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Organizations are of different types and could be defined as social entities that are goal directed and are designed purposely to structure and coordinate various activity systems and which are also linked to external environment. An organization is made up of various key elements that include building policies and procedures, developing relations between the each other in the company. A successful organization interacts with each other to perform all the essential functions that help the organization to achieve its goals and objectives. The dimensions of organizational design explain the various structural and contextual dimensions that are the most important factors that make an organization with the competitive market. The organizational design, structure, strategies, effectiveness, innovation, decision making process, organizational culture and ethical values are the major building blocks of any organizations success. If all these elements are effectively planned it leads to effective organizational outcomes.
This research mainly focuses on the Organizational structure and design and its concepts of the selected company so as to understand in practical about an organization.
AIM and OBJECTIVES
The main aim of this report is to focus on the overall strategy and organizational design and its effectiveness of EMKE group. The main objectives include
Analyze the strategy and organizational design and its effectiveness of EMKE group
To study the organization structure and dimensions of EMKE group
Examine the innovation and change strategies of EMKE group
Examine the organizational culture and ethical values of EMKE group
Finally put forward few recommendations accordingly.
EMKE is largest retailer in UAE. It is an Abu Dhabi based company established in 1966 by Founder and Chairman Mr. M K Abdulla. Mr. Yousuf Ali M.A. (his picture below) who is nephew of the founder joined the group as Managing Director in 1973. The Company's overview indicates that the group started its activity as retail chain and Shopping Malls developers but the real growth came from the diversity of products and diversity in geographical areas. The philosophy of the Group as mentioned in their website is "right products in the right place at the right time" has brought the company in limelight as the execution of the same has been done in the traditional supply chain methodology (www.emkegroup.com).
This research has used both primary and secondary data collection methodologies. As a part of primary data collection methods we have conducted telephonic interviews with the HR managers. We have chosen secondary data collection process for the purpose of giving a strong theoretical basis. For this the research reviewed past literature, in view of the raised aims and objectives. This gave a clear understanding on the concepts of strategy and organizational design and its effectiveness, and the various issues related to this. Next related books were referred, this improved the standard of the subject content and therefore this helped the research to get more information on the proposed subject. Next reviewing various journals and articles has helped me to know the research background of the topic. Finally various search engines (Google, Google books, MSN, Yahoo etc.) were used to gather more information so as to give a strong theoretical basis for the research. The analysis mainly concentrates on the various aspects of organizational structure and design.
ANALYSIS and RESEARCH RESULTS
The structure dimensions
The Group operates popular brands of retail chain stores that include the renowned Lulu chain of supermarkets, department stores, hypermarkets and now shopping malls (support.fvc.com). Al Falah Plaza and Emirates General Market are other popular retail chains operated by us (www.emkegroup.com).
The company recorded turnover $2.1 billion in 2008. In UAE market share has increased to 40% in the organised sector. According to one of the bankers EMKE group is considered as one of the biggest group operating in UAE. The group has presence in 75 supermarkets in UAE, Oman, Qatar, Kuwait, Bahrain, Saudi Arabia, Yemen, India, Indonesia, Thailand, Hong Kong, China, Kenya, Tanzania and Benin which is approximately 15 countries in Asia and Africa (www.luluexchange.com). According to the estimates by the bankers EMKE group has US$ 1.18 billion and its retail chain cater to more than 320,000 customers every day. Market share is reported be more than 32% of the total retail market share within the GCC (www.emkegroup.com).
