Entering a New Market
Entering a New Market

Entering a New Market

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  • Published: June 25, 2018
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[pic] Albert Heijn goes to Dubai AuthorsJames Lawton Max Zijlstra Garrett Koolman LecturerDhrs. D. Boels InstituteStenden University DateJune 5, 2009 Introduction “Conformity is the jailer of freedom and the enemy of growth”. John F. Kennedy For our economic report, we chose to analyze the supermarket chain Albert Heijn, part of the multinational organization Koninglijk (Royal) Ahold for the Dubai market. Albert Heijn is one of the leading food retailers in the Netherlands with over 800 stores. Its stores come in different formats and their wide product range caters to all levels of income.

Dubai has a blossoming economy that caters to the wealthy and middle income earning families, as unemployment in Dubai is only 2. 5%. We believe the high quality of Albert Heijn matches the expectations of these consumers and will fit into this market perfectly. Unfortunately the recent global economic crisis has had its effects on the economy of Dubai. This is mainly due to the fact that Dubai’s economy’s main driving force which is import/export of raw materials is intimately entwined with the economy of the United States.

But there is strong belief that the situation will bounce back as soon as faith and trust is restored in consumers and investors alike, as the secondary sectors of the market for example real estate increases and balances the shortages felt as a result of the lack of exports. On conducting research we have seen as an advantage for Albert Heijn the economic similarities between Dubai and the Netherlands are

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immense. Furthermore, for Albert Heijn to enter the market would not be as risky as one thinks as since 2004, experts have estimated that the number of Dutch people living and working in Dubai has almost quadrupled.

We believe that this will make it easier for Albert Heijn to penetrate the market by using ethno-marketing strategies which would target the Dutch population first to gain a foothold in the market and later focus on providing services to the local population as well. In this report we will describe the country of Dubai and how the supermarket chain complements each other. We will also analyze the demographic situation, ecological and economical situation of Dubai. Finally we will provide a SWOT analysis and a Porters Five Forces analysis of Albert Heijn to get a better grip on how it could fit into the Dubai market.

Background of Dubai and Albert Heijn The Country of Dubai Our report is based on the launching of Albert Heijn, a Dutch supermarket chain in Dubai. So our report will be focused on Dubai, but it must be mentioned that Dubai forms part of United Arab Emirates. This Middle Eastern Federation consists of seven countries. These countries are Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Um al-Quwain. Amongst these seven member states Dubai has the largest population.

The United Arab Emirates is rich in oil and natural gas, has been blossoming since the 1970s due to direct foreign investments. The HDI in Dubai is fairly high for an Asian country and is listed at 39th globally. The

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supermarket chain Albert Heijn Albert Heijn is one of the leading food retailers in the Netherlands. It is also one of the most recognizable brands in the Netherlands. The company was founded in the year 1887 its mission statement has always been, “to make the ordinary affordable and the extraordinary attainable” for its customers.

Today the company has over 800 stores in the Netherlands and has recently gone international to the Caribbean with a store in Curacao. It employs approximately 62,000 people making it one of the largest employers in the Netherlands. Along with its wide range of unique products and services Albert Heijn also adopts the latest forms of technology available in food retail. As can be seen in the graph below the company that owns Albert Heijn has had steady growth over the past 5 years and is predicted to grow further.

This can be seen as a positive outlook for an expansion to Dubai as entry barriers such as capital and brand awareness will be easier to overcome. [pic] SWOT of Albert Heijn Below is a SWOT analysis that we will be using as a strategic planning method, in this case we will use it to evaluate the strengths, weaknesses, opportunities, and threats of Albert Heijn involved in this particular business venture. Strengths • Leading food retailer in The Netherlands • Part of Royal Ahold multinational supermarket conglomerate. • Over 800 stores and 62,000 employees Own private label • Private label accounts for 50% of sales • Brand recognition • Employs the latest technology in the supermarket industry • Brand recognition Weaknesses • Dutch company in a Arab country • Not much experience operating outside of Europe • Too much variety • Different standards in packing and distribution of food products • Quality control would have to be adapted Opportunities • Dubai is in its blossoming faze • Financing and Tax laws are very favorable • Good trade regulations • DIFC has imposed 55,5% foreign ownership for companies

Threats • International population is mostly Asian • Operating in the food retail might not go well with the culture • The economic crisis might cause foreign investment policies to change • Dutch standards in food retail might not go over well with Arab countries Economics Demographic Dubai is located in Asia and forms part of the UAE it is the second largest country of the federation but has the largest population with an estimated population of 1,450,000. From the total population of Dubai 18% are native and the remaining 81% are internationals.

Dubai has been offering a prosperous future for immigrants who are in search of a better life and job. The blossoming economy of Dubai has lead to the need for manpower in the field of construction and service industry. The pay is not extraordinary high in these fields but is better than in most developing countries or other countries in Asia. Since we are looking to take Albert Heijn a food retailer to Dubai it is important to take the whole population into consideration. Age of Dubai population circa (2005) 0-14 years:

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