Download - Contemporary Issues of MNEs in the UAE
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Group Case study Analysis Examining contemporary issues of MNEs in the UAE
Of Logistic issues
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Table of Contents
1. Company Introduction..............................................................................................................2
2. Contemporary Issues on MNE's In UAE about Logistics Issues.............................................2
A. Issues for Multinational Companies.....................................................................................2
. Issues !irectly "elated to Logistic #perations in t$e UAE.................................................%
C. &o ($ese Issues Affect Cron "elocations.......................................................................)
!. *$at Are t$e +olutions to ($e Issues,.................................................................................-
%. Conclusion................................................................................................................................
). "eferences..............................................................................................................................1/
0. Appendices.............................................................................................................................12
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! Company "ntroduction
($e United Arab Emirates is a $ig$ly lucratie maret for arious types of entrepreneurs.
($e economy is stable and groing3 so many multinational companies prefer to start t$eir
business in t$e region. ($ere are seeral logistic companies operating in t$e country today and
Cron "elocations is one of t$em. As a successful multinational business4 Cron $as more t$an
250 facilities in t$e orld. ($ey $ae many ot$er businesses besides t$e relocation operation3
t$ey $ae a large are$ouse spaces amounting to more t$an -.0 million s6uare feet t$roug$out
t$e orld. It offers t$e folloing business in t$e UAE7
• !omestic and International "elocation +erices
• +$ipment and transport of $ouse$old goods
• +$ipment of baggage
• #nline tracing systems
• Coerage of legal documents and re6uired forms for relocation to foreign countries
• Adice on residential areas4 $ealt$ and educational facilities.
($e company $as ultra8modern storage facilities4 protection4 management and global
tracing systems. It offers t$e most silled4 talented and dedicated serice staff.
#! Contemporary "ssues on MNE$s "n UAE about Logistics "ssues
Among ot$ers4 some t$e t$e MNE related Issues t$at multinational companies face in t$e
UAE are discussed in t$e folloing lines.
A. Issues for Multinational Companies
Alt$oug$ t$e country is one of t$e #ACI+ for many businesses4 it still proides certain
c$allenges for multinational companies. ($ese issues are releant to t$e logistic companies too4
so it is better to get an understanding of t$em at t$e beginning. According to t$e restricted
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regulations of t$e country4 many multinational business entrepreneurs do not lie to inest in t$e
country. ($ere are seeral issues of concern to multinational companies 9#ut8la.com4 n.d.:.
•
According to t$is rule a ne business must register it$ t$e folloing institutes. ($ey are
t$e Ministry of Labor UAE and t$e !epartment of Neutrali;ation and "esidency.
• ($e employment
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• ($e economy of t$e country is one of t$e basic factors t$at affect t$e logistic serices.
($e rate of unemployment and t$e increase in prices ill create critical issues in logistic
operations.
• Logistic operations are associated it$ transport and related c$arges4 so t$e increasing
price of fuel in t$e country can also affect operations in t$e UAE.
• (rucs and ot$er modes of transport are important factors and t$eir rates are increasing as
a result of arious elements suc$ as4 rising fuel cost4 cost of spare parts and certain
regulations of t$e goernment.
• ($e capacity of transportation is not sufficient to support t$e actiities of t$e company4 so
it directly affects reenues.
• ($e infrastructure of t$e country4 especially its $ig$ays4 is not in perfect condition and
t$ere are certain riss in some areas.
• +ecurity is an issue t$at remains a c$allenge for t$e company as it continues to operate in
t$e UAE.
C. &o ($ese Issues Affect Cron "elocations
Increased legal re6uirements for foreign employees $as created a certain restriction for
t$e company. ($e company ants to obtain t$e serices of t$e 6ualified and talented indiiduals
from t$e orld labor maret4 but it is not possible $ere. ($e restrictions $ae reduced t$e
opportunity for migrated orers. ($e company $as to face certain difficulties4 $en it $as to
enlist t$e serices of local labor. ($e success of a company depends on a set of good employees.
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($ey s$ould be able to or for t$e benefit of t$emseles4 $ile ac$ieing t$e aims and
ob=ecties of t$e company. It is not possible4 $en staff is unmotiated and insufficiently silled.
($e decision of t$e goernment is to add more and more local labor to multinational companies
9"esearc$gate.net4 n.d.:4 but it is a $armful practice from t$e iepoint of some companies.
>oernment policies can adersely affect t$e deelopment of t$e organi;ation.
