Executive Summary
Aramex is a company that focuses on mail delivery and logistics services. The organization’s executives emphasize the importance of growth, performance, innovation, and sustainability by developing clear operational and managerial strategies in order to stay profitable (Aramex, n.d.). According to Aramex’s official website, the enterprise continues to form alliances and partnerships with transport corporations and non-governmental organizations (Aramex, n.d.).
Growth and performance are dependent on Aramex’s successful entry to new markets and practical investments in new infrastructure. Innovation refers to the organization’s ability to source modern e-commerce technologies. The company’s sustainability initiatives include environmental and social programs in an effort to engage with local communities.
The analysis of Aramex’s current situation includes the assessment of its environment, competition, and market intelligence tools. Despite the geopolitical tensions and loose financial conditions connected to the oil industry volatility, the UAE remains one of the global leaders in economic diversification due to the country’s investments in the private sector (International Monetary Fund, 2019).
The UAE residents’ lifestyles and consumer behaviors are beneficial to Aramex’s operations. Aramex’s goal is to make its operations as climate neutral as possible. It also cares for its employees and customers and guarantees the protection of their rights in accordance with the law.
In a highly competitive logistics sector, it is crucial to identify and analyze the competitors. Aramex has numerous domestic and international competitors, but DHL International remains the largest of them (Aramex Service Comparison, 2019). Aramex gathers the majority of its customer and market intelligence using a subsidiary called InfoFort (Aramex, 2017). Aramex’s marketing strategies are centered on promotion, customization, and differentiation. The company’s demographics in the UAE region remain favorable due to the residents having a large disposable income.
Customer loyalty, sustainability initiatives, customized solutions, and engagement with the local communities make Aramex stand out. The organization’s mission and ambition serve as the basis of its future plans that include further international expansion, hiring more employees, and engaging with the national sustainability initiatives (Aramex, n.d.). The company has to seek new partnerships and focus on e-commerce in order to grow and improve its performance.
Environmental Analysis
In order to create an accurate representation of Aramex’s environment, political, economic, social, technological, legal, and environmental aspects need to be analyzed in detail. Aramex is an international enterprise that specializes in “express courier delivery, freight forwarding, logistics, supply chain management, e-commerce, and record management services” (Aramex, n.d.).
Fadi Ghandour and Bill Kingson founded the business in Amman in 1982 before moving the company’s headquarters to Dubai in 1985 (Aramex, n.d.). Since then, Aramex has grown to operate in more than 60 countries and today, the company has about 16,000 employees (Aramex, n.d.). The business has a wide network of stakeholders, including employees, shareholders, customers, local communities, and business partners.
The report published by the International Monetary Fund in 2019 contains the necessary data to make evidence-based claims in regards to the UAE’s geopolitical state and economic prospects. The reduction of global demand and international trade uncertainties are associated with the UAE’s financial market volatility (International Monetary Fund, 2019).
Political conflicts in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region put Aramex’s business operations at risk (International Monetary Fund, 2019). Ongoing disputes in Libya and Yemen, as well as the rise of the Islamic State of Iraq and Levant (ISIL), contribute to the fluctuation of oil prices (International Monetary Fund, 2019). According to the report, loose financial conditions related to volatile oil prices lead to a number of budgeting problems in the United Arab Emirates (International Monetary Fund, 2019).
Despite the increased fiscal spending and geopolitical tensions, the UAE manages to “leverage comparative advantages, and foster diverse sources of growth” (International Monetary Fund, 2019, p. 25). The UAE’s efforts to promote the private sector and diversify the national economy have resulted in the development of a well-regulated logistics sector, which Aramex continues to lead.
The social aspect is an essential part of Aramex’s environmental analysis. Despite the low population growth rate of 1.5 % (The World Bank, 2018), the UAE residents’ lifestyles and shopping behaviors remain favorable for Aramex’s operations. The process of globalization attracts more tourists to the country, which affects the logistics and cargo industry. As for the current career attitudes, the UAE has a particularly high projected unemployment rate in the public sector due to lowering oil prices (International Monetary Fund, 2019).
