Logistics Business In United Arab Emirates Marketing Essay

3045 words (12 pages) Essay

1st Jan 1970 Marketing Reference this

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This research proposal will examine how Deutsche Post DHL can develop possible strategy for future sustainability of the logistics business in United Arab Emirates (UAE) within the context of an emerging competitive environment.

PART 1

Background to the research

It is a fundamental necessity of every business to survive, grow and succeed in their chosen industry. Therefore, it is essential to assess the environment, market situation, competition and own strengths and weaknesses on a regular basis, in order to develop and maintain competitive advantage and future sustainability.

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The world and its citizens are constantly going through changes and every business in order to keep up with the pace of the world also needs to change. Products and services that are popular and highly demanded today may not be such in future. The world progresses, so must the organisation to maintain their business and be one step ahead of the competitors.

DHL, established in the USA in 1969, inventor of international air express industry, is now the largest global logistics specialist that continues to expand to new locations constantly improving their services. In 2002, Deutsche Post became the majority shareholder in the DHL with 51% stakes, which made the Deutsche Post DHL a global leader in the logistics and communications services with presence in USA, Europe, Asia Pacific, Middle East and Africa (DHL International GmbH, 2012).

DHL is affected by socio-economic and political trends and developments of the world, and in turn it influences the world in which they operate. It is essential for Deutsche Post DHL to understand and address the factors that shape the future.

Climate change is one of the biggest concerns around the globe, and sustainability matters a lot to people. Therefore, it is very important to focus on sustainable solutions in logistics industry, increasing the company’s and its customers’ competitiveness. DP DHL was the first logistics company which began carbon-neutral shipping. The company truly believes that sustainably-oriented business will transform the industry. DHL has to aim to make a positive contribution to the environment of its operation. One of the trends is to do so by lowering carbon emissions which can be very challenging, long process. Logistics industry has a special role in local and global economies and can offer a lot to societies concerned with sustainability.

DP DHL financial position in 2011 and first quarter of 2012 has remained very solid. In the DHL logistics divisions, global investments are helping the company to expand in both mature and growth markets. Given good performance in 2011 and in the beginning of 2012, DP DHL forecast to reach GBP 2.2 billion revenues in this financial year. The express and logistics divisions are expected to contribute approximately GBP 1.5 billion to this figure (Deutsche Post DHL, 2012).

The Middle East Gulf Cooperation Council countries (Bahrain, Qatar, Kuwait, Oman, Saudi Arabia and United Arab Emirates) is one of the fastest developing economic regions in the world. The transportation volume and flow of goods has rapidly increased due to improved life standards, growing demand and geographic location of these lands. DHL developed the first high-performance regularly-operating road network of its kind between Europe and Middle East. Currently, DHL has more than 160 freight terminals in Europe and 16 major distribution centres and many local terminals in the Middle East. Amman and Dubai function as the main hubs and competence centres of the region. DHL Middle East Service is the right choice for a range of products and is the preferred logistics service provider within the fast-growing Middle East region (DHL, 2012). According to 2009 reports, in the EEMEA (Eastern Europe, Middle East, and Africa) region, Deutsche Post DHL (DP DHL) has maintained its dominance with 46% of market shares, alongside such other major international service providers as UPS (9%), Aramex (10%), and TNT (12%), and many local companies.

UAE, the second largest economy in GCC, is considered as a premier logistics hub of Middle East due to many reasons. First of all, it is a strategic geographic location between the Eastern and Western world where logistics industry is in high focus at present. Due to the importance of this business sector, world class logistics infrastructure facilities, including free trade zones for transhipment and re-exporting, have been made available in UAE. The country has one of the lowest average logistics costs in the world. Finally, it has been rated best in logistics infrastructure in Middle East by World Bank’s Logistics Performance Index 2012 (Ramakrishnan, 2010).

The UAE is one of the key growth catalysts for the contract logistics market in Middle East. GCC countries’ high gains in Middle East contract logistics market is driven by high levels of investment, fast economic growth and consumer spending. The UAE market grew for 11.9% and remains the region’s second largest contract logistics market with a value of USD 451 million during 2011 (menafn.com, 2000).