A company may also face legal restrictions4 $en dismissing an unanted employee or
agent and it is e?tremely $armful to t$e deelopment of t$e company. &oeer4 if a company
does not terminate unanted employees and troublemaers from of t$e company4 it ill
discourage t$e et$ics of t$e organi;ation and t$e employees ill become less motiated. ($e
et$ics of a company are an important factor4 as it creates a certain subculture inside of an
organi;ation. Employees be$ae and perform according to t$e e?pected norms and alues of t$e
organi;ation. ($e $uman resource is ery important for t$e success of t$e company4 so
management s$ould not be pro$ibited from dismissing unanted employees. According to ne
policies it is 6uite a difficult tas4 so t$e final result ill be a decline of reenues 9#ut8la.com4
n.d.:.
+$ould a company $ae to $ire local agents for t$eir operations it is not considered a
satisfactory state for t$e company. ($e situation ill become disastrous $en local agents are not
performing ell. +ome local agents do not perform t$eir duties in t$e best interest of t$e
company4 instead t$ey perform certain actiities4 $ic$ are $armful to t$e operations of t$e
company. As a result of t$at4 t$e company it $as become difficult to recoer due amounts from
arious indiiduals and organi;ations 9@C4 n.d.:.
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($e economy of t$e county is stable but it must be improed in order to earn more
reenue4 but t$e grot$ is not as it as e?pected. ($ere are certain issues preailing in t$e
country suc$ as unemployment4 escalating cost of liing and economical deiations among
indiiduals. ($e decline of t$e global economy $as affected t$e economy of t$e country. ($e
economic issues of ot$er countries can affect t$e efficiency of t$e company in t$e UAE. ($e
logistic operations are associated it$ ot$er countries4 so t$e company $as to face un$ealt$y
economical conditions in suc$ areas. In t$ose areas t$e company $as to bear $ig$er ages4
c$arges and goernment ta?es.
($oug$ t$e UAE is one of t$e leading proiders of petroleum fuels4 t$e rates are not
satisfactory. uels are ery important to logistic serices. *$en t$e price of fuel rises t$e
company is not in a position to ac$iee its e?pected goals. Cron "elocations also $ad to face
t$e cost of transport c$arges due to t$e increasing cost of fuel. ($e increasing cost of transport
proiders can alter t$e efficiency of t$e operations of t$e company. ($e company $ires t$e
serices of t$e local operators on certain occasions4 as its fleet is not sufficient to manage
operations. ($e suppliers increase t$eir rates for arious reasons and t$e company is not able to
ac$iee t$e e?pected reenue limits 9!celocity.com4 2/11:.
"oads and ot$er infrastructures are ery essential to logistic operations. ($ere s$ould be
good roads4 electricity4 aailability of parts and 6ualified mec$anics t$roug$out t$e country. It is
satisfactory in ma=or urban areas but outside of urban areas t$e situation is not as acceptable. ($e
company $as to perform its serices t$roug$out t$e country. ($e ma=or $ig$ays are in t$e
perfect condition but not eac$ and eery $ig$ay of t$e country. ($e company $as to incur e?tra
e?pense for operating on t$ese routes. ($e e$icles $ae to be repaired regularly and t$e fuel
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astage is $ig$er t$an it ould be on a good $ig$ay. ($e cost of spare parts and ot$er
components are increasing4 so it directly affects t$e reenues of t$e company.
($en t$ere is t$e matter of inade6uate security in certain areas. ($ere ere reports of
looting and andalism4 $ic$ caused t$e company to face a s$ortage of driers for t$ese areas
and increased insurance premiums for t$e e$icles and goods. ($e company $ad no ot$er
alternatie t$an to c$arge customers more. ($e increased t$e cost of serices directly affects t$e
operations of t$e company. @eople ill be unable to obtain t$e serices of t$e company and t$e
reenues of t$e company ill decline automatically. ($e surety can affect t$e performances of
t$e company directly 9Aybar and ($irunauarasu4 2//0:.
($e number of e$icles 9priately8oned: $as reduced as a result of arious factors suc$
as increased cost of liing4 $ig$er prices for parts and t$e fuel. ($is situation caused t$e company
to limit certain operations and t$e situation $as directly affected t$e improement plans of t$e
company. ($e company $as to use ot$er modes of transport suc$ as s$ips and airplanes. ($ese
modes of transport are associated it$ increased c$arges and t$e rates are not $ealt$y for t$e
improement of t$e company. ($e decrease in t$e number of e$icles in t$e ot$er countries4
$ic$ can be used for t$e serice of t$e company4 $as directly affected t$e operations of t$e
company 9!celocity.com4 2/11:.
