Licensing and franchising is an effective trading option for entry in the new market. It can help to begin the business in the new location and allow another company to sell the products. Another person can charge some fees to sell the organizational products and services in the new market (Ali and Ahamat 2018). Cacao 70 can use licensing and franchising to develop a new customer market in UAE by receiving a fee from another individual or company to use the brand name and sell products. Partnerships and strategic alliances are considered an effective entry mode in the global environment that works through a mutual contract agreement. To achieve a common purpose, two organizations make an alliance approach to collaborate with the purpose of earning revenue and manage a valuable partnership (Ali and Ahamat 2018). It can be used by Cacao 70 by partnering with another company that works in the domestic environment of the UAE. It can help the organization to manage the business locally and perceive an effective business value. Whereas it can affect international business goals as it can be possible that another company can seek different goals in the business. The acquisition is an effective model for trading in the global environment (De Villa, Rajwani and Lawton 2015). Cacao 70 can acquire a company in the domestic market of the UAE to maintain a quick establishment in the country. This strategy can help to manage the new strategies and work as a branded product. Cocoa 70 can seek for several options that can help the organization to manage barriers in the international market and adopt suitable strategies. Import-export and trading are considered as the most appropriate techniques of business that can be applied in the organization (Gollnhofer and Turkina 2015).
Hofstede's model of cultural dimensions reflects the influence of culture in the workplace (Beugelsdijk, Kostova and Roth 2017). Through collective programming, individuals seek for effective national culture. With the business expansion in the UAE market, the major issue of culture can affect the organization. Different dimensions of national culture are presented in Hofstede's model which represents independent preferences that are distinguished from other individuals. The major dimensions of culture are individualism, small power distance, masculinity, indulgence, long-term orientation and high uncertainty avoidance (Beugelsdijk, Kostova and Roth 2017). Each dimension represents the requirement of different cultural background that can affect the business operations of the organization. The individual values are based on diverse cultures and their potential behaviour (Kristjánsdóttir, Guðlaugsson, Guðmundsdóttir and Aðalsteinsson 2017). Six cultural dimensions are:
With the entry of Cacao 70 in the UAE market, different structure of the organization needs to be followed by the company. Corporate governance is influenced by globalization through the available policies and procedures (Kristjánsdóttir, Guðlaugsson, Guðmundsdóttir and Aðalsteinsson 2017). The style of management needs to be based on the available resources and their culture. The individual values affect the leadership style and functions of the business (De Villa, Rajwani and Lawton 2015). Corporate culture is based on the individuals, thus the organizational culture is affected by the leadership style and individual values of the employees. Legal and political institutions define the regulations and laws that are necessary to be followed by the organization in the nation. The operations in the UAE market impact the organizational culture, values and structure through its cultural dimensions. It affects the organization through cost, prices, technological adaptation, quick production, target market and quick response to the customers to enhance market share (Ali and Ahamat 2018).
Corporate social responsibility (CSR) is based on commercial activities that are necessary for environment protection. Sustainable development approaches for greener economic growth and enlightens the society for better opportunities (Khan 2016). Businesses in UAE are based on responsible corporations that provide a commitment to working in a sustainable manner. For the long term growth in the business, corporate responsibility needs to be maintained by the business corporations. Financial transparency, environmental impacts, responsibility and accountability in the organizations are necessary to be maintained to meet the challenges of environment and economic goals (Khan 2016). Fulfilment of ethical and sustainable considerations helps Cacao 70 to establish an effective business in the country and maintain responsibilities towards the society and the environment (UAE 2020). Effective actions maintain the legal requirements in the business and promote business success. Anti-discrimination policy, consumer policy, community relations, environmental policy and work-life-balance affects the operations of the organization. Effective corporate social responsibilities in the environment lead to maintain the environment and fulfil the needs of the nation. Environment management promotes a positive outcome for the financial and non-financial performance of the nation. Companies implement CSR practices to maintain governmental support, fulfil a common guideline and manage independent verification. Sustainable investment helps societal improvement and encourages organizations to attain effective outcomes with business success (Khan 2016).
UAE government is concerned with the sustainability, environment and corporate social responsibilities. For social development and care in the economy, UAE focuses on several responsibilities that are needed to be followed by the organizations. Ethical and sustainable considerations for Cacao 70 are based on the operations of the organizations in the UAE market (UAE 2020). Cacao 70 can promote several initiatives for ethical and sustainable considerations in UAE:
Business ethics and sustainable initiatives promote effective business operations. For sustainable development in the UAE market, Cacao 70 needs to focus on fair, honest and equal treatment of employees that can lead to social development. Corporate social responsibilities also are fulfilled by the organization. Sustainable practices promote environmental, economic and social effectiveness. Cacao 70 needs to maintain sustainable practices through different strategies and possible efforts (UAE 2020).
