MANAGING INTERNATIONAL TRADE BOARD OF DIRECTORS PAPER

MANAGING INTERNATIONAL TRADE: BOARD OF DIRECTORS PAPER 14

MANAGINGINTERNATIONAL TRADE: BOARD OF DIRECTORS PAPER

Theobjective of this research is recommending the Board of Directors ofthe United Arab Emirates’ (UAE) Company, the Al Ain Dairy Company,to acquire and execute the latest export strategy for venturing intothe UK dairy market. The benefit of this approach is that itguarantees the quickest services ever. In addition, the strategy hasbeen proven by the test of time that it is safe and reliable, as thesubsequent information will confirm.

Thefirst section of the essay will concentrate on creating an exportplan for the Al Ain Dairy Company through application of a SWOTanalysis method. On the other hand, the second section of the paperwill be based on identifying arguments that will both support andcounter-support the developed proposal with the assistance ofPorter’s Five Forces (Al Ain Dairy Farm 2013, p. 1).

Theresearch details, as well as the proposal information containedherein are reliable, as the data comes from a variety of reliablesources such as the International Monetary Fund (IMF), The UAEMinistry of Economy, Dairy Statistics in the UK from Dairy ResourcesLibrary, and comprehensive research from its hired market consultantsamong other resources. Al Ain Dairy was established in 1981, and itis partially owned by the UAE government. It was founded under thedirection of Sheikh Zayed Al Nahian (Late H.H). The company producesa variety of locally made juice and dairy products. Presently, theorganization is the biggest and most famous dairy company,especially, because of its innovative products (Agriculture andHorticulture Development Board 2012, p. 1).

Accordingto UAE Ministry of Economy, Al Ain Dairy Company is among the fastestmost valuable companies in the country. The business has investedhuge capital in research and development for the last three decades,and the effort has helped it to develop innovative products that cancompete in the developed international markets. Therefore, thisresearch will provide a proposal that will help the board ofdirectors of the Al Dairy Company to export its camel milk, fruitjuice, and dessert products into the UK market (Al Ain Dairy Farm2013, p. 19).

BriefSynopsis of the Issue

Inthe recent past, researchers have discovered that camel milk containsa large variety of nutrients that can help in curing or preventingvarious health disorders such as diabetes, autism, allergies,cancers, and hypertension. On the same note, scientists haveidentified camel milk and its byproducts as valuable food supplementsfor losing weight. Many people in the developed countries, includingthe UK, are struggling to lose weight (Jere 2011, p. 24). The demandfor the camel milk and its byproducts has been increasing steadilyafter people discovered that consuming the product can help inhealthy weight loss. The Al Ain Dairy Company has on the other handcapitalized on the market trend through extensive research that hashelped the company in developing a variety of innovative milkproducts such as desserts and fruit juices blended with the product(Young 2011, p. 9).

Background/Researchassessment on the topic

  • Al Ain camel milk standard meets the tough regulations required in the United States

  • The company will have an edge in marketing its products in the UK since there are no other companies

  • The licensing requirements

  • Suitable location of the company

  • The target market

  • Association with other dairy companies in the market

  • Rebranding the UK products to give the company a local taste

  • Free Trade treaties

  • National competitive advantage

  • Absolute advantage

  • UAE political and economic relationship with the UK

S

S

WOTAnalysis

Strengths

  • Quality milk products

  • Product rarity

  • Cost benefit

  • Good business relationship with the UK

  • UAE already has FTA agreement with the UK

Weaknesses

  • No camel farmers in the UK

  • Lack of established distribution infrastructure

  • High cost of building business structure

Opportunity

  • Ease of barriers

  • New technology

  • FTA agreements

  • Favorable access to distribution networks

  • High demand for camel milk

  • Readily available skilled employees

Threats

  • Substitutes

  • Export hazards

  • Tough operation regulations

Recommendations

Priorto the company starting its expansion plan, it would be essential forthe management of the company to evaluate these questions.

  1. Will the company establish a new factory in the UK or it will import finished products from UAE?

  2. Does the company have special dairy products for the UK market?

  3. How will the Al Ain Dairy beat the threat of substitute?

  4. Is there adequate financing for establishing support infrastructure in the UK?

  5. Will rebranding the company make the brand stronger than its status?

  6. Where will the company get experienced technical staff in the UK?

  7. Would the company need to develop special camel milk products for the UK market?

Otherfactors that the company will require considering include tastes andpreference of the UK customers, cultural hindrances, marketingstrategies, government policies, and business quotas. In order toprevent the local companies, the United Kingdom government oftenplace limits on the units of imports that another country can shipinto its market. In addition, the company should considerestablishing a research and development (R&ampD) branch in theUnited Kingdom so that it can create byproducts tailored to fit themarket (Jere 2011, p. 24).

ExportDecision

TheAl Ain Dairy Company market penetration has been growing at asignificant rate since 1981. The company has invested heavily inresearch and development that has assisted them in acquiring low fatdairy products. In addition, the company is ready to offer a varietyof camel milk products. Presently, the organization has developed sixunique products made from fresh camel milk. The products are promotedunder the “Camelait” brand name (Tamime 2009, p. 14).

