Running Head: Strategic Management Project 1

Strategic Management Project

Institutional Affiliation
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7.0: Business-Level Strategy

7.1: Business level strategy of M.H. AlShaya

AlShaya Group has its operations throughout the Gulf and other areas including Eastern Europe,

Morocco, Turkey and Russia. The company operates in 12 countries in three great regions. The

company business strategy enabled AlShaya to expand across different market regions (AlShaya

n.d). There are a lot of success stories about AlShaya Group. It is the best, most dynamic and

successful retail operator in the Middle East region. The company CEO decides on the

leadership style and strategy along with a group of leaders that help in implementation of plans.

AlShaya aims at setting up a competitive strategy that will outperform its retail competitors

while attaining the set objectives. The competitive strategies should be within low cost

achievement, differentiation, innovativeness and diversification (Grant, 2016). All this will

strengthen the position of the company in the global market.

Competitive rivalry and competitive analysis of AlShaya Group

The main competitors for AlShaya in the Gulf region are Chalhoub group and La Vie en Rose.

Although AlShaya Group has dominated in the region as a franchiser, they still face stiff

competition from those two companies. Chalhoub Group owns most of the luxury retail stores in

the Gulf region and thus controlling a huge share of the retail market just like AlShaya. AlShaya

faces a threat from new firms to enter the market and thus weakening its strength in the market

(Peng, 2017). If the ability of these new firms into the industry is easy, then AlShaya is subject to

stiff competition from new comers. Further, suppliers and buyers have a great power in
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influencing prices. If the forces of buyers and supplier supersede the company strength then the

company is subject to failure in setting prices (Ramraika, & Trivedi, 2016).

7.2: Competitive risks

Competitive rivalry is an oblivious force to any organization. If the two top competitors can

overcome the competence and innovativeness of AlShaya, then the existence of the company in

the region can be weakened. Easy substation of products and services by competitors can also

pose serious problems to sustainability of the company in the global and Gulf regional market

place.

8.0: Analysis of financial situation

The current ratio of AlShaya is. 0.8805. This means the liquidity position of AlShaya is below 1

and the company may not be able to pay its short term obligations when they are due. As

compared to 2017, AlShaya is able to meet its short term obligations because they have a current

of 1: 02.

2018 2017
Current ratio = current assets/ Current ratio = current assets/

current liabilities current liabilities

= 47,157,316/ 53,555,387 = 57,627,275/ 56,428,783

= 0.8805 = 1.021
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Return on Equity of AlShaya is 11.21% thus showing that the firm is able to generate good

returns for its shareholders and they are able to generate favorable benefits in 2018. As compared

to 2017 which rate ROE of 10.99%, the company is increasing its returns from the shares bought.

2018 2017
ROE = Net Income/Average ROE = Net Income/Average

Common Equity Common Equity

52,108,591/ [(485,391,318 + 48,862,538/ 444,286,817

444,286,817)/2]
= 0.1099

= 52,108,591/464,839,067.5
= 10.99%

= 0.1121

= 11.21%

The Debt ratio of AlShaya is 0.44 and it means the leverage ratio of the company is quite fair

since the company is not spending or using a lot of debts to cover or run its operations. As

compared to 2017 which displayed a debt ratio of 0.45, the company is slowly improving on its

debts. Debt Ratio = Total Liabilities/ Total Assets

= 377,361,687/862,753,005

= 0.44

The operational performance of AlShaya is quite fair since on average the company fixed assets

generate net sales of 10%. Compared to 2017, the company is doing better.
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Fixed Assets Turnover = Net Sales/ (Fixed Assets - Accumulated Depreciation)

= 58,890,866/ (815,595,689 - 8,719,462)

= 58,890,866/806,876,227

= 0.1

AlShaya Price to Earnings ratio is positive since it holds a positive value of 1:0 willingness of

investors to pay a higher price for its earnings in the company; P/E = Market Capitalization /

Total Net Earnings

51,278,562/ 50,960,460 = 1:0

9.0 Analysis of HRM workflow:

9.1 Recruitment and selection plan

The recruitment process at M.H. AlShaya is quite unique since it is tailored to incorporate

opportunities that the company offers. They consider personality difference in careers offered

and thus vary their interviews based on this and different roles. The recruitment journey at

AlShaya is consistent and it is conducted in different ways with diverse assessment tools

including video interviewing, competency based screening and face to face assessment. The

recruitment process includes;

One, an online application completed in the company website. Once the application is

completed, an email is sent to the applicant to confirm submission of the required information.
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Secondly, once the application is successful, there is a guide towards an onboarding

process. International applicants are relocated to transition smoothly into the new country.

