Introduction & Background
About ALDARdevelopments_yasisland.jpg
Aldar Properties PJSC is leading the development efforts in the Emirate of Abu Dhabi, and plays a large civilian developmental projects worth billions of dirhams in the capital of the UAE, also contribute to the development of new sectors for commerce, housing, shopping and entertainment. ALDAR's vision is to establish Abu Dhabi as the UAE's most dynamic forward-thinking real estate market by creating unique and prestigious developments that can be used as a benchmark of quality, while maintaining the cultural and natural heritage of the city.
Since it's established in 2005, the value of projects launched by ALDAR 75 billion U.S. dollars, and the variety of species and size of projects, and managed to attract the attention of investors from all over the world, which contributed to the increase of foreign investments in the emirate. It is owned by leading institutions, shareholders and investors in the Emirate of Abu Dhabi, providing them with a sound long-term portfolio.
Aldar has a key competitive advantage due to its sound financial backing, large resources, the high level of management expertise and the Government's support in undertaking large-scale, market-driven projects which add value to the Emirate's booming property industry. Aldar Properties has received in 2008 on the classification of A3 by the rating agency "Moody's" and A-ratings agency Standard & Poor's "S & P". Morgan Stanley Research Europe cited Aldar as the leading developer in Abu Dhabi's real estate sector.
Aldar Properties is committed to developing real estate projects that balance the need to develop infrastructure with environmental sustainability. The company owns more than 50 million square meters of land in strategic locations in Abu Dhabi. The company is currently responsible for the development and redevelopment of many real estate projects in the Emirate of Abu Dhabi, including Yas Island and Al Raha Beach and Central Market, the island Nareel and Noor Al Ain.
Aldar Properties Focus on balancing the evolving nedds of a modern city while maintaining and conserving the environment. And take into account ALDAR projects meet the requirements of the physical, social and economic development of the United Arab Emirates and Abu Dhabi, in the long and short terms, for the benefit of those who live and work in the region.
More information
Aldar is building the Yas Marina F1 circuit on the $40 Billions.
Al Raha Beach and the $30 Billions Reem island.
Overall, full year profit in 2008 rose 77.3 percent to $936m, compared to $528m in 2007.
Aldar has $3.29bn in cash and $2.98bn in undrawn credit lines.
Our Vision:
Rewarding investment - To create for our shareholders a stable and lucrative investment platform providing realistic returns and long term benefits.
Leadership - To be regarded as the most credible and reliable real estate company in the region by the real estate and financial community as well as our customers and partners.
Long-term Communities - To create modern, efficient, attractive and sustainable environments to facilitate the social and economic development of Abu Dhabi.
Growth - To achieve the attraction of inward investment, and controlled expansion into international markets.
Premium - To create communities developed to high-quality standards, balancing the need for infrastructure with the sustainability of the environment.
Environment - To protect and maintain the environment so that our developments complement and enhance the existing beauty of the sea and landscapes.
Mission
Deliver maximum return for stakeholders through sustainable and world class property developments.
Through the planning of our developments, ensure delivery of the highest quality products on time and on budget with the highest standards of finishes.
At all times be stakeholder focused, responding and reacting to the needs, wants and desires of our shareholders, customers and residents.
Create and promote developments that are forward looking, innovative and tailored for specific markets.
Promote Abu Dhabi's image as a global destination, a good place to live, work, visit and enjoy life.
Encourage inward investment and promote employment.
Optimize personal development of staff through quality training, and establishing and maintaining the highest standards of professionalism and ethics.
Market Entry Decisions
Why GCC Market?Map of GCC Countries
"The Middle East region has experienced strong growth over the recent years; this has been the strongest growth for the Middle East region in the last decade. The economic boom is mainly fuelled by the substantial increase in oil revenue in recent years. Future growth prospect is also positive, as many Middle East countries are taking various measures to attract foreign investment and liberalize their economies to benefit from international trade."
The GCC, a trade community linking the six Arab Country of the Arabian Gulf, has some of the fastest growing economy in the world, due to a booming in oil and natural gas revenues.
The GCC has the a desire to establish the region as a financial and tourism center, and provide jobs opportunities to the growing young population through the establishment of new industries.
The Gulf Cooperation Council corporate and financial firms have become international players as they have an objective to expand beyond the GCC region.
From 2008-2010, construction projects announced for the GCC totals $942 billion, the majority of them in the UAE $441 billion.
