Report on Madeira Group Strategic Management

         The aim of this report is to represent the strategy of Madeira Group for international expansion using strategic management tools. This report analyses the current strategic position of Madeira Group and discuss its entry mode strategy to Singapore. Madeira Group is selected as the company to evaluate and elaborate on strategic management. Madeira Group is the leading company of USE which is successfully working in more than 10 countries around the world. Some selected locations of current business operations are beaches in the Middle East, Dubai, Medina, Bahrain, Frankfurt, Kuwait, Au Habit, Bali, Shanghai, Oman, Nanjing, Markka, and London. Most of these areas are from the Middle East and Europe. Continuous growth, strong market position, and focus on expansion strategy are the key factors that encouraged the researcher to select the Madeira Group for strategic management analysis. The selected country for expansion is Singapore because of several factors as economic stability, political stability, increasing trend of hosteling, and increasing tourism ratio. Madeira Group will entry in the new market with wholly-owned subsidiary entry mood as it will provide full control on the execution of business operations in the market of Singapore.

Madeira Strategy Analysis

            Company strategy analysis includes internal and external analysis of the Madeira Group. The internal analysis includes SWOT analysis, TRIO, and value chain analysis of Madeira Group. While on the other hand, the external analysis includes SWOT (O&T), PESTLE, and Porter five forces analysis.

Internal Analysis of Madeira

·         SWOT Analysis (S&W) of Madeira

SWOT analysis (S&T) are presenting the internal strengths and weaknesses of the Jumeirah Group (Fifield, 2012).

According to the analysis, the company has strength because of financial resources as it has the opportunity of external and internal investments. Furthermore, the lack of interest taken in the marketing and advertisement are weaknesses of the company that needs to have retreated with effective strategies.

·         TRIO Analysis  of Madeira

In accordance with the above-mentioned TRIO analysis table, financial resources have competitive parity in the market. Somehow, human resources are capable to deliver a competitive advantage to the Madeira Group as employees working in each field are highly skilled and experienced. Experience and skills of employees support Madeira Group to provide the best services to the customers from cooking to the delivery of services (Catatonic, Ferrari, Frederick, & Tube, 2011).         

·         Value Chain  of Madeira

External Analysis of Madeira

·         SWOT Analysis (O&T)  of Madeira

·         PESTLE of Madeira

·         Porter’s 5 Forces   of Madeira

Country Analysis of Madeira Group

              Madeira Group is going to adopt a geographical expansion strategy after continuous success in the UAE and Europe. According to the plan, Madeira Group will execute its operations in the market of Singapore. In this section, Singapore is selected for the country related analysis. Madeira Group is currently working in different geographical locations where large population groups are available to enjoy hoteling experience.

            Now Madeira Group is seeking for the opportunity to execute operations in Singapore because of the high hospitality trend in this country. Basically, there a number of factors that makes Singapore the best choice for Jumeirah Group. Firstly, Singapore is a famous country for hotels and restaurants. There are a number of big and famous restaurants working to meet the demand of the market but still, there is an opportunity for the new entrants as demand factor is really high.

          Tourism is quite common in Singapore. Each year millions of tourists visit Singapore. According to the report of 2018, total tourists who visited Singapore were around 18.5 million. Moreover, statistical reports also recorded an increase in tourism in Singapore by the percentage of 6.2% annually (Channelization, 2018). Increasing tourism trend indicates the increasing demand for hotels and restaurants. Basically, the key reason behind the increasing trend of tourism in Singapore is attractive sights, attractive culture, and historical places.  Even there are a number of hotels working in Singapore but still, there is space for new entrants particularly who comes with strong customer equity and positive market image. Madeira Group is famous in the Middle East, Asia, and Europe. Tourists having experience of Jumeirah Group services will definitely prefer to stay in the Madeira Group hotels and restaurants.

            However, other than tourism population of Singapore is also increasing with the passage of time. The current population of Singapore is more than 5869060 which equals to 0.08% of the overall world population. Another supportive factor for the decision of business expansion is Singapore is the economic condition of Singapore. Singapore is a highly advanced country with stable economic growth. Therefore, while initiating business operations in Singapore Madeira Group would not have to face many challenges. Buying power of customers is enough good to afford to stay in luxury hotels and enjoy quality meals. In short, all social, economic, political, and environmental factors indicate that Singapore would be the best choice for the Madeira Group.      

