Strategic Management
Q1.
Al Dar Properties Limited is a company in the United Arab Emirates that has heavily invested in the real estate industry, construction, Tourism among other sectors. The company’s assets are valued to be over $ 60 billion, an investment that makes it feature among the companies with large land ventures in Abu Dhabi. Al Der properties limited currently contains over 20616 shareholders who comprise various investors, founder shareholders together with certain institutions. The company contains a total staff of around 500 individuals who are usually obtained from various parts of the world as a means to diversify their ideas. Al Der Properties Limited currently is struggling to recover from the effects of the economic crisis that it underwent over the past two years. The company, at the moment, is implementing various strategies that are speculated to boost its economic status that has deteriorated over the last few years.
The real estate industry in many countries more specifically in the United Arab Emirates has proved to be a very unstable and volatile sector in the economy. It is characterized by constant fluctuations in profit margins. The global economic crisis of 2008 highly affected the real estate industry in UAE negatively in that the losses are still felt current. Al Der Properties being one of the victims in the industry is employing efforts towards recovering from the massive losses. The company is diversifying its operations to education, healthcare, and other projects as a strategy of improving as rents and prices of real estate properties have recently fallen. The company currently has increased its total earnings as compared to the two years of the aftermath of the global crisis.
Q2.
Prior to 2008, Al Dar Properties Limited was a very profitable company that prospered in the real estate industry in the major cities of UAE i.e. Abu Dhabi and Dubai. However, after the 2008 global economic crisis the company suffered actual losses. The major economic factors that have affected the company’s performance include; Capital growth, inflation rates, employment morale and Debt Management among others.
The company over the past years has received many potential investors who ventures their capital in the company. Therefore, the company contained more than enough finance to expand their operations thereby maximizing their profits prior to 2007. However, the increment of inflation rates in the United States and Europe in 2007due to the global economic crisis affected the company negatively. Most currencies’ value decreased therefore limiting the powers of the consumers to purchase or rent real estate properties. Therefore, the demand for their products went down and eventually the returns were minimized. Also, the company due to constant losses after the economic crisis, it decreased the number of employees in 2011. The remaining employees were uncertain about their future in the company a factor that reduced their morale towards carrying out their duties. The result of the employee reaction was an ineffective performance of the company thereby limiting the amount of profits. Al Dar Properties also over the past years has experienced problems in debt management. The decrease in profits highly contributed to the company’s inability to service its debts. This has currently forced the company to sell some of its properties as a remedy to settle its debts. The company reducing its assets could contribute to the reduction of the overall returns.
Q3.
The global economic crisis of 2007was of much influential to most economies of many countries in the world. The global economic crisis highly affected the real estate industry in the United Arab Emirates and more specifically the performance of Al Dar Properties Limited. The economic crisis decreased the values of many currencies in various regions in the form of inflation. This reduced the purchasing powers of the consumers. The real estate industry being a luxurious sector felt the effect, as there was no sufficient money at hand for the consumers to spend on such properties. The companies in the real estate industries, including Al Dar Properties were subjected to losses after that.
The real estate industry is considered to be the most affected sector by the economic crisis in the United Arab Emirates. The real estate industry in UAE is mainly financed by foreigners from Europe and America, which contain the countries that the crisis was of many effects than even in the Arab World. The period after the crisis happens to be the one that Al Dar recorded the highest losses ever. At the end of the 2009 financial year, the company recorded a net loss of Dh 1.36 billion as compared to the previous net profit of Dh. 837.4 million. This is a clear show of how deep the company felt the effects of the global economic crisis.
Q4.
The company is committed to consolidating its revenues together with increasing its profitability as a measure to recover from the recent losses that it has experienced. Also, is laying strategies that will ensure that the company will not again experience such deep effects as a result of the world market. Al Dar is currently diversifying its assets from the real estate industry also to include construction and management and development of various social service investments. The company is committed to achieving the diversification through investing in academics, leisure, health, and tourism among others. The company currently is developing schools, hospitals, golf courses, hotels, and other social institutions.
Also, the company as a remedy to manage its debts it has taken the option of government bailouts. The government being one of the company’s major shareholders it offered aid to the company that included purchasing some of the company assets to as a measure for the company to reduce its debts. Also, the company issued convertible bonds to Mubadala, which is owned by the state at a cost of $760 million dollars. Al Der also has taken impairment charge as a remedy to deal with the drop of its assets value with the aim of attaining sustainable long-term growth.