DHL is the current Middle East logistics market leader and its logical business target is to maintain and improve the company’s position, staying as successful and competitive as (it is) at present. It is important to constantly work on the sustainability planning and design strategic actions according to the changing world and challenging competitive market. The whole purpose of the research is to aid the planning of strategic decisions with a complete analysis of current situation and suggested courses of action.

The research should find value of importance in the eyes of the client, Deutsche Post DHL. This paper should educate the readers about the current DHL position in UAE logistics sector among rival companies, and it will suggest possible strategy that would sustain the company’s market leadership in this region in the future.

It will expand and deepen the researcher’s understanding of several aspects of the logistics business, particularly DHL’s sustainability in UAE. New skills and experience acquired during conduction of the research will benefit the future career of the researcher.

The proposal is organised in three main sections. Part one is focused on the background of the research that includes the context for research, purpose, relevance, research areas and the structure of the proposal. Part two presents the research design with formulated research questions, description of research style, data types and sources, and their reliability and representativeness. Part three discusses the plan of analysis with details of the methods of analysis, work plan, ethical issues, and expected outcomes of research.

PART 2

Research Design

This research is proposed following the company’s request to examine the future sustainability of its business within the context of an emerging competitive environment. The researcher will evaluate and propose to the management possible logistics strategies that would sustain DHL’s market share in UAE.

Research Question

The main research question that will be explored in the study is:

What strategic measures need to be taken in order to sustain DHL’s current market share and competitive advantage in UAE?

In order to complete the inquiry and help address the main question, several key questions will be examined:

What is the current DHL’s market share in the logistics industry in UAE?

Which division of the logistics drives the success of the company in UAE?

Who are the biggest competitors in the industry in UAE?

What successful business strategies the rival companies currently employ?

Finding answers to the above questions will help to answer the following research objectives:

To investigate the current DHL’s market position in logistics industry in UAE

To suggest possible strategies how DHL can implement to sustain their current market share in UAE logistics sector within the context of an emerging competitive environment.

Selection of Research Style, Data Sources & types

The research will be carried out in deductive manner with mainly qualitative research methods used to analyse historical data.

The essential qualitative information will be collected first of all from secondary data sources. These will include various internal and external company data sources, such as, databases, industry reports, company reports, published accounts, periodic company analysis, government surveys, trade association reports, government papers, trade and industry papers and competitor information, provided that access to the above can be granted.

The Internet is an important source that provides access to increasingly more secondary data sources which helps to meet the requirements of information specification, and consequently answer the research question. It is also an easier accessible and low-cost research tool, if compared to surveying and interviewing, which may reduce the necessity for such primary data collection styles, provided the information is reliable and authentic. For this very reason, secondary data will be collected prior to the preliminary data. If a necessity will arise during the research, conduction of interviews and surveying will also be carried out. In that case, the timing of the research may need to be extended, as acquisition of preliminary information will be rather time-consuming, and will also cost more.

Research Plan

First of all, vast amount of information will be collected about the company from within the company’s sources. It will be essential to develop and maintain positive cooperative relationships with the company, as the research could not be conducted without such a supportive environment. Records of operational activities, products and services, technologies, research and development information and other, are highly-valued reliable intangible assets of the company that will be exploited in this research in order to develop accurate understanding of DHL’s position and reach the research objectives.

As mentioned earlier, one-to-one personal interviews with senior management can also be conducted, if necessary. Data can be collected via individual conversations and questionnaires with the company’s management and employees discussing various matters of the company’s operation. In a confidential and anonymous environment, interviewees will be able to share opinions while answering specifically designed questions relevant to the research topic. Main areas of questioning would include internal environment and situation of (in?) the company, and, most importantly, their view on DHL’s current market position and steps to take to maintain future sustainability in UAE market within the competitive environment will be investigated.

When the appropriate insight into the internal situation is gained, it is essential to investigate the external environment. This will be achieved through thorough secondary information collection about such areas of interest as location, market, customers, competitors and other.

In addition to literature search, PESTLE analysis will be used to examine the political, socio-economic, technological, legal and environmental factors of the location.