Growth exceeds capacity in many areas of the economy. Power, water, real estate, logistics are under huge demands across the region.
Growth could be hold backed by limited labour force and short supply of key inputs such as steel, glass, and cement.
Oman
Why Oman?Oman Flag
Business Environment
Young real Estate Market
Attractive legal lows and Regulation for international business
The government economic policy concentrating in truism and real estate, with the aim of reducing the percentage of oil sector contribution to GDP to 9% by 2020.
Real Estate competitors are still growing up.
Social issues almost are same as UAE.
Supportive environment. It is also similar to UAE environment. Neighborhood and historical relationship between both nations is also supportive.
Currency : Omani Rial
Exchange rates: OMR per US dollar - 0.3845
Language : Arabic/ English business language
Religion : Islam
Income category: High income
Population: 2,785,361
GNI per capita (US$): 18,987.76
GDP Growth $59.946 billion
Infliction: 5.3% (2009 est.)
Area: About 309,500 sq. km.
North border is by UAE, on the northwest by Saudi Arabia, and on the southwest by Yemen.
Coastline stretches 3,165 km.
Major Cities: Muscat (Capital), Salalah, Nizwa, Sohar, Sur.
Climate: Hot and humid on the coast; hot and dry in the interior; summer monsoon in the far south.
Labor force: 1,032,560
Unemployment rate: 15% (2004 est.)
Real GDP growth rate (2008 est.): 7.8%.
Natural resources: Oil, natural gas, copper, marble, limestone, gypsum, chromium.
Trade (2008 est.): Exports--$37.72 billion. Major markets--China (29.3%), U.A.E. (10.9%), Japan (10.6%), South Korea (9.6%), Thailand (6.8%).
Imports--$22.92 billion: machinery, transportation equipment, manufactured goods, food, livestock, lubricants. Major suppliers--U.A.E. (27.2%), Japan (15.6%), United States (5.7%), China (4.7%), India (4.5%).
Other Important information:
The Government has actively a development plan which focuses on diversification, industrialization, and privatization, with the aim of reducing the percentage of oil sector contribution to GDP to 9% by 2020.
Ease of Doing Business Table
Ease of Doing Business
Doing Business 2010 rank
Doing Business 2009 rank
Change in rank
Doing Business
65
60
-5
Starting a Business
62
78
+16
Dealing with Construction Permits
130
134
+4
Employing Workers
21
24
+3
Registering Property
20
19
-1
Getting Credit
127
125
-2
Protecting Investors
93
88
-5
Paying Taxes
8
8
0
Trading Across Borders
123
121
-2
Enforcing Contracts
106
103
-3
Closing a Business
66
66
0
Pestel analysis
Political
a high degree of stability.
Member of GCC.
Trade Organizations WTO / FTA
Very good relationship with its neighbors.
Economic
World financial crisis has less impact on Oman Economy comparing to other GCC country.
Booming Economy.
High income.
GDP Growth $59.946 billion.
Real GDP growth rate (2008 est.): 7.8%.
Infliction: 13.5% (2008 est.)
Very liberal economy.
Established great economic relations with regional and international players and has been very open to world economy.
Provided Solid infrastructure.
Growth in demands in Real estate industries ($20.8 b)
Increasing business activity in the region.
Infliction: 13.5% (2008 est.)
Social
Religion Islam
Language : Arabic/ English business language
Increasing Population: 2,785,361
40% of Omani Holding high school diploma
A bout 50% of Oman population lives in Muscat.
Living standards are still rising.
Technological
Oman is an Emerging Market for technology business development.
Oman has embarked on an ambitious journey to transform Oman through the empowerment of its people, through the eOman initiative, along with opening up of thousands of jobs Opportunity for nationals in the information technology sector, and within a digital society. Objective includes a significant improvement in the quality of services provided by the government to citizens.
Oman has the basic infrastructure in IT industries.
Environmental
Oman has Protection environment law.
Climate: Hot and humid on the coast; hot and dry in the interior; summer monsoon in the far south.
Oman has strategic Location in Arabian Peninsula.
North border is by UAE, on the northwest by Saudi Arabia, and on the southwest by Yemen.
Natural resources: Oil, natural gas, copper, marble, limestone, gypsum, chromium.
Oman has different Type of Topography.( Mountains, plains, Desert and long Cost.
Legal
Promulgate investor friendly laws and regulations.
