Contemporary Issues of MNEs in the UAE

8/18/2019 Contemporary Issues of MNEs in the UAE

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LOGISTICS ISSUES of CROWN RELOCATION - 1

Group Case study Analysis Examining contemporary issues of MNEs in the UAE

Of Logistic issues


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Table of Contents

1. Company Introduction..............................................................................................................2

2. Contemporary Issues on MNE's In UAE about Logistics Issues.............................................2

A. Issues for Multinational Companies.....................................................................................2

. Issues !irectly "elated to Logistic #perations in t$e UAE.................................................%

C. &o ($ese Issues Affect Cron "elocations.......................................................................)

!. *$at Are t$e +olutions to ($e Issues,.................................................................................-

%. Conclusion................................................................................................................................

). "eferences..............................................................................................................................1/

0. Appendices.............................................................................................................................12


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! Company "ntroduction

($e United Arab Emirates is a $ig$ly lucratie maret for arious types of entrepreneurs.

($e economy is stable and groing3 so many multinational companies prefer to start t$eir

business in t$e region. ($ere are seeral logistic companies operating in t$e country today and

Cron "elocations is one of t$em. As a successful multinational business4 Cron $as more t$an

250 facilities in t$e orld. ($ey $ae many ot$er businesses besides t$e relocation operation3

t$ey $ae a large are$ouse spaces amounting to more t$an -.0 million s6uare feet t$roug$out

t$e orld. It offers t$e folloing business in t$e UAE7

• !omestic and International "elocation +erices

• +$ipment and transport of $ouse$old goods

• +$ipment of baggage

• #nline tracing systems

• Coerage of legal documents and re6uired forms for relocation to foreign countries

• Adice on residential areas4 $ealt$ and educational facilities.

($e company $as ultra8modern storage facilities4 protection4 management and global

tracing systems. It offers t$e most silled4 talented and dedicated serice staff.

#! Contemporary "ssues on MNE$s "n UAE about Logistics "ssues

Among ot$ers4 some t$e t$e MNE related Issues t$at multinational companies face in t$e

UAE are discussed in t$e folloing lines.

A. Issues for Multinational Companies

Alt$oug$ t$e country is one of t$e #ACI+ for many businesses4 it still proides certain

c$allenges for multinational companies. ($ese issues are releant to t$e logistic companies too4

so it is better to get an understanding of t$em at t$e beginning. According to t$e restricted


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regulations of t$e country4 many multinational business entrepreneurs do not lie to inest in t$e

country. ($ere are seeral issues of concern to multinational companies 9#ut8la.com4 n.d.:.

•

According to t$is rule a ne business must register it$ t$e folloing institutes. ($ey are

t$e Ministry of Labor UAE and t$e !epartment of Neutrali;ation and "esidency.

• ($e employment


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• ($e economy of t$e country is one of t$e basic factors t$at affect t$e logistic serices.

($e rate of unemployment and t$e increase in prices ill create critical issues in logistic

operations.

• Logistic operations are associated it$ transport and related c$arges4 so t$e increasing

price of fuel in t$e country can also affect operations in t$e UAE.

• (rucs and ot$er modes of transport are important factors and t$eir rates are increasing as

a result of arious elements suc$ as4 rising fuel cost4 cost of spare parts and certain

regulations of t$e goernment.

• ($e capacity of transportation is not sufficient to support t$e actiities of t$e company4 so

it directly affects reenues.

• ($e infrastructure of t$e country4 especially its $ig$ays4 is not in perfect condition and

t$ere are certain riss in some areas.

• +ecurity is an issue t$at remains a c$allenge for t$e company as it continues to operate in

t$e UAE.

C. &o ($ese Issues Affect Cron "elocations

Increased legal re6uirements for foreign employees $as created a certain restriction for

t$e company. ($e company ants to obtain t$e serices of t$e 6ualified and talented indiiduals

from t$e orld labor maret4 but it is not possible $ere. ($e restrictions $ae reduced t$e

opportunity for migrated orers. ($e company $as to face certain difficulties4 $en it $as to

enlist t$e serices of local labor. ($e success of a company depends on a set of good employees.


