Strategy Management Assignment Help
The Task
Your task is to produce a management report providing strategic solutions for an issue or Strategic issue or issues that you have identified in your own organisation or Strategic Business Unit.
The solution(s) should be based on thorough analysis and should involve critical evaluation of a range of potential solutions. The emphasis must be aiming to achieve competitive advantage. The choice of the final strategic decision should be justified. The solutions must not be descriptive of what the organisation is actually doing but analytical and proposing what it could and should do. This may be different to the actual decisions made by your organisation. It may however be a justification of what is actually proposed by the organisation but must justify it in the light of other options and through analysis. Which approach you take depends on the circumstances of your organisation.
1.0 Introduction
As the concept of globalization is increasing at rapid the competition between businesses organizations are also increasing, and in order to sustain in the competitive environment, the organizations are required to modify their policies and strategies and adopt innovative methods of operation. The primary purpose of this report is to analyze the issues that are being experienced by Al Dallah Al Arabia a popular trading and contracting company operating in Oman. SWOT framework will be conducted in order to gain information regarding the internal business environment of the company.
Al Dallah Al Arabia is an SME local community company that is popular for providing services to the infrastructure, gas and oil industry. The company is gaining success in Oman, and over the years the organization has rendered their expertise in the mechanical construction activities such as piping fabrication, structure fabrication, rotator equipment erection, equipment rental services and mechanical maintenance. The company has built a strong reputation in the consumer goods, high tech, heavy industry, medical, recreational vehicles and transportation sector. The company is operated with the help of around 200 qualified and well-experienced staffs that are dedicated to improving the services of the firm (adaoman.com, 2019).
In order to grow and gain brand popularity on a larger scale the company merged with an Algerian based firm registered in Dubai, forming a subsidiary company KM services (adaoman.com, 2019A). The merger proved to be prosperous for the organisation and over the decade the firm became a trusted organisation providing exceptional technical knowledge and expertise in a number of services and projects. The merger brought the organisation a huge return and increased brand popularity. KM service mainly deals with oil field constructions and has successfully achieved long term as well as short term service contracts. The success of this merger encouraged Al Dallah Al Arabia that in order to grow the company must expand and provide its services at different geographical areas.
Recently the company is experiencing low business, and the performance of the firm is stagnant. In order to overcome this issue, the management of Al Dallah Al Arabia has decided the organisation should expand in new markets where they will be able to attract potential consumers for their services and increase their sales and performance in order to gain a competitive edge. The management is experiencing the issue in the decision of which market to enter. In order to ensure the success of the business it is important that the new market should be selected after conducting thorough research and in order to gain information regarding the markets the researcher will make effective use of PESTLE framework.
2.0 Identification of issues
As per the SWOT framework conducted in appendix 1, it is evident that the organisation is experiencing an issue of slow growth rate and in order to stabilise the business, the management of Al Dallah Al Arabia has decided to expand their business in new markets that will boost their sales revenue. In order to expand in a new market it is essential that the management must have adequate information regarding the different markets that are potential for the business. It is identified that the management is experiencing an issue in deciding the new market they should enter in order to gain popularity and success for their business. The organisation has a strong base in Oman, and a successful merger was evident in Dubai. The success of KM services in Dubai indicates that if the strategic and sound market for expansion is selected the organisation will be able o gain immense success and therefore, certain solutions regarding the issues have been further discussed that can help the organisation in overcoming the identified problems.
3.0 Solutions
It is evident that the growth rate of Al Dallah Al Arabia is slow and therefore, in order to increase the business the management has decided the company should expand in a new market. However, the issue of which market to expand is prevailing, and in order to overcome this issue, the organisation must explore the markets where trading and contracting business in the field of oil and gas is relatively high. Some of the most prominent country dealing in gas and oil services includes Australia, the United States and countries in the Middle East. These countries are popular for their strong economic growth and stable political situations that are essential for the growth and development of the business. It is suggested that Al Dallah Al Arabia should try to consider these countries for their expansion. In order to be more accurate regarding which is the most suitable country for expansion market research must be conducted that will evaluate the state of business of these counties.
Expanding in the US
As the company, Al Dallah Al Arabia is mostly providing services for the oil and gas industry in Oman they can benefit from expanding their business in the US. As per the business environment of the US mentioned in appendix 2 of this study the political situation of the country is quite strong. The petroleum industry in United Stated gained huge popularity after the oil discovery at the Oil Creek area in Titusville (Sidortsov and Sovacool, 2015). It is analysed that the United States is credited to be the world's third largest oil producer after Saudi Arabia and Russia. As Al Dallah Al Arabia gained popularity in Dubai and secured long as well as short term projects with oil gas industries, it will be beneficial for them to expand in United State as the petroleum industry is booming in the country and can take advantages from Al Dallah Al Arabia's services. The company is also known for installing rotator and static equipment in Oman. Therefore, as the US is technologically well equipped and advanced the company can grab this opportunity and lend their expertise to help US petroleum sector in installing appropriate equipment that can allow them to conduct smooth and efficient business. However, it must be observed that technological advancements can also add extra expenditure to the company. As the competition in business is increasing majority of the companies are dependent on technologies, however, keeping up with the latest technology can cost a company heavily and in order, t remain competitive in the market the companies are forced to adopt technological advancements.
