Strategic Management: Right Strategy for the Right Results

Executive Summary

The Ladies Home Centre is a start-up company that wanted to build a mall at the heart of Dubai City. The centrepiece of the mall is a wellness centre that will cater solely to women. This wellness centre is complemented by a childcare centre because this is also one of the primary reasons why this type of businesses flourished in Dubai. It is not enough to have a place where women can go to find services that can help them with their needs but they must also have a facility that can take care of their children.

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At end of the study the proponent has completed a report that provided the necessary information that explains the reason why it would be profitable for all the investors to put up a huge investment for the creation of the said mall. Although it was also pointed out that risks can be mitigated by taking a long hard look at how big the mall should be. The emphasis should be on the creation of a world-class wellness centre as well as an equally impressive childcare centre and not spend a great deal of money constructing another expensive shopping centre.

Introduction

Without having to go through extensive research and relying merely on newspapers, magazines, and news reports on TV one can easily determine that there is something important going on in Dubai. It is indeed easy to see that this is one of the fastest growing cities in the world. Even an informal overview of the construction boom, the significant number of expatriates, as well as the number of businesses sprouting like mushrooms all over Dubai, one can easily sense that it is on the right path to becoming another Singapore or Hong Kong.

The city has become a sea and air transport hub, increasing its capability to do business with other territories in the Middle East but most importantly it can connect to the global market. As a result spectacular hotels, malls, and venues for international sporting evens had been constructed. There are many more to come. This has resulted in the creation of a tourist destination area that offers sunshine all year round as well as the amenities and the experiences that could only be offered in the Middle East.

This study proposes looking into a particular need of tourists, expatriates, and residents combined. It is the need of women to have a place to relax, go to the spa and perform the necessary sporting activities or exercise and yet at the same time have a facility that can take care of their most precious children. It is one thing to have a great shopping district where a lady can shop till she drops but it is also another where one can have a shopping spree and at the same time the peace of mind that comes with a world class childcare centre.

It is not a good idea to drag children around when one is trying a dress or asking a salesperson the intricacies of a particular product. It can be very stressful to the mother and at the same time the child will also detest being forced to accompany his or her mom while doing some errands. Therefore, there is a special need for facilities and businesses that offer this kind of service. On the other hand one also has to consider the millions of visitors that go through Dubai immigration. These are the tourists that came from all over the world. Not all of them are mothers. There are single ladies and parents who decided to come minus their children. In this regard it is also important to cater to their needs and therefore the kind of facility that must be constructed should not be limited to a childcare centre. It must also have a health club and a spa. It must have sporting facilities such as a gym and a swimming pool. On top of that it must have offer services related to shopping such as restaurants, beauty centres, art gallery, E-library, a regular library and of course facilities that can handle parties for children.

Taking it in its entirety this facility can be developed into a mall. With the way Dubai is growing and the millions of visitors and expatriates in the city it is easy to see that number of women, especially foreign women who will need this kind of service. Thus, it would also be easy to find investors willing to provide the necessary funds for this project to commence. The proponent of this study is part of a company called Ladies Home Centre. The goal of this study is to put up a strategic plan that will enable financiers as well as the CEO of the said company to see the viability of constructing a mall in the heart of Dubai to provide a solution to a growing need: women from all walks of life desiring for a ladies centre that can provide for all their needs.

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Research Methodology

The proponent of the study is part of a team tasked by Ladies Home Centre the mother company to come up with a strategic plan on how to build a centre designed to serve the needs of women particularly those who have children. The said ladies centre must be a magnet for expatriates and visitors who are looking for a place to shop and at the same time do the other related activities such as the need to go to a wellness centre and gym afterwards. It can also be a place where women can indulge their senses and enhance their learning by going to the E-library or regular library within the mall.

The proposed project will be built from scratch. But the task is made easier because of the existence of a successful Ladies Club established some time before. The success of the Ladies Club will be the pattern that can be used. This requires examining the services that they offered as well as the facilities available for the clientele. Then the next step is to propose a plan based on the findings.

The plan will be developed by first understanding the meaning of strategy and strategic management. After explaining that part of a strategic plan is to conduct external and internal analysis the proponent will then go to the next stage which is to explain the various tools used for the purpose of analysis. There are two types: the external and internal analysis. The external analysis is to have a view from without while internal analysis is a view from within. The forces that are at work outside the company are those that the organisation may not be able to control but it can make adjustments or prepare in accordance to perceived impact.