Entry Mode Strategy of Madeira Group

            There are almost 6 appropriate entry modes being commonly in use in the world. These entry modes are known as licensing, joint ventures, wholly-owned subsidiaries, franchising, turnkey contracts, and exporting. All these entry modes have some advantages and disadvantages that are must be required to be taken into consideration while expanding business in the new market or new country. Jumeirah Group is going to execute its operations in Singapore. Best entry mode is required to be selected to avoid issues and future negative consequences (Montrachet, Scrammed-Klein, & Ententes, 2015).

·         Exporting: Evaluative analysis suggests that exporting (entry mode) is particularly related to the export of manufactured goods from the local market to the selected new market. Somehow in the case of Madeira Group hotel related services and products cannot be exported in Singapore. In fact, the company needs to open a new branch or new hotel in the selected country. Therefore, we can conclude that exporting entry strategy does not relate to the Madeira Group geographical expansion.

·         Turnkey contracts: Another entry strategy is turnkey projects in which organizations agree to handle every detail of a project for a foreign client. Turnkey contracts or projects are somehow limited to a short period of time. While Madeira Group wants to have long term business operations in Singapore. Therefore, turnkey projects cannot be selected as an appropriate and required entry strategy for the Madeira Group.

·         Licensing: The third available option is licensing. Licensing is about making an agreement with the other entities to use intangible property in return of royalties. In accordance with this entry mode, Madeira Group would be required to have a licensing contract with the hotels working in Singapore for the execution of operations in return of royalties (Cachepot & Abs, 2016). Evaluative analysis indicates that licensing is not the most suitable strategy for Madeira Group as it will not provide tight control over value chain activities. Moreover, the transfer of financial capital is also difficult in different countries. Considering the disadvantages of this entry mode it cannot be selected as an entry strategy for Madeira Group.

·         Wholly-Owned Subsidiaries: In wholly-owned subsidiaries company have two key options that are Greenfield investments and acquisitions. Keeping in mind the advantages and disadvantages of both options acquisition is selected for Madeira Group.

·         Joint ventures: Joint ventures will also reduce political risk and shared costs. Somehow, chances of conflicts and limited control are the key disadvantages that encourage the decision to avoid joint venture for the Madeira Group. Now the last and most suitable entry mood for Madeira Group in Singapore market is wholly owned subsidiary. Furthermore, prohibit movement of profit between different countries is also a limitation for the selection of this entry mood. The joint venture is also an attractive strategy as it will benefit the Madeira Group by providing local partner’s knowledge.

·         Franchising: Franchising is an attractive option for Madeira Group as it will reduce cost and risk. Somehow, at the same time, it would also reduce the quality control which may cause to influence the brand image of Jumeirah Group.

Best Strategy for Madeira Group

            Madeira Group is going to execute its operations in Singapore hence best entry mode is required to be selected to avoid issues and future negative consequences. The wholly-owned subsidiary is the best entry mood as it covers several advantages and benefits for Madeira Group with limited disadvantages and limitations. The wholly-owned subsidiary will reduce the risk factor associated with the loss of technical competences to a competitor company in the market. Furthermore, it will provide tight controls of operations to the Madeira Group. Thus managerial staff of the Madeira Group would be able to execute operations in accordance with the policies and corporate strategies of Jumeirah Group without any external involvement.             

Competitive Position and Sustainable Competitive Advantage of Madeira Group

The decision of expansion will result in the improvement of current competitive position and help the organization to achieve sustainable competitive advantage. Expanding market results in the increase of targeted audience. In Singapore, the demand for hospitality and hotel industry is quite high therefore there are chances of increase in sales and revenue. Thus expansion is linked with the improvement of profitability and financial growth of the Madeira Group. Somehow, at the same time, another major supportive factor for this strategy is that it would help out the Madeira Group to increase their market shares by capturing maximum geographical locations. Expansion in Europe and Asian countries present that Madeira Group is an international brand of hotels and restaurants which is not only limited to the local market of UAE. Increase in market share and internalization of the business will improve the overall brand image and help out the Jumeirah Group to stand out of the local competitors. Of course, a local brand cannot compete with the international brand because of the huge difference in brand image, financial strength, and customer equity. In short, the geographical expansion in Singapore will not only increase the financial profit but also result in a supportive factor to earn a secure and strong position in the local competitive market.              

Conclusion on Strategic Management of Madeira Group

          The whole discussion concludes that Madeira Group is working well in UAE with the current product line and services portfolio. Internal and external analysis indicates that the company has a strong competitive position in the local market of the UAE. Continuous success in the local market and increasing demand for hotels in the international market is causing to have geographical expansion decision for Jumeirah Group to Singapore.