always ensure its full compliance with legislative and regulatory directions that indicated in the relevant Company Act of the country where it conducts business operation and put special emphasis on the accounting system in order to generating a method of checks and balances.

Rashid (2012, p.5) mentioned that they have conducted a landmark research with the SME companies of the UAE where 75% SMEs like ‘Number 1 General Trading’ have demonstrated their eagerness to integrate corporate governance and they are able to realize the importance of CG1. In the same study it has pointed out two major dilemmas to implementing CG in the UAE, first lack of knowledge of internal corporate governance between the SMEs and the others is scarcity of qualified specialists is this area to work externally as company’s needs. There are regulatory bindings in the UAE to maintain to compulsory corporate governance for the listed companies in the local stock exchanges while the non-listed companies have the opportunity for voluntary integration of CG.

The ‘Number 1 General Trading’ is a family business categorized as an SME with limited liability and not yet listed in any of the stock exchanges of the country, so there is no compulsory obligation to integrate corporate governance. ‘Number 1 General Trading’ is a company with family governance, Rashid (2012, p.28) added that it is very difficult to formulate any particular framework to govern due to the family relationship in the business and frequently more complex than the non-family business. Every family has its particular emotional engagement where such relationship break down the business administration and the management become bound to compromise with such engagement that could spoil the business growth to a certain objective. To overcome such dilemmas, ‘Number 1 General Trading’ needed to have a written governance plan that every family member would follow without any obligation; however, to introduce such provision, it may require to establish a ‘family council’ looks like a board of directors and all the members would cooperate to execute this procedure.

Environment Analysis

PESTEL Analysis

Political Factors

The Number 1 General Trading is an SME organization of the UAE and the political factors of the country are very influential agenda for the company to conduct its business smoothly in this territory. The undemocratic government of the UAE has prolonged with old-fashioned monarchy of seven individual emirates with a supreme council while the citizens of the country striving for democracy following the wave of Arab spring in the Middle East region in 2011. The government forces strongly condiment the anti-government movement and suppressed the organizers with serious violence and torture on the democratic forces. The human rights condition of the UAE is very worse; the law enforcement authorities cracked down on democratic movements and peaceful demonstration of the workers and provide imprisonment to the activists without any trail (IndexMundi, 2013, p.1)

There is no freedom of expression in the UAE, if anyone criticizes on any governmental activities, he must be harassed under the criminal justice system of the country and put for imprisonment. 88.5% of the working force of UAE is overseas workers; the country could not continue its economic activities without foreign workers, but suppression on them is very inhuman, poor wage rate, absence of collective bargain, and immigration law turned them into slavery.

Even the employers kill their employees and propagate it as suicide, in the government statistics, the rate of commencing suicide has increased seriously among the foreign workers (HRW, 2013, para.1). Women of UAE are seriously discriminated, men are allowed to keep four wives at a time, but women are not polygamous marriages, men are allowed to keep foreign spouses, but women would lose their citizenship if they marriage any foreigners. The most uncivilized penal code of the country allowed men to physically abuse and torture the women children and there is no scope for women to sue against domestic violence.

Economic Factors

The UAE is one of the richest countries in the world; in addition, based on the oil economy, the country has overcome from the major shock of global financial crisis without any momentous harm to the local economy (BTI, 2012, para.1). However, Lloyd’s (2013, p.1) reported that the GDP of the UAE on purchasing power parity in 2012 was US$ 271.2 billion, according to the official exchange rate GDP was US$ $361.9 billion, and GDP real growth rate was 4% with a per capita income of $49,000 in the same year.

To reduce dependency on the oil sector the government has been emphasizing to explore its non-oil sectors, with huge budget surpluses it has engaged to carry out broader economic development scheme with special attention to the infrastructural development, health care as well as education sector development. The demography of the country consists with 85% foreigners and 15% local people, the expatriates are the major contributor of the economy, and the education rate is increasing gradually in the primary and secondary level.

Social Factors

The development of civil society is very backward, lack of sufficient strength it could not influence the social progress and could not dare to protest against the undemocratic role of the government. There are few initiatives from the government to raise a puppet civil society to serve the monarchy rather than addressing the needs and demands of the society, due to lack of democratic institutions, few professional associations along with a little number of NGOs and voluntary organizations are trying to explore broader citizen participation.

The people’s participation in the social events is very low due to the governmental suppression, the progress and protection of social trust has explored through personal contacts rather than institutional engagement. Although the governmental initiatives urged to develop societal groups, women empowerment and people’s engagement, but people think that there are only propaganda to misguide the development partners with the aim to long lasting the monarchy.

