Contents

1.

Executive Summary:..........................................................................................................2

2.

Industry Business Description:...........................................................................................2

3.

Company Description.........................................................................................................2
3.1 Type of business:.........................................................................................................3
3.2 Legal Structure:...........................................................................................................3
3.3.1 History of DAMAC:.................................................................................................4
3.3.2 History of Skanska:...................................................................................................5
3.4 Company Principle:.....................................................................................................5

4.0 Product/Service Factors.......................................................................................................6

4.1 Product/Service Analysis:............................................................................................6
4.2 Customer Profile:.........................................................................................................7
4.3 Competitive Situation:.................................................................................................7
5.External Analysis:.................................................................................................................10
5.1

PESTEL:................................................................................................................10

5.2 Hofstedes cultural dimensions:.................................................................................12

5.3 SWOT Analysis:........................................................................................................14
6.0 Business Strategies:...........................................................................................................14
6.1 Product/service positioning:......................................................................................14
6.2 Pricing strategy:.........................................................................................................16
6.3 Distribution and logistics:..........................................................................................17
6.4 Promotion and Advertising:.......................................................................................17
6.5 Estimated sales/sales mix:.........................................................................................20
6.6 Product/service strategies:.........................................................................................20
7.

Financial planning:..........................................................................................................21
7.1 Cost analysis/funding/cash flow:...............................................................................21
7.2 Projected profit and loss statement:...........................................................................22
7.3 Financial Synergies:...................................................................................................22

8.0 Management Considerations.............................................................................................22

8.1 Personnel/Sales Force Factors:..................................................................................22
8.2 Business Advisers:.....................................................................................................23
8.3 Decision Making:.......................................................................................................23
8.4 Contingency Plans:....................................................................................................24
9.

Recommendations:..........................................................................................................25
Approved by Academic Council 4 March 2009 (AC/34/2009)

10.

Conclusion:...................................................................................................................26

Bibliography............................................................................................................................26
11.

Appendix:.....................................................................................................................29
Appendix 1:.....................................................................................................................29
Appendix 2:.....................................................................................................................31
Appendix 3:.....................................................................................................................32
Appendix 4:.....................................................................................................................33
Appendix 5:.....................................................................................................................33
Appendix 6:.....................................................................................................................34
Appendix 7:.....................................................................................................................34
Appendix 8:.....................................................................................................................35
Appendix 9:.....................................................................................................................35

1. Executive Summary:
The business plan is being construction for Damac Properties which was established in 2002.
The plan is to take Damac into a joint venture with Skanska, a strong construction company
in the Swedish construction market. Bringing in Damacs expertise in luxury real estates, the
blooming market in Sweden invites foreign investors to make large investments in
construction projects. The Swedish annual growth rate (CAGR) is expected to be about 2.49
percent over the forecast period and go down from 3.37 percent during the review period of
2014 all the way to 2019 (Timetric 2015). The legal structure is a positive sign for Damac as
there is low corporate tax. Sweden has a huge opportunity in the construction market. There
is a demand for housing projects due to the ageing population in Sweden. Together with
Skanska, this newly formed partnership can be one of the most successful companies within
a span of 5 to 10 years.

2. Industry Business Description:

Throughout the past few years, one of the most successful industries for UAE has constantly
been the property development industries (EstatesDubai 2016). Dubai has become a hub to
invest more since the rental yields have been increasing throughout the years. A research was
conducted by Dubai Land Department, they found out that approximately Dh 12 billion was

spent by the foreigners to invest in the properties during the first three months of 2015
(Bishop 2015). With such conditions, investors get very tempted to invest more and more
because they seem to gain increasing profits yearly. Where so many property developer
companies have been successful in the country, one name that stands on the top of the list is
Damac too. It has done a range of projects in UAE and the Middle East and has gained strong
popularity over the years. Damac has looked into doing a joint venture with a Sweden based
company called Skanska and expand their company into Sweden.

3. Company Description
Damac
Established in 2002, Damac properties have been very successful throughout the years and
have a big list of their achievements. Damac has undertaken many projects like the AKOYA
Oxygen AKOYA by Damac, AYKON City. It presently also has undertaken two big serviced
hotel apartments which are Damac Mansion The Vogue and Naia Breeze which would make
them the leading company in the property developer industry (Arabian Business 2015). A
research done in December 2015 shows that since 2002, Damac has executed more than
13000 successful projects which included hotel rooms, apartments and villas (Damac 2016).
Despite a fall in the real estate market, Damac Properties has been one of the companies to
remain upbeat and undertake new projects and develop them in the country. They have
remained optimistic and say that they will continue to undertake the projects and keep the
economy high by having more supply than the present demands (Reuters 2016).
Skanska
Founded in 1887 in Stockholm, Sweden, Skanska is a multinational firm for construction that
has established itself in many parts of the world. It is ranked as fifth company that comes in
the list of top ten construction companies in the world (Phillips 2015). Out of many projects,
the big projects done by Skanska are the Natwest Tower in London in 2002 (The Telegraph
2002), Mater Dei Hospital in Malta in 2008 (Calleja 2009), MetLife Stadium in New Jersey,
USA which is the home to New York Jets and the Giants in 2010 (Skanska 2016). The
company also has a strong financial strength of $7.3 billion as of 2014. It is also well known
for its donations in charitable trusts that come up to $1.5 million and also has more than fifty
million hours of labor work done each year from the reports generated in 2014 (Skanska
2013). One important feature about Skanska overall is the sustainability outlook that the
company possesses. Skanska has been a firm believer in maintaining sustainability and also
does ventures with companies globally only who put sustainability at first too (Fava 2012).

Skanskas agenda focuses on three important sectors which is the social, environmental and
economic that makes up the sustainability agenda for Skanska (Skanska 2015).
The main business aim of this venture is to provide luxury housing to the potential investors
of Sweden and also have government projects like subways and railways.

3.1 Type of business:

The type of business is a joint venture because Damac wants to collaborate with Skanska to
do luxury real estates and also take up government projects like railway and subway
building.

3.2 Legal Structure:

Skanska is licensed to do construction work around the world. It is domestically and
privately owned and has expanded to North America and European countries. There are two
main shareholders of Skanska which are Industrivrden AB and Lundberg Group (Skanska
2016).

