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Albaddad’s Macro- and Microenvironment and Competitive Strategies

A famous Emirati company, Albaddad International operates in the industry of light engineering providing different kinds of mobile constructions and complimentary services. The purpose of this project is to study firm’s performance with the aim to discover the reasons for its excellence and identify potential threats. This survey has a geographic limitation, which is the native market. To learn the critical characteristics of Albaddad’s performance in a native state, this project examines a number of formal and informal sources. The implemented method of reasoning is inductive, which is utilized to connect collected data and make appropriate recommendations and conclusions. The identified limitation is a hard accessibility of information about Albaddad’s financial records. The scope incorporates Albaddad’s PESTLE and SWOT analysis, branding techniques, and corporate ethics. In addition, this report discusses the performance of company’s main rival, De Boer, with the goal to provide the effective ways that can help eliminate the adverse factors of Albaddad’s macroenvironment.

Moreover, the project is also aimed at detecting the internal shortcomings that impede or may inhabit the further company’s development. Specifically, the Emirati company has insufficient strategies of building customer’s loyalty. Besides, it poorly maintains philanthropic responsibility; though, the basic business ethics seem to be profoundly met. Nonetheless, the main issue is a vague differentiation from the main competitor. What is more, the findings imply that this business organization experiences moderate tension caused by political and environmental factors of the UAE market. In overall, Albaddad is a reliable company that conducts business in frames of corporate ethics. This firm is profitable; it enriches its stakeholders and contributes to the growth of domestic economy. To remain sustainable, Albaddad is recommended to improve differentiation strategies, increase cyber presence, develop philanthropic responsibility, and enhance collaboration with complementary industries.

Introduction

Albaddad International is chosen for analysis because of the novelty of its products (tends and other fast-made eco-friendly steel constructions). This study is geographically limited to the UAE market. The paper reveals PESTLE and SWOT analysis. Moreover, it surveys company’s branding strategies and corporate ethics. To accomplish the above-identified goals, this project studies a range of formal and informal resources that should help collect complete, credible and unbiased data, which is processed by applying the inductive method of reasoning. Detecting the limitations, it is necessary to point to poor availability of statistical data such as financial reports. This report is aimed to provide important characteristics of Albaddad’s performance and construct appropriate recommendations that will be interesting and useful for its stakeholders.

Constructing a Brand

Albaddad International was founded by the first generation of Albaddad family in 1971 in Abu Dhabi as a project that was supposed to fulfill the demand for tents for the royal family and other official authorities. Nevertheless, this company shortly became popular in building tents for various private events. Thereafter, the next generation of the Albaddad decided to expand. Following this purpose, they established “factories for prefabricated units, aluminum, glass, technology, steel and steel structures in addition to the garden furniture” (‘Who we are’ 2014). Obviously, the company reached the levels of excellence due to timely identified businesses niche.

The ways in which Albaddad constructs and promotes its brand image nowadays is explored by analyzing its advertising video on YouTube. The surveyed video reveals that company utilizes differentiation advantage as competitive strategy. This approach requires building a brand image based on the constantly enhanced tangible and intangible value of products and services. Moreover, it naturally suggests the constant increase and differentiation of goods and services.

The approach towards differentiation complies with company’s self-description taken from official website of Albaddad. In particular, it states “nowadays we owned around 3,000.000 squared meter of different mobile halls designs, which using for the storing, sports, events and military”(‘Company profile’ n.d., p. 12). Furthermore, the company applies to the notions of comfort and luxury, which is typical for differentiation competitive strategy. The company promises that their mobile constructions are equipped with “all necessary accessories, air conditioning, lighting, furniture and decoration” (‘Company profile’ n. d., p. 12).

What is more, a strong evidence of implemented differentiation advantage is the claim that “we are the only company within the group that sells, rents, and distributes mobile halls, modular prefab building, car parking shades and canopy, and garden furniture” (‘Company profile’ n. d., p. 12). Besides, the notion of luxury is explicitly manifested in the name of an advertising video, “VIP tents marquee” (Laungani 2014). Moreover, this assumption is supported with the slogan “world under one roof” (Laungani 2014) that strongly correlates with the idea of exclusive quality provided to VIP clients. In addition, differentiation of products is clearly visible in the diversity of exterior- and interior designs. The examples of product differentiation above testify that the company effectively utilizes this competitive strategy for maintaining financial sustainability and expanding further.