When we look at the Organizational structure of EMKE group it is seen that EMKE Group, which runs the LuLu chain of supermarkets and Hypermarkets across the Gulf states, has a very vast organizational structure with 18,000 employees out of which more than 13,000 are Indians. One of the most important factors to be mentioned here is effective Human Resources and Project Planning. With the experienced management and employing the locals in the overseas subsidiaries the Group has been able to continue the growth trend not only on volume but also in the products and services profile. The local employees have been beneficial for the accurate feedback of the culture, products and services etc. Taking a clue form such findings and expertise of locals the Company plans for the future projects. The geographical presence as a new outlet in other countries depends upon the needs of the customers and this accurate position is one of the secrets behind the EMKE Group's chain of outlets. There is perfect coordination between each sector of the activity which complements each other and reduces the cost of production and improving the margins. The SAP implementation is the advantage to the Group which enables the company to have detailed information on hand at any point of time. It saves lot of time, labour and improves Customer Service which is of prime importance to the Group (www.sap.com).
Strategy, Organization Design and Effectiveness
The company's strategy to diversify into manufacturing after starting initially from retail is a good move for the risk management purposes. The study of the Group shows that in case of the overseas investment in Indonesia, China, Hong Kong & Thailand the Group has even diversified into manufacturing and export of garments as well as textiles, food stuff, furniture, glassware, footwear, luggage, paper products and other general merchandise. From Jakarta the group earns export income by exporting the above referred items to number of clients in the Far East, USA, UK, Spain, UAE, Saudi Arabia, Egypt, Kuwait, Qatar, Bahrain, Kenya, Senegal, South Africa, The Netherlands, India, Bangladesh, Sri Lanka, Australia, New Zealand, Fiji and Mauritius. The supply chain system has been established even through outsourcing the items for retail products based on the culture and requirements of the countries operating in (www.in.kpmg.com).
The Group has entered into various segments as per the strategy and the effectiveness is seen from the fact that the slowdown in the economy has not impacted the group to large extent as the multifarious activities taking into consideration the following factors:
Large scale of domestic economic activity (ceo.usc.edu)
Growing middle classes that are large in absolute size (numbers) but small relative to the overall population
Foreign-based multinational companies that traditionally have struggled to break into the market and serve the majority of domestic consumers (ceo.usc.edu)
In view of the above, the company has maintained the quality and expansion is the evidence that the brand value has increased over the years.
The most important aspect of the retail chain is the implementation of SAP. This is on record that EMKE is amongst the first in Middle East and North America (MENA) to increase the business transparency. During September 2009 SAP AG (NYSE: SAP) has signed a deal to supply EMKE Group, the owner of a raft of well-known supermarkets and shopping malls in the region, with its groundbreaking new SAP Business Objects Explorer solution supporting the retail group's demand for business clarity and transparency (www.sap.com).
This will enable the Group to know the product-specific information in real- time and can be used to give a clear view of an organisation's daily operations and inform critical decisions. This was top most necessity for the Group due to its large customer base and number of transactions that take place each day. The software will streamlines the entire data process, from internal procurement to the customer experience (www.sap.com).
The Design of Organization for International Environment
The group has engaged in Shopping malls, Hypermarkets, Supermarkets - Retail chain and is diversifying into other activities.
EMKE Group with its brands of Lulu hyper & supermarket chains is by far the biggest gulf based operator.
The Group has diversified into manufacturing, import and export of various types of goods and also under its brand name LuLu.
The Group is expanding in different countries and taking advantage of the economies of these countries.
The Group has also entered into education field by establishing IT college. The Syscom Institute provides IT training to corporate professionals and individuals. The College is duly approved by the Ministry of Higher Education and Scientific Research (UAE), offers undergraduate courses to students of all nationalities, readying the youth of today with skills for tomorrow.
One of the major objectives of the Group is the designing of each mall or hypermarket as an art in itself. The company emphasizes more on reliability and durability as the list of requirements set forth by the Project Management team as the mall was to operate for years on. Stringent quality standards were to be met and reliable products were sought. Selection of vendors is given prime importance to maintain the quality standards and brand image.
The type of shopping malls to be built in is indicated from the report regarding Group's investment in India.