3.3.1 History of DAMAC:

Year
2002
2003
2004

Event
Establishment of Damac
Start of construction on Marina Terrace, Dubai
Inauguration of Park Towers which is a
uniquely created two tower project built
in Dubai Financial District
Expansion of the company continues

2005

Executive Heights project completed and

launched in Tecom
The Dubai Government also marked
Damac and the first company that has
been successfully developed projects in a
master planned way

2006

The number of ongoing development

plans reached to 20 in the Middle East

2007

Marina Terrace project completed

First development project launched in Saudi

2008

Arabia in Al Jawharah in Jeddah

Completion of Lake Terrace in Jumeirah Lakes

2009

Towers. Damac completes 7817 units

Completion of Lake View in Jumeirah Lakes

Towers and The Cresent at The International

2010

Media Production Zone.

Damac collaborated with Versace to make
Damac Tower by Versace Home located
in Beirut, Lebanon.
Completion of flagship developmental
project called Ocean Heights.
Damac awarded with national and
international awards for success in their

2011

projects
Initiation of a hospitality project called
Damac Maison by Damac
Damac completed another 4072 units
which made them at the top of all other
development companies

2012

Completion of Park Towers in International Dubai

2013

Financial Center
Commencement of Akoya which is a 42
million square foot development project
plan.
Damac collaborates with Fendi for
development projects designed for Saudi
Arabia and Dubai.
Damac also collaborated with Paramount
Hotel and Resorts to make Damac Towers

2014

by Paramount in the Burj Al Khalifa area

Announcement of Tiger Wood as the designer at

2015

Akoya Oxygen
Damac collaborated with Bugatti to
design villas at Akoya Oxygen
Establishment of Aykon Nine Elms by
Versace Home in London. Damac listed
on Dubai Financial Market.
(Damac 2016)

3.3.2 History of Skanska:

Year
1887

Event
Aktiebolaget Sknska Cementgjuteriet was
founded by Rudolf Fredrik Berg in Southern

1900s

Sweden
Skanska had double sales during the
1900s

 Skanska got listed on Stockholm Stock

21st century

Exchange
Skanka got its official business name
Skanska spread in different European countries
and in America
(Skanska 2016)

3.3.3 Mission Statement:

As a successful and a leading real estate organization, Damacs mission is to provide
luxurious homes with a unique concept and satisfy the customers coming from worldwide.

3.3.4 Vision Statement:

Damacs vision is to provide luxury integrated in rich quality of apartments and other
development projects.

3.4 Company Principle:

Damac strictly follows seven main principles to strategize and implement their projects
successfully. These are:

Make Damac the leading luxury development industry throughout the Middle East
Expand the existing Damac range of products
Enhance and make the customer service better internationally
Make sure that all the products that are delivered at an elite standard with a good

price
Every project delivered should be ensured to be done in an efficient style
Maintenance of capital structure of the company at all times
Deliver investors value (Damac 2014, 18)

3.4.1 Ownership structure:

While doing the venture, if is highly expected of Damac to come up with many innovative
ideas to build unique development projects in Sweden. Damac has past experience of
working with top designers in the world like Versace, FENDI etc. (Damac 2015, 4) to create
better interiors and collaborating with top designers again for the projects in Sweden will
give an opportunity for the companies to place a firm position in the market. Skanska is more
of a commercial property development company (Skanska 2016) and Damac is a luxury
property development company and so acquiring most resources from Damac would give
Skanska many advantages like increase in revenue, better position in the industry etc. While

doing the venture, it is advisable that Skanka could take over the basic layout of the projects
and integrate small things in the venture like the Human Resources.

4.0 Product/Service Factors

4.1 Product/Service Analysis:

DAMAC Properties provide different types of products and services, which are Damac
luxury hotels & apartments, Damac Community villas, Damac Residences, Damac retail and
Damac commercial leasing. As Damac emphasis on quality and luxury, they are providing
complementary offerings which include branded real estate, serviced hotel apartments and
hospitality (Sajwani 2016). In addition, Damac also provides customer care programs, not
only from their Dubai (UAE) headquarters but also from Jordan, Iraq, Lebanon, KSA and
Qatar (All Dubai 2016). Whereas Skanska operations are divided into four business streams
which includes Construction, Residential Development, Commercial Property Development
and Infrastructure Development. The services which Skanska can provide are sustainability,
safe working environment, housing and financial information (Skanska 2016). Our main
focus would be on merging both the companies services, technologies, design and products
to build a joint venture.

4.2 Customer Profile:

Outlining a strategic plan wherein different types of potential buyers that are likely to
purchase the company products and services are known as customer profile. This helps in
developing and targeting customers through advertising and marketing as they are essential
factors for any business organization. Customer profile can also cut down costs and assists
the business through focusing on potential customers than wide range of consumers, as it
saves money and time (V.Ryan 2008). As we are taking Damac properties to Sweden for joint
venture with Skanska, it is important for Damac to know the Swedish customer profile and
their approach. Their focus should be on the Swedishs population that have ageing as an
economical issue. Sweden is also preparing their country for future, where one in four
swedes would be 65 years or older. So Damac and Skanska, taking this as a huge opportunity,
should target elderly people from the age of 40 to 65 or above (Sweden Sverige 2016).
Sweden has high cost of living than UAE by 17.5% (excluding rents) and 59.87% lower rents
than UAE and also they have high tax percentage (NUMBEO 2016). So it is essential for

both the companies to research on Swedish peoples income and knows how much they
spend on housing or renting an apartment. Once the decision is made, they can diversify their
services and produce the products which satisfy the customers and focus on their needs and
wants. Sweden is facing the issue of an ageing population and requires more housing projects
by 2025 (Kruger 2016). DAMAC along with Skanska can provide extensive range of luxury
real estates and green projects (sustainable).