Furthermore, this business uses differentiation advantage of services that complement the goods and enhance their value. For instance, Albaddad provides various transportation and logistics services as well as remote security (‘Who we are’ 2014). Apart from comfort and luxury, Albaddad strives to build the image of a reliable and responsible company. For example, an advertising video informs that a firm ensures five years warranty and various assisting services (Laungani 2014). Therefore, this company implements differentiation competitive strategy appearing as a reliable organization, for which the core principle is to assure high-quality of their products and services. In this regard, it successfully constructs the brand image that refers to comfort, exclusiveness, and luxury.

The Pyramid of Corporate Social Responsibility

Economic Responsibility

The company’s orientation towards maintaining economic responsibility to the main groups of stakeholders is explicitly articulated in firm’s vision and mission statements. The company states that its vision is “to be existing professionally in different economical, investment, business, and intellectual sectors by implementing a global concepts and methodologies” (‘Who we are’ 2014). Without a doubt, this claim is attractive to investors, employees, clients, and communities because if it is successfully implemented, all these groups benefit from company’s economic sustainability and approach towards high-quality. Moreover, this supposition is supported by company’s mission: “guarantee the flow of goods and services from the production places to the consumption places professionally” (‘Who we are’ 2014). Considering that Albaddad significantly contributes to the UAE‘s economy and continues to expand, it is natural to suggest that this firm maintains financial responsibility.

Legal Responsibility

The survey of different sources regarding Albaddad’s legal responsibility reveals that this firm did not gain publicity for illegal actions. Thus, adhering to the principle of the presumption of innocence, it is possible to deduce that this company maintains legal responsibility towards its stakeholders.

Ethical Responsibility

Albaddad’s ethical responsibility is explicitly manifested in firm’s statement of values. Company promises “integrity, transparency, and credibility in the work” (‘Who we are’ 2014). Additionally, it intends to treat the clients with the highest respect providing the fastest services of an excellent quality for reasonable prices (‘Who we are’ 2014). This statement of values is in compliance with the materials of the advertising video that promises the safety of products and their robustness (high resistance to cold, direct sunrays, and wind) (Laungani 2014). Besides, the video promises that construction can be ready within 6 hours (Laungani 2014), which complies with the promise of the fastest services. What is more, Albaddad strongly follows the principles of environmental sustainability. Specifically, this company “offers many “green” advantages such as improved waste management, reduced workforce travel, and less site disturbance” (‘Who we are’ 2014).Therefore, it is possible to deduce that Albaddad adheres to ethical responsibility.

Philanthropic Responsibility

Unfortunately, nothing is known about philanthropic responsibility. It implies that the company focuses more on the basic and practical responsibilities that were described above.

PESTLE Analysis

Political Environment

Political environment of the UAE for Albaddad is moderately challenging. The UAE seems to direct the focus towards constructing international trading relations. In these circumstances, domestic businesses receive poor state’s support. Presumably, it relates to the strictness of the ruling regime, characterized by lack of democracy. The corresponding data revealed by the Word Bank (2016) indicates that “ease of doing business index” decreased in the UAE in 2015 comparing to 2014. Consequently, one should comprehend that political environment for Albaddad is not getting friendlier.

Economic Environment

The World Bank (2016) anticipates that in 2016 the global growth will moderately increase and constitute about 2,9% . Unlike many other developed and developing states, after the global economic crisis the UAE experienced fast recovering. The GDP growth continued to moderately increase in 2011-2014 (The World Bank Group, 2016). Besides, in terms of native currency, one should point to “exchange rate stability” (see Graph 2) and reduction in the inflation rate (see Graph 3). (Federal Coordination Office for Aid n. d., p. 40). This data implies that the economic macroenvironment of the Albaddad is safe and beneficial for the further company’s flourishing.

Social Environment

The standards of the social life of the Emirians have been improved greatly since the 70s of the 20th century (Federal Coordination Office for Aid n. d.). Specifically, the life expectancy has increased to 77 years, which almost equates the high income states (Federal Coordination Office for Aid n. d.). Moreover, this state has a low poverty level (The World Bank Group, 2016). This social situation is advantageous for Albaddad because it is related to the enhanced purchasing power of the natives.

