Pumps for All's market entry strategy in the UAE

Pumps for All

The United Arab Emirates has developed rapidly over the past several years. Each Emirate is run under separate administrations, such that economic development varies between them. Dubai, Abu Dhabi and Sharjah are the most developed emirates, with relatively open economies for the region. This has spurred a substantial boom in population. For the UAE as a whole, the population has increased rapidly as economic migrants have entered the country in search of work. Non-nationals account for 73.9% of all residents of the country (CIA World Factbook, 2010), and most of them live in the three most prosperous emirates. To meet the infrastructure needs of this rapidly growing population, the UAE has made substantial investments. Among them have been major water projects for both Dubai and Abu Dhabi, including the three-phase Hassyan Power and Desalination Complex in the former (Shandling, 2008). This rapid increase in the amount of water infrastructure makes the UAE an excellent market for Pumps For All to enter.

Corporate Strategy and Operating Environment

PFA's corporate strategy is to create different divisions along product lines. This will allow the firm to compete on a more even scale with their competitors. This decision is guided in large part by the need to match the production flexibility of the competitors. This indicates that two factors are essential to success in the industry. The first is price, since flexible production is not necessarily the most efficient production. For PFA to succeed with multiple business units, this means that each unit has highly efficient but relatively inflexible production relative to PFA's historic strategy. The second key success factor is specialization. This means that producing and marketing pipes for different markets requires different companies with different marketing arms and proprietary production facilities.

The operating environment for this type of product is largely global, particularly at the major infrastructure level at which PFA will operate in the UAE. For major infrastructure projects, pumpmakers the world over compete for contracts in the millions. These firms must demonstrate the ability to build and install pumps in a wide range of water projects in a wide range of environmental conditions.

The main factor in the growth of the global pump market is regional economic conditions. In each region, the performance of the economy vs. that of the global economy will vary. For example, the recent global economic downturn led to a reduction in or delay of major infrastructure projects in many regions, such as North America and the Middle East, but the downturn had a less significant impact in China, where growth merely slowed. As a result, the demand for water pumps will vary according to regional economic conditions. The UAE in particular has microeconomies. Dubai's economy, for example, is more directly correlated with world financial markets while Abu Dhabi's economy is more directly correlated with world oil markets. The difference derives from the fundamental difference in the major funding sources of the two economies. Abu Dhabi is oil-rich, while Dubai is oil-poor and therefore relies on international financing to fuel its development.

Strategy

The company should adopt a strategy that focuses on long-term talent development in its international workforce. This is the key driver of success for major projects of the type that will be completed in the UAE. Key talent will come from a relatively small talent pool. Thus, the firm needs to focus on strategies both to tap as deeply into this pool as possible, but also to broaden the pool. The former is straightforward, and already a part of PFA's HRM strategy. The latter is not yet a part of the strategy, but it will be.

It is also recommended that training become an increasingly important component of the company's HRM strategy. Training for the long-term improves not only the loyalty of temporary local workers, but it can increase their effectiveness in the short-term as well. Such workers can grow to become valuable members of the international team. In the UAE in particular, local workers are immigrants and guest workers, so they can also help the company identify opportunities in their home countries. This strategy supports all of the key competitive strategies at Pumps For All. The company is seeking to expand its business, and to this it will need a steady supply of quality employees at the international level. PFA also wishes to increase its profits, which requires both expansion of revenue streams and also efficiency improvements to make the most of those streams.

There are several critical factors that will impact HRM in the UAE that may differ from the company's experience in the United States. The first is managing the different types of employees. In addition to the international employees, there will also be locals and third-party nationals working for the company. These workers each come with their own set of legal statuses, work experience and motivations. This degree of disparity is uncommon in the United States, and presents unique challenges. The second critical factor is the management of religion. In the UAE, not only is Islam the religion of the land, but it is a guiding social force. Furthermore, most guest workers are Islamic adherents. This complicates the work process in a number of ways -- the response of workers to female foreign managers, the need for access to mosques and prayer times, and the need to accommodate Muslim dress even on a construction site.

The third critical factor for success in the UAE is building employee loyalty. In the U.S., employees are geared towards loyalty for a number of reasons. In the UAE, the guest workers in particular are more mercenary. They lack the loyalty found in Americans, but if the HRM strategy is to succeed these workers must be given additional training and the possibility of career progression, and must be able to pay for that. A fourth critical factor for success is the UAE is the management of linguistic difficulties. The project may have English-speakers on the management team, a group of Arabic-speaking locals, and guest workers speaking any of a number of Asian tongues. This poses a problem with respect to communication, and HRM should focus on training to help resolve these potential communications problems.

Three examples of managing diversity as a critical factor would be developing career-oriented guest workers, should they be identified as talented; finding good Emiratis who do not have a sense of entitlement (al-Gergawi, 2008); and finding international managers willing and able to make a long-term commitment to the UAE operations (De Bono, der Heijden & Jones, 2008). The different types of workers each comes with its own set of problems that must be addressed within the HRM strategy. The needs of each must be met, but the strategy should also emphasize a degree of equality between the groups that may not appear to exist on the surface.

Examples of Islam as a problem for HRM include the need for prayer times, the need for mosques and issues with regards to gender equality. HRM must ensure that the needs of a predominantly workforce are met, in accordance with the standards of the religion and the UAE (Budd & Scoville, 2005). In addition, the HRM strategy needs to be specifically geared towards eliminating gender issues in the workplace. This can include a degree of sensitivity training but also strong statements about the equality of the sexes.

Language barriers are going to cause major communications problems (Wilson, 2005). This can impact on the messages delivered at high-level meetings; it can impact worker safety and it can result is communication breakdown between senior local managers, who may not be confident of their English and home office, who will be weak in Arabic. HRM must develop strategies to ensure that the employees have the right language skill set for each job, and to ensure that proper interpersonal communications skills are followed, by means off establishing a communications protocol for all UAE-based workers.

Works Cited:

CIA World Factbook. (2010). United Arab Emirates. Central Intelligence Agency. Retrieved January 27, 2010 from https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html

Shandling, K. (2008). New water and power infrastructure projects in the UAE. MaximsNews. Retrieved January 27, 2010 from http://www.maximsnews.com/news20080327uaewaterprojects10803270802.htm

De Bono, S., Van der Heijden, B. & Jones, S. (2008). Managing Cultural Diversity. New York: Meyer & Meyer.

Al-Gergawi, M. (2008). Emiratisation and the curse of entitlement. The National. Retrieved January 27, 2010 from http://www.thenational.ae/article/20080911/OPINION/551738683/0/SPORT

Budd, J. & Scoville, J. (2005). The ethics of human resources and industrial relations. Champaign, IL: University of Illinois at Urbana-Champaign.

Wilson, J. (2005). Human resource development: Learning and training for individuals and organizations. Sterling, VA: Kogan Page.