4.3 Competitive Situation:

Competitive analysis identifies the competitors and evaluates the strategies to regulate their
strengths and weaknesses with that of the companys own product and service. It plays a
critical role in any companies marketing plan to evaluate the product and provide unique
services which can attract the target market (Entrepreneur Middle East 2016). According to
the Construction Global Magazine, Skanska stands in the 5th position in the top 10
construction companies in the world (Phillips 2015). But as every organization Skanska also
has strong foreign competitors, which are NCC AB (Nordic construction company)
(Sweden), Hochtief (Germany) and Fluor Corp. (United States) (Skanska 2015).
Nordic Construction Company (NCC) AB- Sweden
In Northern Europe, NCC is the one of the prominent construction, property development
and infrastructure company in 2015, with EUR 6.7 billion sales and 18000 employees. Their
group has been expanded into NCC Construction, NCC Housing, NCC property
Development and NCC Roads (NCC 2016). They have construction projects which include
Aktiivikoti home, which is specially designed for senior citizens (NCC 2016). Commercial
premises such as Retail Park, Business Park, Office buildings and mall extensions (NCCOur references 2016). Historic buildings, Housing, Offices, Renovation services and Retail
space (Our references 2016).
Hochtief
Hochtief Aktiengesellschaft officially known as Hochtief is a German based construction
company. It is one of the worlds leading construction groups, excelling since past 140 years.
Their main focus is on infrastructure projects on delivering basis of concession models.
Hochtief represented themselves in the worlds major markets with more than 44000
employees and EUR 21.1 billion sales volume in 2015 (Hochtief 2015). Hochtief core
competence is construction, they have a wide range of traditional construction business and
construction management which consist of building construction, civil engineering and

providing infrastructure facilities (Hochtief 2015). In Scandinavia, Hochtief has been

successfully operating in infrastructure market and founded a business office in 2007 in
Sweden. As their main focus was on infrastructure, they had been successful in implementing
major tunnel and road constructions with local partners and partly alone. In 2013, they have
built two construction sections in Stockholm (capital of Sweden), which was northern bypass
Norra Lanken with Oden their Swedish partner. Hochtief was also responsible for NS 13
Vagtunnel, a section of European superhighway E4/E20 in 2011 (Hochtief Solutions AG
2014).
Fluor Corp.:
Fluor is a US Corporation that focuses on product diversification. Their client market are
targeted in Energy & Chemicals, Power, Infrastructure, Mining & Metals, Industrial and
Government based projects. As in the case of Swedish investments, they have only
established in Energy & Chemicals and Power. Though there is future projects that may
involve in taking up government projects, it will be difficult to manage a heterogeneous line
of products which gives an opportunity for Damac to make its entry into Government
projects (Fluor 2016).

4.3.1 Porters 5 forces model:

This business strategy tool developed by a Harvard business professor Michael E. Porter
assists organizations with evaluating the attractiveness and profitability of an industry. It has
been used by various companies to develop strategies and tactics that have helped them
increase competitive advantage in their industry. The model gives an in-depth analysis of five
forces that may affect a companys position in any given industry (Ahlstrom and Bruton
2010). These five forces are
1. Threat of new entrants: Because of the employment opportunities being provided by
foreign investors, the government have made it fairly easy for an organization to start
up business in Sweden by offering special incentives. As the demand for luxury
homes keep increasing, there are many competitors that might want to start up their
businesses in this thriving economy where there is profit to be made and the
infrastructure is top quality. The barriers to entry are low as long as the legal
requirements required from the government are met (Pettersson 2016).

2. Threat of substitutes: There is currently a high demand for luxury homes in Sweden
and as the demand continues increasing, there are very few construction companies
offering luxury homes and there arent many of them on the market. This makes it a
huge opportunity for DAMAC to enter the Swedish construction market. The homes
being provided by DAMAC properties are customized and the interior designs for
each real estate built, have unique style and creativity which captures the interest of
potential buyers. . The product is different and is also very clearly distinguished,
customers that prefer this style of design will not have a lot of options available for
them.
3. Bargaining power of customers: Customers looking to buy luxury homes in Sweden
are wealthy and affluent individuals who are willing to pay the price set for the homes
DAMAC properties can offer. The bargaining power of the target customers that are
in the age group starting from people in their late 30s to the age of 65 as Sweden is a
country with more population leaning towards the older generation, is high but
owning these homes is a symbol of affluence. It should also be noted that housing
prices increased in the year 2015 and some experts believe that this will be a
continuous trend (Billner 2015).
4. Bargaining power of suppliers: There are many suppliers for construction and housing
materials in Sweden, these suppliers offer the best value and good prices. The
bargaining power of the supplier is low because there are many on the market that can
provide a customer with similar or better quality of products. This is a huge advantage
for DAMAC as suppliers offer eminence in value added raw materials at affordable
prices (Billner 2015).
5. Degree of rivalry amongst existing competitors: The degree of rivalry is low in the
Swedish market for luxury housing and there are very few competitors because the
demand for this product has only started rising (Team FME 2013). Damac properties
which have a great distinctive competency will thrive extremely well in this market as
they offer the best quality.

5.External Analysis:

5.1 PESTEL:

Political Factors:
Swedens government policies and regulations on Foreign Investment were restrictive and
complex until the 90s when they joined the European Union (EU). Since this time the
government has encouraged foreign direct investment and it has increased over the years.
Foreign investment from various countries has contributed to increase in employment rates
with over 1,000 foreign companies providing 570,000 jobs (Jones 2016). Sweden is a country
that practices democracy and the head of state is a prime minister, it is politically stable and
has peaceful elections. There is little or no government intervention in organizational affairs
and government incentives like low corporate tax and eradication of capital gain taxes have
been implemented by the government to encourage foreign investors (Plattform 2016).
Additionally, profits earned in the Swedish branch of a foreign company may be sent abroad
without incurring any tax except the usual corporate income tax.
This makes it easier for DAMAC to enter into the Swedish construction market without
facing any political issues. They can also take Government projects like railway projects
offered by Stockholm bypass. This project amounts to SEK 13.9 billion and the next project
starts in late 2016 and another in 2025 (Eliasson 2015).
Economic Factors:
Sweden has experienced continuous economic growth regardless of the recession going on
worldwide, this is because the government had taken steps beforehand to ensure a certain
level of economic stability so even if worldwide there are several economic issues the effect
is mild in this country . Unemployment rates and inflation rates are low compared with that
of other countries worldwide. Foreign companies and favorable government policies have
assisted Sweden with its economic stability. It is one of the countries with a lot of foreign
investments and political stability has helped drive the success of the economy. Although
GDP growth rate was constrained by the 2008-2009 global financial crisis, the economy
recovered with 6.6% GDP growth rate in 2010 and GDP is expected to grow to $99.5 trillion
while the economy grows to $591 billion by 2018 Sweden has a high income economy and it
is the world's tenth-richest economy in terms of per capita income which means income
earners have more disposable income to spend and makes it a good market for construction
companies (Focus Economics 2016).
This makes Sweden a golden opportunity for DAMAC to make investments in the
construction and infrastructure sector.
Sociocultural factors:

When it comes to business meetings, the Swedish adopt a more formal environment. Some of
the most important things a foreign manager has to take care with are punctuality, setting up
appointments in advance, open and direct communication, use of first name, respect of
personal space and conservative dressing (not flashy). In western culture, it is common for
businessmen to separate their personal lives from their professional lives. In the UAE, it is
the complete opposite as business partners or acquaintances might be more familiar with
each others families and ask questions regularly. Consumers value CSR and social welfare
so it can said that businesses with effective CSR policies will be favored over the others
(Brown 2016).
In order to solve this, the people who are sent to work in Sweden need to refrain from asking
personal questions unless they open up on their own and also maintain punctuality so that
they gain many business projects. Keeping a professional stance is a must when handling
business meetings.
Technological factors:
Sweden is one of the most technologically advanced countries and results from research
performed by OECD shows that Sweden invests 3 per cent of its GDP in research and
development, the only countries that exceed this amount are Finland and Israel. The
government has set up various government agencies that fund and coordinate research, fields
that are currently being focused on include medicine and bioscience, technology and climate
change (Dahlstrand 2015). Swedes are innovators and the Nobel Prize which is awarded to
people that drive innovations and change was created by a Swedish man called Alfred Nobel.
The increased use of social media also helps companies communicate with their target
buyers.
Environmental factors:
The first nation to inaugurate an environmental protection agency is Sweden; this shows the
extent to which they value environmental sustainability. Swedish government have taken
various steps to ensure protection of the environment and there have been large investments
and increased efforts to raise awareness which ensure organizations decrease their carbon
footprints and suppliers provide materials that were sourced ethically. According to
the OECD Environmental Performance Review 2014, Sweden is a very innovative country
when it comes to environment-related technology (Global Property Guide 2015). Investments
in environmental R&D have made Sweden an innovation leader for several clean energy
technologies, including biofuels, smart grids and carbon capture and storage, these

investments have resulted in Sweden being ranked 4th in the Global Cleantech Innovation
Index (Brown 2016) .

Legal factors:
In the year 2006, the government introduced the Companies Act which enables foreign companies to
have a better say in their stock businesses. All business enterprises in Sweden must register at the
Swedish Companies Registration Office, registration of trademark is also required to enable the
government provide adequate protection for intellectual property. Workers rights are protected under
the Work Environment Act which includes working hours, gender equality and anti-discrimination
laws, working hours are 40 hours per week and overtime hours are 48 hours over a four week period
and no more than 200 hours a year. Foreign companies must be able to meet the minimum legal
conditions required by the government and Workers Union (Plattform 2016).

5.2 Hofstedes cultural dimensions:

Individualism: This describes the degree to which people in a society depend on each other.
When comparing the culture of Sweden and UAE, it can be observed that Sweden practices
more of an individualistic culture while UAE is more of a collectivist society. Sweden scores
75 while UAE scores 25 in this dimension.
Because UAE is a multicultural country it might be easier for them to adapt to the culture of the
Swedes in regards with this dimension.

Power distance: This dimension deals with the fact that inequality amongst individuals exists
across various societies and it examines the cultures attitude towards the inequality- is it
accepted or not. In the UAE there is high power distance, people with wasta are allowed
more opportunities than others and this is generally accepted while the Swedish society
values egalitarianism where emphasis is placed on equality in the workplace and the society
in general. Societies with low power distance experience equality and independence in the
workplace (Itim International 2016).
To avoid having to face issues in the partnership company, proper communication should be the main
factor when dealing with different employees. With the help of the HR team, it becomes easier to

understand what each individual wants. In the case of individuals from high power distance, the
managers are expected to resolves disputes and also make all the crucial decisions. On the contrary,
individuals from the low power distance will willingly comply with solving issues and stating their
point of view to managers.

Masculinity: Sweden scores 5 in this dimension which means it is a very feminine society
where emphasis is placed on caring for others and quality of life. When it comes to the
workplace, leaders practice transformational leadership. There is an emphasis on nurturing
their staff by including them in decision making process and providing them with extra
incentives, bonuses, decreased working hours. UAE can be described as neither masculine
nor feminine and their score in this dimension is 50 (Itim International 2016).
Going into a country such as Sweden, the employees from the UAE will be able to enjoy work
benefits and since they are neutral, they would easily adapt to the working conditions in Sweden.

Uncertainty avoidance: Uncertainty avoidance is the degree to which a society can deal with
not knowing what the future holds. Sweden scores 25 in this dimension which means they do
not prefer to avoid uncertainty. Societies with low uncertainty avoidance tend to be more
relaxed when it comes to rules and nonconformity to the general norms is tolerated. In
comparison UAE with a score of 80 in this dimension has a high preference for avoiding
uncertainty, countries with high scores conform strictly to laws and there is little or no
tolerance for nonconformity (Itim International 2016).
Entering in to a country with a more relaxed nature, they tend to be more into innovation and
newness. To balance between two different set of employees, keeping a general set of laws within
the company is a must. Adhering to new ideas by setting up workshops in the company once a
week with the help of motivators will be beneficial to both UAE and Swedish employees.

Long term orientation: This dimension describes how every society strives to preserve links
with its own past while dealing with the challenges of the present and future. Sweden score
for this dimension is 53 which indicate there is no real preference for this dimension. There is
currently no score available in this dimension for UAE (Itim International 2016).

Indulgence: This dimension describes the extent to which people try to control their desires
and impulses and this is based on their upbringing. Cultures with weak control can be

described as indulgent while those with string control can be described as restrained. Sweden
scores 78 which shows there culture practices indulgence, societies that have high indulgence
tend to be more optimistic and possess a positive outlook on life. There is currently no score
available in this dimension for UAE (Itim International 2016).

