LOGISTICS ISSUES of CROWN RELOCATION - 1

Group Case study Analysis Examining contemporary issues of MNEs in the UAE
Of Logistic issues

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Table of Contents
1.

Company Introduction..............................................................................................................2

2.

Contemporary Issues on MNE's In UAE about Logistics Issues.............................................2

A. Issues for Multinational Companies.....................................................................................2
B. Issues Directly Related to Logistic Operations in the UAE.................................................3
C. How These Issues Affect Crown Relocations.......................................................................4
D. What Are the Solutions to The Issues?.................................................................................7

3.

Conclusion................................................................................................................................9

4.

References..............................................................................................................................10

5.

Appendices.............................................................................................................................12

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1. Company Introduction
The United Arab Emirates is a highly lucrative market for various types of entrepreneurs.
The economy is stable and growing; so many multinational companies prefer to start their
business in the region. There are several logistic companies operating in the country today and
Crown Relocations is one of them. As a successful multinational business, Crown has more than
265 facilities in the world. They have many other businesses besides the relocation operation;
they have a large warehouse spaces amounting to more than 7.5 million square feet throughout
the world. It offers the following business in the UAE:

Domestic and International Relocation Services

Shipment and transport of household goods
Shipment of baggage
Online tracking systems
Coverage of legal documents and required forms for relocation to foreign countries
Advice on residential areas, health and educational facilities.
The company has ultra-modern storage facilities, protection, management and global

tracking systems. It offers the most skilled, talented and dedicated service staff.
2. Contemporary Issues on MNE's In UAE about Logistics Issues
Among others, some the the MNE related Issues that multinational companies face in the
UAE are discussed in the following lines.
A. Issues for Multinational Companies

Although the country is one of the OACIS for many businesses, it still provides certain
challenges for multinational companies. These issues are relevant to the logistic companies too,
so it is better to get an understanding of them at the beginning. According to the restricted

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regulations of the country, many multinational business entrepreneurs do not like to invest in the
country. There are several issues of concern to multinational companies (Out-law.com, n.d.).

According to this rule a new business must register with the following institutes. They are
the Ministry of Labor UAE and the Department of Neutralization and Residency.

The employment Visas and resident permits are a must, so a person must have the abovementioned documents to live and work in the country.

A foreign employee must have contracts for employment and also to reside, so an
employee from another country working in free zones must have both of them in order to
work.

It is not an easy task to dismiss an unwanted employee or an agent without legal

procedures.
It is a must to employ a local agent as an intermediate for sales.
The recovering of delayed payments has become more difficult.
Embassies advise their investors to identify the market and related issues prior to starting

their industries in the UAE. There are common issues, which can affect any type of business or
multinational companies in United Arab Emirates. Now it is time to have a look at the issues
related to the logistical operations of the country and how they directly affect Crown
Relocations.
B. Issues Directly Related to Logistic Operations in the UAE

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The economy of the country is one of the basic factors that affect the logistic services.
The rate of unemployment and the increase in prices will create critical issues in logistic
operations.

Logistic operations are associated with transport and related charges, so the increasing
price of fuel in the country can also affect operations in the UAE.

Trucks and other modes of transport are important factors and their rates are increasing as
a result of various elements such as, rising fuel cost, cost of spare parts and certain
regulations of the government.

The capacity of transportation is not sufficient to support the activities of the company, so
it directly affects revenues.

The infrastructure of the country, especially its highways, is not in perfect condition and
there are certain risks in some areas.

Security is an issue that remains a challenge for the company as it continues to operate in
the UAE.

C. How These Issues Affect Crown Relocations

Increased legal requirements for foreign employees has created a certain restriction for
the company. The company wants to obtain the services of the qualified and talented individuals
from the world labor market, but it is not possible here. The restrictions have reduced the
opportunity for migrated workers. The company has to face certain difficulties, when it has to
enlist the services of local labor. The success of a company depends on a set of good employees.