Technological Factors

The UAE has placed at the top position among the Middle East countries for ICT progress and reached at 29th position in the global ICT ranking index depending on its infrastructural development, number of connectivity, bandwidth, and time of uses (ITU, 2012, para.2). At present, there are only 30.8% of the connectivity has integrated with fiber optic network and the government has planned to improve the nationwide of fiber optic connectivity with a further investment of US$ 1.36 billion that would provide broad brand connectivity at home, educational institutions, and both public and private sector.

The researcher added that government is also much aware to provide ICT security and it has already amended the relevant legislation and keeping its continuous effort for scientific and technological innovation to contribute the national development (TRA, 2012, p.6). The online presence of the UAE companies through eCommerce and website integration, governmental initiatives to integrate e-governance would be helpful for business operation in this region.

Environmental Factors

Library of Congress (2007, p.7) added that the cultural factors and ethical issues of the UAE develop with a Muslim majority state with 85% Sunni ethic group are privileged by the state; in addition, the 15% Shia and others are minorities with comparatively deprived class. With a rolling desert, the county has 1,318 km of coastline from the Persian to Oman Gulf with a special economic zone up to 200 nautical miles (Library of Congress, 2007); however, there is no river in the country, but it has two Oases that provide natural water resources of the country for cultivation. The climate is hot and dry and the most hazardous fact is that there are regularly sand and dust storms that harshly reduce visibility and very risky to travel out of the shelter. In the coastal areas of the country, there are huge coral reefs, uneven sandbars are available and carry the threats to destroy by the presence of travelers, the tidal storm, and irregular windstorms make it difficult navigate near the shore for fishing.

Legal Factors

All commercial concerns in the UAE have to organize under the ‘Commercial Companies Law’ -1984 that make it compulsory to have the local nationality while the legal system of the country allowed foreign companies as a heavenly place to start a new business (Tarbuck & Lester, 2009, p.5). The legal framework has designed in a manner that significantly encourages the local and foreign companies to do business in this jurisdiction smoothly that provide appropriate treatment civil law principles of Islamic Sharia. Easy licensing scope, free trade zones, and duty free entry are the major attraction for overseas companies to start business in the UAE.

Porter’s 5+1 forces model

Threats of new entrants (TNE)
Number of entry candidates In general, threats of new entrants become too high when it is easy for the entrepreneurs to start business in the local market; however, the UAE government has provided all facilities for the entrepreneurs to enter market with new ideas and contribute the national economy. However, the purchasers cannot rely on the new companies for which Number 1 General Trading will be able to retain customers if they can response in accordance with market demand; therefore, it will experience low threat of new entrants though penetrating in the market is easy
Rivalry among existing firms
Number of competitors Products and services of the Number 1 General Trading are satisfactory for which it was possible for the company to expand business in the UAE market, but the competitors are expended business more efficiently and rapidly. Therefore, the rivalry among the existing firms is very high and it has to face severe pressure from the competitors due to have a lot of similar service providers and these companies will capture the market if Number 1 can serve the clients efficiently
Product or service characteristics The Number 1 General Trading offers diversified products and services to the clients, such as, Fast Moving Consumer Goods, Office Supply & Equipment (Office Stationeries, Shelving System, and Corporate Uniforms), Corporate Gift Items Airline Supplies, Hospitality Supplies, Merchandising and so on. Different segment of this company faced competition from different competitors in the national and international market, for instance, Kahraman Dubai General Trading Co, Salah General Trading Company and Metalix General Trading LLC are direct competitors of food chain
Ability of existing firms to differentiate their products Existing firms have also differentiated their product line considering market demand, but Number 1 General Trading had already expanded business in six major segments; therefore, the rivalry among the existing companies is comparatively low
Pressure from substitutes:
Buyer’s switching costs – low Many companies in the UAE offer substitute products, such as, Pan Emirates General Trading House, WARIS Trading, Dubai, Metalix General Trading LLC, EMKE General Trading LLC, Emirates Gourmet General Trading LLC, Island Rock General trading Co, Procurio General Trading LLC, and Kahraman Dubai General Trading Co; therefore, the pressure from substitutes products is very high
Bargaining power of buyers
Small number of buyers purchase a large portion of the seller’s product The clients of this company have strong position in the national and international market for which these companies never compromise with quality, for instance, the largest purchaser of this company is Emirates Airlines. This company has to concentrate on maintaining high quality as it supplies a wide range of cabin comfort products, food & Beverage, entertainment items, and many other products to this airlines; however, the clients relied on this company for high standard products with
Existence of Alternative Suppliers The purchasers’ bargaining power is too high while Number 1 General Trading will experience loss if it fails to satisfy this loyal customer. As a result, alternative suppliers can easily serve the purpose of the clients with quality products and services
Bargaining power of suppliers
Products of Supplier is too significant factor to the buyer’s business As the Number 1 General Trading concentrates on the diversified and differentiated product line, it needs quality raw materials for the production of different products. The major clients of this company highly focus on the quality and the company tries to supply products at lower costs; therefore, suppliers play important role to maintain low cost and quality of the products and services
Relative power of other stakeholders
Government and shareholders Family business helps the nation reduce unemployment rate and contribute economy for which the government of UAE introduce flexible rules and regulation for the entrepreneurs to develop this industry; as a result, the family business holders like Jasem Al Shehhi has to pay no tax. On the other hand, this company has no partners, but it has more than 25 employees (both family and non-family members) who play vital role to implement strategic plans

