International Business Semester Project Strategic Market Assessment and Analysis Gul Ahmed-Abu Dhabi

Presented to: Ms. Fatima Omer Presented by: Mehreen Gul Ayesha Yaqoob M. AbuHuraira Ch. 08-0219 08-0576 08-0350

Dated: 3rd May, 2012

Contents
Introduction ................................................................................................................................................... 3 Product& Market .......................................................................................................................................... 3 Financial and Economic Screening ............................................................................................................... 4 Political and legal screening ......................................................................................................................... 6 Type of government in U.A.E................................................................................................................... 6 Entry barriers ............................................................................................................................................ 6 Profit transfer barriers ............................................................................................................................... 6 Political risk .............................................................................................................................................. 7 Socio-cultural Screening ............................................................................................................................... 9 Demographic data..................................................................................................................................... 9 Religion and Social Structure ................................................................................................................... 9 Product relevance ...................................................................................................................................... 9 Competitive Screening ................................................................................................................................ 11 Competitors Introduction ........................................................................................................................ 11 Nishat .................................................................................................................................................. 11 Bareeze/Kayseria ................................................................................................................................ 11 Sana Safinaz ........................................................................................................................................ 12 Seasonal exhibitions of Designer fabric.............................................................................................. 12 Others .................................................................................................................................................. 13 Marketing strategies of the competitors .................................................................................................. 13 Strategy: ...................................................................................................................................................... 16 Conclusion .................................................................................................................................................. 17 References ................................................................................................................................................... 18

Introduction The story of textiles in the subcontinent is the story of Gul Ahmed. The group began trading in textiles in the early 1900s. With all its know-how and experience, the group decided to enter the field of manufacturing and Gul Ahmed Textile Mills Ltd. was incorporated as a private limited company, in the year 1953. In 1972 it was subsequently listed on the Karachi Stock Exchange. Since then the company has been making rapid progress and is one of the best composite textile houses in the world. The mill is presently a composite unit with an installed capacity of 130,296 spindles, 223 wide width air jet looms, and a state of the art processing and finishing unit.

Product& Market Unstitched fabrics are what we will be exporting to Abu Dhabi and our clients will initially consist of end consumers. We hope to reach our target market through direct representation which will be accomplished by opening a franchise of Gul Ahmed Exclusive Store in the Abu Dhabi Mall which is one of the largest malls in Abu Dhabi. The Abu Dhabi Mall's shops include children's, women's and men's fashion stores, make-up and perfume, music, soft-furnishings, household furniture, electrical goods, gifts, health-food, pharmacies, confectionery, dates, sportswear, books and stationery including the grocer Abu Dhabi Co-op. Since the weather in Abu Dhabi is mostly hot and arid, with very short periods of cool weather, our range of unstitched fabrics has the potential to become quite successful in this market. Moreover, the majority of the inhabitants of Abu Dhabi are expatriate workers from countries like Pakistan, India, Bangladesh, Sri Lanka among others, for whom unstitched fabric (lawn, cotton), and especially by a renowned brand such as Gul Ahmed would be nothing less than a treat. As the proceeding data and research will show, taking Gul Ahmed to Abu Dhabi, will prove to be quite beneficial for the brand in terms of sales and expansion.