Technological Environment

Technological environment is friendly for Albaddad. In particular, the innovative technologies allow decreasing the number of workers and time of manufacturing (Laungani 2014). Therefore, technological penetration enhances the value of company’s product and increases its profitability. Moreover, numerous Internet users enable advertising and searching for clients through social media.

Legal Environment

Given the UAE’s adherence towards protecting country’s ecology, it is not surprising that environmental regulations are imposed on local businesses (Singh 2014). This aspiration complies with Albaddad’s environmental sustainability and, thus, it should not be considered challenging. Besides, the simple and sparing system of taxation is a strong benefit for conducting business there (‘United Arab Emirates’ 2016). Therefore, the legal environment of the UAE is not challenging for Albaddad.

Ecological Environment

The UAE greatly cares about environmental protection and preservation of resources (Federal Coordination Office for Aid n. d.). This state strictly regulates ecological footprint. For instance, it manages to keep the level of CO2 emission at approximately the same level since 1980 (see Graph 5) (Federal Coordination Office for Aid n. d., p. 63). This state does not have ecological threats or draining resources; however, rapid development stipulated significant increase of electricity consumption (Federal Coordination Office for Aid n. d.). Considering strong environmental sustainability of Albaddad that complies with state policies, this company does not experience environmental threats. Besides, one can conclude that the expansion of the state environmental regulations and the need to conform engage Albaddad in increasing respectful competencies.

The Threat of Rivalry

One of the major Albaddad’s competitors is the European company, De Boer. This multinational corporation was initially launched in Netherlands almost a century ago; since then it has grown considerably reaching the markets of the 17 states (‘About us’ 2015). De Boer positions itself as a client-oriented organization. For example, its official website assures the visitors in providing “the highest client satisfaction” (‘About us’ 2015). This firm uses differentiation strategy and constructs a brand image that resonates with the notions of “being a reliable, involved, inventive and professional partner” (‘About us’ 2015). The catalogue of its products includes “event and hospitality accommodations, temporary storage facilities, warehousing, short-term office and retail facilities and emergency accommodation, supermarkets and airport baggage handling” (‘About us’ 2015). In general, it is implied that De Boer poses a great threat to Albaddad. The next paragraph is aimed to provide the rationale to this premise.

Albaddad and De Boer are much alike, which poses a threat to both of them. First, the range of products is quite similar. Second, they have the same level of cyber presence and work in the similar mode: orientation towards clients’ satisfaction, reliability, high quality warranties, and fast building process. The only identified difference is the image of luxury and exclusiveness created by Albaddad; meanwhile, De Boer accentuates its compliance with profit-prone goals advertising such constructions as supermarkets, scenes for mass events, ice rinks, etc. Besides, in terms of size and profitability, De Boer claims to have three times fewer employees than Albaddad. Hence, it is impossible to deduce whether it implies directly proportional revenue, or the number of workers is small because of optimization of the working process with technological novelties.

In addition, De Boer and Albaddad benefit from rapidly developing tourism sector and so-known event tourism that attracts many visitors to the UAE (see Graph 4) (Federal Coordination Office for Aid n.d., p. 58). Without a doubt, this situation is advantageous for the UAE and both industries. What is more, in the modern UAE there is a strong tendency towards the increase of the labor force stipulated by the enhanced amount of working women and prolonged life expectancy (see Graph 1) (Federal Coordination Office for Aid n. d., p. 40).

It means that working force may become cheaper, but simultaneously, more qualified, which is connected with the improved life quality, including medicine and education.

Given these peculiarities, it is possible to suggest that Albaddad builds its image utilizing the strategies and techniques that brought success to De Boer. Undoubtedly, it is a smart step and a famous positioning strategy used by many firms. Nonetheless, the trap is that these companies utilize the competitive advantageous strategy and, in these terms, the lack of differentiation is negative for both organizations. Undoubtedly, the lack of differentiation is one of the main De Boer’s weaknesses. Hence, considering that De Boer has been practicing half a century longer and has conquered more markets around the world, poor differentiation is adverse for Albaddad. Another weakness is that comparing to Albaddad, De Boer has more inferior communication with stakeholders. In particular, it is hard to find mission/vision/value statements or financial reports. Nevertheless, the threat of rivalry for Albaddad is quite serious.