Table 1: Porter’s 5+1 forces model. Source: Self generated from Number 1 General Trading LLC (2013)

CP Matrix

Number 1 General Trading Kahraman Dubai General Trading Co Salah General Trading Company
Direct Competition Direct Competition
Critical Success Factors Weight Rating Weighted Score Weight Rating Weighted Score Weight Rating Weighted Score
Market allocation 0.1 3 0.30 0.1 3 0.30 0.1 3 0.30
Pricing 0.1 3 0.30 0.1 3 0.30 0.1 3 0.30
Financial situation 0.15 3 0.45 0.15 3 0.45 0.15 2 0.30
Product feature 0.15 4 0.60 0.15 3 0.45 0.15 3 0.45
Consumer reliability 0.15 4 0.60 0.15 3 0.45 0.15 3 0.45
Advertising 0.04 2 0.08 0.04 2 0.08 0.04 1 0.04
Management 0.06 2 0.12 0.06 3 0.18 0.06 2 0.12
International Expansion 0.06 2 0.12 0.06 3 0.18 0.06 3 0.18
Innovation 0.14 3 0.42 0.14 3 0.42 0.14 2 0.28
Web expansion 0.05 2 0.10 0.05 1 0.05 0.05 2 0.10
TOTAL 1.00 3.09 1.00 2.86 1.00 2.52

Table 2: Competitive Profile Matrix (CPM). Source: Self generated

The above CP matrix table demonstrates that Kahraman Dubai General Trading Co is the powerful competitor of Number 1 General Trading because the total scores of Kahraman are 2.86 while Salah General Trading Company gains only 2.52; however, the total weighted scores of Number 1 are 3.09.

SWOT Analysis

Opportunities

This company has already opened a new branch in China and five branches in the UAE market; however, it has opportunity to gain competitive advantage from international market particularly GCC market using existing business resources and capabilities. At the same time, the owner of the Number 1 General Trading has ability and capacity to acquire other business entities to expand business or open new outlets in the national and international markets to achieve the short-term mission and long-term vision of the company. Moreover, it has scope to take the advantages of globalization, and free trade concepts (reduce trade barriers and minimize costs in some extent) to exploit the emerging markets across the globe to increase sales revenue and profit margin. On the other hand, this organization has several opportunities to boost profit margin, as this company has to pay no tax according to the regulation of this country for family business; in addition, it takes competitive advantages as a private owned multi-disciplinary company.

Threats

The competition in the local market has increased significantly because of the adverse impact of globalization; in addition, the number of small family business increased rapidly in this country due to lack of liability imposed by the government. At the same time, it has only one outlet in the foreign market and has limited manpower in order to compete with the competitors of GCC market; in addition, it has not enough resources to focus on technological changes and adoption of new technologies. This company has to face severe challenges despite the existence of these opportunities, such as, rapid growth of substitute products and services by the emerging companies, rules and regulations to expand business in the local and foreign market, adverse economic condition influenced buyers, insufficient labor force, and resources for expansion, threats from new entrants (small private organization) and so on.