External and Internal Analysis

For external analysis one of the best tools available for a finance and marketing team is the Porter’s 5 Forces Analysis which is an overview of the competitive forces that are shaping the industry (Stahl & Grigsby, 1997). These forces are listed as follows: potential entrants with their threat of entry; buyers with their bargaining power; suppliers with their bargaining power; substitutes with the threat of substitute products or services; and industry competitor with their rivalry among existing firms (Stahl & Grigsby, 1997). By studying the external environment and the competitive forces, the team can decide whether it is feasible to set up the same type of products and services.

The external analysis can be enhanced by the use of the BCG Matrix. It is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group and based on the observation that a company’s business unit can be simplified into four categories based on market growth and market share relative to the largest competitor (NetMBA, 2007). The four categories are labelled as dog, question mark, star, and cash cow. Dogs are businesses that have low market share and low growth rate. Question marks are those that are growing rapidly which requires a significant amount of investment and yet generating little cash. Starts are businesses that generate a large amount of money but at the same time it consumes a large amount of money because of the high growth rate. Cash cows on the other hand are generate cash that is greater than the market growth rate and therefore more profitable for the company.

The external analysis can be further enhanced with an eye towards Critical Success Factors. This means understanding the following: a) the industry; b) competitive strategy and industry position; c) environmental factors; d) temporal factors; and e) managerial position (Morrison, 2009). Using these three tools the team can assess the external environment and the various competitive forces that make an industry attractive or not.

Internal analysis is a way of looking at the various components that comprise an organisation. One of the best tools to use is the 7-S framework which stands for (McKinsey, 2009:

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  • Shared Values – In the 7-S framework “shared values” is positioned in the centre, it is also known as core values or the central beliefs of the company.
  • Strategy – this is the plan that will guide the allocation of scarce resources to reach a particular goal.
  • Structure – this is how an organisation is structured whether it is centralized, top-down, decentralized, a matrix, a network etc.
  • Systems – this talks about the procedures, processes and routines that must be observed in order to keep communications flowing and also to finish tasks that are of significance.
  • Staff – this is of course the number and type of personnel within the company.
  • Style – this is more about the culture of the organisation and has a lot to do with management styles.
  • Skills – the capabilities of the personnel and what it can achieve if taken together as a whole unit.

Generation of Options

After having an overview of the external and internal factors working for and against the company the next stage of the process is to provide options or steps that management can investigate or implement. In the case of the Ladies Home Centre the team will have to show a clear plan that will help the CEO to make a decision whether to build the mall or not. This can be achieved by using various tools of analysis such as TOWS Matrix, Stake Holders Analysis, and Ansoff Matrix. The TOWS Matrix is the determination of the threats, opportunities, weakness, and strengths in terms of the external and internal environment.

Stakeholders Analysis on the other hand looks at the people, groups, and even organisations that can influence, support or block the plan that will be laid out by the team (UN-Habitat, 2001). It is important to find out beforehand their legitimate interests with regards to the plan of building a ladies centre in the heart of Dubai. If the team can identify in advance the people and groups that can strengthen or weaken the plan then it can make the necessary adjustments or it can be used as a basis for deciding against the proposed business venture.

The Ansoff Matrix on the other hand allows the team to analyse the position of the company through existing products, new products as well as existing markets and new markets (QuickMBA, 2007). With regards to the Ladies Home Centre the most useful feature of the Ansoff Matrix is the part wherein it talks about product and market development. This is a company that wants to build a mall without an existing product or market share. The team will rely greatly on the success of companies existing within the industry. It is driven forward by the knowledge that there are many expatriates, residents, and visitors looking for a ladies centre with a childcare centre as one of its major services being offered. It is up to the conclusion of the strategic management plan that will be submitted to the head of the company that will determine if the project will push through or not.

Organisational Background

The Ladies Home Centre is a company established by a group of investors wanting to penetrate the industry focused on women and young ladies that are in Dubai. They can be visitors, expatriates, or citizens of the United Arab Emirates (UAE) but they have one thing in common. They all wanted a one-stop location where they can have a wellness centre, a gym for their exercise needs, and then a childcare centre because most of the women who can afford these facilities are married and have children. As of today there are various businesses operating within the industry but one of the most successful is the Dubai Ladies Club.