Each entry mode comprises of several advantages and limitations. Specific entry mode can promote effective business success that highlights the revenue-generating opportunities in the business. Cacao 70 can adopt any of the entry modes that can promote effective business opportunities and boost up the strengths. Chocolate products are widely popular in UAE that covers 8% in the annual demand (Gollnhofer and Turkina 2015). Import-Export, Foreign Direct Investment, Partnering, Franchising, Strategic Acquisition and Joint Ventures are different trading modes in the overseas market. The demand and need for chocolate consumers in the UAE market can impact the organization. Different barriers can be arising in the international market that includes cultural barriers, tariff and taxes, regulations, licenses and transportation barriers. Through the selection of an effective entry mode in the UAE market, Cacao 70 can overcome the barriers in the business (Mittal 2018).
The AAA frameworks is a global strategy framework developed by Pankaj Ghemawat in 2007, it helps us to determine the best approach to global value creation. The framework is based on AAA stands for adaption, aggregation and arbitration. Adaption emphasizes on the localization of the product giving tailored made features for a market. The aggregation focuses on the "standardization of the existing product and launching it to the new markets where arbitrage encourages reducing the cost and exploiting the difference between the markets itself (Ghemawat 2018). Considering the AAA, the combination of Aggregation and Adaptation would be the best because the UAE is a cosmopolitan country having residents from all walks of life who came from different countries. The Aggregation will help the company to establish its products by the touch of western taste and there are many people of west residing in the country. Also, the local people are familiar with the westernize tastes but the combination of Adaptation will be more advantageous because it will give the local flavour to the native Emiratis. Eventually, the company shall be able to cater to both audiences preferring western and native tastes. Overall, it will help the company to earn a high revenue and testing with new native flavour in markets.
Porter’s five forces
Porter's five forces is a framework developed by Michael Porter in 1980, it is used to analyze the competition in the market and determines the intensity of the competition in the market. Thus, it is a powerful tool to identify the entry barriers and challenges associated with this. Further, this helps in developing a competitive strategy for entering into a new market. Considering the energy bar market of the UAE below is the analysis of the five parameters of Porter's five forces
As per the analysis of the work the UAE chocolate market, these are some of the barriers to enter into the market.
Tactics to overcome
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Beugelsdijk, S., Kostova, T. and Roth, K. 2017. An overview of Hofstede-inspired country-level culture research in international business since 2006. Journal of International Business Studies, 48(1), pp.30-47.
De Villa, M. A., Rajwani, T. and Lawton, T. 2015. Market entry modes in a multipolar world: Untangling the moderating effect of the political environment. International Business Review, 24(3), pp.419-429.
Ghemawat, P. 2018. The new global road map: Enduring strategies for turbulent times. Harvard Business Press.
Gollnhofer, J. F. and Turkina, E. 2015. Cultural distance and entry modes: implications for global expansion strategy. Cross Cultural Management, 22(1), pp.21-41.
Khan, M. A. 2016. Entry modes: franchise. In The Routledge Handbook of Hotel Chain Management. pp. 168-182. New York: Routledge.
Khan, S. 2016. A theoretical framework on factors affecting entry mode choices of MNCs. Journal of Arts, Science & Commerce, 7(4).
Kristjánsdóttir, H., Guðlaugsson, Þ. Ö., Guðmundsdóttir, S., &Aðalsteinsson, G. D. 2017. Hofstede national culture and international trade. Applied Economics, 49(57), pp.5792-5801.
Mittal, S. 2018. Choice of market entry mode: A critical issue in international business. Choice, 4(6).
n.a 2020. Cocoa Bean Importers in UAE. [Online] TRADEFORD. [Available at] https://uae.tradeford.com/buyers/cocoa-bean [Accessed on] 5th June 2020.
n.a 2020. Consumer Goods and Retail. [Online] TECHSCIRESEARCH. [Available at] https://www.techsciresearch.com/report/gcc-chocolate-market/3666.html [Accessed on] 5th June 2020.
n.a. 2020. Environmental protection. Retrieved from: https://u.ae/en/information-and-services/environment-and-energy/environmental-protection
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