External factors analysis summary (EFAS):

External Factors Weight Rating Weight Score Comments
Opportunities
Changes behavior of the clients 0.2 4 0.8 Quality of Life
Ability and capacity to acquire other business entities 0.1 5 0.5 Financial stability and economic growth
New products development and differentiation strategy 0.15 4 0.6 Vital aspect for the company
Business expansion in the local and international market 0.15 2 0.3 Free trade exploitation
Threats
technological changes and adoption of new technologies and liquidity crisis 0.1 3 0.3 Skilled development and economic destruction
Substitute products and services of existing companies and new entrants 0.1 1 0.1 Companies closing going overseas
Energy Availability and Cost 0.1 2 0.2 High fuel prices and raw material costs
Competition in UAE market for globalization and free trade zone 0.1 4 0.4 Switch off cost would be low
1 3.2

Table 3: EFAS. Source: Self generated

Jovanovic & Davidovic (2012, p.2) stated that EFAS identified the most significant categories of chances and external threats to demonstrate the extent to which the company able to face such external factors by taking into consideration their importance. The above table pointed out key opportunities and threats those derived from the SWOT analysis of the Number 1 General Trading; however, it included weight along with rating for each opportunity and threat (greater the weight indicates bigger the influence) to assess the strategic position of the business in the market. At the same time, the result of the rating (multiplying each factor’s weight by its rating) shows how well this private organization responds to each opportunity and threat; however, total weighted score of the company “Number 1 General Trading” equals to 3.20, which indicates it has to concentrate more on the external factors to develop the position in the market.

Strengths

The Number 1 General Trading is one of the top 100 SME’s of Dubai, which is the strongest point for the future development of the business; in addition, brand awareness is the key asset of this company. According to the report of the company website, many renowned companies in the UAE and GCC countries have purchased products and services from this company, such as, Emirates, Milk & Honey, Etihad Airways, IMAR Spa, Jumerah Group and so on. However, other renowned clients are Dubai World Trade Center, Dubai Silicon Oasis Authority, kempinski Hotels, & Resorts, Rotana, etc. Moreover, the CEO of this business has three years experience to operate business in the UAE with honesty, integrity, and professionalism.

At the same time, this family business has no leadership crisis because the CEO “Jasem Al Shehhi” has exclusive control over the employees of the Number 1 General Trading and there is no board of directors. However, this company has three subsidiaries and distributors to enhance business operation in the UAE market, such as, Archetypal, UAE based company “First Choice Tents”, and RAK Petroleum (under process to collaborate with International Oil & Gas companies). Other success factors are economies of scale to increase the volume of production and distribution centers, introduction of new outlets to maximize the market penetration and target customers, consider effective strategic management (diversification of the products and services), and adoption along with implementation of technology, skill development programs, and Differentiation of the products from the market.

Weaknesses

This company has many internal problems, such as, inadequate customer service to build loyal customer base, motivation of the employees, lack of transparency as it has no board of directors and effective corporate governance system, execution of strategic plan for lack of human resource, less attention in the core business, unpredictable audience in the post recessionary period and so on.

Internal factors analysis summary (IFAS):

Internal Weight Rating Weighted Comments
Strategic Factors Scores
Strengths
Loyal customer base 0.15 3 0.45 Comparatively high customer satisfaction
Leadership, employee relations, and training 0.10 3 0.30 Cordial Environment
Diversified products and services 0.05 3 0.15 Strong Entry Barrier in international market
Brand image 0.05 4 0.20 Satisfactory level as a private business
Economies of scale 0.15 3 0.45 Not too impressive
Quality products and service 0.15 4 0.60 Favorable for the business
0.00
Weaknesses
lack of transparency 0.05 4 0.20 Hindering the image
Biased Research 0.05 3 0.15 Negative
Weak financials 0.10 3 0.30 Barrier for further growth
Lack of motivated employees 0.10 3 0.30 Negative for the company
Ineffective customer care service 0.05 4 0.20 Needs improvement
0.00
TOTAL SCORES 1.00 3.30

Table 4: IFAS. Source: Self generated

According to the report of Jovanovic & Davidovic (2012, p.2), IFAS recognized the most significant categories of internal strengths and weaknesses to demonstrate the extent to which the firm able to envisage such internal aspects by taking into consideration their significance. However, the above table categorized main strengths and weaknesses those based on the SWOT analysis of this company; nevertheless, it provided weight as well as rating for each strength and weakness (larger the weight indicates larger the influence) to assess the tactical position of the firm in the UAE private business sector.

In this case, the result of the rating (adding the result of multiplying) demonstrates how well this family business responds to each opportunity and threat; however, total weighted score of the company “Number 1 General Trading” equals to 3.30, which illustrates it needs to focus more on the internal aspects to change the position of this firm in the market.