The company has created a team of business strategists to look into the matter. The proponent of this study is a member of the said team the primary responsibility is to document the significant information gleaned from the investigation and to come up with a written report that will be submitted to the CEO of Ladies Home Centre. The contents of the report will help make the decision whether to build a business similar to the Dubai Ladies Club located at Jumeirah Beach Road or create a similar business but more modest.

The company has the manpower and a group of competent managers as well as corporate leaders who can put up the necessary capital to build a mall. Early on the main idea that has been floating around at headquarters is to build a mall that can cater to the needs of the women in Dubai. The centrepiece of the project is a wellness centre with a spa and a gym. But the second major attraction is the childcare centre. This facility is housed within a mall because related services will be created around the wellness centre and the childcare centre. These related services are the beauty centre, art centre, and facilities offering classes that can enhance the skills of women such as in art, music and even those that can complement their homemaking skills such as cooking, baking etc. The mall can never be complete without shops that can also increase the number of patrons by attracting tourists who would also like to do their shopping within a one-stop location.

The idea comes from the realization that the malls in existence in Dubai were all designed for families. There is no specialised mall designed solely for the needs of women. The success of the Dubai Ladies Club is the confirmation that women with substantial disposable income are willing to pay for high-end services. Moreover, the presence of visitors from all over the world is also indicative that there are customers who can afford high-quality products and services. More importantly the company is thinking of building the mall at the heart of Dubai where it is close to the offices and condominiums where the expatriates live.

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Market

Dubai is one of the fastest growing cities in the world today (Carter & Dunston, 2006). One of the most important things to consider about Dubai is not only its booming economy but also the number of people who want to come here. There were over 5 million visitors who flew to Dubai in the past few years (Cater & Dunston, 2006). It is easy to understand why people from all over the planet would love to come and spend their money here. First of all the state-of-the-art airport that greeted them upon arrival is a good sign of things to come. Then, there is the assurance that there will be sunshine all year round.

They can have a comfortable stay because there are many spectacular five star beach hotels in the city. Aside from that the numerous and classy shopping centres will assure them that there are plenty of things that they can choose, buy, and take home with them. The malls are and one can find many things to do inside. For the extremely wealthy they can head to a seven star hotel and the for those who wants more than shopping there are international sporting events that can keep them entertained. One way to sum up Dubai is to borrow this statement, “Like a game of SimCity that never ends, Dubai just keeps growing at a freakishly fast rate” (Carter & Dunston, 2006). It must be pointed out though that it is not only the citizens and the visitors that are fuelling economic growth. The expatriates hired to build the city contributed much to the evolution of Dubai.

More than two million people live in this massive metropolis. Most of whom are expatriates (Ghani & Lockhart, 2008). The expatriates are here not only because of the construction boom but also the fact that Dubai has become a major air and sea transport hub. More importantly the hard work of its people and its leaders had made Dubai a centre of global finance (Ghani & Lockhart, 2008). The incredible growth and movement of people reached a high point when in 2002 the Dubai government allowed foreigners to own property (Cooper, 2008). This also added a great boost to the construction boom that saw the creation of hotels and malls.

The Dubai Ladies Club which is a business of interest to this study is located at Jumeirah Beach Road. It is easy to see why women are flocking to this ladies centre. The nice location and the beach nearby is just an idyllic setting for a facility that markets itself as a wellness centre as well as a spa. The wellness centre includes fitness centre as well as a state-of-the-art Technogym. If the client requires the old-fashioned way of getting fit then the said Ladies Club can offer tennis and squash facilities.

The Ladies Club also has an art and talent centre where paying customers can enrol in classes that teach about painting, dress making, digital photography, crochet, fashion design, pottery, mosaic, jewellery design, make-up course and many more. Their motto sums it all up: It’s not just club (Ladies Club, 2009). The proponent of this study would like to add that aside from all the services being offered what really stands out is the childcare centre. The availability of this service makes it possible for mothers to go to the Ladies Club. It can be argued that there are only a few teenage girls who can afford the fees therefore a majority of the clientele are married women with children.

These women can have other options, there are many fitness clubs and there are many wellness centres but there are only a few where everything that they will need is in one location. So if there is a childcare centre then they will be attracted to it like a moth to a flame. This is the model that the Ladies Home Centre would like to emulate. This is the pattern that must be used for the construction of the proposed mall. At the heart of the facility is the childcare centre, surrounded by shops ad related services.