The next step is investigation of the market of operation and its many dimensions, such as market regulations, size, trends, growth rate, industry cost structure and profitability, distribution channels, and key success factors. Information on market size can be collected from government data, trade associations, financial data from major players and existent customer surveys. In order to assess the market profitability, buyer power, supplier power, barriers to entry, the threat of substitute services and rivalry among firms in the industry would be examined. Yip’s Global Drivers research instrument will evaluate the governmental, technological, cost, and market determinants in order to assess the reasons why the company chose to enter the UAE market. Market analysis will provide documented data that can be used to plan the company’s activities appropriately. The ultimate goal of market analysis is to evaluate the future attractiveness of a (the?) market by understanding the opportunities and threats in relation to the company’s strengths and weaknesses. Information can then be used to base the organisation’s future investment decisions and further its progress and success (NetMBA.com, 2010).

Last but not least is the survey of competitors, their operation, position, and other trends. It is important to assess the competition not just from the point of view of similar services in the logistics industry, but also taking other threats into consideration, such as the customers, substitute services, and new competitive market entrants. Porter’s Five Forces research tool will be used to investigate the above.

To summarise the major steps of the research, the necessary information about internal and external environment will be collected, and analysed thereafter by the use of various research tools.

PART 3

Plan of Analysis

Methods of Analysis

The collected data will be analysed using various environmental and competitive analysis tools. SWOT will be used to explore the internal factors and external challenges DHL face in UAE market. PESTLE analysis of the political, economic, social, technological, legal and environmental factors will be conducted to assess whether the external environment works in favour of the organisation’s development or possesses threats. The information obtained will provide guidelines to strategic decision-making.

The first supportive question: ‘What is the current DHL’s market share in logistics industry in Middle East?’ will be researched from available secondary information and also answered using Yip’s Global Drivers analysis of the governmental, technological, cost, and market determinants that will help to assess the reasons why the company chose to enter Middle East market.

The answer to the second question: ‘Which division of the logistics drives the success of the company in Middle East?’ can be sought by the use of Ansoff Matrix, a marketing planning tool, that will help determine the product and market growth strategy of the company. Value Chain will be applied to describe company’s primary and secondary business activities that affect the competitive strength of the business. Porter’s Generic Strategies will research the company’s cost leadership, differentiation, and┬ámarket segmentation in order to evaluate the company’s competitive advantage and suggest strategies for achieving and maintaining it.

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The third and the fourth questions: ‘Who are the biggest competitors in the industry in Middle East’? and ‘What successful business strategies the rival companies currently employ?’ will be investigated using the famous Porter’s Five Forces analysis to examine the competitiveness of the logistics market, profitability prospects, and aid in business strategy development.

Work Plan

There are time limitations to the research and, therefore, it is essential to plan the research steps and follow the plan during the study accordingly, in order to achieve the desired results in the set time frame. The allocated time for the research will be 12 weeks (Table 1, p.) and should be used for each section as follows:

Background of the Research 5%

Literature Review 35%

Research Methodology 10%

Data Collection 20%

Data Analysis 15%

Recommendations and Conclusions 10%

References and Appendices 5%

Table 1. Gantt Chart

Research Execution Timeline

Tasks

Weeks

1

2

3

4

5

6

7

8

9

10

11

12

Revise design proposal if necessary

Design questionnaires

Conduct interviews &surveys

Collect secondary information

Analyse primary &secondary data

Interpret results

Identify main findings

Conclusions &recommendations

Write up report

Reference to research questions

Polish up writing

Print, bind &submit report

Ethical Issues

Possible ethical issues can arise due to surveying and interviewing to be carried out in this research. Consent form will be designed and consent obtained from every individual participating in surveys. Confidentiality and careful handling of sensitive information, both primary and secondary, will be strictly adhered to in the process of information collection and analysis. Primary data will be protected, stored and disposed of securely, in line with a research protocol that will be designed to meet the requirements of responsible and ethical research. All information will be collected legally and will be coordinated with permission obtained from the third parties. All sources will be referenced according to Harvard referencing system.

Expected Outcomes

Research questions will be answered in order to reach the objectives stated in the research design. Strategic propositions will be made to the DHL management that will contribute to the design of an action plan of business sustainability in UAE during the times of emerging market competitiveness. Suggestions will then be evaluated and can be acknowledged as unsuitable. The action in such case will be returning to the analytical phase to repeatedly evaluate the data, until the strategic choice matches the objectives of the company and justifies itself.