Generate strategic factors analysis summary (SFAS)

Weight Rating Weighted Comments
Scores
Opportunities
Growth in emerging countries like China 0.05 3 0.15 Can help in achieving higher growth
New products development 0.10 4 0.30 Growth in new segment
Ability and capacity to acquire 0.10 4 0.40 Entering new market and achieve goals
Threats
Substitute products and services 0.05 3 0.15 May not be able to satisfy the customer
Strong Competition in the UAE market 0.10 2 0.20 Decreasing profit margins
Technological changes and emergence of new technologies 0.10 2 0.20 Require more investments
Strengths
Customer loyalty 0.05 3 0.15 High Customer equity
Economies of scale 0.10 3 0.30 Presence across globe
Leadership 0.10 4 0.40 Strong control
Weaknesses
Weak Financials 0.10 2 0.20 Could face loss in the future
High cost 0.05 2 0.10 Low production capacity
lack of transparency 0.10 3 0.30 Raise question on honesty
TOTAL SCORES 1.00 2.85

Table 5: SFAS. Source: Self generated

According to the above total scores are 2.85 (near to average); therefore, Number 1 General Trading responses to the external and internal environment with average concentration and it should give more effort on these factors.

Level of Strategies

Functional level strategies

Gutterman (2007, p.1) stated that the main features of this strategy are the capability of the firm to carry out specific functional activities more proficiently with intent to offer low price and differentiates the products and services to design future plan and increase the profit margin.

Financial

Mr. Jassim Al Shehhi is the chief executive officer and chairman of this family business who strictly control all employees; however, there is no board of directors and external CFO because the leader of this company has ability to mange the function of financial department of this small company

Marketing

The marketing policy of this company is not too effective to increase sales revenue of the fast moving consumer goods, office supply & equipment, corporate gift items and hospitality supply & equipment (hotel supplies, shelving system, mattresses and appliances); however, it uses social media like twitter, linkedin, Facebook and many other sites in order to develop business. Emirates Airlines and Etihad Airways are two major clients of the airline supply segment for which it is possible to expand this segment with limited marketing campaign; on the other hand, other segments of this company had not experienced such huge success from advertising in social media. Therefore, this report suggests the Number 1 General Trading to introduce effective marketing campaign particularly for hospitality supply, FMCG and office supply.

HR strategies

According to the survey report, the Number 1 General Trading has 12 employees at present (other secondary sources show 25 employees) and two of them are -family members hold the top management position. In addition, the top management introduced special procedure for all segments of the business to coordinate the task of the human resources; however, all employees are responsible to appreciate client’s needs, comply with the rules and regulations, offer quality service, and work with integrity and honesty.

Sales

This company has five outlets in the local market and one branch in China (survey report); however, it has already entered European and the US markets using different strategies to increase sales of the products. Furthermore, the supply chain management of the core segment is very strong for which it became possible for this company to hold 29th position among the 72000 small and medium size companies in UAE; however, it has three subsidiaries and distributors.

Business Level Strategy

Cost leadership In the high competitive market, cost leadership strategy offer lowest price of the products and services in the market; however, Number 1 General has not used this strategy because main clients of this company concentrate on the product quality instead of lowest price
Differentiation: Number 1 General Trading offers unique products to the clients to gain competitive advantage generate high profits and build a brand image; however, this company uses this strategy as it helps to supply unique products with unique features. In addition, this strategy incurs many risks, but helps to create loyal customer base, ask high price by satisfying customer
Cost focus: Number 1 General Trading has not considered this strategy as it considers differentiation and unique expensive products. However, it should follow this strategy for the development of different segments, such as, FMCG, hospitality and office supply
Differentiation focus: The CEO of this company follows the features of this strategy considering the fact that customers have distinctive preferences and special needs

Table 6:- Competitive Business Level Strategy for Number 1 General Trading. Source: Self generated

Corporate Level Strategy

Keller (2009) argued that this strategy needs to consider when a firm deals with several projects or units or business divisions; in addition, it plays vital role to control different units by addressing key factors, such as, identify prospective markets, direct the top management, estimate invest in each business, and centralize at the corporate level. At the same time, Keller (2009) further addressed that levels and types of diversification are the main indicator to assess the position of the company; however, less than 70% of the total earning generated from Airline supply, which indicates it is following moderate level diversification strategy.

