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Emaar Properties PJSC[Case study ]

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Table of Contents:

Table of Contents: ............................................................................................. 2

Introduction : .................................................................................................... 5

Industry analysis : ............................................................................................. 7

1-The market where operates: ........................................................................ 13

Products and services : ................................................................................... 16

Management team : ........................................................................................ 16

Financial Results: ............................................................................................ 21

Conclusion:.................................................................................................... 23

Appendix ......................................................................................................... 25

Executive summary:

Strategic management process is away that judge the improvement of a business . It

measures the development of the strategic plan within abusiness. Any entity that would like

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to develop anew strategic plan will have to follow the strategic process and make

use of the four steps involved in it . The strategic management process is made up of four

elements: situation analysis, strategy formulation, strategy implementation, and strategy

evaluation. Those elements are considered while developing anew management plan.

Situation analysis is the first step that help the organization define its mission by providing

her with the necessary information about the position . It is like "scanning and evaluating

the organizational context, the external environment, and the organizational environment"

(Coulter, 2005, p. 6). This element can be defined by observing the internal and external

environment. The observation of the communication ways between the employees and the

others, between the managers and the share holders .the culture within the organization and

the values adopted by the staff will tell us what the organization is like. On the other hand

the relation between the entity and the outsiders like the customers and the creditors must

be evaluated .1

The second step to develop the strategic management is the strategy formulation which is

very important for designing the new strategic plan by recognizing the strengths aids within

the organization . There are three organizational levels for the formulation. The first level is

the Operational strategies are short-term and are associated with the various operational

departments of the company, such as human resources, finance, marketing, and production

(Coulter, 2005, p. 7).

1Coulter, M. (2005). Strategic Management in Action. (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

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The second level is the competitive strategy which means the ways that the

company uses to compete in the market . here information about the competitors is

essential to determine the strengths of the others and the advantages they offer that make

them more acceptable than us .

The third factor for strategic management process is the strategic implementation which

means the process that make the strategic plan into practice by applying the strategic plan .

here , it can start with the worst problems within the organization then move to the other

problems ."The approaches to implementing the various strategies should be considered as

the strategies are formulated" (Coulter, 2005, p. 8).

The last factor is the strategy evaluation as an important element to show how the strategy

implemented and the sequences of the implementation. It is through evaluation that we can

judge the strategy followed by the company to achieve its mission and whether the

company was able to do that or not. Both the employees and the management are involved

in the evaluation as each one can inform about a problem that occurred within a certain step

during implementation this will help a lot. Schedule can be put to overcome the

difficulties.2

At last the strategic process does not have an end. It is continuous process that develops

and changes as long as the company develops.

2Coulter, M. (2005). Strategic Management in Action. (3rd ed.). Upper Saddle River, NJ: Pearson Prentice

Hall.

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Introduction :

I have selected the company of Emaar UAE as it is one of the companies based on the

United Arab Emirates and that it has many employees. The company is apart of Emaar

corporation. It has been working in the infrastructure sector. The company shared the

establishing of the country. It has developed a lot and it has witnessed many strategic

management plans. Emaar UAE is listed on the Dubai Financial Market and is part of the

Dow Jones Arabia Titans Index. Emanate properties as it called is keen on the satisfaction

of the customers. It strives to offer modern homes styles that can attract the taste of the

inhabitants and care for the massive development of the country. The company is seeking

anew course of growth through the geographical expansion and market segments. Emaar

is developing new competencies in hospitality & leisure, malls, education, healthcare and

financial services, which have evolved from its integrated approach to customer service

and property development.3The companys mission launches from the future view. The

company is transform Emaar into a one-stop, global solution provider for lifestyle,

including homes, work, play, leisure, retail, health, education, finance, industry and more.

(Emaar web site , March 2011)

The company goal is to transform itself into a global life style developer and provider. the

company as a result has adopted strategy based on the business segmentation to create

business clusters functioning as different growth engines which can grow and converge as

a single entity known as the Emaar group PJSC4

3http://www.emaar.com/index.aspx?page=about

4 Coulter, M. (2005). Strategic Management in Action. (3rd ed.). Upper Saddle River, NJ: Pearson Prentice

Hall.