According to Weber (2015), the economic situation of the US is stable and is expected to grow at a rapid rate. As mention in appendix 2, the GDP of the US in 2017 was 19.49 trillion US dollars. This suggested that the US has adequate purchasing power and as the business of their petroleum sector is increasing the government of the country will be willing to invest in the quality services provided by a well-reputed organisation such as Al Dallah Al Arabia. The company has well qualified and experienced staffs that are equipped to handle the project in the most efficient manner. The employees can assist the organisation in delivering superior quality services to the new nation and earn a brand name on a global level. According to the data of statista.com (2019A), US produced around 571 million metric tons of oil and around 734.5 billion cubic meters of natural gas in the year 2017 indicating that the business of petroleum is growing in the country. As the business is growing the companies in the US will be requiring services of Al Dallah AL Arabia on a larger scale that indicates the Omani company will have a great opportunity to earn revenue and popularity in one of the leading countries of the world.
In the US the import and export of gas and oil take place through ship and pipeline. Around 90% of refined and petroleum products are transported with the help of pipelines. It is evident that Al Dallah Al Arabia is well experienced in executing service contracts for the maintenance, shut-down and repair of various gas and oil equipment and production facilities. As the US petroleum industry is heavily dependent upon pipeline services, Al Dallah can expand in the US and focus on this business opportunity in order to gain success in the new market. However, it must be noted that expanding in the United States can be significantly difficult for the SME as the capital investment for the expansion process will be huge. In addition, the governing legislation of the United States towards foreign direct investment is a bit complicated. Marketing in a new nation is another barrier that will be experienced by the firm, the culture of business in the US is completely different from that of Oman if the management is expanding in the US they must be fully equipped with the cultural differences and prepare them for the new work environment. This initiative will require a lot of training session that will add up to the expenditure and also require additional time.
Expanding in the Middle East
As the Al Dallah Al Arabia is presently located in Oman and is operating successfully in Dubai expanding its operation in other parts of the Middle East would be comparatively easier for the management of the company. The management is well aware of the political situations of the country and is well adapted to the business environment of the nation so expanding in the Middle East would be beneficial for them. As per appendix 3, the political situation of the Middle East is conflicted when it comes to land and oil refineries. Therefore, if the organisation is expanding its firm in other countries, they can experience the restrictions or barriers of their own government that can be stressful for the business. The Middle East is one of the leading countries that provide the world with oil and gas. According to the data collected by (statista.com, 2019B), Saudi Arabia produced 12 million barrels of oil per day in the year 2017 and out of which 1.1 million barrel if petroleum was exported to the US per day. These figures indicate that the petroleum industry of the Middle East is growing and operating at a rapid rate. As Al Dallah Al Arabia provides services to the petroleum industry, they can gain benefit from expanding in the areas of the Middle East that are associated with the petroleum industry. The company can gain huge business opportunity in expanding in the Middle East. The merger in Dubai helped in understanding that the oil business of the Middle East was beneficial for the KM services; it will be equally beneficial if the company expand in more parts of the Middle East.
In addition, it is observed that the Middle East has become one of the most popular countries that provides work opportunity for individuals from emerging countries. In 2015 there were around 32 million international migrants in the Arab state region (ilo.org, 2019). These figures indicate that Al Dallah Al Arabia can recruit skilled candidates from diverse nations at a lower price for their operations. As they are service providers and the petroleum industry of the Middle East is increasing the company will need an increasing labour force in order to carry out the maintenance and construction services offered by their organisation. Recruiting skilled and qualified workers from emerging nations at a lower price will allow the company to earn increased profit revenue. Therefore, if the organisation expands in the Middle East, they will be able to secure low-cost labours. Furthermore, it is evident that the labours from emerging nations are harder working and are willing to do extra work in order to earn more. The company could benefit from hard-working employees and provide quality services to their clients. However, as per the business environment conducted in appendix 3, it is analysed that the climate of the country is hot and this is one of the primary issues that will be experienced by the organisation as the workers will not be able to work for longer hours and the outcome of the company can be relatively low. In contrast, if the organisation expands in another country this aspect can be avoided.
The Middle East is technologically well upgraded, and this is one of the most beneficial factors that will help Al Dallah Al Arabia in order to enhance their services and gain market recognition. The company can make use of digital advancements in order to market their services and reach out to potential companies that are need of their services. The organisation has a well-developed website that can acknowledge the clients with the various services that are offered by them. This will allow the clients in contacting the company regarding the services that are needed by them. As the company is dealing in mechanical services and provided types of equipment to the business companies, it is important that all their equipment and services must be as per the latest technology so that users can easily operate it and gain competitive advantages. Therefore, expanding in a nation that can provide the firm with technological assistance will be beneficial for the growth of the business.