Financial and Economic Screening Abu Dhabi experiences a rapidly growing economy with a high GDP and per capita income. It is not only the wealthiest emirate of UAE but also qualifies as one of the wealthiest cities in the world.Abu Dhabis GDP per capita income also nearly touched the $70,000 mark which is far above the average income of the United Arab Emirates itself and it ranks third in the world after Luxembourg and Norway. The apparel industry in Abu Dhabi mushroomed during the second half of 1980s. There was no appreciable increase in 1990s. In fact some countries closed down due to the quota exhaustion. By the time the quota system was abolished in 2005, this is industry is too well established now. It is considered to be the second largest manufacturing industry in UAE and constitutes about 155 of the non-oil industrial exports. The banks are usually happy to provide this industry with finances The key growth drivers of this industry are mainly corporate efforts, government support, and recognition of foreign and local designers and lastly the awareness of fashion brands. The government supports the apparel industry by organizing fashion events to promote tourism. Large events, such as DSS Dubai Fashion Fiesta, DSS Kids Fashion Week, etc., were part of the government supported large tourist programs in 2008. The Dubai Chamber of Commerce and Industry also supports the fashion industry and has brought many leading international fashion houses to Dubai. The Dubai and Sharjah governments are assisting this sector by sponsoring exhibitions, which attract many international textile and apparel manufacturers. The Middle East Fashion Textile, Leather and Accessories Exhibition (MOTEXHA 2006), the Middle East region's largest trade show for garments, textiles, leather and fashion accessories was inaugurated in April 2006. There are several underlying factors behind the Emirates attractive investment climate in the apparel industry, including a strategic geographic location, highly developed infrastructure, the miscellaneous facilities offered by the Emirates free zones and industrial cities, very low tax, easy access to energy sources and credit facilities etc. Investment statistics for 2010 show that the total number of registered textile business reached 96,381, of which 10.4% were newly licensed businesses, compared with 86,402 businesses in 2009 of which 14.7% were licensed
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during the same year. There are huge opportunities for Abu Dhabi to enhance the industry by attracting more foreign investments, improve the value added in the local economy and increase non-oil exports. Based on analysis of Central Bank information, the textile and apparel sector comprised an estimated 5.73 billion USD, which makes up 6 percent of the UAE non-oil economy. In 2009, the total industrial production in the UAE was 75.6 billion USD. The total manufacturing industrial production was 16.6 billion USD, which comprised 21.96 percent of the total industrial sector, according to the Ministry of Economy's statistics. In 2010, textiles and apparel comprised 5.6 percent of the UAE's imports, 5 percent of its non-oil exports, and 7.3 percent of the country's re-exports, based on estimated data by the UAE Central Bank. In 2010, the UAE exports in textile and apparel to the U.S. comprised 67.86 million USD, according to the Dubai Chamber of Commerce's economic bulletin published in May 2010. Officials from textile factories noted that they are optimistic about the future of the textile industry in the UAE. They said the UAE textile industry is able to compete with US and Europe because of a lower cost of inputs in the UAE in comparison with these countries, particularly the cost of labor, electricity, water and oil.

Political and legal screening Type of government in U.A.E The government of U.A.E is constitutional and Emirate in nature. Emirate is similar to a monarchy or sultanate. The emir may be an absolute overlord or a sovereign with constitutionally limited authority. Administratively, U.A.E. is a loose federation of seven emirates, each with its own ruler. The UAE constitution established a government that includes a President, Vice President, Council of Ministers, Federal Supreme Council, and a 40-member Federal National Council. Entry barriers Amount of foreign ownership: Under UAE law, foreign investors are allowed to own up to 49 percent of a company. Companies in free zones can have up to 100% foreign ownership. Technological transfer requirements: Abu Dhabi will focus on developing technology transfer between the regions and leading global educational institutions for the next 5+ years. Profit transfer barriers Limitation of foreign investments: Currently, there are four major laws affecting foreign investment in the UAE: the Federal Companies Law, the Commercial Agencies Law, the Federal Industry Law, and the Government Tenders Law. These laws, especially the Federal Companies Law, are seen as the largest obstacles to foreign direct investment in the UAE. Repatriation of profit: U.A.E laws place no restriction on repatriation of capital and profits. Availability of foreign exchange: The UAEs monetary is the dirham (AED), which is divided into 100 fils. Dirham notes come in 5, 10, 20, 50, 100, 200, 500, and 1000 denominations, while coins come in AED 1, 0.5, 0.25, 0.10 and 0.05. The dirham is pegged to the US Dollar at the official exchange rate of AED 3.6725 to every US Dollar. Money exchanges (bureau de changes) are all over Abu Dhabi and offer rates that are often better than the banks. Many hotels will also exchange money and travelers cheques at standard (non-competitive) rates.

Political risk Stability of country and government: The U.A.E. has no political parties. The rulers hold power on the basis of their dynastic position and their legitimacy in a system of tribal consensus. Rivalries exist amongst emirates and within ruling families. There have been no instances in recent memory involving politically motivated damage to projects, or insurgencies that have impacted the investment environment. Role of armed forces: The UAE's armed forces organization in turn reflects the political structure of the federation itself, where each emirate retains broad autonomy from the central government in Abu Dhabi. Public unrest: The UAE has not experienced political violence in the past year. Political demonstrations are rare and must have prior approval from the UAE government. The demonstrations which occurred previously were short in duration and peaceful. Taxation laws: Personal income tax, capital gain tax, value-added tax, withholding tax, and corporate tax are not applicable in the United Arab Emirates. The only companies that are required to pay taxes are of oil, gas, petrochemical, and branches of foreign banks. Safety conditions: Compared to similarly sized cities worldwide, Abu Dhabis crime rate appears to be significantly lower. Environmental factors: The UAE is subject to frequent sand and dust storms, which can severely reduce visibility. The smaller islands in the Persian Gulf, as well as many coral reefs and shifting sandbars, are a menace to navigation. Strong tides and occasional windstorms further complicate ship movements near the shore.