5.3 SWOT Analysis:

Internal analysis will examine problems that can be faced by Damac properties when trying to set up
their business in Sweden. SWOT analysis is the tool that will be used to identify issues and
opportunities when venturing into Sweden.

Strengths:

Access to capital for investments.

Successful and reputable

business.

Weaknesses:

culture.

Opportunities exist in

Threats:

construction sector for foreign

companies with huge projects
proposed by the Swedish

Low level of corporate tax

Recession might have an impact on

demand in the long run.

Competitors that have firsthand

knowledge of Swedish economic and

government.

Language barrier between the

Swedish and Arab.

innovation.
Opportunities:

Not many staff comes from diverse

backgrounds.

Good hold on logistics

infrastructure, technology and

Managers not familiar with Swedish

sociocultural background.

Countrys increasing aging

(Skatteverket 2016).

High demand for luxury homes.

Workforce with advanced

population means reduction in labor

force.

companies which are NCC AB

technical skills.

International competition with top 3

(Nordic Construction Company),

Since Sweden has experience

Hochtief (Germany) and Fluor Corp.

with technological advancement

(United States) (Skanska 2015).

relating to sustainability, it poses

an opportunity for DAMAC

Escalating raw material prices

(Carlsen 2015).

(Bergstrom and Ofverholm 2011).

6.0 Business Strategies:

6.1 Product/service positioning:

Stockholm, the capital city of Sweden is the gateway to millions of construction
opportunities. There has been an increase in demand for construction companies forming
together with new markets for suppliers of sustainability buildings, green products and new
building design and methods (Kruger 2015).

By applying the Kraljic purchasing portfolio matrix relating to product positioning, he

explains the need to keep in tabs with continuous technological changes and economics
growth. Companies need to protect against negative supplying interruptions (Caniels and
Gelderman 2005). The matrix brings in four stages
1. Purchasing management:
Skanska is one of the biggest construction companies worldwide having a strong foothold in
the US and Europe. They provide innovative solutions and keep close contact with their
customers providing world expertise mixed with their own culture. They own about 80
percent in purchasing to sales ratio with an proximity of 100 billion but differ among their
business units because of their sub- suppliers. Because Skanksa is more fragmented, the car
industry has more control over the supply chain in Sweden as they provide low standardized
margin products. In order to have low margin products, their focus needs to be more on the
supply chain and Skanska proves to have inefficient supply chain. This is where Damac can

come in to stabilize the supply chain by having control of the purchasing, materials, sourcing
and supply department. DAMAC has good reputation in the know-hows of buying quality
products such as steel and iron at low rates which will be useful in reducing costs and
maintaining profits in this newly formed partnership (Stockholm School of Economics 2008).
2. Materials management:
This deals with acquisitioning and improving the flow of materials such as logistics and
materials management. The main focus is not only on price but also volumes and time.
DAMAC needs to balance buying large quantities to an average pricing. Not buying too
much material to avoid expensive stocks. At the same time, it should not be too little so as to
avoid shortage and production stoppage (Stockholm School of Economics 2008).
3. Sourcing management:
Keeping a structured organizational design is an important factor when handling cross
culture teams. They need to improve on their overall understanding of purchasing knowledge
so as to understand the sourcing process (Ferreira and Kharlamov 2012). The sourcing
process focuses on strategic and calculated purchasing activities.

This is a cross-functional process aimed at managing, developing and integrating with

supplier capabilities to achieve a competitive advantage. This include both externally and
internally oriented activities
4. Supply management:
This includes previous tasks but also the information of supplier structures, the development
of suppliers capabilities (resources, knowledge), and improving administrative routines. This
is done to reduce the total cost, not only of the price of specific products bought, but also the
cost of related activities like quality assurance and administration. It also includes the
construction of new prospects in terms of new products and process improvement. There
needs to be a balance between handling suppliers and strategic positioning which are to
exploit, stabilize and to diversify (Ferreira and Kharlamov 2012).

6.2 Pricing strategy:

Pricing strategies have been under researched by many companies within the marketing
sector. When in perfect competition, the product producers are the price takers. The aim of

pricing strategy is to construct the mix to maximize market returns. An important aspect in
construction is that both the power of individual supplies and customers are likely to reach at
an agreement stage in the principle of bargaining. Different customers value different product
and service. This is why price cannot stay constant as preferences change from one customer
to another. Gronroos mentions that price can never be of sustainable advantage. The moment
one of our competitors offers a lower price, the customer will be gone unless he/she values
quality. Attention is being reeled in relationship marketing equating to the value of the
relationship in pricing (Ford et al 2003). In conclusion, prices should not be set too high
(also referring to the price bubble in construction sector in Sweden) , as this will potentially
ruin a positive relationship with a potential buyer, but it should be high enough to offset the
constructional costs incurred and still gain a profit based on quality and service value
(Mochtar and Arditi 2000).

6.2.1 Penetration Strategy:

Penetration Pricing strategy is a strategy relating to market entry tool as well as loyalty
building. This strategy is based of a high quality product ( as in the case of bringing luxury
real estate into Sweden) at a much lower than expected price. With the help of green
technology, it helps the business for entry into new market even when there are strong
competitors thus building brand loyalty with new customers from the very beginning. These
customers tend to get hooked with a great first product offering and they would buy high end
buildings assuming future products to be as high quality as the first (Skitmore and Smyth
2006).

6.2.2 Premium Pricing Strategy:

Premium pricing strategy takes advantage of a certain set of customers who expect that
having high quality products means that it comes at a premium price. These types of
customers dont try getting the lowest price possible amongst the many competitors.
Businesses that use this strategy try to price their products at its maximum in the market.
This only has a limited customer base to market their products to, but in turn provides higher
profit margins for every sale made (Akintoye and Skitmore 2010).
Different pricing strategies have been divided into three major strategies which are:

1. Cost Oriented Pricing - This method is based mainly on cost plus mark-up, target rate of
return and break- even analysis.
2. Competition Oriented Pricing This involves ensuing the prices of competitors in relation
to what the competitors' expected reactions are.
3. Demand Oriented Pricing This type of pricing is based solely on the ongoing price or
clients perceived value (Skitmore and Smyth 2006).