Designed systems for incentives and loans
laws allow the free transfer of capital and profits, and access and departure of expatriate workers to and from abroad
Labor laws.
Oman is a member of WTO.
Investment law provides income tax exemption to corporate for five years.
No Tax on capitalist returns or profits.
Law corporate profits tax.
Health and safety regulations
developments_algurmresort.jpg
Entry Mode Strategy
Decision Criteria for Mode of Entry
Market Size and Growth
Risk
Government Regulations
Competitive Environment
Local Infrastructure
Company Objectives
Need for Control
Internal Resources, Assets, and Capabilities
Flexibility
MAJOR ISSUE
Striving for more success and aggressive expansion in the region as first step for the International Market, ALDAR has to make attention to the key issue that the Company is facing.
Main issue is represented in
Should ALDAR Enter the Oman Market with Joint venture with The Wave Muscat (Company)?
OR
Enter the market with wholly owned subsidiaries?
And in Order to enter the Oman market effectively, it is required planning carefully when addressing this issue and other sub issues that the Company is facing.
Sub issues
Along with the key issue mentioned above, ALDAR was faced with other sub issues as follows:-
Time of Entry:
ALDAR should make attention to Time of Entry because it is will make the different for ALDAR in the Future in the Market and in the first step in the international market as well, because the early entrants often enjoy a greater share of the market? First, consumers in general do not like risk. If the product or service provides enough satisfaction, consumers do not want to risk changing for a new product or service. Secondly, the pioneer becomes a leading model for the product category. Entrants are compared later to the pioneers, and to some extent always negative. Third, consumers know the best features of the early entrants. Knowledge translates to more strongly held beliefs that are larger and have great confidence in the choice. Finally, the early entrants are able to get the best locations in the market.
Local Competitors
To make sure ALDAR has successful entrance in the Oman market, ALDAR should Identify and realize there competitors in the Market and to put short term and long term plan to utilize and come over the completion in order to secure the market and to build barrier for late entrants. Also ALDAR Should Enhance services Products for local region.
STRATEGIC ALTERNATIVES
Thinking about the business situation in hand, an important variant to the Key issue, is to consider risk mitigation of Entering ALDAR Oman market through the following strategic alternatives:-
Enter Oman Market by Joint Venture with the Wave Muscat (company).
Advantages:
Access to local partner's knowledge.
Sharing development costs and risks.
Politically acceptable.
Technological/marketing unions can exploit small/large firm synergies.
Disadvantages:
Lack of control over technology.
Inability to engage in global strategic coordination.
Inability to realize location and experience economies.
Value of one firm may be reduced over time.
Potential for conflict in operations between firms
Enter Oman Market by Wholly Owned subsidiaries.
Advantages:
Protection of technology
Ability to engage in global strategic coordination
Ability to realize location and experience economies.
Disadvantages:
High costs and risk
Unfamiliar of business regime in Oman
developments_nooralain.jpg
RECOMMENDATION
Going through the PESTEL analysis and advantages and disadvantages of Strategic alternatives, we recommend ALDAR to Enter Oman Market by Joint Venture with The Wave Muscat Company.
PLAN OF ACTION
The plan consists of short term and long term detailed steps that ALDAR should consider while moving forward with the investment intended for Expansion in Oman Market.
Short Term Plan
Joint venture with The Wave Muscat to enter the market.
Identify the actual opportunity in the market.
Build relationship with local Government and Supply Chain.
Maintain high reputation as one of the benchmark in the region.
Gain top managerial commitment and respect.
Strengthen the relationship with strategic alliance.
Long Term Plan
Establish ALDAR Oman as Wholly Owned Subsidiaries.
Developing ALDAR competitive advantage to enter the international market.
Developing local manpower to participate in achieving ALDAR Vision.
Activate the actions of customer satisfaction follow-up to the Customer Advisory Board Unit.
The customer advisory unit should develop effective marketing research tools to strengthen the expansion of ALDAR.
Create a strategic marketing team within the company to create future growth plans of company.
Accelerate the Product & Services Innovation programs within the company in order to actively dominate the market share.
developments_hq.jpg
Bibliographical references:
www.aldar.com
www.doingbuisness.org
www.worldbank.org
http://www.omantourism.gov.om/wps/portal/tourism
http://www.chamberoman.com
http://www.highbeam.com
www.thewavemuscat.com
International Business, the Challenge of Global Competition Eleventh Edition, by Ball, McCulloch, Geringer, Minor, McNett.