Once the process is initiated, it is upon the supervisors to select, interview, recruit, orient

and hire the employees. Supervisors play a significant role in an organization when hiring new

employees. When selecting a new employee the supervisors need to identify the physical and

mental activities that the employee will perform. The supervisor must also clarify the reason for

the position and the significance of that position. The supervisor should suggest the

qualifications required for the position. At this stage the specifications provided by the

supervisor is very important because it helps in recruiting the right applicant for the position. The

supervisor needs to explain the skills and competencies that are required to perform the role.

He/she should also explain where the job fits within overall hierarchy of the organization. The

information provided by the supervisor forms the support of information based on which

recruitment and selection is done. The supervisor’s specifications give the basis of employment

contract and also helps manage employee performance. The supervisor is also a member that

interviews the applicants and the evaluation of the supervisor is of great significance. This

therefore means that the supervisor should give a higher preference to applicants who closely

match the required qualifications for the position.

AlShaya’s supervisors also have a significant role to play in orientation of new employees.

Orientation is the planned introduction of new employees to the organization, their jobs and

coworkers. At AlShaya, a welcome letter should be sent to the employee before the employee

starts working. The letter states the exact date of joining and gives a copy of employee policy

and procedures. During arrival the supervisor should meet with the employee and provide him
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with a copy of the job description and the performance goals. This explains the duties,

responsibilities and expected performance of the new employee. The supervisor needs to make

arrangements for the new employees.

9.2 Training and development plan

Training and development is essential since it enables employees to adapt to new changes

and demands that are ever changing. Training is also essential since it promotes digitalization of

workers at AlShaya. It will be significant for employees to develop so that they can rethink and

ensure that organizational impact is meaningful. At AlShaya, the learning and development of

talent teams will help ensure that the organization over 60,000 employees will receive career

support and develop in their areas of specialties. The organization uses the L & D department to

invest in their future. At AlShaya, people are the greatest asset to invest in.

9.3 Performance management plan

Performance management system has been designed to manage employees’ job and track

their performance. The system tracks and records employee performance over time to ensure that

they become productive and satisfied in their performance; after training and development,

AlShaya employees become more capable as they gain more experience. The firm would wish to

gain a competitive advantage out of the capable employees and therefore, they would manage the

employees to ensure they deliver the best out of their performances. There are several ways or

approaches in which AlShaya enhance job performance management. These include the goals

approach, contractual approach and incident approach. AlShaya system is set to track, monitor

and control performance of individual employees in a workplace setting. It is also used to

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monitor performance of departments and the management of the company. Performance

management system forms part of strategic and integrated approach of companies that is

designed to deliver success and improve the performance of employees at AlShaya.

9.4 Compensation plan

At AlShaya, every employee is entitled to benefit from insurance covers and other incentives

given. Other than salary, there are other benefits attached to employee performance. Every

employee in Alshaya is striving to earn some commission, salary and other benefits while

meeting the company target goals. Each of them has personal needs and goals that they strive to

attain apart from the company goals. In this regard, there is need for a good compensation plan

by AlShaya HR executives. Several reviews in the company praise the pay rate and the benefits

offered at AlShaya with most of the employees commenting positively on insurance benefits

offered at the organization.

10. Analysis of marketing plan

10.1 Situation analysis

Currently AlShaya runs over 70 brands in 2,400 retail outlets around the world. It is an

international retail franchiser with over 2 billion sales turnover. The company enjoys wide range

of advantages over its competitors. At the moment, AlShaya enjoys a strong brand image from

its 70 plus brands in three regions. This image makes the company have an advantage over its

competitors (Ramraika, & Trivedi, 2016). The strong image is based on the quality of products

and services offered as well as convenience of customer to buy one or more products at the

nearest town possible. Affordability and availability of the luxurious products from other
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countries like Starbucks makes the company popular in Middle East Region. This has also

increased its market share in the global market and thus enhancing high revenue value over its

competitors. The current state of AlShaya is stable to run and maintain the business to the next

level although the company is still faced with challenges of price and tax changes and

fluctuations in the market.

10.2 Opportunities analysis

Income level is at a constant increase in AlShaya which shows a positive space for

growth. When the income level is constantly increasing, the outcome desired from the company

is a successful growth. Another opportunity linked to AlShaya is the growing economy in

Middle East. Growth in the economy is a sign of stability in sales and income levels. Further,

presence in the global markets is an opportunity to diversify and increase its revenue benefits.