ExportPlan

AlAin camel dairy products have been increasing steadily over the yearsas research is a central strength to the company. The company willstart by establishing joint ventures with established dairymanufacturers in the UK. It will then expand through creatingindependent structure and distribution channels that will aid it inspreading throughout the United Kingdom. Besides, it will collaboratewith other dairy companies in creating product milk brands that aretailored to suit the local market (International Monetary Look 2014,P. 1).

EntryStrategy

TheAl Ain Dairy Company has a variety of potential strategies forpenetrating into the American market as the diagram belowillustrates.

However,the best tactic for the company to venture into the global marketwill be determined by the level of safety, dependability and reducedrisk. The only approach that can deliver these factors combined isthe indirect export strategy.

Justificationfor the chosen strategy: considering the evidence illustrated on theabove diagram, the level of rewards increase as the level of riskrises. Since Al Ain Dairy Company is an upper-scale level company,the adopted strategy should be evaluated depending on the SMART model(Tamime 2009, p. 14). The technique will help the company to setgoals on milestones and rewards that it would be intending toachieve, and then execute plans that would attain the objective. TheSMART evaluation ensures that the adopted approach utilizes theenergy, time, resources, and competence effectively (InternationalMonetary Look 2014, P. 1).

Theabove figure illustrates the indirect export alternatives. All theabove options reduce the risk level on the side of the entrepreneurfinancier or owner. The entire methods outlined in the figure varyon the style required for implementing them. The board of directorswill require scaling the different levels, including profitability,prior to making the final decision (Farahet al. 1996, p. 14).

Argumentsagainst the recommendations

Porter`sFive Forces

Threatof entry

Themain threat of entry Al Ain Dairy Company will face in the UK ismarketing its brand in the UK without established structure. Inaddition, the company might be forced to spend high capital increating distribution network as labor, real estate, licensing, andother resources required in establishing basic infrastructure aremore expensive in the UK than the UAE. In addition, the businesslacks both an affiliate company to help its fast establishment in theUK, as well as a skilled technical staff as it has at home (Jere2011, p. 29).

IndustryCompetitors

Thecompany will enjoy relative domination in the market since there isno other major dairy focusing on selling camel milk in the UK. Inaddition, the company will have cost benefit on the trade, as thecost of manufacturing camel product in the UAE is lower than in theUK. The FTAs and the vast economic infrastructure will help thecompany in exporting finished camel products conveniently. On thesame note, the threat of rivalry is low since the UK has not camelsthat local dairy companies can acquire adequate amount of milk forcommercial purpose.

Argumentsin support the recommendations

Threatof Substitutes

Althoughthere is no other company specializing in local supply of camel milkin the market, many people still prefer taking either cow or goatmilk. Many people are yet to accept camel milk as a healthy productthat everyone can take. Consumers often view its high price tag asmore worthy for people looking to reduce weight than their healthycounterparts (Farah et al. 1996, p. 24).

SupplierPower

Thesupplier power of Al Ain Dairy Company is dependable in the UK sincethe company’s plant in the UAE has the capacity of producing excesscamel milk supplies. Besides, the existing import and exportinfrastructure, FTAs, and cordial relationship between the UK and theUAE will facilitate fast and convenient transportation of the dairyproducts.

BuyersPower

Asthere is no other camel milk company supplying in the UK market, thebuyers’ power will be significantly reduced. The company willremain the sole supplier and supplier of the products, as it will notlicense third party companies to manufacture generic brands.

Implementationof the Recommendations

Theobjective of this research is providing a platform for the Al AinDairy Company to expand into the international market where theorganization will be at a better position to increase its income froma developed economy market. The objective of the company is becomingthe biggest camel dairy manufacturer and supplier in the world, whilegiving priority to the needs of its customers.

References

AGRICULTUREAND HORTICULTURE DEVELOPMENT BOARD. (2012). DairyStatistics: An insider`s guide 2012. DairyCo Resources Library.

ALAIN DAIRY FARM (2013). Web. Retrieved on June 20, 2014 fromhttp://www.alaindairy.com/en/Pages/default.aspx

TAMIME,A. Y. (2009). DairyFats and Related Products.John Wiley &amp Sons.

TAMIME,A. Y. (2005). ProbioticDairy Products.John Wiley &amp Sons.

FARAH,Z., SCHWEIZERISCHE KONTAKTSTELLE FÜR ANGEPASSTE TECHNIK AM ILE., &ampEIDGENÖSSISCHE TECHNISCHE HOCHSCHULE ZÜRICH. (1996). Camelmilk: Properties and products.St. Gallen, Switzerland: SKAT, Swiss Centre for DevelopmentCooperation in Technology and Management.

JERE,W.A. (2011). CamelMilk.Equ Press.

YOUNG,P. (2011). CamelMilk: Will America Embrace A New Kind Of Milk?The Huffington post. Retrieved on June 20, 2014 fromhttp://www.huffingtonpost.com/philippa-young/camel-milk-_b_828752.html

INTERNATIONALMONETARY LOOK (2014). World Economic Outlook (WEO) Update: Is theTide Rising? Retrieved on June 20, 2014 fromhttp://www.imf.org/external/pubs/ft/weo/2014/update/01/