Al Der Company is also committed to improving the Morales of its employees one way of increasing its performance. The company currently engages in corporate social responsibility practices by considering the safety, health, security and providing a good environment for both its employees and the society. The worker’s working conditions have been highly improved. According to the financial report of 2010, the company highlighted that it values the “People” as their major asset. In recruitment, the company offers equal opportunities regardless of gender, age, color, and origin among others. These ensure diversity among its employee’s thereby promoting talent development and execution, which in turn increases the performance of employees.
Q5.
Al Der’s current approaches towards solving the recent problems are justifiable and can be applied by other organizations in solving such similar difficulties. For instance in the diversification of their investments, more specifically in education, the company already own the Al Bateen School in Abu Dhabi. Also, the company has already invested in the development of mix-use facilities located at Al Raha Beach. In Dubai and Abu Dhabi, Al Dar has also developed some hospitals, golf course, and tourism hotel as a means of diversifying their businesses. The most successful extension is the development of Yas Marina Formula One, which is a circuit meant to enhance sports in tourism in Abu Dhabi. The circuit has managed to attract many tourists from various parts of the world successfully.
In the year 2011, the company received a bail aid amounting to $5.2 billion from the government as a strategy to reduce its debts. In addition, it issued convertible bonds to a certain developer amounting to $ 760 billion and took an impairment charge of $ 2.86 billion to deal with the reduction of its assets. All these were meant to cater for its debts. Currently, Al Dar is engaging in corporate social responsibility in its areas and countries of operation. The workers working conditions are up to standards and equality is highly considered. The employees are well treated as a remedy to motivate them towards carrying out their duties effectively.
Therefore, these methods are justifiable and can be applied by other organizations whether in the same industry or not in dealing with the similar issues. For instance, other firms should consider engaging in corporate social responsibility as a form of creating a good image in the society. This is likely to increase their production, sales, and the organization’s returns.
Q6.
Considering the current performance of the company, we can conclude that the strategy has worked positively towards solving the financial problems that Al Der Properties Limited has been experiencing. The strategy of diversification of its coverage over to include important sectors of the economy such as education has worked out well. The extension has increased the company’s income through covering the international curriculum besides to the local one. These have increased the number of clients in the form of students the company service in these schools. The result will eventually increase the returns of the company.
Also, Al Dar Company has successively attracted investors and customers to make use of their facilities from foreign countries more so the western world. These can be portrayed in the increment of these clients in the school, hotels, and the golf course that are developed in western designs. The sale of some of the company’s assets has given the company the ability to work towards recovering from the severe effects of the economic crisis.
The company has increased its returns with the implementation of this strategy. For example in the first quarter of the year 2010, the company increased its profits by DH 144 million as compared to DH 731.2 million attained in the previous period. With the above achievements, we can, therefore, conclude that the strategy employed by the Al Der company in recovering from the economic crisis aftermath are successful.
Q7.
Considering the commitment and the due success attained by the management of the Al Der Properties Company, I can say that the management’s progress is good. The management has employed much efforts in ensuring that the company recovers from the effects of the economic crisis. Reviewing how the company has utilized the five strategic tasks of management, it’s clear that the company is moving towards the right direction.
The mission and vision of the company are well developed which entails the company to make use of various strategies in recovering from the financial difficulties and maximization of the profits. The company has already started attaining profits, which is a clear indication of its commitment towards mission fulfillment. Secondly, the company’s objectives were well set in reflecting the mission of the company. Al Der is committed to attaining much profits. According to management’s third task, the company has crafted ideal strategies for example diversifying its investments to include other sectors like education, leisure, and tourism. The strategy has positively contributed towards recovering of Al Der from the effects of the economic crisis. In the implementation, the management of Al Der is timely and effective in the implementation of the strategies as already there are schools, hospitals, and tourism hotels that are working in a promising manner. Lastly, in evaluation and reviewing of the performances and developments, the management are on improving the developments, for instance including foreign curriculums in schools.