SWOT Analysis

Internal Environment

Strengths

  • eco-friendly materials of good quality;
  • environmental sustainability;
  • adherence to corporate business ethics;
  • cyber presence (official website, social media);
  • strong and positive brand image;
  • significant diversity of goods and services;
  • profound approach towards eliminating customers’ risks.

Weaknesses

  • poor philanthropic ethical responsibility;
  • the absence (or poor advertisement) of customer loyalty programs;
  • too many similarities with the main competitor.

External Environment

Opportunities

  • expansion of market connected with constantly increased urbanization and improved infrastructure;
  • possibility of collaboration with complementary industries, such as tourism;
  • an opportunity to create a blue ocean zone through assimilation of a construction industry with tourism, education, medicine or other sectors;
  • beneficial social environment that resonates with the increased purchasing power;
  • enhanced and improved labor market, which implies cheaper working force of great quality and diversity;
  • spare system of taxation.

Threats

  • authoritarian political regime;
  • state’s orientation towards attracting foreign international corporation;
  • high rivalry.

Conducted SWOT analysis of Albaddad company implies the following premises

The firm’s success is predefined by the prevailing amount of strengths and opportunities over weaknesses and threats. This fact is supposed to make Albaddad attractive to foreign and domestic investors. Moreover, company’s sustainability is achieved due to its superior adaptation to the external factors and demands. Specifically, Albaddad operates in a compliance with state’s laws, including environmental regulations. Besides, it adheres to the principles of corporate ethics, which helps maintaining a good reputation. Furthermore, an initial similarity to De Boer was beneficial, but in the future Albaddad should find other ways of self-promoting in order to become qualitatively different while being compared with its competitors. In general, SWOT analysis reveals that the company has good chances to keep the leading position in its industry in the short-term perspective.

Recommendations

Acknowledging the obtained data, it is appropriate to make the following recommendations. In overall, the analysis of Albaddad’s corporate responsibility suggests that company’s success is largely stipulated by its adherence to business ethics. Therefore, this firm should remain responsible towards its stakeholders, which assumes the need to improve philanthropic responsibility. Albaddad should continue to increase cyber presence because the penetration of the Internet can be used for advertising, monitoring clients’ and rivals’ actions, and building market segments. Considering that it is a popular approach to constructing a positive image, it should be used to increase company’s sustainability.

What is more, taking into account identified rivalry threat, it is necessary to improve Albaddad’s remedies and ways of differentiation. Being too similar to a more famous and greater in size competitor is a negative tendency that can lessen firm’s profits. In this respect, the previous recommendation can be partly achieved by conquering customer’s loyalty with corresponding techniques (discounts, certain free services as a benefit from purchased products, discounts for wholesales buyers, etc.). Besides, it is necessary to emphasize that Albaddad should develop relations with complementary industries. This approach will help increase the amount of clients and, respectfully, profits. Given that this country evokes a lot of interest in foreigners due to its rapid development and preserved unique culture, the industries connected with improvement of infrastructure/building, tourism and service are expected to continue increasing. Moreover, striving to strengthen differentiation strategy, Albaddad should work at increasing the number of provided goods and services.

Conclusion

Albaddad International’s excellence is predefined by correctly and timely identified businesses niche. Moreover, apart from political and environmental factors, which possess medium pressure for the discussed firm, economic, legal, technological, and social particularities of company’s macroenvironment are beneficial. In terms of threats, it is identified that the main competitor is the European firm, De Boer, which conducts business on the much larger scale. The relations between these rivals imply that Albaddad must continue enhancing the diversity of products and services. In addition, it should diversify branding techniques. Furthermore, SWOT analysis suggests that Albaddad should continue using technological progress; in particular, it is recommended to enhance cyber presence. Moreover, this firm maintains financial, legal, and ethical responsibilities to its stakeholders, which makes it a reliable partner, employer, client, and provider; however, it has a poor philanthropic responsibility, which is advised to be improved. In overall, one should stress that Albaddad maintains financial sustainability despite the considerable rivalry and moderately challenging political environment.