!. *$at Are t$e +olutions to ($e Issues,
($e company $as been operating in t$e UAE for 6uite some time and it $as a stable
business4 so t$e company must pay attention to ma?imi;ing its reenues by controlling certain
enironmental issues and also increasing its maret penetration. ($e company is not in a position
to c$allenge t$e policies of t$e goernment. ($e company can recruit silled and 6ualified
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indiiduals by employing sub=ect oriented sill tests. ($e company can train t$e employees to be
able to face t$e c$allenges in t$e organi;ation. ($e management can do a great deal to increase
t$e maretability of t$e employees t$roug$ &" management programs and ors$ops
9C$ristop$erson4 2//2:. ($e company must try to get t$e ma?imum output from t$e aailable
$uman resource. It is possible to ac$iee suc$ an outcome by employing a suitable type of
motiational met$od.
($e economic problems of t$e orld and also t$e economical issues associated it$
operations are beyond t$e control of t$e company. ($e company $as to face t$e problems it
encounters and it is better to find certain ays and means to reduce t$e e?penditures of t$e
company. Management must try to introduce lo cost strategies to perform its operations4 so
t$at it can sae money and allocate t$at saings to coer some of t$e $ig$er e?penses of t$e
company.
($e infrastructure and t$e security are t$e responsibility of t$e goernment and t$e
company can discuss issues concerning suc$ it$ t$e goernment to come to a certain solution
for t$ese issues. ($e goernment ill $opefully tae certain measures to reduce t$e ris in t$e
road 9Ayildi;4 2//5:. It can be done easily by allocating more security personnel to t$ese risy
areas. "egular road maintenance is one of t$e met$ods t$at can be used to eep t$e roads and
ot$er infrastructure in perfect condition4 so t$e company and t$e goernment bot$ can tae
necessary steps.
($e company can sae money and manage all t$e business actiities by maintaining its
on fleet of e$icles. ($e company $as to spend a lot at t$e onset by purc$asing e$icles4 but it
can recoup t$is money t$roug$ reenues in a fe yearsB time. ($e company must $ae a good set
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of driers and mec$anics4 $o are ready to or for t$e company. ($ese people can be
motiated by incenties and ot$er strategies to $elp t$em ac$iee t$eir personal goals $ile
improing t$e efficiency of t$e company as a $ole.
%! Conclusion
Companies $ae to inest in ot$er countries in order to earn more reenue. ($e
competitie maret $as become a ery tig$t place as t$e result of t$e deelopment as ell as t$e
economical decline of t$e ma=ority of some countries. As a multinational company4 $ic$ is
performing in t$e UAE4 Cron "elocations $ad to face seeral issues. +ome of t$em are
common to any type of business in t$at country4 but t$ere are seeral uni6ue issues. ($ese issues
can do a great deal of $arm to t$e business t$ereby reducing reenue. Most of t$em are out of t$e
control of t$e company. +ome of t$em are t$e result of goernment policies and t$e ot$ers are
t$e elements of global economic depression. ($ere are certain issues for $ic$ t$e company can
find solutions. y improing t$ese issues it can increase reenues. ($is analysis is ery
important in t$e process of starting a business in a certain areas of t$e globe. Management s$ould
pay e?tra attention to t$e aboe8mentioned issues in t$at particular maret. Cron "elocations
can employ t$ese findings to en$ance its business actiities in t$e United Arab Emirates.
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&! 'eferences
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Enironmental "esponsibilities7 ($e Case of (urey. Social Responsibility Journal 4 292:4
pp.1)2810/.
Aybar4 . and ($irunauarasu4 A. 92//0:. Emerging Maret Multinationals7 An Analysis of
@erformance and "is C$aracteristics. Journal of Asia-Pacific Business4 592:4 pp.08%.
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#rientation on t$e "elations$ips beteen Commitment and (ransportation +erice7 An
Approac$ to International reig$t orarders. The Asian Journal of Shipping and Logistics4
%/92:4 pp.121810%.
ar$em4 .4 ounies4 &.4 D +mit$4 @. C. 92/11:. "aning t$e future global manager
c$aracteristics and noledge re6uirements according to UAE business managers'
opinions. Education, Business and Society: onte!porary "iddle Eastern #ssues, $%&'4 228
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Causgil4 +. (.4 nig$t4 >.4 D "iesenberger4 F. ". 92/12:. #nternational business( Pearson
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C$ristop$erson4 +. 92//2:. *$y !o National Labor Maret @ractices Continue to !ierge in t$e
>lobal Economy, ($e GMissing LinH of Inestment "ules. Econo!ic )eography4 -J91:4
pp.182/.
!celocity.com4 92/11:. Top *+ logistics challenges for +* %and beyond' . /elocity.
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E?port.go4 9n.d.:. 0( .1#2) B3S#2ESS #2 T4E 32#TE. ARAB E"#RATES - E5port(go6.
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(ong;on4 F. and C$eong4 I. 92/1%:. ($e c$allenges of deeloping a competitie logistics industry
in A+EAN countries. #nternational Journal of Logistics Research and Applications4 1-9):4
pp.%2%8%%J.
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(! Appendices
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