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The international expansion of EGA in USA market

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jihan azzazi

on 28 August 2016

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Transcript of The international expansion of EGA in USA market

The international
Company profile
EMAL was founded in 2007 in United Arab Emirates as a subsidiary of Emirates Global Aluminum (EGA).
Before Phase II production expansion, it produces and supplies 800,000 tones of high quality aluminum metal annually.
After Phase II, it is expected to produce 1.3 m tones of smelter aluminum globally.
It has more than 150 customers worldwide.
Type of products are extrusion billets, sow, sheet, and standard ingots and the foundry aluminum.

Emirates Aluminum (EMAL) Company profile
EMAL was founded in 2007 in United Arab Emirates as a subsidiary of Emirates Global Aluminum (EGA).
Before Phase II production expansion, it produces and supplies 800,000 tones of high quality aluminum metal annually.
After Phase II, it is expected to produce 1.3 m tones of smelter aluminum globally.
It has more than 150 customers worldwide.
Type of products are extrusion billets, sow, sheet, and standard ingots and the foundry aluminum.

Strengths Analysis of the company
Using the state-of-the-art infrastructure and technology.
Using the Leaning Manufacturing systems and modern tools.
Ensure health and safety among their best practices.

A Weaknesses Analysis of the company
its products are not immune to the global market fluctuations.
The demand growth is weaker than expected.

EGA’s Entry mode strategy for international expansion in USA
Current entry mode strategy – Exporting
More than 92% of production is exported internationally

Serve more than 440 customers in 55 countries around the world.

Prices for the metal have gained almost 10 per cent this year, giving EGA more reason to expand as quickly as possible to help the country seek other forms of revenue apart from oil

Key markets
What is the entry mode strategy for US market
Direct exporting
Overseas sales in which a producer or supplier controls all activities and collects all drawbacks.

Why direct exporting
1. High demand and limited number of customers
PESTEL Analysis

Political, Economic, Social, Technological, Environmental and Legal factors

Political Factors

Is to understand the business set policies, unemployment, government policies, security, licenses, permits, population and number of states within the country.

Under Obama’s Regime: several trips in UAE to ensure strong investment and political links exists.

security in the country has also been increased and there are chances to have favorable market environment (since 9/11/2001 & 2007 Financial Crisis)
Economic Factors

Is to understand what required to adhere to economic based policies such as registration with commerce based organizations, interest rates and employ Americans

Financial Crisis 2007: interest rates in banks increased and companies had to devise new ways of raising revenues

US economy growth: 1.9% in 2011, 2.2 % in 2012 and 2.0% in 2013.

U.S economy is the largest national based economy with over $14.3 trillion GDP hence a reflection of a high purchasing power

U.S has huge reserves of aluminum and other minerals for all companies planning to settle in the country
Social Factors

Involve how society views investors, population, attitudes towards certain foreign company products and diversity

310 million people’s population---- provide ample source of market for the aluminum based products and large market force to service.

Has the most ethnically divided population----- factor for high performance


Technological Factors

I
nvolve technological changes which influence company growth and performance.
The technology facilitated improved railway, road and air transport hence reducing time wastages

Companies do not incur heavily costs due to poor infrastructure

The technology has facilitated reduced operation cost because several companies are no longer using labor intensive but capital based production

Has a large number of educated people who have come up with new ideas on how to improve company’s performance through new innovations
High demand
Limited number of customers
8 customers / country
No need for Intermediaries
‎2-‎ The cost of assets of aluminum manufacturing are very high‎
‎3-‎ The geographical distribution of the international markets ‎
The ideal location of UAE will reduce the cost of transportation
4- Cost of energy
Every 1 ton of aluminum requires 14 MW
2.3 million ton = 3.509.800.000 Dh / Year
5- Income tax rates
SWOT Analysis

Opportunity
The Federal reserves reduce interest rate to encourage investment.

US Federal Government has plan to compensate all companies whose properties have been destroyed.

Threats
US economy may be surpassed by Chinese company in the next 30 years

Political threats (change in the Government)

Environmental factors
Legal factors
Resources Management Plan
A resource is "any physical or virtual entity of limited availability; a stock or supply of money, materials, staff and other assets that can be drawn on by a person or organization in order to function effectively".

Economics (financial): this includes money, shares and other assets.
Physical: refers to tangible property such as equipment and office space.
Human resources: includes the knowledge, training, experience, as well as the time of the business owner and employees.
Technological (machinery): are embodied in a process, system or physical transformation, like unique software products and tailored information system architecture.
Reputation and Marketing: encompasses the perceptions that people in the business' environment have of the business.

Must be critically analyzed and identified before moving to US market
Legal factors which are set by the federal government to touch the key economic issues
Full transcript