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Emaar consider the customers as the life blood of the organization. Without

them there would be no Emaar the chairman said, the focus is on the understanding of the

customers and the relationship with them. Emaar is keen on providing the customers with

the life style houses that copes with the up-to date styles and tastes of the customers as

well. Also the values of Emaar rely on the trust, integrity and fairness with the customers,

the employees and the partners. The corporation believes that trust is built on honesty,

reliability and quality. 5(Emaar web site , March 2011)

To achieve this target. We see that Emaar is giving due attention to the employee by

training and day to-day experience. It provides the employees with all the courses,

training and guidance to develop and innovate in their fields. The company focuses on the

internal environment as it believes that the relationships between the employees are very

important for the development of the corporation. Trust is major thing that will make the

staff more loyal and more creative. The company tries to build a sense of belonging to the

organization. The employees are not a paid people but they are participants through their

roles. Without them the organization will fail to achieve the mission so the company put in

consideration the psychological factors of the employees. It offers chances for the

development, promotion and gaining experience. (Emaar Website. March 2011)

Emmer encourages innovation. It believes that the employees are concerned with the nature

of the organization and they are aware of the mission, aspiration and the target of the

organization so it gives them the chance to suggest ideas on on how processes can be

5http://www.emaar.com/index.aspx?page=about6

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streamlined, customer satisfaction enhanced and cost savings strengthened via the

Employee Suggestion Scheme called Afkaarna. Emaar home page.

The development of the company is also due to the focus on ensuring a high quality

standard for the products and services with is supported by a unique performance

management system. We find that executing and delivering results is also important for the

corporation. It is keen on coping with the international industry standard and benchmarks.

The company has been acquired many awards and the ISO 9001:2008 quality certification

and ISO14001:2004 environmental certification and the prestigious Dubai Quality Award.6

(Emaar web site , March 2011) annual report

Also , Emaar won the Best Developer in the Middle East and North Africa honor at the

2009 Euro money Real Estate Awards. Emaar also won top laurels as Best Developer in

the UAE andBest Developer in Saudi Arabia.

Industry analysis :

Strengths:7

1. The company has strong position in the UAE market and world wide. The company

enjoys high reputation in both markets as there is wide trust in the companys time

tables and high quality.

2. The company enjoys competitive advantage over the other companys results from

the long history of success and the fascinating structures that it had undertaken over



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the last few years. The company was awarded much recognition for its

achievements.

3. The company enjoys the experience in the field of providing life style houses and

high technology tools. It has experienced employees who are satisfied with working

in the company as it succeeded to share the employees in the decision making and

they are aware of the strategic plan and the mission of the company.

4. The company has strong financial position and it could avoid the risk of depending

on one market.

5. The company put into consideration market segments and the future depends on the

achievement of diversity and reaching all incomes of the customers.

6. The companys location is very essential so the company existed in the right

position and it expands according to the operations that it undertakes moving with it

and cross the borders as well.

7. The management board is very promising and it helps the company to achieve

success. It changes according to the requirements. We have seen from studying the

management system within the company that it meets the current position.

8. The companys philosophy, values and mission are promising and they will achieve

change within the company.

Opportunities:

1. The company has opportunity due to the rapid growth of the country and the

increase in the living standards.

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2. There is bad need for small and low incomes houses in the country with the

increase in the number of the expatriates in the country which is considered a good

opportunity for the company to meet requirements.

3. The government has decreased the tax on the exports for the equipments and

building materials as well as the modern houses accessories which will encourage

the company to undertake many projects and sign contracts.

4. The company will be able to handle with the technology development in the real

estate sector by the experience it has along its history. That will improve the

position of the company in the market and will cut the excess expenditure on

exporting it.

5. SAGIA to provide one-stop-shop services .which will reduce bureaucracy and

facilitate the establishment of new business, attract investments, jobs and demand

for real estate to KAEC.

Weaknesses:

8

1. The company has a lot of contracts and due operations that are considered risk in

case of not being able to meet them as scheduled.

2. The company focused in the past on the high incomes customers and big projects

Burj Halifax and other massive projects neglecting wide sector in the community .

3. The company suffers a shortage of funds due to the undertaking of huge projects

and participation in other projects out side the country.


