Posted: August 12th, 2013
Future of International Business in the UAE
Future of International Business in the UAE
A. Introduction and General Theory
Europcar is a multinational company that deals with car rentals. Eurazeo, an investment company in France owns Europcar. The automobile manufacturer Volkswagen that was based in Germany initially owned Europcar. However, since it was not as profitable as they had anticipated it to be, the Volkswagen group decided to sell it off. Volkswagen founded the company first in Paris in 1949. Presently, the company’s headquarters are in France, particularly in Saint Quentin en Yvelines at Immeuble Les Quadrants. This occurred in 2006 after the sale of the company was finalized. The company owns approximately 200, 000 vehicles and is based in over 150 countries all over the world. It also boasts of having branches in over 2800 locations in the said 150 countries. Europcar is mostly located in Europe, Africa, Middle East, North America and the Caribbean Islands.
However, as much as the company is a well-known multinational, the brand is most common in European countries like France, The United Kingdom and Germany. These are Europcar’s major markets in the case of corporate and leisure rental services. The car rental field is a severely competitive field but Europcar ahs been able to withstand this competition and remain the most popular brand in a majority of the European countries. In order to strengthen the company further, they decided to purchase another car rental company, Vanguard EMEA in 2007. Vanguard was the operator of two companies, Alamo Rent a Car and National car rental. These companies were doing well in Europe and North America. Purchase of Vanguard enabled Europcar to penetrate the North American market. As a result, the company grew tremendously and made huge profits. Europcar’s logo is the company name set in a green background and is used in all the branches that they have all over the world.
Its vision is to become the best car rental company by offering impeccable services to their customers. The mission of the company is to offer services of the highest quality with the use of the latest technology, which are in line with the international standards. The company has an intricate organizational structure, which enables it to perform extremely well. A board of directors, who are the overall decision makers of the company, heads Europcar. The company also has managers in the several departments who oversee the company on a day-to day basis. This structure of leadership is emulated in each of the branches that Europcar has all over the world. Nonetheless, the company has only one board of directors who oversee the company’s progress. Europcar’s main target market is the tourists. This is because, as they tour the different areas, they require cars and they cannot travel with their own. In addition to this, the company also targets corporate societies and the citizens of the country in question as well.
B. Introduction to firm
Europcar is a company that specializes in car rental services. It is widespread with over 2800 locations in about 150 countries all over the world. The company owns over 200, 000 fleets of cars of different makes and brands. All these cars are offered to their customers who may rent them for any period. Renting of the company cars maybe done physically in which case the customer visits one of their offices or of by the use of the internet whereby the customers paces their request online. The majority of their customers are from European countries like France and Germany.
Business history: Europcar was started in 1949 by the Volkswagen group but was later sold to Eurazeo in 2006. Eurazeo have been in control of the company since then and the company had improved significantly. The company’s headquarters are based in France but it has location in about 150 other countries worldwide. The majority of the customers of the company are from European countries like Germany and France. For this reason, Europe is its main market. The company also purchased another car rental company in 2007. They did this in order to strengthen their hold in the North American region. The company they purchased was Vanguard EMEA whose main target market was North American countries. The company is aimed at providing only the best services to their customers all over the world. Europcar uses all the recommended technologies to ensure that it meets the international standards of quality. For this reason, Europcar has become one of the most popular car rental services.
SWOT Analysis of the company
Strengths: The kind of services that the company provides is if high quality and this makes their customers content. Therefore, customer loyalty is created since the customers appreciate the services offered to them. Finally, the pricing of their cars is very reasonable, which has been another reason for their growth.
Weaknesses: The Company is mainly based in Europe and this has limited the number of customers that they have. Sudden changes in the management of the company affected the revenues of the company in 2011.
Opportunities: The Company identified the opportunity in the market in UAE, which would ensure increased profits for the company. For this reason, they have targeted several cities in the region such as Dubai.
Threats: Other car rental firms worldwide have been a threat to the success of the company. For instance, in Dubai, firms like Avis and Hertz have been a great competition for Europcar. In order to counter such firms Europcar may embark on serious campaign strategies or offer services that are more favorable to their customers in the region.