Price controls: They were recently introduced on food items but not on textiles. This information would be useful to us as using it we can evaluate law and order situation in Abu Dhabi and in what ways they will impact our business. It also helps us in evaluating whether Abu Dhabi is a feasible city for exports or not. For example entry barriers such as amount of ownership helps us in evaluating that if in future we want to establish a factory or retail outlet in Abu Dhabi to what extent would we be able to exercise our control over the business. Then technological transfers

situation would help us in planning how to take advantage of technology to make our product better, to reduce our costs by taking advantage of efficient machinery. Profit transfer barriers help us in evaluating how much we would be able to retain, distribute and reinvest to improve our business further. Political risks evaluation helps us by letting us know about the stability in the country because instability in any country means lower profits. Moreover the taxation laws help us in deciding whether to invest or not as they directly affect the amount of returns we are left with.

Socio-cultural Screening Demographic data Abu Dhabi is the largest and most inhabited region of United Arab Emirates with around 80% of its landmass. The population of emirates as of now is approximately 1.6 million in which the Emirati citizens make up almost 20% of the total population and rest of the 80% are expatriates from around the world. About two-thirds of the immigrants are Asians, mostly from Pakistan, India, Bangladesh, Iran, Sri Lanka, Malaysia and the Philippines. The rest of them are from other Arabian, European, and American regions. Abu Dhabi has a diverse and multicultural society. The official language is Arabic but more than a few languages are also spoken among the expatriate community. It includes a variety of dialects of Urdu, Hindi, Persian, French and Filipino. English is also widely spoken and is considered the language of commerce. Religion and Social Structure In Abu Dhabi, Islam widely dominates all aspects of life. About three fourth of the population is Muslim where the rest of the population comprises of non-Muslims. Emirates are liberal towards other religion but the cultural traditions are deeply rooted in Islam. Abu Dhabi caters to the ostentatiously wealthy individuals therefore the concept of social stratification does exist. More than a few residents of Abu Dhabi are rich and snobbish in nature. In such a society it is easy for Gul Ahmed to enter and target this upper class segment in which there is a constant need to puff up egos by spending on fashionable, exclusive and classy stuff. Product relevance Abu Dhabi has a hot arid climate where the inclination of people is more towards wearing lightweight summer clothes. Mostly the individuals prefer to be dressed in comfortable outfits as the climatic conditions of the city are hot and humid all over the year. Usually the dresses worn by the majority of women and men are of material such as cotton, lawn and other similar comfy fabrics. Gul Ahmeds lawn is also in synchronization with the socio-cultural aspect of the region. Its fabric suites the climatic conditions and due to the high incomes of the individuals and heavy
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spending nature it provides a large customer base in this region. In view of that, there is a great potential for Gul Ahmed to enter into this market and captivate this upper class segment with its exclusive branded lawn.

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Competitive Screening Competitors Introduction The following competitors of Gul Ahmed have been chosen based on brand perception, image and similar marketing strategies. They compete for the same share of limited customers.
Nishat

For years, the Nishat Group has been a leading business entity in South Asia. Highly diversified, the group has made inroads into the fields of textiles, cement and financial services, showcasing its varied expertise and acumen in every facet of its operations. Nishat Linen is a concern of Nishat Mills, the textile and home fashion retail chain that has redefined the industry with acute attention paid to quality, design and affordability. Nishat Linen prides itself on being the brand of preference for discerning customers who are in search of things, unique and chic without compromising on aesthetics or price. Unsurpassed customer service, including tailor-made orders, ensures our clientele remains loyal to the Nishat family. It has three exclusive outlets in Dubai. There has been a significant increase in sales in 2010 by 32.11% over 2009; it is in line with the Companys commitment to year on year growth trend in sale quantities together with the significant increase in sale prices. It is worth mentioning here that the garment sector has shown more than 100% increase in sales in 2010 over 2009. The investments in the garments segment have started showing positive results in the current year and it has shown a growth in revenue and gross margin of 107% and 335% respectively.
Bareeze/Kayseria

With over three decades of commitment to quality, Bareeze is today, a recognized brand for quality products in the domestic and international markets. It is owned by sefam (Pvt.) Ltd., a sister concern of Sarena Industries and Ali Embroidery Mills (Pvt) Ltd.