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They should be able to work for the benefit of themselves, while achieving the aims and
objectives of the company. It is not possible, when staff is unmotivated and insufficiently skilled.
The decision of the government is to add more and more local labor to multinational companies
(Researchgate.net, n.d.), but it is a harmful practice from the viewpoint of some companies.
Government policies can adversely affect the development of the organization.
A company may also face legal restrictions, when dismissing an unwanted employee or
agent and it is extremely harmful to the development of the company. However, if a company
does not terminate unwanted employees and troublemakers from of the company, it will
discourage the ethics of the organization and the employees will become less motivated. The
ethics of a company are an important factor, as it creates a certain subculture inside of an
organization. Employees behave and perform according to the expected norms and values of the
organization. The human resource is very important for the success of the company, so
management should not be prohibited from dismissing unwanted employees. According to new
policies it is quite a difficult task, so the final result will be a decline of revenues (Out-law.com,
n.d.).
Should a company have to hire local agents for their operations it is not considered a
satisfactory state for the company. The situation will become disastrous when local agents are not
performing well. Some local agents do not perform their duties in the best interest of the
company, instead

they perform certain activities, which are harmful to the operations of the

company. As a result of that, the company it has become difficult to recover due amounts from
various individuals and organizations (PwC, n.d.).

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The economy of the county is stable but it must be improved in order to earn more
revenue, but the growth is not as it was expected. There are certain issues prevailing in the
country such as unemployment, escalating cost of living and economical deviations among
individuals. The decline of the global economy has affected the economy of the country. The
economic issues of other countries can affect the efficiency of the company in the UAE. The
logistic operations are associated with other countries, so the company has to face unhealthy
economical conditions in such areas. In those areas the company has to bear higher wages,
charges and government taxes.
Though the UAE is one of the leading providers of petroleum fuels, the rates are not
satisfactory. Fuels are very important to logistic services. When the price of fuel rises the
company is not in a position to achieve its expected goals. Crown Relocations also had to face
the cost of transport charges due to the increasing cost of fuel. The increasing cost of transport
providers can alter the efficiency of the operations of the company. The company hires the
services of the local operators on certain occasions, as its fleet is not sufficient to manage
operations. The suppliers increase their rates for various reasons and the company is not able to
achieve the expected revenue limits (Dcvelocity.com, 2011).
Roads and other infrastructures are very essential to logistic operations. There should be
good roads, electricity, availability of parts and qualified mechanics throughout the country. It is
satisfactory in major urban areas but outside of urban areas the situation is not as acceptable. The
company has to perform its services throughout the country. The major highways are in the
perfect condition but not each and every highway of the country. The company has to incur extra
expense for operating on these routes. The vehicles have to be repaired regularly and the fuel

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wastage is higher than it would be on a good highway. The cost of spare parts and other
components are increasing, so it directly affects the revenues of the company.
Then there is the matter of inadequate security in certain areas. There were reports of
looting and vandalism, which caused the company to face a shortage of drivers for these areas
and increased insurance premiums for the vehicles and goods. The company had no other
alternative than to charge customers more. The increased the cost of services directly affects the
operations of the company. People will be unable to obtain the services of the company and the
revenues of the company will decline automatically. The surety can affect the performances of
the company directly (Aybar and Thirunavukkarasu, 2005).
The number of vehicles (privately-owned) has reduced as a result of various factors such
as increased cost of living, higher prices for parts and the fuel. This situation caused the company
to limit certain operations and the situation has directly affected the improvement plans of the
company. The company has to use other modes of transport such as ships and airplanes. These
modes of transport are associated with increased charges and the rates are not healthy for the
improvement of the company. The decrease in the number of vehicles in the other countries,
which can be used for the service of the company, has directly affected the operations of the
company (Dcvelocity.com, 2011).
D. What Are the Solutions to The Issues?

The company has been operating in the UAE for quite some time and it has a stable
business, so the company must pay attention to maximizing its revenues by controlling certain
environmental issues and also increasing its market penetration. The company is not in a position
to challenge the policies of the government. The company can recruit skilled and qualified