Aramex utilizes a number of managerial and operational strategies to create innovative technological solutions. The UAE public and private sectors’ focus on automation, artificial intelligence, machine learning, and augmented reality result in an agile and progressive economy (Maceda, 2018).
According to the IMD World Digital Competitiveness Ranking 2018, the UAE beats Germany, Ireland, France, and Japan and becomes the most digitally advanced country in the Middle East region (Maceda, 2018). Aramex incorporates network services, cloud-based technologies, and large-scale automation to improve the quality of the services it delivers.
When it comes to the environment, climate change presents an issue to the transportation industry. Natural disasters associated with global warming imply numerous risks to the logistics sector due to their extreme effects on the production and transit of goods. The United Arab Emirates partakes in a number of global initiatives to cut carbon emissions, including the Vienna Convention and the Kyoto Protocol (The UAE’s response to climate change, 2019).
The UAE government launched the Masdar initiative, invested in the development of low-carbon technologies, and created new mass transit systems to make transportation more sustainable (The UAE’s response to climate change, 2019). Aramex takes part in the green optimization of warehousing through capacity utilization and auto-routing (Aramex, 2017). The company is set on making its operations as climate-neutral as possible.
As for the legal environment, the UAE’s government has a Consumer Protection Department as a part of the Ministry of Economy (Customer protection, 2020). According to the law, the UAE consumers are granted the right to safety, the right to know, the right to choose, the right to representation, as well as the right to be informed (Customer protection, 2020).
In 2019, the UAE passed a new federal law that aims to protect consumers at the age of e-commerce and encourages companies to create a code of ethics (Customer protection, 2020). Aramex’s Code of Conduct that includes employee guidelines and focuses on establishing core values of the company, including service, financial, and legal integrity (Aramex, 2015). Aramex executives aim to protect the legal rights of their employees and customers in accordance with the UAE law.
Competitor Analysis
The logistics industry grows to be more competitive due to globalization and technological innovations. Aramex’s competitors include DHL, FedEx, UPS, Purolator International, Schenker, and TNT, with DHL being the most well-established courier service in the UAE out of them (Aramex Service Comparison, 2019). DHL generates 15.9 billion dollars more than Aramex, which demonstrates DHL’s international superiority (Aramex Service Comparison, 2019).
DHL has a higher quantity of offices, employees, and annual shipments than Aramex does (Aramex Service Comparison, 2019). Moreover, Aramex does not lead the logistics industry in any country in terms of annual revenue and the number of sites. The only competitive advantage Aramex can utilize in order to reclaim the Middle Eastern market is strategic cooperation with the governments.
Since the company is based in Dubai and most of its investments come from the UAE, Aramex can leverage its economic importance and try to dominate the Arab region once again. Since most of Aramex’s employees are from the Middle East, they should be able to use specific cultural elements that would be relatable to the customers. Investing in innovation, including automation and cloud-based machine learning, is crucial to make the business more cost-effective and customer-friendly.
Market and Customer Intelligence and Research
The success of Aramex’s operations in the UAE largely depends on the currents state of the logistics sector. The UAE logistics industry contributes 5.4 % to the country’s economy, and the number is expected to grow since the UAE market is becoming more mature (UAE logistics sector’s contribution, 2019).
The emergence of “integrated free zones, massive investments in infrastructure and fast-growing e-commerce” (UAE logistics sector’s contribution, 2019) contributes to the growth of the logistics sector. In an effort to diversify the national economy, the UAE managed to create a system of projects in the field of logistics development. The harmonious development of the UAE’s logistics sector is associated with the government’s effort to stimulate international trade relations.
In order to build deeper connections with existing customers and develop the methods to attract new ones, Aramex incorporates a system of tools that enable the business to gather and analyze data. The organization has a market intelligence team that develops insights on competition and identifies potential areas for improvement.