6.3 Distribution and logistics:

With the highest quality of available staff added with high quality of living in Sweden, it
makes it a center of a global magnet and as a location for regional head office and centralized
logistics operations. A few of its advantages are:
High Frequency:
From Sweden, all the major cities in Sweden, Norway, Finland, Denmark and the coastal
regions of Poland and Germany can be given quality service in less than 12 hours .
Advanced distribution network:
Logistic providers and their customers in Sweden are given solutions that entirely mix with a
consistent flow of information with cash and goods, including customers, suppliers, banks
and logistics suppliers.

6.4 Promotion and Advertising:

Advertisement usually plays a very big role in the organization because it is the most
effective and an easy way to attract the potential customers and market the organizations
products and services. At the present there are a number of ways how advertisement is done
and these advertisement strategies would be a plus for Damac since they are entering a new
country and it is most likely that the organization at this stage is unknown to the people in
Sweden.

6.4.1 Website:
A research done in May 2011 states that there are about 324,697,205 websites on the internet
(Elassad 2011, 4). In the present day, having websites is the quickest way of advertising the
company and to be reached to thousands of people living worldwide. When Damac does a
joint venture with Skanska they should firstly plan to create a very attractive designed

website and then find a good way to market the website and publish it worldwide (Elassad
2011, 4) This would also help to cut costs.
Designing the website:
While designing the website, it should be kept in mind that the website should have a
translator so that people can view the website worldwide in an understandable language
(Elassad 2011, 4). The default language in which the website should be created is English
because its a universal language that people would be able to comprehend with. The
translator language would be Swedish because Damac is moving to Sweden and their
primary customers are the Swedish people. The ideal language that should be picked to
design the website is ASP.NET. ASP>NET is a part of the .NET framework launched in 2002
(Microsoft 2016). It is a tool used for web development where a use can make web
applications with lease coding since ASP.NET consists of tools that are required to make web
applications. The website can be made with ASP.NET using the C# language which is new
and easy to use (Microsoft 2016). By using this language, it would be very easy for a user to
make interactive websites under the ASP.NET web forms or application (Microsoft 2016).
The website should be made sure to have all the features that the organization offers and
should be as user-friendly as possible.
Marketing the website:
For marketing the website, as stated above, the first primary language of the website should
be English to market to the customers worldwide. The other language that the website must
have is Swedish so that it is marketed to the Swedish community. The purpose of having the
website marketed in two different languages is because by having different languages, it
would help the website gain strong popularity in different parts of the world (Elassad 2011,
4).

6.4.2 Radio:
While in car, most people would prefer using radio as their preferred source of entertainment
while driving to places. Radio would be a good source for advertisement because there are
many active listeners who would pay attention while on the roads. In a news story from The
Drum, it is seen that Skanska collaborated with a radio called Radio Airtime Media to send a
message to their target audience to take care of the construction workers on the roads while
they work (Media Agency Group 2013). They have a thirty second ad on the radio where a
story is narrated about how a worker lost his life after being hit by a truck drive early

morning. The ad ends with a message to take care and look out for the construction workers
(Media Agency Group 2013). The same marketing strategy can be used by Damac to
establish itself in Sweden. The primary target audiences of Damac are the people who are
interested in luxury estates and the main target city is Stockholm because it is the richest city
in Sweden (Nylander 2013). Damac can do collaboration with Vinyl 107 which is a popular
radio station in Stockholm that plays classic hits (Dean 2009). The main reason to choose this
radio station is because the in the target audience, there is a big chance that the primary
investors would be people who are aged like mid 30s- 60 or more. It is most likely that their
choice of preferred music would be old songs and Vinyl 10 streams classic hit would give a
big advantage to Damac to air live ads on this station.

6.4.3 Ads in theaters:

Going to watch a movie in theaters is one of the most common types of leisure activity for
people worldwide. Just like people in other parts of the world, Swedish people too like to go
to cinemas (Witt 2013). It would be good for Damac to put an a before the movie so that it
would catch attention of the viewers that would help in increase of popularity of Damac in
Sweden.
Social Media
Out of all the methods of advertising, the most popular method of advertising in Sweden is
social media (Media Buying 2014). Research shows that about 67% of content marketing
executives say that they prefer social media as the most reliable and trustworthy source of
advertisement (Media Buying 2014). The most popular social media applications used by
majority of people are Twitter, Facebook, Instagram etc. Damac can make a Facebook page
and increase their popularity because Facebook has many Swedish users that access the
application daily since it is the most usually used social media application in Sweden (T
2014) that would make people more known about Damac and its features (Tsevtkova 2014).

6.5 Estimated sales/sales mix:

Sales managers need to be mindful of the sales mix when they strategize commission plans
for the sales staff, since the intention should be to be an incentive to the sales staff to sell
high end profit items. A poorly created commission plan could thrust the sales staff in the
course of selling the wrong products, which changes the sales mix and results in lesser
profits.

A cost accounting variance otherwise called as "sales mix variance" is used to determine the
change in unit volumes in the definite sales mix from the planned sales mix .

6.6 Product/service strategies:

Sustainability strategy:
With DAMAC entering into a country which has the highest sustainability, they need to
strategize in order to make business in Sweden. Malm, the third largest city in Sweden, is a
clear example of having the worlds two leading sustainable building. Being a populous city,
they have luxury real estate buildings which are economical friendly. Bo01 is a constructed
district that unites modern architecture with ecological sustainability, while Ekostaden
Augustenborg is one of the largest investments in Europe in the ecological conversion of an
existing residential area. The estimated cost benefits of green building is that building values
decreses to 7.5 percent, operating costs drop down from 8 to 9 percent, Return on investment
improves to 6.6 percent, rent ratio hits up to 3 percent and occupancy ratio rises up to 3.5
percent (Mc Graw Hill Construction 2015). Hyllie will be developed into the resund
regions most climate-smart district. Likewise, DAMAC can focus on climate smart district
in the capital city of Sweden, Stockholm. Its energy supply will consist of 100 per cent
renewable or recovered energy. By planning to use an eco-cycle approach, it is necessary to
showcase ecological and environmentally sensitive construction and living (Sverige 2013).
This is be a huge attraction to potential buyers as Sweden is sensitive to sustainability.
Growth Strategy:
A growth strategy needs to be adopted by DAMAC in an attempt to introduce new products
such as creating new design in line with the taste of Swedish people. By this joint venture
with Skanska, they can infuse Skanskas building structural design with their luxury interior
designing.