This research proposal will examine how Deutsche Post DHL can develop possible strategy for future sustainability of the logistics business in United Arab Emirates (UAE) within the context of an emerging competitive environment.

PART 1

Background to the research

It is a fundamental necessity of every business to survive, grow and succeed in their chosen industry. Therefore, it is essential to assess the environment, market situation, competition and own strengths and weaknesses on a regular basis, in order to develop and maintain competitive advantage and future sustainability.

The world and its citizens are constantly going through changes and every business in order to keep up with the pace of the world also needs to change. Products and services that are popular and highly demanded today may not be such in future. The world progresses, so must the organisation to maintain their business and be one step ahead of the competitors.

DHL, established in the USA in 1969, inventor of international air express industry, is now the largest global logistics specialist that continues to expand to new locations constantly improving their services. In 2002, Deutsche Post became the majority shareholder in the DHL with 51% stakes, which made the Deutsche Post DHL a global leader in the logistics and communications services with presence in USA, Europe, Asia Pacific, Middle East and Africa (DHL International GmbH, 2012).

DHL is affected by socio-economic and political trends and developments of the world, and in turn it influences the world in which they operate. It is essential for Deutsche Post DHL to understand and address the factors that shape the future.

Climate change is one of the biggest concerns around the globe, and sustainability matters a lot to people. Therefore, it is very important to focus on sustainable solutions in logistics industry, increasing the company’s and its customers’ competitiveness. DP DHL was the first logistics company which began carbon-neutral shipping. The company truly believes that sustainably-oriented business will transform the industry. DHL has to aim to make a positive contribution to the environment of its operation. One of the trends is to do so by lowering carbon emissions which can be very challenging, long process. Logistics industry has a special role in local and global economies and can offer a lot to societies concerned with sustainability.

DP DHL financial position in 2011 and first quarter of 2012 has remained very solid. In the DHL logistics divisions, global investments are helping the company to expand in both mature and growth markets. Given good performance in 2011 and in the beginning of 2012, DP DHL forecast to reach GBP 2.2 billion revenues in this financial year. The express and logistics divisions are expected to contribute approximately GBP 1.5 billion to this figure (Deutsche Post DHL, 2012).

The Middle East Gulf Cooperation Council countries (Bahrain, Qatar, Kuwait, Oman, Saudi Arabia and United Arab Emirates) is one of the fastest developing economic regions in the world. The transportation volume and flow of goods has rapidly increased due to improved life standards, growing demand and geographic location of these lands. DHL developed the first high-performance regularly-operating road network of its kind between Europe and Middle East. Currently, DHL has more than 160 freight terminals in Europe and 16 major distribution centres and many local terminals in the Middle East. Amman and Dubai function as the main hubs and competence centres of the region. DHL Middle East Service is the right choice for a range of products and is the preferred logistics service provider within the fast-growing Middle East region (DHL, 2012). According to 2009 reports, in the EEMEA (Eastern Europe, Middle East, and Africa) region, Deutsche Post DHL (DP DHL) has maintained its dominance with 46% of market shares, alongside such other major international service providers as UPS (9%), Aramex (10%), and TNT (12%), and many local companies.

UAE, the second largest economy in GCC, is considered as a premier logistics hub of Middle East due to many reasons. First of all, it is a strategic geographic location between the Eastern and Western world where logistics industry is in high focus at present. Due to the importance of this business sector, world class logistics infrastructure facilities, including free trade zones for transhipment and re-exporting, have been made available in UAE. The country has one of the lowest average logistics costs in the world. Finally, it has been rated best in logistics infrastructure in Middle East by World Bank’s Logistics Performance Index 2012 (Ramakrishnan, 2010).

The UAE is one of the key growth catalysts for the contract logistics market in Middle East. GCC countries’ high gains in Middle East contract logistics market is driven by high levels of investment, fast economic growth and consumer spending. The UAE market grew for 11.9% and remains the region’s second largest contract logistics market with a value of USD 451 million during 2011 (menafn.com, 2000).