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4. The companys focus of the taste of the new styles, high quality of houses

and providing costly houses that doesnt suit the other layers in the community.

Note that the high incomes layers represent only 25% of the inhabitants of the

country.

5. Distant completion time line increases uncertainty and operational risk

Threats:

1. Credit risk is the risk of financial loss to the Group if a customer or

counterparty to a financial instrument fails to meet its contractual obligations.

The Group is exposed to credit risk principally from its receivables from

customers, other receivables and from its financing activities, including deposits

with banks and financial institutions, foreign exchange transactions and other

financial instruments.

2. Geographical instability in the Gulf region.

3. Execution of risk due to shortage of labor and rising construction costs.

4. Competition from other emerging cities and industrial clusters.

Marketing Strategy:9

9 Follows ,R ,lang ford, D,Newcombe,R, urry,S,(2002) construction management in practice , second Edition, black well,

Oxford

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The company has to focus more on the internal challenges and achieve

more diversity in the markets based on the strategic plans and taking market

segments into consideration. it is essential for a projectised business to understand

its business management project and position of projects which is considered part

of future strategies of organization.(maria, pavai and Heiki ,2007)

2. The opportunities in front of the company can empower it to achieve more success

and reach its mission . by evaluating the current position of the business . I think

that the most important strategy is to consider all layers of income and focus more

on the low income customers building new relation with them and provide low

priced houses and facilities . the business should not focus on one layer or it will be

full soon.

Functional:

3. The HR sector should follow a new strategy based on the employees

empowerment. Increase their experience, guarantee their lives and launch programs

for their welfare. also , in recruitment , it has to select the active staff that are

willing to work in all condition, ambitious and patient , the employees have to be

self dependant , innovative , and articulate .11

4. The most important is the external environment in which due attention should be

give to the partners, shareholders and customers of all layers . the HR and the board

of directors have to monitor their decisions, strategic plans, market segments and

the staff attitude to be able to make any changes at the right time and make sure that

11Follows ,R ,lang ford, D,Newcombe,R, urry,S,(2002) construction management in practice , second Edition, black well,

Oxford

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the company is moving toward achieving its mission .Schedules, time

tables, rewarding system related to roles and duties should be followed as well as

punishment and warning for any carless employee.

The marketing strategy depends on the real study for the market and searching all factors

like :

1-The market where operates:

After a study for the nearby region, I have concluded that the best market will be in North

Africa for the many reasons I have noted now days.

The Arab countries in North Africa are thirsty for development and improvement

for the service sectors especially after the decline of the previous corrupt rulers and

the change in political government.

Most of the residents in the North Africa are living in bad houses and they are

looking for new economic hoses that can enable them live some healthy life with

modern services. (tuor2u)

The area is promising economically due to the new governments who strive to

prevail security and peace and achieve prosperity for their peoples to satisfy them.

The region in North Africa is full of resources that are missed hidden for a long

time and that are in need of investment. They have the human resources and, oil,

tourism and control the trade route between the west and the east through the red

sea. (Egypt Overview, 2011)

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There are rich classes in this region that are searching luxury and comfort of

live such as business men , highly educated people , the cultured class and the

wealthy farmers.

The north African region participate in the Asian region in many things from the

past till present some of such connections are:

1. Language: the Arabic language is famous in the North African countries as in

Egypt, Libya, Tunisia and Algeria.

2. Religion: most f the residents in the North African countries are Muslims and

fewer ethnic groups are Christians.

3. Culture: the North African countries are part of the Arab world who shares the

cultural values that stem from the Arab cultures and the Islamic religion. (Egypt

Overview, 2011)12

Marketing Mix:

1-Product marketing

The product part of the marketing mix concerns determining what products or services

customers want and establishing specifications for those items. Considerations include

functionality, appearance and quality of the product, as well as packaging, warranty and

support.

12African Economic outlook-http://www.africaneconomicoutlook.org/en/2/2/2012

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2-Pricing marketing

Setting a competitive price for a product or service is an important part of marketing. That

price may be based on the marketing strategy of whether to give the impression of quality

or to appeal to the price-conscious buyers. Supply and demand also affects pricing. Pricing

includes not only the list price, but also discounts, financing and leasing options. the school

apply the pricing strategy.