In addition, Aramex has a subsidiary called InfoFort that specializes in data and information management (Aramex, 2017). InfoFort helps Aramex “to make critical business decisions by automatically identifying relationships through intuitive dashboards and reports” (Aramex, 2017, p. 14). The company utilizes InfoFort as their main tool to digitize the process of gathering, reviewing, and storing data.
Current Marketing Strategies
Marketing Mix
The components of a traditional marketing mix include product, place, price, promotion, and packaging. Aramex’s product is a variety of different services related to logistics and transportation. International Express is a service that allows customers to send and receive documents and goods worldwide. Freight forwarding refers to an extensive network of sea, air, and land transportation methods. Domestic express enables customers to get local deliveries.
Warehousing and supply chain management of publications and their distribution is a service that covers the shipping, storing, and online tracking of catalogs, PR materials, and documents. Aramex also provides businesses with innovative managerial and technological solutions. The company has numerous subsidiaries, including Shop and Ship, Import Express, Cash on Delivery, REACH Customer Relations Management System, Global Case System, Aramex Bio, Sales and Tenders Support, as well as their information management business called InfoFort (Aramex, 2017). Therefore, Aramex provides a number of services both to customers and businesses in the field of mail delivery and logistics.
Although Aramex operates internationally, the company’s headquarters are located in Dubai, UAE. The organization has managed to establish itself in the area since it entered the market in 1985 (Aramex, 2017). The United Arab Emirates remains one of the most digitally technologically advanced countries, where the government continues to invest in the private sector.
This, along with the well-developed transportation system and the popularization of tourism to Dubai and Saudi Arabia, creates the necessary conditions for Aramex to operate effectively. According to UAE law, corporations are obligated to protect customers’ rights, which translates into fair pricing (Customer protection, 2020). Aramex’s prices are calculated in accordance with their customer demographics, legal norms, and business intelligence insights.
Nowadays, it becomes crucial for an organization to promote in order to position itself in a highly competitive business environment. Aramex’s competitors include a number of rich and powerful companies, including DHL, UPS, FedEx, and many others (Aramex Service Comparison, 2019).
Aramex has a Marketing Department and an Advertising Team that both work on creating strategic promotion plans (Aramex, 2017). The company had a number of successful social media campaigns that generated traffic (Aramex, 2017). The efforts of offline integration include events and charity gatherings such as Aramex hosting scholarship students in Uganda (Aramex, n.d.).
The company’s marketing strategy focuses on optimization, which is managed by InfoFort through the collection and subsequent review of data with the goal of innovation. Aramex’s advertising is a substantial element to the business’ brand identity and consumer recognition. In order to create a continuous image of Aramex, designers employed at the organization create packaging and digital promotion materials in accordance with the brand’s colors and overall aesthetic. The visual representation of Aramex is simplistic and modern, incorporating red and white as the primary colors.
Customer Demographics: Target Segments
Aramex is a mail delivery and logistics company that targets a large demographic of local UAE residents and international tourists, as well as a number of businesses looking for an effective management solution. Abu Dhabi and Dubai are among the richest cities in the world, with the biggest number of households that earn more than 250 thousand dollars a year (Consumer spending in UAE – Statistics and trends, 2018), which is demonstrated in the graph in the Appendix.
According to the survey conducted by the Dubai Chamber, 55% of UAE residents are confident about immediate spending intentions (Consumer spending in UAE – Statistics and trends, 2018), which creates a lucrative opportunity for an organization like Aramex. It is apparent that the company’s target segment of men and women aged 20 and higher has a disposable income that allows Aramex to regulate prices accordingly.
Differentiation Strategies: Unique Selling Points
Every successful business has qualities that differentiate it on the market in order to attract new customers. The first value proposition that Aramex has to offer is customized solutions due to the company’s ability to gather crucial insights with the help of subsidiary services like InfoFort and Aramex Bio. The UAE market is the most loyal to Aramex’s services since the organization differs from its competitors because of a long operating history in Dubai.