The Bareeze range includes crisp cottons, luxurious silks, sheer organza, chic chiffons and an ever-developing range of innovative products. Textile embroidery is an art-rooted tradition. The use of only the best materials and unflinching resolve not to compromise on quality, coupled with the use of the best Swiss textile machinery enables us to produce embroidered fabrics which compare favorably with the best in the world. We have more than 50 outlets nationwide, and already well-established setups in Dubai, Sharjah, Abu Dhabi, Delhi and London.
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Kayseria is a sub brand of Bareeze that deals in seasonal loose fabrics. Their mission is to provide beautiful and unique fabrics of the highest quality with good value for money to the world market. They are dedicated to providing designs that are exclusive and original that embraces a beautiful fusion of colors and creativity inspired by ethnic genius and rooted in spirituality. It has an exclusive store in Abu Dhabi. Bareeze is a well-established brand in Pakistan and also oversees. It has tremendous brand awareness and people hold positive brand associations with it; worldwide. The financial strength of Bareeze is evident from the chain of outlets it maintains and the number of brands operational. Its strong financial position, competitive strategy and advantage coupled with years of experience makes it a tough competitor of Gul Ahmed.
Sana Safinaz

The label of the designer duo have formed a forte for themselves in the designer industry for their clothes ranging from intricately embellished bridals to refreshingly cool lawn prints for summers. Today, in collaboration with a textile mill, they produce a retail line that allows the brand to reach every home. The Sana Safinaz lawn collection mingles together with the richness of pattern and design with the softness of the purest and the lightest fabric. Sana Safinaz is operating in Pakistan and oversees for many years now and has established a reputation reflected through a huge customer base. They display their brands strength through conducting fashion shows worldwide and attracting customers. The profitable venture of seasonal clothes and demand potential is evident from perfect sale out at exhibitions and unavailability of prints on stores even at the very start of every season.
Seasonal exhibitions of Designer fabric

The hot humid climate in summers and the cool winters provide great opportunities for selling seasonal fabrics. In addition to this, the Muslim community and sub-continental settlement further glorifies business opportunities for designer fabrics. A lot of designers especially from Pakistan and India hold their exhibitions at least once every season and have a huge customer base. The designers from Pakistan include; SobiaNazir, YahsirWaheed, AsimJofa, Omer Saeed, Nomi Ansari, HSY etc. All of these are very famous designers and customers have strong associations with these brands.

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They have advantages of low operating costs, high demand and positive sales trends. These exhibitions add value to both the customers and the designers as they operate on mutually beneficial trade arrangements.
Others

This category includes all the non-branded competitors that are operating in Abu Dhabi from all around the world. This includes loose fabric coming in bulk form especially from India, Bangladesh and Pakistan. Low operating costs and minimum investment capital make these small businesses into profit centers that have an ability to even threaten the big brands. The low prices prevalent in this category increase their demand and customer base by providing economical alternatives and offering variety. Marketing strategies of the competitors Nishat Pricing policy: Nishat follows a premium pricing policy; it is also called skim pricing as it is an attempt to skim the cream off the top of the market. It is used to maximize profit in areas where customers are happy to pay more. It is used to improve brand identity in a particular market. This is called price-quality signaling, because the high price signals to consumers that the product is high in quality. Distribution policy: Nishat Textile Mills, the groups 60-year-old flagship company founded in 1951, retail is a logical vehicle for the companys textile operations and the Dubai opening underlines its intentions of becoming a leading player in the global textile industry. The company has been exploring effective ways to expand their international presence for some time now and this is a landmark achievement for the group. After Dubai, Abu Dhabi is seen as a potential that will create more openings. The group plans to open 25 Nishat Linen outlets in GCC countries over next two years to market its famous brand, beginning with Oman and Qatar

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once it covers the rest of the UAE emirates. Distribution through exclusive retail store system gives them a chance to fully control their distribution and manage the brand image. Bareeze/Kayseria: Pricing policy: Pricing is a major element of marketing any product, and it is vitally important to set the right price. Elements such as target market, profit margin needed growth strategy for the company and market share all play a role in what pricing strategy is used. Bareeze is a high end brand that is in business since decades. In order to uphold their brand image they have to follow a premium pricing policy to give it snob appeal through an aura of 'exclusivity.' At every step of fabric processing they add a certain percentage profit to the cost and then the fabric is passed onto the next stage. This makes their product very expensive and highly priced. Distribution policy: Exclusivity, uniqueness and maintenance of high quality are amongst the most precious business values of Bareeze. In order to fully exercise their control and command over these business values Bareeze operates through a retail distribution network worldwide. They have their own signature outlets around the world and there are no intermediaries involved. Sana Safinaz Pricing policy: The designer duo has established strong brand associations of quality, comfort and luxury with their brand through years of hard work. They too follow a prestige pricing strategy used to enhance and reinforce their product's luxury image. Pricing for Sana Safinaz is an indication of good quality; people believe it to be a sign of self-worth it authenticates the buyer's success and status; it is a signal to others that the owner is a member of an exclusive group. Distribution policy: The marketing team at Sana Safinaz explores various ways in order to make sure that their product is available to the maximum number of customers. Exclusive retail outlets, exhibitions and distribution at multi-brands store ensure maximum reach and market coverage for the brand.
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Designer exhibitions: The seasonal exhibitions that take place in Abu Dhabi rely on three models of pricing. Firstly, at the start of the exhibition a blend between premium and line pricing is maintained. They use a limited number of prices for all product offerings and the prices are set high in order to signal quality, luxury and exclusivity. Secondly, if the response rate for a particular exhibition is low; Demand-based pricing may be used. It is a pricing method that uses consumer demand - based on perceived value - as the central element of pricing.