3-Promotion marketing

The promotion part of the marketing mix concerns communicating and selling to potential

customers. This includes advertising, sales promotion, publicity and personal selling. It

refers to the various methods of promoting the product, brand or company, as well as the

message and media to be used.

Advertising and promotion costs can be a large part of the product price. Analysis should

be performed to determine the actual value of the promotion in getting new customers.

4-Place marketing

Place is the location or channel where the sale can be made. This may include geographic

location and market segment. Sometimes this "P" stands for placement or distribution,

which refers to how the product or service gets to the customer.

Distribution includes market coverage, channel member selection, logistics and levels of

service.

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Products and services :

We are an architecture company that work in the field of construction of buildings and

public offices such as schools, hospitals, departments and police stations. We work in

everything that is in relation to architecture and construction of buildings. The company

has good fame in the UAE since it has shared the country in the modernization process and

its development as it has undertaken some of the most well known projects and

infrastructures. The most reason for searching for new markets is the increasing numbers of

companies in the same field operating in the UAE as when started in 1970 there has been

only one competitor. The number increased now to more than ten big companies operating

with wide fame. Competition between the companies has become sever to a degree that few

projects are being undertaken in the current time. (tuor2u)

On the other hand, the UAE market has been fully supplied with infrastructure

requirements as well as the world crisis and its effects on the construction field

Management team :

In 2009, Emaar focused on project delivery and completion of projects, and delivered

approximately 3,100 residential units during the year. Despite the challenges of the global

financial crisis, Emaar handed over Alma townhomes in Arabian Ranches five months

ahead of schedule complementing the hand over of La Avenida, a cluster of 17 luxury

villas within Arabian Ranches, eight months ahead of schedule. A community of 212

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luxury homes, Alma townhomes in Arabian Ranches had gained overwhelming

investor response when launched in 2007. Emaar Website. March 2011

Emaar also handed over Burj Views, a three-tower residential complex, with several

apartments opening to prime views of Burj Khalifa, the worlds tallest building, and The

Dubai Fountain, the worlds tallest performing fountain. The homes are located along the

outer edge of Downtown Dubai, described as the most prestigious square kilometre on

earth. Also highlighting Emaars focus on project delivery was the hand-over of homes in

Lofts in Downtown Dubai, as well as serviced residences at The Address Dubai Mall and

The Address Downtown Dubai. Further establishing the appeal of Downtown Dubai as one

of the most sought-after Dubai, Emaar unveiled an iconic residential project, The Palace

Residences, to strong investor response. Part of The Old Town Island development.

(Emaar annual report Emaar Website. March 2011)

The Palace Residences are on a class of their own with 65 units, all of them completed

and offered for viewing. Customers had the choice of opting to live in or benefit from the

lease options provided by The Address Hotels + Resorts, the hotel brand owned by Emaar

Hospitality Group. Emaar welcomed the residents of Ghadeer in The Lakes and Fairways

in The Views, both established residential communities that are part of Emirates Living. In

Dubai Marina, Emaar handed over homes in Marina Quays and The Address DubaiMall

serviced residences. Emaar also successfully recertified its Quality Management System

(QMS) for ISO 9001:2008 certification, the latest global benchmark in the standards of

excellence. Emaar was originally certified to the ISO 9001:2000 by LQRA in September

2006. After completion of its three year validity period, Emaar underwent a stringent

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recertification audit in August-September 2009 to audit the companys QMS to ISO

9001:2008 standards.Emaar annual report

Organizational structure:

The Board of Directors:13

The Companys Board consists of eight members, of which six are non-executive directors.

The Board is headed by the Chairman who schedules the meetings, prepares agenda in

consultation with the Group Chief Executive Officer / Managing Director and effectively

administers the flow of information between senior management and the Board. To

perform its duties, the Board has direct access to senior management. If necessary, the


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Board can seek independent professional advice at the Companys expense. The

position of the Chairman and the Group Chief Executive Officer / Managing Director is

held by two persons, in support of effective and clear supervision and accountability at the

Board and management levels. This illustrates the theory provided at the top of the article

as the focus on the internal environment is the first step of the strategic management.