Therefore, public trust due to the company’s credibility is the second selling point. Aramex cannot compete with organizations like DHL and FedEx in terms of the number of delivery sites. However, Aramex’s engagement with the local communities through promotional events and charity initiatives makes the business stand out on the market. Another unique selling point that is not common in Asia and Eastern Europe is the company’s mission revolving around sustainability. The rise of ethical consumption and climate change media campaigns has led to the emergence of conscious consumers who prefer environmentally-aware brands.
Future Plans
Like any successful enterprise, Aramex has a set of goals that relate to its global mission. The company’s vision is “to enable and facilitate regional and global trade and commerce” (Aramex, n.d.). Aramex is working on expanding its network of influence as a mail delivery, courier, and logistics services provider. The business is set on minimizing its weakness that refer to Aramex’s inability to establish itself globally (Europe and North America) and excessive collaboration with smaller companies that do not have a lot of leverage.
The logistics market is growing, which is why Aramex remains profitable despite the competitors like DHL and FedEx. Technological excellence aids Aramex in the achievement of continuous innovation, which is why it remains an important part of Aramex’s growth strategy. International expansion and technological advancement are the company’s primary objectives.
The goals of the corporation include legal, financial, and service integrity in regards to employees, existing, and prospective customers. Customer support and employee protection are the focus of Aramex’s operations and strategic plans for the future due to its efforts to develop corporate responsibility. The organization’s mission is “to be recognized as one of the top five global logistics and express transportation service providers” (Aramex, n.d.).
Moreover, Aramex is an environmentally-aware company that ensures all the future operations are sustainable and climate neutral. The development of its logistics and market solutions services is included in the organization’s future plans (Aramex, n.d.). Aramex will continue to invest in the subsidiaries that work on analyzing competition and customers, and generating strategic development plans in accordance with the insights gathered through metrics, scoring, and segmentation. Aramex has long-term plans regarding continuous international growth, ensuring the highest level of sustainability in its operations, and hiring new employees worldwide.
Conclusion and Recommendations
Aramex remains one of the most profitable mail delivery and logistics companies in the world. The UAE market presents a number of cultural, geopolitical, and economic issues to an international organization that wants to enter the MENAP region. However, since the United Arab Emirates serves as a domestic market to Aramex, the business has learned to adapt to the challenges and embrace the benefits of a technologically advanced country.
With the United Arab Emirates being one of the most digitally competitive countries in the world, Aramex has the necessary conditions to engage in innovative research and technological development. The company offers a number of services targeted to both individual customers and large corporations looking for a management solution from one of Aramex’s subsidiaries. Sustainability is one of the business’ primary focuses since the UAE supports environmental initiatives and invests in low-carbon technologies in order to cut carbon emissions.
Customer loyalty, sustainability, customization, and extensive engagement with the local communities differentiate Aramex among its competitors. In order to grow, Aramex needs to focus on e-commerce services and invest the majority of funds in their development and promotion. The company has to spend its resources on modern, high-tech businesses instead of maintaining a large number of subsidiaries that do not offer services that are in demand.
The company needs to seek financial support through alliances and partnerships to cope with volatile oil prices. Aramex could potentially gain back its advantage in the Middle East by cooperating with local governments, which continue to invest in the company. Aramex must continue to invest in sustainability while focusing on forming long-term relationships with NGOs and the UAE government.
References
Aramex (n.d.). About Aramex. Web.
Aramex (2017). Aramex annual report 2017. Web.
Aramex (2015). Code of conduct. Web.
Consumer Spending In UAE – Statistics and Trends. (2018). Go Gulf. Web.
Customer protection. (2020). The United Arab Emirates’ Government Portal. Web.
Maceda, C. (2018). UAE most digitally advanced in Arab world. Gulf News. Web.
The UAE’s response to climate change. (2019). The United Arab Emirates’ Government Portal. Web.
The World Bank (2018). Population growth (annual %) – United Arab Emirates. Worldbank. Web.
UAE logistics sector’s contribution to GDP projected to hit 8% by 2021 (2019). Middle East Logistics. Web.
Appendix
Consumer Spending In UAE – Statistics and Trends Graph (2018). Web.