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individuals by employing subject oriented skill tests. The company can train the employees to be
able to face the challenges in the organization. The management can do a great deal to increase
the marketability of the employees through HR management programs and workshops
(Christopherson, 2002). The company must try to get the maximum output from the available
human resource. It is possible to achieve such an outcome by employing a suitable type of
motivational method.
The economic problems of the world and also the economical issues associated with
operations are beyond the control of the company. The company has to face the problems it
encounters and it is better to find certain ways and means to reduce the expenditures of the
company. Management must try to introduce low cost strategies to perform its operations, so
that it can save money and allocate that savings to cover some of the higher expenses of the
company.
The infrastructure and the security are the responsibility of the government and the
company can discuss issues concerning such with the government to come to a certain solution
for these issues. The government will hopefully take certain measures to reduce the risk in the
road (Akyildiz, 2006). It can be done easily by allocating more security personnel to these risky
areas. Regular road maintenance is one of the methods that can be used to keep the roads and
other infrastructure in perfect condition, so the company and the government both can take
necessary steps.
The company can save money and manage all the business activities by maintaining its
own fleet of vehicles. The company has to spend a lot at the onset by purchasing vehicles, but it
can recoup this money through revenues in a few years time. The company must have a good set

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of drivers and mechanics, who are ready to work for the company. These people can be
motivated by incentives and other strategies to help them achieve their personal goals while
improving the efficiency of the company as a whole.

3. Conclusion
Companies have to invest in other countries in order to earn more revenue. The
competitive market has become a very tight place as the result of the development as well as the
economical decline of the majority of some countries. As a multinational company, which is
performing in the UAE, Crown Relocations had to face several issues. Some of them are
common to any type of business in that country, but there are several unique issues. These issues
can do a great deal of harm to the business thereby reducing revenue. Most of them are out of the
control of the company. Some of them are the result of government policies and the others are
the elements of global economic depression. There are certain issues for which the company can
find solutions. By improving these issues it can increase revenues. This analysis is very
important in the process of starting a business in a certain areas of the globe. Management should
pay extra attention to the above-mentioned issues in that particular market. Crown Relocations
can employ these findings to enhance its business activities in the United Arab Emirates.

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4. References
Akyildiz, F. (2006). The Failure of Multinational Companies in Developing Countries in Sharing
Environmental Responsibilities: The Case of Turkey. Social Responsibility Journal, 2(2),
pp.142-150.
Aybar, B. and Thirunavukkarasu, A. (2005). Emerging Market Multinationals: An Analysis of
Performance and Risk Characteristics. Journal of Asia-Pacific Business, 6(2), pp.5-39.
Bae, H. and Ha, M. (2014). The Moderating Effects of Internal Orientation and Market
Orientation on the Relationships between Commitment and Transportation Service: An
Approach to International Freight Forwarders. The Asian Journal of Shipping and Logistics,
30(2), pp.121-153.
Barhem, B., Younies, H., & Smith, P. C. (2011). Ranking the future global manager
characteristics and knowledge requirements according to UAE business managers'
opinions. Education, Business and Society: Contemporary Middle Eastern Issues, 4(3), 229247.
Cavusgil, S. T., Knight, G., & Riesenberger, J. R. (2012). International business. Pearson
Education, New Jersey.
Christopherson, S. (2002). Why Do National Labor Market Practices Continue to Diverge in the
Global Economy? The Missing Link of Investment Rules*. Economic Geography, 78(1),
pp.1-20.
Dcvelocity.com, (2011). Top 10 logistics challenges for 2012 (and beyond) DC Velocity.
[online] Available at: http://www.dcvelocity.com [Accessed 12 Dec. 2014].

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Export.gov, (n.d.). 6. DOING BUSINESS IN THE UNITED ARAB EMIRATES - Export.gov.

[online] Available at: http://www.export.gov [Accessed 12 Dec. 2014].
Harris, H., & Brewster, C. (1999). An integrative framework for pre-departure
preparation. International HRM: Contemporary Issues in Europe, 223-240.
Out-law.com, (n.d.). Employment issues in The United Arab Emirates. [online] Available at:
http://www.out-law.com [Accessed 12 Dec. 2014].
PwC, (n.d.). Transportation & Logistics issues: Risk & compliance - PwC. [online] Available at:
http://www.pwc.com/ [Accessed 12 Dec. 2014].
Researchgate.net, (n.d.). Multinationals in the Middle East: Challenges and opportunities.
[online] Available at: http://www.researchgate.net [Accessed 12 Dec. 2014].
Tongzon, J. and Cheong, I. (2013). The challenges of developing a competitive logistics industry
in ASEAN countries. International Journal of Logistics Research and Applications, 17(4),
pp.323-338.

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5. Appendices

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