The Decision Making Processes
The Group follow the policy that top management focuses on productivity and future course of activities and measurements that are aligned with company plan. Being a retail chain the strategy is most important for inventory holding and continuous supply of the goods. Second line management persons i.e. supervisors takes care that the Strategic Planning is being executed as per the plan. As ,mentioned above there are specific recruitment as per job profile, accordingly, Financial Analysis and Forecasting, Marketing Strategy, Supply Chain. Management are taken care by top management persons. The financial decisions are effective planning is effective which is the responsibility of top management, who are not responsible for direct line supervision (www.emkegroup.com).
Following the top companies showing steep growth on yearly basis the Group has also established well organised Human Resources division. The recruitment and training which develop the skills and motivating the employees for retention is directly supervised by the Managing Director. The policies have been well defines for the organisation requirements so that right persons are recruited according to the job profile. On the job training along with continuous evaluation is continuous process in the Group. The strategy of the Group for the human Resources is of great significance as the employees are recruited from different countries with different culture and social behaviour. As per the Group's records the employees belong to 29 countries and there is perfect harmony (www.emkegroup.com).
Innovation and Change
The Group implemented the revolutionary changes in the logistic concepts by introducing the Warehouse Management System. The company has reported that they will comply with all International logistic standards. The company imparts training to the employees for the logistic standards to implement the concept of optimizes the warehouse process through the application of LFS 400. To clarify the modular LFS 400 warehouse management system is used across various industries and is designed especially for more demanding requirements. The standard system supported by a relational database controls the entire material and information flow in logistics centres by means of dialogue supported applications (www.ehrhardt-partner.ae).
As per the media report and press release as mentioned above the introduction of LFS 400 in the Abu Dhabi warehouses was challenging since a partial reorganization of existing warehouse operations was necessary, even though the acceptance of the WMS was very high. "We chose the LFS 400 as the preferable system due to its flexibility and easy to use customized solution which meets all the standards in our business. And with E + P's global experience and German expertise we are confident of meeting and satisfying the requirements of our customers", Mr. Ashraf, the Executive Director of EMKE commenting on their choice to use LFS 400 (www.ehrhardt-partner.de).
Even in the past i.e. during the year 2007, EMKE Group was involved in Research and Markets. At that time EMKE Group, Lulu Hypermarket and Masafi are among the Companies Operating in the UAE Food and Drink Industry. In the same year 2007 the Group was involved in research and innovations for credit card. The history of the Group indicates the innovative ideas and diversity in products. In continuation to the referred concepts EMKE Group that spearheads the popular LULU chain of Hypermarkets launched a co-branded credit card with Abu Dhabi Commercial Bank (ADCB). This has benefited the Group in improving the turnover as the credit card users will get the
usual features of an ADCB credit card but also unique additional benefits to reward them for their loyalty to EMKE stores (www.ehrhardt-partner.de).
According to the ADCB statement "Co-branded credit cards make for an incredibly powerful customer proposition. They are good for the bank, the strategic partner and most importantly, the customer. We are thrilled that our first such signing is with EMKE Group, which is undoubtedly one of the leading retailing groups in the region and also a valuable customer" (www.ehrhardt-partner.de).
The Group also implemented SAP system and according to the statement of Ramon Thoms, Regional Manager of Ehrhardt + Partner Solutions EMKE will be befitted to large extent which will include smooth operational sequence and a very easy communication with SAP system. With LFS 400 and the SAP arrangement the group was able to connect even Bahrain sites with the central machine at the beginning of 2010. The Group is being benefited by LFS 400 which is designed in a way that different warehouse sites in different countries can be connected with only one software installation. This enabled the Group in Transforming into a pioneering position in the supermarkets through innovation and transparency on the market spread over so many countries (www.pcmag-mideast.com).
Organization size, life cycle, and decline
EMKE Group though not amongst the top 500 Fortune companies published by USA but it attracts all the fortune 500 companies due to its multifarious activities and presence in developing countries. However, EMKE Group is ranked 12th in the African & Middle East Top 30 Grocery Retailer list. According to the study the Group will be at 10th position by 2010 (www.in.kpmg.com).