10.3 Targeting and positioning process

M.H AlShaya is currently positioned to dominate in the retail industry although it still faces

changes or fluctuations of the market values. Customers have commented positively on the

convenience and availability of the products offered but prices still fluctuate. The primary target

market of the AlShaya brand is all users and consumers located in the Gulf region, Eastern

Europe and Africa. The secondary target market is homeowners, tourists, professionals, business

owners, other corporations and academic institutions in the three regions. These target markets

will position the company in a better place. To achieve a good positioning there is need to

consider consumer behavior based on culture, basic, personal, psychological and social.

Internal Strategic Factors (Strengths)

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 Strong brand image – from its 70 plus brands in the international market.

 High profit margins from its yearly returns

 Global stage/market

 Quality and luxurious products

Weaknesses (Internal Strategic Factors)

 Inadequate distribution network

 Fluctuating prices

 Harsh tax regulations

Opportunities (External Strategic Factors)

 Distribution network expansion

 Rising demand for luxurious products

 Diversification

Threats (External Strategic Factors)

 Aggressive competition

 Harsh government terms

 Rising labor cost in countries where AlShaya stores are located

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10.4 Marketing strategy for products and services

Use advertising to introduce new products and services into the market and thereafter

apply sales promotion to build and grow the brand in the regional and global market. Advertising

in local press and other channels creates awareness and increases customer base for products and

services at AlShaya. Promotion increases customer usage and pulls new customer to try the

product. All this increases the company sales and the global market share.

There will be sales promotion activities like free gifts, campaigns, seminars, displays and

free samples to increase sales of the products.

Since AlShaya has a competitive advantage that has capabilities that are rare and hard to

imitate. The company has visionary leadership. It can conceive of unique ways of satisfying

human needs. Moreover, the management motivates the staff to perform at their peak through

training. Also, they give the staff the freedom to exercise their skills in the field. The

combination of these two factors gives AlShaya a competitive advantage that others can hardly

imitate.

10.5 Pricing; distribution; promotional mix

The company use advertising and sales promotions as the major methods of promotion in the

introduction stage. Advertising is aimed at building AlShaya’s product awareness among

innovators and dealers. Sales promotion on the other hand is aimed at attracting potential

consumers to try the new products. The promotion is focused toward building awareness in the

mass market (Gao, Shu, Jiang, Gao, & Page, 2017). Advertising is still a strong method of

promotion during the growth stage.

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Product Line pricing strategy

This is a pricing strategy where the company management is expected to set steps or make

decisions on various product lines that will be priced based on their cost differences, and

customer evaluations.

Optional - product pricing strategy

It involves pricing of AlShaya’s products along with its main product.

Captive-product pricing strategy, pricing the product along with other products in which they are

used together

11.0 Analysis of operational plan

M.H. AlShaya was known because of its liberal business consideration. The company has the

layout, advancing and creative partners.

Key partners: customers, distributors, suppliers of manufacture materials, employees,

competitors such as Chalhoub group and La Vie en Rose, directors, creditors such as banks and

financial institutions and distributors of the products to warehouses and customers.

Key activities: analysis of competitor market, customer analysis to determine its needs and

preferences, product branding and packaging, product positioning and targeting and finally

market trend analysis.

Key resources: support system of the business, investment in assets, copyrights, brand

patents, data from competitor market and customers, and finally well-skilled electronic

employees.
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Director responsibilities: supervise employee, distribute dividends, make and execute

long-term investment decisions.

References

Gao, Y., Shu, C., Jiang, X., Gao, S., & Page, L. (2017). Managerial ties and product innovation:
The moderating roles of macro-and micro-institutional environments. Long Range
Planning, 50(2), 168-183.

Grant, M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Head, W., & Alford, J. (2015). Wicked problems: Implications for public policy and
management. Administration & Society, 47(6), 711-739.

M. H. AlShaya 2018 Financial Report . (n.d.). Retrieved from

file:///C:/Users/JOSEPH/Downloads/Mabanee-Annual Report 2018-En-10_03_19.pdf.

Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game
changers, and challengers. John Wiley & Sons.

Our history. (2019). Retrieved from https://www.alshaya.com/en/about-us/our-history/

Peng, W. (2017). Cultures, institutions, and strategic choices: Toward an institutional perspective on
business strategy. The Blackwell handbook of cross‐cultural management, 52-66.

Ramraika, A., & Trivedi, P. (2016). Sources of Sustainable Competitive Advantage

Robson, W. (2015). Strategic management and information systems. Pearson Higher Ed.

Rugman, A., & Verbeke, A. (2017). Global corporate strategy and trade policy. Routledge.

Schwartz, S. (2017). Corporate social responsibility. Routledge

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Volberda, H. W., Morgan, R. E., Reinmoeller, P., Hitt, M. A., Ireland, R. D., & Hoskisson, R. E.
(2011). Strategic Management: Competitiveness and Globalization (Concepts & Cases). ISBN
978-1-4080-1918-4