Strategy and Strategic Management

A basic understanding of strategy is to find out the origin of the word. It comes from the Greek word “strategos” and can be roughly translated as general. So it automatically gives the idea that the one who is making a strategy is like a general surveying the battlefield and analysing not only the strength and weaknesses of the enemy but also its own army. A more technical definition can be seen below:

Strategies are general programs of action and deployment of emphasis and resources to attain comprehensive objectives; the program of objectives of an organisation and their changes, resources used to attain these objectives, and policies governing the acquisition, use, and disposition of these resources … the basic long-term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals (Weihrich, 2009).

The key terms that can be gleaned from above are “comprehensive objectives”, allocation of resources, and long-term objectives. In other words strategy can assist the businessman or the capitalist to see the feasibility of a particular business proposal. It can also help a CEO or a manager to determine if it is the right time to develop a new product or if the necessary course of action is to spend more money on advertising. This means that the businessman or CEO is no longer doing business relying merely on gut feel. Strategic management also asks the more questions regarding the profitability of the company and if it can survive on the face of stiff competition (Grant, 2002). Strategic management also focuses on internal resources such as capital and human resources, as the major determinants when it comes to the capability of the firm to compete in the market (Aharoni & Nachum, 2000). This time around there are tools and concept that he or she can use to create a more scientific way of assessing the probability of success of a particular business decision.

Another way of looking at strategy and strategic management is to determine answer to a set of penetrating questions such as: “Why do some firms persistently outperform others?” (Hitt, Freeman, & Harrison, 2001) This question can be rephrased to find out the principles why a particular enterprise is consistent when it comes to generating profit and increasing shareholders’ value for instance. Strategic management also answers the question regarding barriers to entry and various competitive forces that can create the impression if a particular industry is attractive or not. Finally strategic management is the utilisation of various management tools, allowing business leaders to see the internal and external factors shaping their industry. On the basis of this information, corporate leaders can make the necessary adjustment in the hopes of improving their position or as in the case of Ladies Home Centre to give the go ahead signal to start the project.

External and Internal Analysis

Using the Critical Success Factors the team can find so many reasons why the company should invest in the said venture. First of all, Dubai is on the upswing when it comes to money flowing in from investors. It would be easy for the company to put up the money needed for construction. The current construction boom will also make it easier for the company to build the mall as quickly as possible. Secondly, the number of visitors that are coming in as well as the number of expatriates will ensure that customers will be pouring in after the completion of the project.

When it comes to human resources, it has already been proven in the past that Dubai can easily attract high-quality expatriates who will be willing to stay and work for the long term. In short there is no short supply of talent. When it comes to the BCG Matrix on the other hand, the team will have difficulty generating data using that tool for analysis. This simply means that as a start-up company the Ladies Home Centre has no existing business unit that can be analysed. There are no products that can be categorized into dogs, question marks, stars and cash cows. Yet, one can use the BCG Matrix to warn the company that building a mall will require a huge investment and therefore huge risks.

Finally, the company that the team represents will have to contend with various types of “ladies centres” or “ladies clubs” within Dubai. In order to make the decision if it is feasible to start a similar business that will compete with existing ones, the team had to consider barriers of entry such as: economies of scale, product differentiation, capital requirements, switching costs, access to distribution channels, and government policy (Barca, 2003). At this point the first three items on the list are major concerns.

First of all, the success of the Dubai Ladies Club means that the company should seriously consider economies of scale. If the company will try to mitigate risks and build a small facility then customers will simply ignore it because there is still room at the Dubai Ladies Club and they can go there knowing that all their needs will be met there. The next thing to consider is product differentiation. The Dubai Ladies Club has a wellness centre, a childcare centre, sports facilities, art and talent centre as well as facilities offering classes that will enhance the skill and beauty of the clientele. The company has to match this level of product differentiation in order to be noticed by customers. And finally, the capital requirements for this will be a huge investment and requires long-term commitment form the investors.

When it comes to the internal analysis it is enough to mention that investors are willing to put up the money needed to build the mall. But more importantly the company is focused on making this project happen. It is very clear to the corporate leaders and the investors that it is time to strike while the iron is hot. It is time to ride the wave and become a part of an economically prosperous Dubai. The company has also the right people who can do the job. It has also the ability to tap into sources of human capital when the time has come for the mall to be fully operational. Still, the strategic plan should show if the money that will be invested will not go to waste.