The company has got the advantage of Geographical diversity by getting knowledge of their requirements as per their culture. The company has also taken into consideration the social requirements of the regions where they are operating. The taste and trend of these markets has been followed to generate the revenue and improve profits (www.in.kpmg.com).
By entering Indian market with the proposed further expansion after completion of the Kerala project the market share of the company is expected to improve to large extent. The company, which has a footprint in 15 countries in Asia and Africa with interests in manufacturing, garments, trading and shipping, is also making a foray into Egypt by opening a store later this year and a hypermarket due to open in 2010 (economictimes.indiatimes.com).
The Group is also engaged in commodity exports which include cashew nuts, betel nut, cocoa, coffee, pepper, copra, fertilizers etc., to markets like India, Sri Lanka, Vietnam, Malaysia, Europe and Singapore. It is also a fact that the Group has entered into business of imports and distribution of building & construction materials, hardware, cloves, rice, wheat and pulses. The diversification of Group activities and products has benefited the group and shows the vision of the promoters for the future developments in the world. One of the overseas associate of the group in Kenya is also involved in Commodities and it procures all the agricultural products to cover the market needs of the African Continent. The Company in Kenya has systematically organised to procure the material even from the interiors. This division is treated as 100% export oriented and has major market share in the African agricultural produce exports (www.emkegroup.com).
According to the study done by KPMG group in India the group operates the biggest hypermarket chain in the Middle East under the LuLu and Al Falah brands is entering the lucrative Indian market by developing the biggest shopping Mall in Kerala by July 2011.The group controls almost a third of the UAE's organised retail market and is planning to invest USD 1.2 billion to expand its network within next three years (economictimes.indiatimes.com).
The organizational culture and ethical values
We have noticed that EMKE group takes effective steps to maintain a positive work environment that encourages both employees and the management to work is a standardized mode where in the employees are trained to develop good culture in work processes and also in customer service. Being ethical towards presenting their products and services is one of the well know feature of EMKE group. It is said that Customer Service is of prime importance to the Group (www.sap.com).
The Group is non technical especially in IT services and usage. Though the professionals have been employed but the prime importance to the technical resource allocation and service management is one of the areas to be continuously upgraded. Being operational in more than 19 countries in Far East, Middle East and Africa; and headquartered in Abu Dhabi, UAE, the internet is the Group's prime mode of communication. The Group should take Information protection on the top priority. EMKE has undertaken a major infrastructure upgrade which needs that the Group's IT department to examine all its internet traffic. The group needed a network-based IPS with unparalleled protection against external and internal attacks.
The Group started with retail chain but as the concept of hypermarket shopping was becoming famous amongst the shopper communities all over the globe and also across the region EMKE Group implemented the changing market trends and responded based on increase in turnover. The Group started with offering its customers bigger and better designed shopping environments by way of LULU shopping malls and hypermarkets. EMKE has interest in all type of products whether food or non food which later on changed to service sector also. The group, was known earlier only for wholesale and retail distribution of food and non-foodstuff but later on it added manufacturing, export-import, frozen and processed food industry and IT has operation bases in all major cities of the Middle East, Asia and Africa as part of the business potential and strategy. The Group maintained its strength by proving significance of training the local youth in the class rooms and on the job. As being done in big corporate for training the well known authorities in retail training were called for training to develop and implement employee training schedule.
Middle East is key market for the retailers across the world. It is well known fact that the region is witnessing rapid transformation in retail industry. During the past few years there have been tremendous changes in the retail culture across the Middle East which has evolved from traditional outlets to large shopping malls, hypermarkets, supermarkets and organized chains. As per the reports there will be a marginal effect of the 2008 financial crisis on the retail market in the Middle East, and it will see a growth of around 14% during 2009-2013. Except for the declining oil prices which may be a cause for concern for most of the oil exporting countries there may not be any adverse impact on retail industry. One of the most important factors in retail industry in the Middle East countries especially UAE is the presence of large expatriate population (Agrawal and Sharma).