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($ey s$ould be able to or for t$e benefit of t$emseles4 $ile ac$ieing t$e aims and

ob=ecties of t$e company. It is not possible4 $en staff is unmotiated and insufficiently silled.

($e decision of t$e goernment is to add more and more local labor to multinational companies

9"esearc$gate.net4 n.d.:4 but it is a $armful practice from t$e iepoint of some companies.

>oernment policies can adersely affect t$e deelopment of t$e organi;ation.

A company may also face legal restrictions4 $en dismissing an unanted employee or

agent and it is e?tremely $armful to t$e deelopment of t$e company. &oeer4 if a company

does not terminate unanted employees and troublemaers from of t$e company4 it ill

discourage t$e et$ics of t$e organi;ation and t$e employees ill become less motiated. ($e

et$ics of a company are an important factor4 as it creates a certain subculture inside of an

organi;ation. Employees be$ae and perform according to t$e e?pected norms and alues of t$e

organi;ation. ($e $uman resource is ery important for t$e success of t$e company4 so

management s$ould not be pro$ibited from dismissing unanted employees. According to ne

policies it is 6uite a difficult tas4 so t$e final result ill be a decline of reenues 9#ut8la.com4

n.d.:.

+$ould a company $ae to $ire local agents for t$eir operations it is not considered a

satisfactory state for t$e company. ($e situation ill become disastrous $en local agents are not

performing ell. +ome local agents do not perform t$eir duties in t$e best interest of t$e

company4 instead t$ey perform certain actiities4 $ic$ are $armful to t$e operations of t$e

company. As a result of t$at4 t$e company it $as become difficult to recoer due amounts from

arious indiiduals and organi;ations 9@C4 n.d.:.


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($e economy of t$e county is stable but it must be improed in order to earn more

reenue4 but t$e grot$ is not as it as e?pected. ($ere are certain issues preailing in t$e

country suc$ as unemployment4 escalating cost of liing and economical deiations among

indiiduals. ($e decline of t$e global economy $as affected t$e economy of t$e country. ($e

economic issues of ot$er countries can affect t$e efficiency of t$e company in t$e UAE. ($e

logistic operations are associated it$ ot$er countries4 so t$e company $as to face un$ealt$y

economical conditions in suc$ areas. In t$ose areas t$e company $as to bear $ig$er ages4

c$arges and goernment ta?es.

($oug$ t$e UAE is one of t$e leading proiders of petroleum fuels4 t$e rates are not

satisfactory. uels are ery important to logistic serices. *$en t$e price of fuel rises t$e

company is not in a position to ac$iee its e?pected goals. Cron "elocations also $ad to face

t$e cost of transport c$arges due to t$e increasing cost of fuel. ($e increasing cost of transport

proiders can alter t$e efficiency of t$e operations of t$e company. ($e company $ires t$e

serices of t$e local operators on certain occasions4 as its fleet is not sufficient to manage

operations. ($e suppliers increase t$eir rates for arious reasons and t$e company is not able to

ac$iee t$e e?pected reenue limits 9!celocity.com4 2/11:.

"oads and ot$er infrastructures are ery essential to logistic operations. ($ere s$ould be

good roads4 electricity4 aailability of parts and 6ualified mec$anics t$roug$out t$e country. It is

satisfactory in ma=or urban areas but outside of urban areas t$e situation is not as acceptable. ($e

company $as to perform its serices t$roug$out t$e country. ($e ma=or $ig$ays are in t$e

perfect condition but not eac$ and eery $ig$ay of t$e country. ($e company $as to incur e?tra

e?pense for operating on t$ese routes. ($e e$icles $ae to be repaired regularly and t$e fuel


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astage is $ig$er t$an it ould be on a good $ig$ay. ($e cost of spare parts and ot$er

components are increasing4 so it directly affects t$e reenues of t$e company.