Emaar Website. March 2011

14Members of the Board are prominent individuals with extensive experience in public

administration, finance, legal, strategic management, retail and commercial businesses.

Further details of the Directors, their qualifications and professional experience are

provided in the Annual Report, under the section Board of Directors. The focus on the

human resources is clear here as the second step of the strategic management process.

The Board may establish and ensure the effective functioning of board committees & sub

committees as it considers necessary or appropriate to oversee critical or major functional

areas and to address matters which require detailed review or in-depth consideration.

Further details of the Board Committees are provided in the following sections.

Board Committees:

There are four Board Committees; Executive Committee, Audit Committee, Nominating

Committee and Remuneration Committee.

Executive Committee:

The Executive Committee is established principally to assist the Board in making decisions

expeditiously and to exercise the authority and functions set out below or as may be

14http://www.emaar.com/index.aspx?page=about-mission-employee

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delegated to it by the Board from time to time. The Committee is comprised of a

Chairman and two non-executive directors.

Audit Committee:

The Audit Committee is comprised of Non-Executive Directors, all of whom have

accounting or related financial management

Expertise and experience.

Internal Audit:

It is the policy of the Companys Board of Directors to maintain and support a quality

Internal Audit function. It has been entrusted internally and reports directly to the Audit

Committee. The Internal Audit is guided by its Charter that represents the general

authorization from the Audit Committee to perform Internal Audit activities within a

certain scope of work in accordance with the annual audit plan approved by the Audit

Committee.

From the previous we conclude that the company is well organized in the way that it

applies the strategic management process which will enable it to achieve its mission. There

is a focus on the internal and the external environments and there is also focus on the

relation ships with the customers and the partners.

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Financial Results:

15The Group has recorded a net profit from continuing operations of AED 2,051 million

for the year ended 31 December 2009 (2008: AED 4,191 million). The Groups losses

from discontinued operations were AED 1,762 million (2008: AED 4,068 million).These

losses primarily relate to the write down of Groups net investment in WL Homes, Groups

subsidiary in United States, upon discontinuation of its significant operations. The net

profit attributable to equity holders of the Group after losses from discontinued operations

was AED 327 million (2008: AED 166 million). In accordance with the Articles of

Association of the Company and UAE Federal Commercial Companies Law, an

appropriation of AED 33 million is made to general reserve from the distributable profit of

AED 327 million. The transfer to statutory reserve has been suspended as the reserve has

reached 50% of the paid up share capital. In view of the current financial and economic

uncertainty, The Board of Directors of the Company have not recommended any dividend

to the shareholders for the year 2009, which is subject to the approval of the shareholders at

the forthcoming Annual General Meeting of the Company. The balance of the distributable

profit of AED 294 million after considering appropriation to general reserve will be

transferred to retained earnings. Total shareholders funds as at 31 December 2009 amount

to AED 28,677 million (2008: AED 28,107million) .Annual report 2009Emaar web site ,

March 2011)

Risk management Overview:

15 http://www.emaar.com/index.aspx?page=about-mission-employee

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After reviewing the annual report and the financial status. I can outline the

threats and risks as in the following:

a) Credit risk,

b) Market risk,

c) Liquidity risk.

Credit risk

16Credit risk is the risk of financial loss to the Group if a customer or counterparty to a

financial instrument fails to meet its contractual obligations. The Group is exposed to credit

risk principally from its receivables from customers, other receivables and from its

financing activities, including deposits with banks and financial institutions, foreign

exchange transactions and other financial instruments. (Emaar Website. March 2011)

annual report.

Market risk

17Market risk is the risk that changes in market prices, such as currency risk, interest rate

risk and equity prices will affect the Groups income or the value of its holdings of

financial instruments. Financial instruments affected by market risk include loans and

borrowings, deposits, financial assets at fair value through other comprehensive income

and derivative financial instruments. The objective of market risk management is to

manage and control market risk exposures within acceptable parameters, while optimizing

the return. (Emaar Website. March 2011)

16 http://www.emaar.com/index.aspx?page=about-mission-employee

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The Group also enters into derivative transactions, primarily forward currency

contracts. The purpose is to manage the currency risks arising from the Groups operations

and its sources of finance. It is, and has been throughout years 2009 and 2008 the Groups

policy that no trading in derivatives shall be undertaken.