Some key leaders in the company
|a) The Chairman of the board of Directors: Jean-Charles Pauze
His main role is to act as an advisor to other senior members of the company. This is because he has a lot of experience in the service industry
|b) The Chief Executive Officer: Roland Keppler
He was appointed CEO because of his vast expertise as evidenced in all the other prominent positions that he held in the other companies he worked for.
|c) The Chief Operating Officer: Rafael Girona
Girona was selected COO in 2006 immediately after Eurazeo bought the company from the Volkswagen group. His prowess in management has enabled him to supervise the company operations effectively
|d) The Chief Financial Officer: Caroline Parot
Parot joined the company in 2011 and due to her competence; Europcar has enjoyed a momentous increase in profits.
C. Global Scenario and Business State of the firm
Europcar is already a multinational company with branches in several components including Asia and Africa. However, their most defined target market is in the European countries. In a bid to diversify their target market, they formulated a three-year plan aimed at penetrating other markets. The plan was dubbed the ‘transformation plan.’ This plan was created in 2012 and is expected to be completed in 2013. Major aspects that will be addressed in the strategic plan include price competitiveness, brand positioning, internal and organic growth. Europcar intended to extend its branches to the United Arab Emirates (UAE).They aimed to expand into this region since its level of growth ha been impressive over the past few years. UAE has become one of the most popular sites for investors. This is because of the friendly policies and the stable economic growth that the region has (Singh, 2008). Europcar has established branches in Dubai, Saudi Arabia, Bahrain, Yemen and Abu Dhabi just to mention a few. The launch of these subsidiaries has enabled Europcar to gain recognition from the Middle Eastern market (Europcar Group, 2010).
This is because it has provided the citizens of this region with services of high quality and it has become the most admired company in the region. In Dubai, for example the company has made enormous profits since its inception. This is probably because Dubai is a well-known tourist attraction. For this reason, the use of rental cars is common amongst the tourists who visit the area. Penetration of the Middle Eastern Market has been a noteworthy achievement for Europcar. This is because it will be easier for them to invest in the region since they are already recognized in the region. If they were not known in the region, it would prove impossible to invest in the region and if they did, they may have lost a lot of money since they would not have known much about the economy of the region. However, the entry into the Dubai market has not been easy since the existing firms posed a lot of competition. Car rental companies like Avis and Hertz are examples of the major competitions that the company has faced in Dubai. . Avis is a company based in the UAE. It was a major competition because it also provided its customers with high quality vehicles, which were all well serviced, and at affordable rates. Hertz is also another chief competition mainly because it has forged connections with institutions like airports in Dubai. Due to the existing competition, Europcar had to advertise more and offer more competitive prices in a bid to attract more customers.
D. Analytical approach
To prove the level of growth that the company has achieved, it is imperative to include analytical proof to substantiate the claims. The data to be used will be with respect to the 2011 annual report.
(The values provided are in millions of £)
Financial statement of Europcar in 2011
|Fleet holding costs||491.9||492.3||499.9|
|Net financing costs||241.6||241.8||228.7|
|Result before Tax||125.6||125.5||83.2|
|Profit/loss for the period||128.4||128.2||72.2|
This financial statement provides a comparative analysis of the company’s performance in 2010 and 2011. The total revenue obtained in 2011 is slightly lower than the 2010 value. This may be attributed to the changes in leadership that occurred in the company in the course of the year. However, several important improvements can be noted in the data above. The operating expenses in 2011 are lower than in 2010. This is an improvement since it enables the company to increase their profit margins. In addition to this, the company’s income from other sources of revenue increases by over three million pounds. For this reason, even if the overall revenue of the company is lower than the one recorded in 2010, is has undergone several improvements that are most likely to show in the financial report at the end of 2012 (Dreyfack & Europcar, 2011).
E, Competitive strength in international markets
For a company to be successful in international markets, they have to obtain competitive strength over their competitors. This will enable them to influence the market trends to their benefit and as a result make more profits. Creation of competitive strength in the market is viewed as a very good market strategy. It is assumed that a company should do well if they have techniques like leveraging their domestic positions and establishing a niche in the international market (Fifield, 2007). Conversely, this is only beneficial in the first stages, in order to succeed in the new market; the company has to go a step further. Techniques that the company may use include strategic flexibility and effective building of the company position of the new and foreign market. Strategic flexibility refers to the ability of a firm to adapt to different situations that may arise in the company. This will ensure that sudden changes in the market will not have a great impact on the company in question. In an international market, this is very important since the company is not sure of what may happen. Market presence and position refers to making an indelible mark on the new market. This may be achieved by the introduction of a new product of very high services. If this is done, the company will have a tremendous effect on the economy and market trends (Bradley, 2005). If these techniques are implemented, the company will be able to gain competitive strength in the international market.
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