($en t$ere is t$e matter of inade6uate security in certain areas. ($ere ere reports of

looting and andalism4 $ic$ caused t$e company to face a s$ortage of driers for t$ese areas

and increased insurance premiums for t$e e$icles and goods. ($e company $ad no ot$er

alternatie t$an to c$arge customers more. ($e increased t$e cost of serices directly affects t$e

operations of t$e company. @eople ill be unable to obtain t$e serices of t$e company and t$e

reenues of t$e company ill decline automatically. ($e surety can affect t$e performances of

t$e company directly 9Aybar and ($irunauarasu4 2//0:.

($e number of e$icles 9priately8oned: $as reduced as a result of arious factors suc$

as increased cost of liing4 $ig$er prices for parts and t$e fuel. ($is situation caused t$e company

to limit certain operations and t$e situation $as directly affected t$e improement plans of t$e

company. ($e company $as to use ot$er modes of transport suc$ as s$ips and airplanes. ($ese

modes of transport are associated it$ increased c$arges and t$e rates are not $ealt$y for t$e

improement of t$e company. ($e decrease in t$e number of e$icles in t$e ot$er countries4

$ic$ can be used for t$e serice of t$e company4 $as directly affected t$e operations of t$e

company 9!celocity.com4 2/11:.

!. *$at Are t$e +olutions to ($e Issues,

($e company $as been operating in t$e UAE for 6uite some time and it $as a stable

business4 so t$e company must pay attention to ma?imi;ing its reenues by controlling certain

enironmental issues and also increasing its maret penetration. ($e company is not in a position

to c$allenge t$e policies of t$e goernment. ($e company can recruit silled and 6ualified


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indiiduals by employing sub=ect oriented sill tests. ($e company can train t$e employees to be

able to face t$e c$allenges in t$e organi;ation. ($e management can do a great deal to increase

t$e maretability of t$e employees t$roug$ &" management programs and ors$ops

9C$ristop$erson4 2//2:. ($e company must try to get t$e ma?imum output from t$e aailable

$uman resource. It is possible to ac$iee suc$ an outcome by employing a suitable type of

motiational met$od.

($e economic problems of t$e orld and also t$e economical issues associated it$

operations are beyond t$e control of t$e company. ($e company $as to face t$e problems it

encounters and it is better to find certain ays and means to reduce t$e e?penditures of t$e

company. Management must try to introduce lo cost strategies to perform its operations4 so

t$at it can sae money and allocate t$at saings to coer some of t$e $ig$er e?penses of t$e

company.

($e infrastructure and t$e security are t$e responsibility of t$e goernment and t$e

company can discuss issues concerning suc$ it$ t$e goernment to come to a certain solution

for t$ese issues. ($e goernment ill $opefully tae certain measures to reduce t$e ris in t$e

road 9Ayildi;4 2//5:. It can be done easily by allocating more security personnel to t$ese risy

areas. "egular road maintenance is one of t$e met$ods t$at can be used to eep t$e roads and

ot$er infrastructure in perfect condition4 so t$e company and t$e goernment bot$ can tae

necessary steps.

($e company can sae money and manage all t$e business actiities by maintaining its

on fleet of e$icles. ($e company $as to spend a lot at t$e onset by purc$asing e$icles4 but it

can recoup t$is money t$roug$ reenues in a fe yearsB time. ($e company must $ae a good set


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LOGISTICS ISSUES of CROWN RELOCATION -

10

of driers and mec$anics4 $o are ready to or for t$e company. ($ese people can be

motiated by incenties and ot$er strategies to $elp t$em ac$iee t$eir personal goals $ile

improing t$e efficiency of t$e company as a $ole.