Generation of Options

The combined use of Porter’s Five Forces, TOWS Matrix, Stakeholders Analysis as well as the Ansoff Matrix will reveal that the Dubai Ladies Club and other similar businesses are serious competitors. The company must not take them lightly. In order to compete with them the company has to invest a serious amount of money to construct a mall. It would be disastrous to play safe and just build a small wellness centre with a childcare facility on the side. On the other hand building a mall and not able to attract customers is as catastrophic as well from a businessman’s point of view.

The economies of scale will be a major problem for corporate leaders to consider because they had to build a mall that will not only provide a wellness centre and a childcare centre but also build it in such a way that it can attract shoppers. And then adding to it the related services, that can turn it into a functional mall. In order for this to work it must be built within the heart of Dubai. This also means that it would be more expensive considering the price of real estate in that area. Even with the assurance of skilled personnel and top-calibre managers it can also be argued that the team is untested when it comes to building a project in this magnitude.

Department Strategy and Selection of Option

Based on the information gathered in the preceding discussion it was discovered that the success of the Dubai Ladies Club became a benchmark in the industry. Even an informal survey of their facilities and the services that they offer will give the impression that this firm is dedicated to offer a world class business. It is fitting for them to do that because the people that are coming to Dubai certainly have the money to splurge and to pamper themselves. Aside from members of rich families, many of the expatriates who come to live and work in Dubai are pulling in substantial amounts of money due to their skills and the nature of their jobs. On top of that the millions of visitors who fly to Dubai are also flushed with cash and ready to spend it in five star or even seven star hotels.

This information is encouraging for the investors and the various stakeholders in the company. There is a bright future for the Ladies Home Centre on the other hand there is nothing wrong with being cautious. Therefore, the team suggested that the excitement to build the mall must be tempered with the realisation that there are numerous wellness centres around Dubai and if the company will push through with the plan of building a mall there are three things to remember. First it must be in the heart of Dubai. Secondly its backbone should be a wellness centre, with a childcare centre, and it must have a shopping centre also. Finally, its prices must be competitive and much lower than the one offered at the Dubai Ladies Club.

Strategic Management Plan

Corporate leaders are advised to sell a project that requires huge sums of money because it requires the construction of a mall within the heart of Dubai. It must be constructed near the centre of commerce and therefore exposed to great numbers of expatriates, citizens of UAE and visitors who are spending a few days in Dubai. In order to mitigate risks, the company can compete at the same level with the Dubai Ladies Club but limited only to the wellness centre and the childcare centre. There is no need to build ostentatious structures that are very expensive. The target market must be expatriates and visitors who may have the money but are not going to spend everything that they have for the sake of having a facial, a massage or a dip in the indoor swimming pool.

The company must spend money to build a world class childcare centre for this can be very attractive to expatriates who do not have extended families in Dubai and rely on childcare centres for the most part of the day and especially during weekends when the ladies needed some assistance so that they can do errands or do shopping as well as exercise. The mall can be constructed on a piecemeal basis. This means that it must be designed that there is no pressure to build a large shopping centre in the very beginning. There is simply room for growth. The company must also aggressively partner with other firms so that they will lease floor space and therefore the company is only responsible for managing the mall and not the entire operation.

The company can also consider building the facility near a mall so there is no need to worry about attracting shoppers. In this way, the tired shoppers from the nearby mall can just walk to the said facility and avail of the services of the wellness centre. They can also drop by before going to the mall so they can deposit their children to the childcare centre so that they will be able to do whatever they have to do without having to worry about their precious ones.

Conclusion

Dubai is on the right track to become the next Hong Kong or the next Singapore. Since it is part of an oil producing country it has citizens who can afford the expensive lifestyle of those who are born with a silver spoon in their mouth. Aside from that expatriates with a significant amount of dispensable income are residing in Dubai. Add to that the millions of visitors who also have the money to splurge. It is therefore a sound investment to build a mall that will cater to women who wanted to shop and at the same time wanting to avail of services offered at Wellness Centres. The key is to build these facilities with a childcare centre as one of the backbone. Surely, customers will be attracted especially if the said mall will be constructed in the heart of Dubai.

References

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