BCG Matrix

 BCG Matrix
Figure 1:- BCG Matrix. Source: Self generated
Stars Number 1 General Trading LLC and competitors have to hard to reach this stage because Star occupies the upper side of the left hand that shows high market growth along with high relative market share for which it is in the best position in this matrix; however, it should not require additional investment due to have available funds
Question Marks On the other hand, it has a small market share in a high growth market; as a result, the companies of this stage need additional investment for market expansion. However, fast moving consumer goods segment of this company occupies this segment, which indicates it needs more investment to expand and develop this sector in local and international market; large investment will give the opportunity to reach Star position otherwise it will fall in dog’s position in the BCG matrix
Cash Cows The airline supply segment of Number 1 General Trading LLC occupies the position of Cash Cows due to having large market share in a mature stage; however, this company has opportunity to use the profit margin from this segment for the development of weak business units like FMCG, office supply & equipment, corporate gift items and hospitality supply;
Dogs Most of the business units of Number 1 General Trading occupy this position, such as, office supply & equipment, corporate gift items and hospitality supply products situated in this position; this indicates low market share and low growth rate. It needs large investment to overcome this position

Table 7:- BCG Matrix table for Number 1 General Trading. Source: Self generated

Stages of corporate Development

Churchill & Lewis (1983, p.2) stated that the owners and managers of the small organizations need to upgrade the operating system in order to maintain growth by solving common problems; however, the researchers suggest five phases for the

Dominant Issue Birth Growth Maturity Decline Death
Objectives Personal subjective Profits and meetings
functionally oriented
budgets
Consider alternative strategies for the future growth focus on environmental change Try to sale to competitors
Popular Strategies Concentrate on core business to exist market, Airline supply Focus both on horizontal and vertical expansion to survive Concentric & multinational diversification to maintain profit status quo Identify risk factors and take proper measures Liquidation or
bankruptcy
Likely Structure This company started journey with only 3 employees Owner recruited more employees to diversify product line Included non family members to increase productivity Recruited employees from foreign markets Dismemberment of structure

Table 8:- Stages of corporate Development. Source: Self generated

Strategic alternatives

Strategic alternatives using the TOWS Matrix

The following table demonstrates TOWS Matrix for Number 1 General Trading and alternative strategic plans to develop market position within next three years –

The SWOT Strategic
Framework
Strengths – S Weaknesses – W
  1. Clients list of the company
  2. Economies of scale
  3. Leadership of Jasem Al Shehhi
  1. Weak Financials
  2. High cost
  3. lack of transparency
Opportunities – O SO – Strategies WO – Strategies
  1. Increasing technological advancements
  2. Prospects of penetrating new markets
  3. Increase market demand for changing customerbehavior
1. Economies of scale give the opportunity to the company “Number 1 General Trading to produce and introduce more new products with low costs for which it could earn more sales revenue
2. New product development will help the company expanding business in new place
3. Jasem Al Shehhi could recruit more employees (non family members)
1. It should try to joint venture with multinational companies to expand business in GCC member states and developing countries
2. It should take cost effective measures, for instance, it can use social media for advertising instead of traditional media
3. Try to develop IMC campaign to increase market demand
Threats – T ST – Strategies WT – Strategies
  1. Substitute products and services
  2. Strong Competition in the UAE market
  3. Technological changes and emergence of new technologies
1. Loyal customer base will minimize the risk of the substitute products
2. Strong financial capacity is important to implement strategies and adopt advance technology to meet market competition
3. Taking right decision in right moment is essential to mitigate external and internal risks
1. It should develop the concept of good governance in the company to work with transparency
2. Reduction of unnecessary costs for the future development in the local and international market
3. As the business is expanding, it should try to get bank loan for large project

Table 9: TOWS Matrix for the Number 1 General Trading. Source: Self-generated from Panagiotou & Wijnen (2005)

Implementation Plan

Programs

Possible Alternatives Strategy and Selection of Right Strategy

In order to identifying the right strategy for Number 1 General Trading L.L.C, this part of the study would use 1 to 5–scale assessment where 1 indicates most unfavorable condition, 5 would indicate the most favorable alignment of the strategy.

Program 1: Develop new product line

In the website of the “Number 1 General Trading L.L.C”, the company mentioned that it has engaged in airline, hospitality, supermarket, and office supplies, including merchandising corporate gift items and FMCG brands where the airlines supplies are doing well. The company has already developed its own brand for FMCG products, as a highly diversified company it is necessary to develop own brand for airline supplies and explore those product line in the hospitality industry including supermarkets and own retail outlets. As the company has strong network in the GCC counties, it could easily penetrate the newly developed products in the neighboring countries without any additional efforts. Meanwhile, in 2012 Mr. Jasem Al Shehh the chairperson of the company received the top 29th SMEs award out of 70,000 SME companies in the UAE, which is a reorganization of its dynamic performance and tremendous financial growth in the recent years.