%! Conclusion

Companies $ae to inest in ot$er countries in order to earn more reenue. ($e

competitie maret $as become a ery tig$t place as t$e result of t$e deelopment as ell as t$e

economical decline of t$e ma=ority of some countries. As a multinational company4 $ic$ is

performing in t$e UAE4 Cron "elocations $ad to face seeral issues. +ome of t$em are

common to any type of business in t$at country4 but t$ere are seeral uni6ue issues. ($ese issues

can do a great deal of $arm to t$e business t$ereby reducing reenue. Most of t$em are out of t$e

control of t$e company. +ome of t$em are t$e result of goernment policies and t$e ot$ers are

t$e elements of global economic depression. ($ere are certain issues for $ic$ t$e company can

find solutions. y improing t$ese issues it can increase reenues. ($is analysis is ery

important in t$e process of starting a business in a certain areas of t$e globe. Management s$ould

pay e?tra attention to t$e aboe8mentioned issues in t$at particular maret. Cron "elocations

can employ t$ese findings to en$ance its business actiities in t$e United Arab Emirates.


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&! 'eferences

Ayildi;4 . 92//5:. ($e ailure of Multinational Companies in !eeloping Countries in +$aring

Enironmental "esponsibilities7 ($e Case of (urey. Social Responsibility Journal 4 292:4

pp.1)2810/.

Aybar4 . and ($irunauarasu4 A. 92//0:. Emerging Maret Multinationals7 An Analysis of

@erformance and "is C$aracteristics. Journal of Asia-Pacific Business4 592:4 pp.08%.

ae4 &. and &a4 M. 92/1):. ($e Moderating Effects of Internal #rientation and Maret

#rientation on t$e "elations$ips beteen Commitment and (ransportation +erice7 An

Approac$ to International reig$t orarders. The Asian Journal of Shipping and Logistics4

%/92:4 pp.121810%.

ar$em4 .4 ounies4 &.4 D +mit$4 @. C. 92/11:. "aning t$e future global manager

c$aracteristics and noledge re6uirements according to UAE business managers'

opinions. Education, Business and Society: onte!porary "iddle Eastern #ssues, $%&'4 228

2)-.

Causgil4 +. (.4 nig$t4 >.4 D "iesenberger4 F. ". 92/12:. #nternational business( Pearson

Education, Ne Fersey.

C$ristop$erson4 +. 92//2:. *$y !o National Labor Maret @ractices Continue to !ierge in t$e

>lobal Economy, ($e GMissing LinH of Inestment "ules. Econo!ic )eography4 -J91:4

pp.182/.

!celocity.com4 92/11:. Top *+ logistics challenges for +* %and beyond' . /elocity.

Konline Aailable at7 $ttp7.dcelocity.com KAccessed 12 !ec. 2/1).


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E?port.go4 9n.d.:. 0( .1#2) B3S#2ESS #2 T4E 32#TE. ARAB E"#RATES - E5port(go6.

Konline Aailable at7 $ttp7.e?port.go KAccessed 12 !ec. 2/1).

&arris4 &.4 D rester4 C. 91:. An integratie frameor for pre8departure

preparation. #nternational 4R": onte!porary #ssues in Europe, &-$+.

#ut8la.com4 9n.d.:. E!ploy!ent issues in The 3nited Arab E!irates. Konline Aailable at7

$ttp7.out8la.com KAccessed 12 !ec. 2/1).

@C4 9n.d.:. Transportation 7 Logistics issues: Ris8 7 co!pliance - P9 . Konline Aailable at7

$ttp7.pc.com KAccessed 12 !ec. 2/1).

"esearc$gate.net4 9n.d.:. "ultinationals in the "iddle East: hallenges and opportunities.

Konline Aailable at7 $ttp7.researc$gate.net KAccessed 12 !ec. 2/1).

(ong;on4 F. and C$eong4 I. 92/1%:. ($e c$allenges of deeloping a competitie logistics industry

in A+EAN countries. #nternational Journal of Logistics Research and Applications4 1-9):4

pp.%2%8%%J.


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(! Appendices


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Contemporary Issues of MNEs in the UAE

Documents