7. Financial planning:
This section will determine the financial projection of DAMAC properties for the next three years. By
observing the figures in the appendix, the conservative estimates of growth, revenue and expenses
will be obtained. Until 2017, no significant increase in profit will be expected, as the company needs
time to earn high end customers and gain government projects in the construction market in Sweden.
Before starting any project it is a necessity for the company to make an analysis if the projects they

take in will be beneficial for the partnership or not. The section is based on the estimates of profit and
loss and balance sheet of the company. It has been established based on the net profit of both Skanska
and Damac that the company will not have to face a negative balance sheet as both have strong
financial statements and net profits. The project taken up will be beneficial for the organization
because the profit related to the project will be higher than its cost.

7.1 Cost analysis/funding/cash flow:

It has been assumed that at the initial stage the company will consider the government projects that
are environmental sustainability and this is due to the high demand for housing in Sweden, especially
in Stockholm. The cost and benefits analysis has been designed to take the project of 30 billion
worth of construction projects. An estimated Euro of 96,000 can be saved in material purchase costs.
This is a cost and benefit analysis done with the help of WRAPs Net Waste Tool, and this evaluates
the net impact of waste reduction on the upcoming government projects reduced from 1,660 tonnes
forecast standard practice going down towards 1,100 actual practice (Wrap 2015).

Waste Saving and Costs:

Value of materials saved

117,000

Costs to achieve savings

21,000

Net Benefit

96,000

Net Benefit is equivalent to 0.29% of construction value

The projected cost analysis will be seen in the Appendix which shows a savings of $1,123,751 by the
end of the year 2023.

7.2 Projected profit and loss statement:

The profit and loss statement is the estimated profit or loss which the newly formed company will
have to face in the initial stages of the business years. Financial factors that can create a change in the
net profit of the luxury real estate business are imposed taxes, interest rates and expenses relating to
the business (for example raw materials). In the first year of the business, profit is to be expected at
minimal since entry into the market requires brand recognition even though Skanska has a good
reputation among Swedish clients. In the upcoming years, there is predictions that there will be a high
significant rate if Damac and Skanska can bag the major government projects that are held in second
half of the year 2016 and in 2025 (Damac Properties 2016). Damac has already established a good

brand image in the UAE, especially Dubai and in order to have a good reputation in Sweden, it needs
to successfully gain projects from Stockholm Bypass especially Subway building and then
concentrate on their expertise which is luxury real estate buildings (Billner 2015). Once the company
gets a hold of recognition, it will be able to bag high profit ratings and growth will be rapid once they
have a strong foothold in the construction industry. Currently, the net profit for the year 2015 in
Damac is $ 1,229,277.91. Skanskas net profits amounts to $ 584,453,610.90 (see appendix).

7.3 Financial Synergies:

Under this aspect, Damacs construction business stream does not need to tie up with capital but
instead operate under free working capital. With the use of free working capital coupled with the
profits produced by Damacs group in combination with Skanskas capital contribution, it helps in
financing of investments in government projects and luxury project development, which in turn
generate high return on invested capital. These investments also help in creating new construction
contracts for the partnership formed thus generating a profit.

8.0 Management Considerations

8.1 Personnel/Sales Force Factors:

As we know many companies use celebrity advertising to increase their sales, but that always does
not work with the construction companies. It is always necessary to be truthful about your products,
so later you wont have to hear any complaints from your customers. Skanska and Damac both have
different style of strategy plans to increase sales, it is essential to take strategies from both the
companies and implement them in the joint venture. The sales force factors for this joint venture
should be mainly based advertising, promotion, and direct communication with the customers. Damac
properties are experts in selecting prime locations for the constructions (Damac 2016), so we can
advertise and promote where the buildings are being constructed in Sweden and what amenities are
provided with scenic view and investment appreciation opportunities. When all the necessities are
provided to the customers, they would be willing to buy or rent the apartments. Direct communication
with customers can be very easy to explain customers their services and can show them model
apartments for living experience. Another sales strategy which can be implemented is providing 3-D
walkthroughs of exactly how the apartments are going to be and the customers can make changes if
required.

8.2 Business Advisers:

Damac is joining with Skanska which is a Swedish company, it is important to recruit a local business
advisor. As the company can gain local business information structure and it offers a wide range of
services to the construction business community (Stokes and Wilson 2006, 159). Local business
advisors can also help and support through planning, functioning, applying funds and also financial
forecasting (Jones 2012). They can be temporarily hired and be present during business contracts with
Skanska as they will be able to provide their expertise in making negotiations as well as share their
knowledge of the business culture in Sweden. Since it is an international expansion, it will be quite
expensive but in future it can reduce costs and failure of business. The business advisers can also help
in hiring skilled labour and the know hows to handle union. Though Skanska is a company that has
most speaking knowledge with Swedish and English, there will be some who cannot properly
communicate what they want to convey in business meetings. In such case, a business adviser can
commute between Damac and Skanska managers.

8.3 Decision Making:

Decision making is a way of selecting a suggested implementation among alternatives in a common
business practice which is known as decision making process (Luthans and Doh 2015, 368). For any
organization or business, it is essential to know whether their company falls under centralized or
decentralised decision making process. Decision making are used to solve issues, sometimes which
are caused by host countries like subsidiary respond to economic and political demands. In overseas
operations, decisions are mostly based on return on investments (ROI) and in other instances, it can
be cultural differences (Luthans and Doh 2015, 368). In this situation, firstly, Damac and Skanska
should look into the factors that influence centralization or decentralization of decision making in
subsidiary operations table (Figure-1). Based on Appendix 1, the table below shows which decision
making operations can be used for the newly formed partnership company.
Centralization:

Decentralization:

Large size (both Skanska and Damac)

Stable environment ( Skanska stands number 4 in

construction field and with the help of Damac,
they can reach to the Top 3)

Large Capital Investment (Because of

High level of product diversification

constructing luxury real estates)

Relatively high importance to MNC (since there

More highly competent managers in host country

is a bloom in need of foreign construction

(as in the case of Skanska)

companies in Sweden)
Strong volume to unit cost relationship (half and

As compared to Skanska, Damac has little

half)

experience in international business.