Judgment Criterion for the Strategic Programs
Evaluation Criteria Decisive factors for Assessment Score for Strategy 1
Development of brand awareness ‘Number 1 General Trading’ is the market leader of the UAE airlines supplies and supplying its products to the national carrier Emirates, the company has not branded its product; thus, it is essential to implement the strategy 1 to build brand awareness in the airlines industry as early as possible 4
Fits with vision statement This strategic alternative completely complies with the vision of the ‘Number 1 General Trading’ 4
Engagement of the core competency It has already proven that the products of the company have passed the procurement criteria of the Emirates Airline, thus the company has world class experience and could explore them in the hospitality industry 3
Competition Due to global financial crisis, both the airlines and hospitality industry look for cost effective solution, and the ‘Number 1 General Trading’ has better opportunity to offer competitive price than the competitors 4
Generating Strong base of loyal customer As the company would offer lower price than its competitors, then it would be quite easy for Number 1 General Trading to creating strong base of loyal customer 3
Total = 25 18

Table 10: Program 1. Source: Self-generated

Program 2: Joint Venture and Acquisition strategy

In 2010, the chairperson of the company has taken part ‘Global-2010’ summit in Vancouver, Canada and signed memorandum of understanding with seven overseas representatives from Brazil, Canada, and France green technology in the field of natural energy recycling, building materials, and ICT. Among the overseas contacts, Mr. Janahi expressed his highest support strengthen the cooperation with the S.S. Lootah Group to generate a precious podium in the UAE that would explore further business opportunities through joint venture with different foreign companies as a source of competitive strength in the local market. Thus, the ‘Number 1 General Trading’ has designed its pathway to gain achieved competitive advantages from joint venture projects with globally renowned companies in order to share its resource and capabilities to increase its business in the UAE market (Number 1 General Trading LLC, 2013, p.1)

Judgment Criterion for the Strategic Programs
Evaluation Criteria Decisive factors for Assessment Score for Strategy 2
Development of brand awareness Among the prospective joint venture and acquisitions, some of the projects would assist to effectively increase its Brand recognition 4
Fits with vision statement As the vision of the company stated to provide incomparable excellence in every project to bring highest customer’s satisfaction, this strategic alternative would facilitate the customers with green technology 5
Engagement of the core competency This strategic alternative would generate further scope to involve its surplus financial resources in appropriate track 4
Competition Due to green and clean technology integrated under this strategic alternative, it would reduce competition for the company 5
Generating Strong base of loyal customer As the company would deliver most innovative and environmental friendly technology with affordable price, it would attract large number of customers and generate tremendous base of loyal customer 5
Total = 25 23

Table 11: Program 2. Source: Self-generated

Program 3: Combination of Alternative Strategy 1 and Strategy 2

Mr. Jasem Chairman of the company attended several trade fares in Hong Kong, Canton, and Uzbekistan with the aim to explore market for its own branded product line in the foreign market and at the same time, he was eager to find out innovative manufacturing process that would fit for the UAE market. In the HKTDC2 Mr. Jasem emphasized to establish trustworthy relationship with the overseas counterpart to generate long-term cooperation for the UAE products, while in the Canton fair he welcomed Chinese companies to establish their technological hub in the UAE. The Uzbekistan mission of the chairperson explored new opportunity for the products of Number 1 General Trading in the global market in terms of both side beneficial events to promote the incomparable history of foreign collaboration. The strategic alignment of the company illustrates that Number-1 is putting similar emphasis to develop new product locally and to explore joint venture and acquisition for further expansion.

Program 4: Social Media strategy and IMC Campaign

Judgment Criterion for the Strategic Program
Evaluation Criteria Decisive factors for Assessment Score for Strategy 2
Development of brand awareness This strategy will help the company to coordinate between new product development strategy with joint venture and acquisitions strategy; in addition, it will provide enhanced scope to flourish its brand image both locally and internationally 5
Fits with vision statement This strategic alternative would generate an enhanced scope to fit with the strategic vision of the company 5
Engagement of the core competency By integrating a mixed strategy, strategy-4 would ensure the highest utilization of the company’s physical and financial resources 4
Competition This strategic alternative would assist to generate highest competitive advantage in order to gain triumph over the competitors 5
Generating Strong base of loyal customer Strategy 4 would be the most reliable solution to compete with the local and foreign competitors of the Number 1 General Trading 5
Total = 25 24