Upon considering on how the management of Al Der is progressing through the application of the five strategies of management, it is clear that they are doing a good job and are focused on achieving the set objectives and eventually fulfilling the company’s mission.
Q8.
The company even before the intervention of its progress with the economic progress has been a highly attractive company. The company through its good performance in the real estate industry by then managed to attract a lot of investors together with clients both locally and internationally. This attraction has aided in the rise of sufficient capital that it utilized to invest in the cities of Abu Dhabi and Dubai thereby maximizing its returns. From the case, it’s portrayed that the majority of the shareholders of the company were foreigners from Europe and the United States. In addition, the company prior to the economic crisis contained a very high growth rate, this indicates that it had the ability to attract both the investors and the clients a factor that increased its capital and returns. With the increment of Al Der’s capital and profits, it managed to contain a very high growth rate. Also, currently the company has attracted many potential investors and customers in their diversified sectors. Therefore, considering the number of investors and customers, primarily foreign, its growth rate and the amount of profits, we can conclude that the company is very attractive.
Q9.
The company for a long period has proved towards utilizing any opportunity that will give it an advantage over its competitors. The company during its development took the advantage of the existence of fewer companies dealing with construction, building, alongside real estate development and management and intensively invested in the sector. In its, development, the company could design the hotels, hospitals, schools and other social facilities in a western style. Also, the company after taking the option of diversifying its operations, it included foreign curriculum alongside the local one in their schools. All these are meant to gain a competitive advantage over the existing and other potential investors in the various sectors. Therefore, Al Der Properties Company contains a strong competitive strategy in executing its operations.
Q10.
I fully agree with the company’s competitive efforts in carrying out their operations although concentrating on the foreign market. The company being an investor in the real estate, construction, tourism and education sectors besides others, focuses on the foreign market where it has applied more competitive efforts. This is a good strategy as the company has already identified its customers and is working towards gaining the larger market share. I will like to improve my competitive advantage by attaining more local investors and customers. The advantage will be achieved through offering certain discounts to the local clients as a way of marketing the company brand and also maximizing in carrying out corporate social responsibilities. By so doing the company will be able to prosper both locally and internationally.
Q11.
According to the way the company carries out its operations, the company’s strengths overweight the weaknesses. The company has strengths of making use of experienced personnel in improving its performance. In addition, the company can diversify its operations to other industries. However, the company does not value the local consumers as a weakness. In addition, the company utilizes its opportunities in an effective manner, for instance, it took the opportunity of the presence of demand of real estate properties in Dubai and Abu Dhabi and highly boosted its returns. The company also utilized also utilized the opportunity of the presence of fewer companies in the real estate industry and maximized its profits. However, the company is threatened by the forces of the global economic market. The company should diversify its operations to other sectors to avoid the threat of being affected by the global market fluctuations.
Q12.
The company contains many values like Commitment, optimism, creativity, and equality among others. For instance, the company is optimistic in the sense that it utilizes any opportunity that will enable it maximizes its returns. The company took the opportunity of the availability of demand of the real estate properties and invested in the industry thereby getting huge returns. The company also is committed to achieving the best returns through venturing in various different sectors. Equality is portrayed in the selection and recruitment of staffs in Al der. Finally, the company is creative in the sense that it introduced the circuit sport in tourism industry meant to attract more customers and eventually increase the returns.
Q13.
The strategic recommendations are relevant and will highly assist the company in recovering from the effects of the economic crisis. For example, the recommendation involving diversification of the company operations is likely to prevent the company in future from the threat of the effects of the global economic crises. In addition, the recommendation to engage in corporate social responsibility creates a good image and relationship between the company and employees alongside the society. The company already has started increasing its performance due to the motivation that it has created among the employees and the attractiveness that various recommendations have attained from investors and customers. The company should further engage their employees in the formulation of various decisions. This will motivate the employees and enable them execute their roles effectively. Nevertheless, the company is likely to recover from the current financial constraints and feature again among the profitable companies upon implementing the available recommendations effectively.
Works Cited
“Part II : The five tasks of strategic management.” N.p., Web. http://hoanamy.bizhat.com/thesis/stra_part2.htm.
“SWOT Analysis (Strengths, Weaknesses Opportunities, Threats).” N.p., Web. http://www.mindtools.com/pages/article/newTMC_05.htm.