DHL is the current Middle East logistics market leader and its logical business target is to maintain and improve the company’s position, staying as successful and competitive as (it is) at present. It is important to constantly work on the sustainability planning and design strategic actions according to the changing world and challenging competitive market. The whole purpose of the research is to aid the planning of strategic decisions with a complete analysis of current situation and suggested courses of action.

The research should find value of importance in the eyes of the client, Deutsche Post DHL. This paper should educate the readers about the current DHL position in UAE logistics sector among rival companies, and it will suggest possible strategy that would sustain the company’s market leadership in this region in the future.

It will expand and deepen the researcher’s understanding of several aspects of the logistics business, particularly DHL’s sustainability in UAE. New skills and experience acquired during conduction of the research will benefit the future career of the researcher.

The proposal is organised in three main sections. Part one is focused on the background of the research that includes the context for research, purpose, relevance, research areas and the structure of the proposal. Part two presents the research design with formulated research questions, description of research style, data types and sources, and their reliability and representativeness. Part three discusses the plan of analysis with details of the methods of analysis, work plan, ethical issues, and expected outcomes of research.

PART 2

Research Design

This research is proposed following the company’s request to examine the future sustainability of its business within the context of an emerging competitive environment. The researcher will evaluate and propose to the management possible logistics strategies that would sustain DHL’s market share in UAE.

Research Question

The main research question that will be explored in the study is:

What strategic measures need to be taken in order to sustain DHL’s current market share and competitive advantage in UAE?

In order to complete the inquiry and help address the main question, several key questions will be examined:

What is the current DHL’s market share in the logistics industry in UAE?

Which division of the logistics drives the success of the company in UAE?

Who are the biggest competitors in the industry in UAE?

What successful business strategies the rival companies currently employ?

Finding answers to the above questions will help to answer the following research objectives:

To investigate the current DHL’s market position in logistics industry in UAE

To suggest possible strategies how DHL can implement to sustain their current market share in UAE logistics sector within the context of an emerging competitive environment.

Selection of Research Style, Data Sources & types

The research will be carried out in deductive manner with mainly qualitative research methods used to analyse historical data.

The essential qualitative information will be collected first of all from secondary data sources. These will include various internal and external company data sources, such as, databases, industry reports, company reports, published accounts, periodic company analysis, government surveys, trade association reports, government papers, trade and industry papers and competitor information, provided that access to the above can be granted.

The Internet is an important source that provides access to increasingly more secondary data sources which helps to meet the requirements of information specification, and consequently answer the research question. It is also an easier accessible and low-cost research tool, if compared to surveying and interviewing, which may reduce the necessity for such primary data collection styles, provided the information is reliable and authentic. For this very reason, secondary data will be collected prior to the preliminary data. If a necessity will arise during the research, conduction of interviews and surveying will also be carried out. In that case, the timing of the research may need to be extended, as acquisition of preliminary information will be rather time-consuming, and will also cost more.

Research Plan

First of all, vast amount of information will be collected about the company from within the company’s sources. It will be essential to develop and maintain positive cooperative relationships with the company, as the research could not be conducted without such a supportive environment. Records of operational activities, products and services, technologies, research and development information and other, are highly-valued reliable intangible assets of the company that will be exploited in this research in order to develop accurate understanding of DHL’s position and reach the research objectives.

As mentioned earlier, one-to-one personal interviews with senior management can also be conducted, if necessary. Data can be collected via individual conversations and questionnaires with the company’s management and employees discussing various matters of the company’s operation. In a confidential and anonymous environment, interviewees will be able to share opinions while answering specifically designed questions relevant to the research topic. Main areas of questioning would include internal environment and situation of (in?) the company, and, most importantly, their view on DHL’s current market position and steps to take to maintain future sustainability in UAE market within the competitive environment will be investigated.

When the appropriate insight into the internal situation is gained, it is essential to investigate the external environment. This will be achieved through thorough secondary information collection about such areas of interest as location, market, customers, competitors and other.

In addition to literature search, PESTLE analysis will be used to examine the political, socio-economic, technological, legal and environmental factors of the location.