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Strategy
Our strategy should be focused more on the price and quality side of our lawn. We shall be providing them premium products at a reasonable cost that will suite their lifestyle as well as their social standing in the society. Consumers in UAE usually have a very heavy spending nature so thats why we are catering to the upper middleclass there. Another reason behind the reasonable pricing is based on the fact that UAE have an emerging market which is rapidly growing these days. So in order to provide them a premium product at a reasonable price would give us a competitive edge over other competitors and helps in gaining more market share for the long run. Our second main target would be on the quality and the texture of the lawn. The climatic conditions over UAE are hot and humid, so we shall try to focus more on the designing of the lawn in a way which suites the consumers and help us in increasing the sales. If we talk about the entry barriers, those are quite negligible and have no impact over our strategy. Likewise other factors, such as political risks also have no influence on our strategy. So we are only focusing more on price and quality only.

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Conclusion
After analyzing the various aspects of our product and our proposed market, we`ve been able to come up with the following findings which support our decision to enter Abu Dhabi: The barriers to entry are minimal and Abu Dhabi is a place where foreign investments are encouraged. Gul Ahmeds lawn is also in synchronization with the socio-cultural aspect of the region. Its fabric suites the climatic conditions and due to the high incomes of the individuals and heavy spending nature it provides a large customer base in this region. In view of that, there is a great potential for Gul Ahmed to enter into this market and captivate this upper class segment with its exclusive branded lawn. The textile and apparel industry in the Emirates is growing by leaps and bounds. The major growth drivers of this industry are mainly corporate efforts, government support, and recognition of foreign and local designers and lastly the awareness of fashion brands. Though Gul Ahmed has a number of competitors both national and international, but Gul Ahmed has a price advantage i.e. it offers the same quality at a lower price than most of its competitors, hence people would be attracted towards it, more than the competitors.

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References
(http://www.gulahmed.com/html/sec_1024/corp.html, Company profile) (http://www.uaeinteract.com/uaeint_misc/pdf/perspectives/13.pdf) (http://grailresearch.com/pdf/ContenPodsPdf/Global_Fashion_Industry_Growth_in_Emerging_Markets.p df) (http://www.scad.ae/en/media/pages/mediadetail.aspx?MediaID=84) (http://www.cablegatesearch.net/cable.php?id=06ABUDHABI3820) (http://www.state.gov/r/pa/ei/bgn/5444.htm#gov) (http://www.gao.gov/new.items/d08320.pdf) (http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm) (http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm) (http://internationalbusiness.wikia.com/wiki/U.A.E._Tax_Laws) (http://www.visitabudhabi.ae/en/plan.your.visit/important.info/money.exchange.aspx) (http://www3.ambest.com/ratings/cr/reports/UnitedArabEmirates.pdf) (http://meria.idc.ac.il/journal/1999/issue1/jv3n1a3.html) (https://www.osac.gov/Pages/ContentReportDetails.aspx?cid=10880) (http://www.zu.ac.ae/library/html/uaeinfo/documents/uaetaxationlaw.pdf) (Country Profile: United Arab Emirates.pdf) (http://www.visitabudhabi.ae/en/about.abudhabi/population.aspx) (http://www.international-travel-tours.com/dubai/culture.html) (http://www.nishatlinen.com/?page_id=4) (http://www.nishatmillsltd.com/nishat/pdf/annual10.pdf) (http://bareeze.com/corporate_profile.html) (http://www.kayseriapk.com/#/shop_locator/latest_news_00) (http://www.sanasafinaz.pk/) (http://www.indexexhibition.com/files/images_retailme_2.pdf)

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