Sonnamera UAE Market Entry Strategy

Sonnamera UAE Market Entry Strategy Student’s Name Institutional Affiliation Sonnamera Market Entry Strategy Introduction Sonnamera is an Asian food factory that deals with the manufacture of canned vegetables and fruits. The organization is looking to expand its distribution into the United Arab Emirates. Their distribution hub is based in Singapore and is strategically located to access markets in the UAE, European Union, and other global markets. The UAE market provides a suitable market for the expansion Sonnamera. Some of the critical factors that are considered when building an effective entry strategy include selecting the first market to access. The UAE is a political federation of 7 states: Abu Dhabi, Dubai, Umm al Qaywayn, Sharjah, Fujairah, Ajman, and Ra’s al-Khaima (European Commission, 2012). While the federal government oversees trade policies of the federation, different states have different statues and policies governing their markets (Akoum, 2008). However, since Sonnamera seeks to export canned foods and agricultural products, which contribute less than one percent of the market, entry into the industry is likely to be easy. Other elements of entry that the brand needs to consider include product position and choice of retailers and distributors. Since the UAE is now among the 20 most powerful first world countries, the product will target exotic consumers. The UAE is the world’s seventh-largest holder of oil and natural gas reserves. As such, the economy of the UAE is one of the most resilient economies in the world, despite the global economic trends that are highly influenced by changes in demand for energy. During the economic recession in mid-2014 and disruption of the economic system in the Gulf region due to the decline in market prices of fuel, UAE continued to register exceptional economic growth regionally and internationally (Zaremba & Szczygielski, 2019). The government has laid a long-term strategy to further economic growth is establishing the federations intention to diversify the economy and reduce reliance on fossil fuels and interest of global energy conservation. This has led to the dedication of funds in research to expand industries, assimilation of smart technologies, and the development of modern infrastructure to attract investment in different sectors (The UAE Defense Industry ICD Research, 2011). However, the exceptional culture interlinked with Islam and Muslim religion needs to be considered in product positioning and marketing. UAE Economic Analysis As established, the federal government launched the UAE Vision in 2010 that aims to integrate sustainable development goals (SDGs) before 2021. The vision comprises of\ four founding components: destiny, responsibility, prosperity, and knowledge. The vision has promoted the incorporation of SDGs in health, economy, education, government services, infrastructure, and housing across all the seven states. Since the UAE is making an effort to be integrated into global efforts unlike the federation’s conservative tradition, this will lead to more friendly trade regulations. This is intended to improve the countries’ performance in a range of international indicators compared to other participants globally. Notably, the emirates built their own strategy guided by the frameworks defined in the federal plan, such as Abu Dhabi’s Economic Vision 2030. To determine the profitability and the attractiveness of the agricultural canned food industry in the UAE, a potter’s five analysis was conducted. A Porter five force analysis identifies the threats and opportunities in the industry to help an organization develop an effective market entry or product positioning (Ahmad & Saber, 2015; Alrawashdeh, 2012; Amiri Aghdaie, Seidi, & Riasi, 2012). Besides monitoring the activities of competitors, the tool also helps investors determine the factors that affect the business environment. Discussed below are the findings of porter five forces analysis of canned vegetables and fruits in the UAE industry. Porter Five Analysis Bargaining power of suppliers. Due to the limited production of fresh and green products locally, the UAE relies on the importation of fresh fruit and vegetables. The importation of these goods grows at 7.5% to 10% annually (Delios & Beamish, 2002). Consequently, the suppliers have a high bargaining power due to the high reliance on agricultural imports for subsistence. However, limitations in the law limiting the access to the market by examining the quality of products, licensing of suppliers, and operating license make it difficult to meet the requirements of the community (Delios & Beamish, 2002). As a result, only a few suppliers qualify to meet the operational requirements stipulated in the law. Consequently, they are in a better position to control the prices due to the high reliance on their supplies and unionization among suppliers. The ability to change the prices of goods, demand for diverse products, and the growth of the agricultural products industry in the UAE market make it a highly profitable market. Bargaining power of Buyers. As established, UAE is one of the leading countries in fossil fuel reserves, leading to high gross domestic products and a per capita income of households. The per capita income in 2017 was 103,465 euros. Consequently, the customers have high bargaining power with the aid of the local protective policies (Nakatani, 2015). Their financial ability to switch from one product to another renders them high power compared to the sellers (Delios & Beamish, 2002). The availability of suppliers from across the globe provides consumers with a variety of products to choose from. The management of these challenges makes it possible to examine the differences associated with the creation of their service. Competition Rivalry. The UAE is in negotiations with European exporters of fruits and vegetables to make trading negotiations on import quotas and regulation of the imported products. However, stringent market entry rules have hindered the successful completion of these negotiations. While the regulation has limited the number of vendors operating in the industry, competition is still stiff, with leading global retailers in the market, such as General Mills Inc and Del Monte Foods, presenting formidable competition due to the global reputation of the firms. Other brands such as chickpeas and ful and molokhia by Arabic cuisines targeting expatriates also control a large market share (European Commission, 2012). Brand loyalty to such companies limits the consumers’ ability to switch to other products (Dev, Brown & Zhou, 2007). However, these firms target expatriates by preparing cuisines custom in their home countries. Sonnamerra intends to target all consumers due to the minimal production of fresh fruits and vegetables in the region. Threat of substitutes. Recently, there has been a change in the consumption trend in favor of organic products that are healthier. This is also in line with the federation's interest in the global SDGs, environmental conservation, and the 2021 vision. The management of these expectations presents a challenge associated with the provision of canned foods in a shifting market. The management of these requirements helps in ensuring that the differences associated with market trends are met accordingly (Delios & Beamish, 2002). The consumers are likely to consume fresh products, making the threat of substitution high. However, canned foods are convenient for people on the move or recreational intake due to their readiness. Additionally, canned fruits and vegetables are more durable compared to fresh fruits. The management of these requirements makes it possible to measure the differences associated with the management of organizational services. Barriers to Entry. As established, the local market faces numerous restrictions to limit the number of foreigners operating on the local market. Consequently, the government has instituted bottlenecks in the market to monitor and limit the scope of operation of the local consumers (Dev, Brown & Zhou, 2007). For example, foreign firms that intend to establish their business in the UAE have to identify a local sponsor who is willing to form a business partnership with them. Additionally, investors can only be the minority owner of the business. The challenge arises in finding partners willing to negotiate the local import statutes and offer guidance in pre-operational regulations. Such hurdles include product licensing and availing products to the local municipal lab to test if the products meet the cultural and health standards. Therefore, the, most important step in entering the UAE market is finding a suitable local agent or distributor. Sonnamera intends to liaise with leading retailers in the region, such as Carrefour, that is an international hypermarket and liaises with the local brand Majid Al Futt...