The next step is investigation of the market of operation and its many dimensions, such as market regulations, size, trends, growth rate, industry cost structure and profitability, distribution channels, and key success factors. Information on market size can be collected from government data, trade associations, financial data from major players and existent customer surveys. In order to assess the market profitability, buyer power, supplier power, barriers to entry, the threat of substitute services and rivalry among firms in the industry would be examined. Yip’s Global Drivers research instrument will evaluate the governmental, technological, cost, and market determinants in order to assess the reasons why the company chose to enter the UAE market. Market analysis will provide documented data that can be used to plan the company’s activities appropriately. The ultimate goal of market analysis is to evaluate the future attractiveness of a (the?) market by understanding the opportunities and threats in relation to the company’s strengths and weaknesses. Information can then be used to base the organisation’s future investment decisions and further its progress and success (NetMBA.com, 2010).

Last but not least is the survey of competitors, their operation, position, and other trends. It is important to assess the competition not just from the point of view of similar services in the logistics industry, but also taking other threats into consideration, such as the customers, substitute services, and new competitive market entrants. Porter’s Five Forces research tool will be used to investigate the above.

To summarise the major steps of the research, the necessary information about internal and external environment will be collected, and analysed thereafter by the use of various research tools.

PART 3

Plan of Analysis

Methods of Analysis

The collected data will be analysed using various environmental and competitive analysis tools. SWOT will be used to explore the internal factors and external challenges DHL face in UAE market. PESTLE analysis of the political, economic, social, technological, legal and environmental factors will be conducted to assess whether the external environment works in favour of the organisation’s development or possesses threats. The information obtained will provide guidelines to strategic decision-making.

The first supportive question: ‘What is the current DHL’s market share in logistics industry in Middle East?’ will be researched from available secondary information and also answered using Yip’s Global Drivers analysis of the governmental, technological, cost, and market determinants that will help to assess the reasons why the company chose to enter Middle East market.

The answer to the second question: ‘Which division of the logistics drives the success of the company in Middle East?’ can be sought by the use of Ansoff Matrix, a marketing planning tool, that will help determine the product and market growth strategy of the company. Value Chain will be applied to describe company’s primary and secondary business activities that affect the competitive strength of the business. Porter’s Generic Strategies will research the company’s cost leadership, differentiation, and┬ámarket segmentation in order to evaluate the company’s competitive advantage and suggest strategies for achieving and maintaining it.

The third and the fourth questions: ‘Who are the biggest competitors in the industry in Middle East’? and ‘What successful business strategies the rival companies currently employ?’ will be investigated using the famous Porter’s Five Forces analysis to examine the competitiveness of the logistics market, profitability prospects, and aid in business strategy development.

Work Plan

There are time limitations to the research and, therefore, it is essential to plan the research steps and follow the plan during the study accordingly, in order to achieve the desired results in the set time frame. The allocated time for the research will be 12 weeks (Table 1, p.) and should be used for each section as follows:

Background of the Research 5%

Literature Review 35%

Research Methodology 10%

Data Collection 20%

Data Analysis 15%

Recommendations and Conclusions 10%

References and Appendices 5%

Table 1. Gantt Chart

Research Execution Timeline

Tasks

Weeks

1

2

3

4

5

6

7

8

9

10

11

12

Revise design proposal if necessary

Design questionnaires

Conduct interviews &surveys

Collect secondary information

Analyse primary &secondary data

Interpret results

Identify main findings

Conclusions &recommendations

Write up report

Reference to research questions

Polish up writing

Print, bind &submit report

Ethical Issues

Possible ethical issues can arise due to surveying and interviewing to be carried out in this research. Consent form will be designed and consent obtained from every individual participating in surveys. Confidentiality and careful handling of sensitive information, both primary and secondary, will be strictly adhered to in the process of information collection and analysis. Primary data will be protected, stored and disposed of securely, in line with a research protocol that will be designed to meet the requirements of responsible and ethical research. All information will be collected legally and will be coordinated with permission obtained from the third parties. All sources will be referenced according to Harvard referencing system.

Expected Outcomes

Research questions will be answered in order to reach the objectives stated in the research design. Strategic propositions will be made to the DHL management that will contribute to the design of an action plan of business sustainability in UAE during the times of emerging market competitiveness. Suggestions will then be evaluated and can be acknowledged as unsuitable. The action in such case will be returning to the analytical phase to repeatedly evaluate the data, until the strategic choice matches the objectives of the company and justifies itself.

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