Liquidity risk:

It is the risk that the company will not be able to face its financial obligation as they fall

due. The group monitors its risk to shortage of funds using recurring liquidity planning tool

which maturity of its financial investments and financial assets and expected cash flow

from operations.

Conclusion:

I have studied the course of strategic management process and I have learnt a lot about

the steps that are essential for any business, entity or organization to go on with the

strategic planning . I have learnt that there are there steps should be followed beginning

with the current status analyses that should provide information about the internal and

external environment , the other steps that involve planning and putting the plans into

action through applying the strategies in the way that can guarantee the achievement of the

mission of the organization .

The last important step is the evaluation which is a continuous process. I have studied,

examined and analyzed an entity based on the U.A.E which is Emaar. I have read about the

strategic plans, management, and functions within the business. The company started as a

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small provider for houses and it is now a big corporation with many branches

inside and out side the country.

It has adopted new strategic management process to achieve the target of being the global

life style provider for houses and services. The company achieved many of the targets

however, there are many still opportunities and threat as well in front of the company . I

have proposed six strategies for the company to achieve its stated mission that need change

in the attitude in business, management and human resources management.

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Financial statement for the year 31 December 2011

CONSOLIDATED INCOME STATEMENT

Year ended 31 December 2011 (US $1.00 = AED3.673)

2010 2009

Notes AED'000 AED'000

CONTINUING OPERATIONS

Revenue 4 12,150,274 8,413,262

Cost of revenue 4 (7,603,530) (4,313,806)

GROSS PROFIT 4,546,744 4,099,456

Other operating income 345,808 519,816

Selling, general and administrative expenses 5 (2,028,190) (1,911,865)Other operating expenses (233,203) (287,579)Finance costs (355,006) (216,687)Finance income 6 265,007 355,733Other income 18 612,348 83,026Share of results of associated companies 16 (430,484) (534,469)

Loss on disposal of subsidiaries 7 (52,522) -Impairment of assets 13, 16 (192,052) (79,677)

PROFIT BEFORE TAX 2,478,450 2,027,754

Income tax (expense)/ credit 8 (1,439) 23,541

PROFIT FOR THE YEAR FROM

CONTINUING OPERATIONS 2,477,011 2,051,295

DISCONTINUED OPERATIONS

Loss from discontinued operations 9 -(1,761,919)

NET PROFIT FOR THE YEAR 2,477,011 289,376

!!!!!!! !!!!!!!

ATTRIBUTABLE TO:

Owners of the parent 2,448,229 327,315

Non-controlling interest 28,782 (37,939)

2,477,011 289,376

!!!!!!! !!!!!!!

Earnings per share attributable to

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the owners of the parent:

Total operations

-basic and diluted earnings per share (AED) 28 0.40 0.05!!!!!!! !!!!!!!

Continuing operations

-basic and diluted earnings per share (AED) 28 0.40 0.34!!!!!!! !!!!!!!

Discontinued operations

-basic and diluted earnings per share (AED) 28 -(0.29)!!!!!!! !!!!!!!

The attached notes 1 to 35 form part of these consolidated financial

statements.

Emaar Annual Report I 08

Appendix 2

Income statement former the year ended 31 December 2011

Emaar Properties PJSC and its Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVEINCOME

Year ended 31 December 2011 (US $1.00 = AED3.673)

2011 2010

Note AED'000 AED'000

Net profit for the year 2,477,011 289,376

Other comprehensive income/ (loss):

Decrease in hedging reserve 27 (9,173) (328)

(Decrease)/ increase in unrealised reserve (208,646) 43,200

Realised loss of fair value movement through

other comprehensive income (62,964) -

Increase in foreign currency translationreserve

183,017 210,410

""""""" """""""

Other comprehensive (loss)/ income for theyear

(97,766) 253,282

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"""""""

"""""""

Total comprehensive income for the year 2,379,245 542,658

!!!!!!! !!!!!!!

ATTRIBUTABLE TO:

Owners of the parent 2,353,684 574,093

Non-controlling interest 25,561 (31,435)

""""""" """""""

2,379,245 542,658

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