Expanding in Australia
Australia is another country rich in its petroleum industry and therefore is a considerable option for expansion. As per appendix 4, it is analysed that the political situation of Australia is stable and the government supports foreign trade. Therefore, expanding n Australia can be an easier option for Al Dallah Al Arabia. However, there are certain changes in the Australian business industry that can adversely affect the business of Al Dallah Al Arabia. As per the Bloomberg releases around 59% of the Australian power by the year 2040 will be supplied with the help of renewable sources. These changes also have a significant impact on the pricing strategy of the petroleum industry of the country. As it is evident that Al Dallah Al Arabia has a strong experience in pipeline maintenance and also provides equipment for the oil and gas industries, these changes in the Australian business can have the negative impact on their trade. On the other hand, the economic stability and growth of Australia is beneficial for the business operating in the country. If Al Dallah Al Arabia expands in Australia, they can earn increased and sales and revenue from the Australian economy. Apart from operating in the gas and oil industry the company also provide some construction and logistics services to their clients. The company also has a number of rental services that can be strategically used to expand their business in the new market.
In Australia, there are a number of legislation that is required to be followed by the businesses operating in Australia. The management of Al Dallah Al Arabia requires conducting in-depth research in order to gain detailed information about the different legislation and the regulations of the Australian government in association with the services that are provided by them. This will help the company in order to work as per the regulations of the government. In addition, the company is required to maintain sustainability standards while operating in Australia. Australia is experiencing an issue of pollution and environmental degradation. In order to overcome the problem, the government has formulated a number of legislation and policies for increasing sustainability standards and protecting the environment.
The management of Al Dallah Al Arabia will have to formulate a number of training programs in order to gain information regarding the operational business culture prevailing in Australia and have to prepare their employees for the working climate of Australia. In addition, expanding in Australia will require them to expend a huge capital which will be difficult for the company as per the present working situations. On the contrary, the technological advancements available in Australia can help the company in enhancing its performance in Australia. The support of the Australian government can also boost the brand image of the company in the new country.
Recommendation
As per the analysis conducted about the business markets of various countries, it can be analysed that expanding in the US can be beneficial for the company. However, the expansion will require huge training programs in order to gain control over the business procedures of the US. Therefore, as per the analysis, it is suggested that Al Dallah Al Arabia should invest in their plan of expanding its business in the Middle East. This is suggested because the company is well acquainted with the business environment of the country. In addition, they can be politically secured in the Middle East and can work as per their culture. in addition, it is evident that the US is importing oil and gas from the Middle East indicating that the business of the Middle East is more beneficial than the US. Therefore, expansion in more locations of the Middle East will allow the company to gain more business opportunity with the worlds leading oil and gas industries. On the other hand, expanding in Australia is not suitable for the company as the Australian culture is mostly drifting towards renewable energy sources and will not need services of Al Dallah Al Arabia as compared to the requirements in the Middle East. In addition, the expenditure of expanding in the Middle East is relatively lower, and the company will be able to save money by recruiting low-cost labour available in the Gulf nations. Middle East expansion will help the company in staying protected from political factors. They will only require t train their employees regarding the business operations and functions no extra training or expenditures will be required. In addition, technological advancement will help the company in interacting with potential clients and serve them with excellent services.
Conclusion
This study has considered the case scenario of Al Dallah Al Arabia one of the leading service provider organisations that are majorly dealing in the petroleum industries of Oman. In addition, it is observed that a few decades back the company merged with the Algerian company and gained popularity and success in Dubai. The firm reached a stagnant position, and in order to improve its revenue, the management wanted the firm to expand in new markets. This report evaluates the strengths and weaknesses of the company in a detailed manner with the help of SWOT analysis. It is observed that the management is experiencing difficulties in making a decision in which market they want to expand.
The issue has been mentioned in a detailed manner, and in order to overcome the issue, it is important that the management must consider leading industries of the world and conduct thorough research about their business. Market research is one of the most important factors as it highlights the requirements of the markets and the trends prevailing in the market. The risks associated with the business are also illustrated, and the success factors are also analysed during the market research. As per the research conducted with the help of three leading countries helps in understanding that the most appropriate country for expansion for the business world is the Middle East nation. The company is already situated in Oman and is well versed in the local culture and business environment of the country. The business investment for the expansion would be relatively less, and a successful merger was evident in Dubai. This indicates that the business in the Middle East is growing and they will require the expertise of service providers such as Al Dallah Al Arabia. The management will have to strategically plan the marketing as well as expansion strategy in order to ensure the success of the expansion.
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