Table 12: Program 4. Source: Self-generated

Timetable

Program 1 – Develop new product line Date Time
Arrange a meeting to raise this issue 30 May 2013 Need 14 days to take decision in this regard
Assess market demand (3 employees are responsible to visit different place) 15 June 2013 15 days require for assessing market
Submit proposal of different items 30 June 2013 Researchers will prepare proposal by 15 days
Select items for manufacturing products 15 July 2013 to 15 Sep 2013 The CEO will decide within 2 months
Start initial activities for manufacturing new items September 2013
Program 2 – Joint Venture and Acquisition strategy Date Time
The CEO has already taken initiatives From 2010 Long-time require to arrange
Collaboration with RAK Petroleum From 2012 Complete initial tasks as soon as possible
The management company will start working to implement this task. The will select numerous local and international firms to acquire and joint venture Start 01 July 2013 It is continues process and every deal needs at least 6 months to 1 year to settle the issues
Program 3 – Social Media strategy and IMC Campaign Date Time
Design a strategy and submit to the CEO of Number 1 General 01 August 2013 15 days require to design a plan
Implement the strategy 31 August 2013 to 30 Nov 2013 Three month projects

Table 13: Schedule to implement the projects. Source: Self generated

Budgets

It helps the company to assess the feasibility of the programs and recommendations in order to develop and reach the objectives of the company. Here, it is important to mention that it is not possible to prepare budget for the first two programs because the management needs to take decision regarding implementation of the projects, product selection and so on; however, the following table prepares a budget for the last program–

Integrated Marketing Campaign Budget
Online media objectives 2013 (AED)
Custom design & template creation 4500
Charge for Blog (several posts) 3600
Maintaining Facebook, twitter & Linkedin account (no charge for profile creation) 2250
Content management expenses 3600
Social media ads to aware audience 7875
IMC over internet 7875
Social networking site monitoring (highest charge) 3600
Examining the target group of this campaign through market research 2250
Public relations 5400
Other costs of the IMC project 750
Fixed amount for the prize winners 5000
Total Budget 46700

Table 14: – Cost of IMC Campaign for Number 1 General Trading. Source: – Self generated

Evaluation and Control

David (2008) stated that the main advantages of the process include provide direction and guidance to the management, and inspire to perform confidently to keep up track record; however, the following figure illustrate the process of evaluation and control-

The process of evaluation and control
Figure 2: The process of evaluation and control

Controls

Output Controls The management of Number 1 General Trading LLC will use customers’ feedback and survey reports to take measure to reach goals
Input Controls Performance of the human resources, control over operating expenses and revenues, physical resources of the company are key issues

Table 15: – Controls. Source: – Self generated

Financial measures

As the company has no CFO, the CEO will calculate return on investment to take financial measure (ROI), earning per share (EPS), and other profitability ratios in order to measure the extent to which the strategic alternatives are feasible for the company.

Stakeholders’ measure

Stakeholders’ measure
Figure 3: Stakeholders’ measure. Source: – Self generated

Reference List

BTI: United Arab Emirates Country Report. (2012). Web.

Churchill, N.C., & Lewis, V. (1983). The Five Stages of Small Business Growth. Web.

David, F. (2008). Strategic Management: Concepts and Cases. London, UK: Prentice Hall.

Gutterman, A. S. (2007). . Web.

HRW: . (2013). Web.

IndexMundi. (2013). 2013. Web.

(2012). Web.

Jovanovic, T., & Davidovic, N. (2012). Strategic Factor Analysis Summary – Applicability in the Case of City Tourism in Novi Sad (Serbia). Web.

Keller, K. (2009). Strategic Brand Management- Building, Measuring and Managing Brand Equity. New Delhi, India: Prentice Hall.

Library of Congress. (2007). Country Profile: United Arab Emirates (UAE). Web.

Lloyd’s (2013). Country Profile: United Arab Emirates. Web.

Number 1 General Trading LLC (2013). Web.

Panagiotou, G. & Wijnen, V. R. (2005). The telescopic observations framework: an attainable strategic tool. Web.

Rashid, M. B. (2012). The Corporate Governance Code For Small and Medium Enterprises Building the foundations for growth and sustainability. Web.

Tarbuck, A. & Lester, C. (2009). Web.

TRA: A View into the UAE’s Future ICT Scene. (2012). Web.

Footnotes

  1. Corporate Governance
  2. Hong Kong Trade Development Council
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