High degree of technology ( technology shared

from both companies)
Strong importance attached to brand name ,
patent rights, etc (both Damac and Skanska
emphasises on brand recognition)
Both companies have homogeneous product
lines.
Small geographic distance between Damacs
home office and susbsidiary in Sweden (which is
approximately 4602.655 km in distance by land
transport) (Free Map Tools 2016)
High interdependence (mutual reliance between
other companies as in the case of Damac and
Skanska) between the units.

The newly formed company in partnership with Skanska would be better managed by centralized
decision- making.
Swedes are slow decision makers and tough negotiators (Kwintessential 2016), whereas UAEs are
also slow decision makers but they are good negotiators. So this can be an advantage for Skanska and
Damac in decision makings and negotiating.

8.4 Contingency Plans:

8.4.1 Financial Conditions:

As Damac and Skanska are well established companies, they both can invest equal 50% each. If those
are not enough to cover the costs, they can take up loans from Swedish Banks such as Riksbank
which provide low interest rates with a record low of -0.50 percent in February of 2016 (Trading
Economics 2016). The Riksbank are taking negative interest rates lower to keep up with global
stimulus (Spence 2016), so this will be an advantage to Damac and Skanska, in the worst case
scenario to take up loans. And also, according to the Swedish economy, Sweden has low and stable
inflation rates and a healthy banking system (Sutherland 2015).

8.4.2 Projects:
Sweden has a diverse, successful economy with high competition. According to the World Economic
Forum, Sweden ranks the 6th position for the worlds competitive country. Also, according to the
World Bank, Sweden is the sixth easiest country to trade with in the world (Sutherland 2015). As
Sweden has high competitive economy, it can be quite difficult to find major projects. But as Skanska
is already a well-established construction company, Skanska and Damac wont have much struggle in
attaining projects as Skanska has good relations with the Government of Sweden. As mentioned
above in 4.2 customer profile, that Swedens population is ageing, Skanska and Damac can focus on
constructing luxurious apartments with the help of Skanska to make it into green projects for the older
generation. This can be supportive for the society and also Damac & Skanska can operate their own
brand recognition in long run. They can also take up government projects, which can improve their
business standards and also get recognized as a joint venture.

8.4.3 Cultural influences:

Swedens culture is mainly concerned with welfare of the people and well-being. Swedish companies
have a flat structure and few management levels with team-oriented structure. They rank high in
individualism and enjoys challenges and values privacy. Organizations in Sweden are open and
informal, their managers and executives tend to be excelled in their field. They also have a personal
sense of responsibility, not to dominate any discussions and the generation of ideas and also,
appreciation of work is given to all the team members in the group (Gallant 2013). As Skanska is
already a Swedish company, it will be easy for their managers to adapt to the culture influences.
Damac needs to adapt to these cultural influences, and their managers and employees should make
connections with the Swedish native and culture influences. They must understand the companys
culture with Skanskas employees and learn basic knowledge of the Swedish language in order to
work effectively.

8.4.4 Management Disputes:

Management disputes are normal in every organization, which can occur between international and
local staff due to their personality, behaviour, attitudes, leadership styles and management structures.
To overcome these issues, Damac and Skanska can adapt to transformational leadership and cross
culture leadership styles. Transformational leaders recognize their employees as their strengths and
set their attainable goals and objectives. They also share a vision to employees by motivating them for

business development. So Skanska and Damac, can appoint a transformational leader to guide and
motivate employees for business growth. The organization can also appoint Cross culture leaders to
understand the local employees as they have different cultures and value systems and help them in
work related social and cultural issues. The leaders should also have the power to organize and lead
workforce through various cultural changes and disputes (Pillai 2011). Damac and Skanskas
employees and managers should have good understanding between each other and improve their
work relations.

9. Recommendations:
Recommendation

Benefits:

Cultural sensitivity training for

This will help the staff be more sensitive to the culture of the people

staff

they are working with who are from different cultural backgrounds.

Worksite Understanding and

Improving the plateau in the long run. The target for lost-time accident

safety

rate (LTAR) to reach about 3.1.

Improve corporate social

Since Sweden places high value on CSR and social welfare, this will

responsibility

help Damac properties receive favor from the government and bring in
more clients.

People development

The need for program tools, employee ownership and leadership

profile programs. There can also be improvements within diversity and
inclusion of leadership skills to run the newly profiled company.

Green projects

Since Damac lacks in sustainability, they need to develop green

solutions in relation to varying interests in the market. Making all
luxury real estate projects with construction up to 75 percent of order
bookings that are green.

Risk Management

There is a need for improvements in Industry leading processes for risk

management by continuous implementation at business level.

Worksite safety improvements plateaued during the period. A lost time accident rate (LTAR) of about
3.0 was short of the LTAR target of 1.0. Ethics Skanska still has ethical risks, and needs to continue
training in this area. Green Skanska has green solutions in place, but there is varying interest in the
markets. All Commercial Development projects are Green, and in Construction up to 75 percent of
order bookings are Green. People development For people development, the programs and tools,
leadership profile and employee ownership program are in place. There is a need for improvements

within Diversity and Inclusion and in leadership. Risk management Industry-leading processes for
risk management are in place, but there is still a need for improvements. Implementation continues at
Business Unit level.

10. Conclusion:
In successfully securing and executing this business plan, proper communication play one of the
major roles and both parties must take respective control over management and the financial aspects.
With Great GDP growth rate, constructive economic policies, low unemployment rate, workforce
with advanced skills, low inflation, consumers with high disposable income and great infrastructure,
this makes Sweden one of the best countries to invest in.

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11. Appendix:

Appendix 1:

(Spencer 2016)

Appendix 2:

(Bo Holm-Christiansen 2010)

Appendix 3:

(Skatteverket 2016)

Appendix 4:

Appendix 5:

Appendix 6:

(Wrap 2015)

Appendix 7:

(Caniels and Gelderman 2005)

Appendix 8:

(Mochtar and Arditi 2000)

Appendix 9:

(Gallant 2013)