Exploring Entrepreneurship in Dubai - Coursework Example

 Exploring Entrepreneurship in Dubai Introduction This report is about the issues faced by an entrepreneur upon starting his business. The Mohammed Omar bin Haider Group is an organization in Dubai which was started in the early 1950s but many new entrepreneurial projects were started by Mohammed Omar in recent times. The report will outline the group’s journey from inception till today and focus on the issues that the group faced in setting up new ventures and diversifying into new sectors. The relevance and relation to the issues faced by the corporation to the course material will be covered and its significance will be noted. The reason for choosing the MOBH group is the vision and mission behind the company and how it started from a mere factory to a powerful group that owns and runs international hotels and is involved in real estate, construction and education. This powerhouse focuses on maintaining first class quality. As one of the largest corporations in Dubai, it provides various elements to study and analyze. Research Methodology The secondary research tool used was the internet. The website of the MOBH group covers all essential aspects of the company background, mission and vision, and future projects. It focuses on all areas of the company and served as a helpful resource. Gulf News and other articles on the groups acquisitions and deals assisted in getting a background on the company. The most important source of primary research was Mr. Mohammed Omar bin Haider, who agreed to a discussion and is the major source of research. The detailed discussion dealt with all the topics that were to be covered in the report as well as most issues faced by him and the corporation. The limitations faced were that the discussion could have been more objective and straightforward and it was difficult to get real problems out on the table. Third party sources and information from and about major customers was difficult to find. Most statements from the entrepreneur were biased or ambiguous. Findings Company Background Mohammed Omar Bin Haider Group (MOBH) is a Dubai based corporation run by Mohammed Omar bin Haider. His father Omar Ali bin Haider was the founder of the company in the early 1950s along with his son. He started with a factory for gas production from 1964 to 1971 was the exclusive provider in Dubai. Mohammed Omar bin Haider is the current chairman of the group and is actively involved in it operations, direction and overall strategy. The company’s vision is to be the best in everything. The mission is to be a high growth company and diversify into various sectors. Mr. Omar bin Haider was the first to lease land from Dubai municipality to start his factory. He focused on construction and energy. The power plant that was set up produced Oxygen and drew calcium. This promising start was taken ahead by the foresight of Mr. Mohammed Omar bin Haider by expansion into real estate, hospitality, shares, engineering and equipment and education. Specifically in the area of real estate, MOBH is one of the largest groups in the Emirates. In its real estate division, the group is involved in brokerage as well as the buying and selling of rental property. They also provide services that encompass all areas of property management. In its hotels division, MOBH boasts of the finest franchise hotels as well as a wide array of hotel apartments and restaurants in its portfolio. Hotel management was started in 1978 and the hotels that come under the management of the group are Sheraton Dera, Crown plaza and Holiday Inn among others. In the shares division, the MOBH group aims to invest in large corporations and currently has shares in Emmar, Dubai Investment LLC, Dubai Islamic Bank, Dubai Commercial Bank and Emirates Commercial Bank among many others. The Commercial division focuses on construction and has been involved in high rise construction in Dubai and Abu Dhabi. In 2004, Mohammed Omar bin Haider decided to expand into the educational sector by opening Al Thurya School in Dubai. It is one of many educational institutions that the group aims to start. Findings An entrepreneur can be defined in different ways; someone who organizes resources, takes risks, is innovative and makes use of opportunities. Mohammed omar bin Haider is an entrepreneur in the true sense on the word. He is the owner and chairman of the group and has led it to new ventures and sectors after he took over the business from his father. He is an innovator and a risk-taker as he has diversified into unrelated fields such as financial investment, education and hospitality. He has made use of opportunities by expanding his business into construction when Dubai was experiencing a real estate boom; he expanded into hotels due to the high number of tourists and rich executives visiting Dubai and started education due to the number of wealthy immigrants relocating to Dubai. Thus, Mr. Omar fits all four of these definitions. Mr. Omar is a driven and ambitious person and contains the traits that are usually found in entrepreneurs. He is a self confident and highly motivated. He has a vision which is to be the best at everything. The vision may sound unrealistic but it has helped him attain his goals of making the MOBH group one of the most diversified and largest groups in Dubai. His obsession with opportunity and risk taking attitude has helped him attain excellence in different sectors. He has been the leading light for the company and believes that he is in control of his destiny. Mr. Omar does not fit the deviant/misfit social theory of entrepreneurs or the social marginality model as he was the son of the owner and held a good position in society. Mr. Omar’s own assessment of being an entrepreneur is to anticipate opportunities and invest in the right places. The MOBH group is a large corporation and does not fit the definition of a small or medium enterprise. With invested capital of $1.5billion and net income of $150-$170 million yearly MOBH is a corporation with many divisions and subsidiary companies. MOBH group has 3000 full time employees and 500 part time employees, with most construction work outsourced. Although it is a large corporation and has a formal organizational structure, the owner is at the helm of all affairs. He is directly involved in the company, but not in the supervision or management of all subsidiaries. He is the final decision maker. Start up issues Mohammed Omar bin Haider took over the business after his father (the founder) suddenly passed away. Mr. Omar was destined to follow in his father’s footsteps who had named the company after him. Mr. Omar’s main motivation was to live up to his father’s expectations and maintain and grow the corporation he had inherited. Mr. Omar’s business ideas were a result of exposure and analysis of international as well as local industries. From his environment he identified the needs of customers that he felt his company could provide and thus he started different ventures to build upon the corporation. When Dubai was facing a business boom and property investments were just starting, MOBH group was one of the early one’s to start a real estate and hotels division enabling them to move in on a prime market. He also started the educational and shares division of the corporation. Mr. Omar states that to lead such a prominent and visionary group, leadership qualities take precedence over qualifications and training. Although push factors (the demise of his father) brought Mr. Omar in to the business, pull factors such as drive, exploiting opportunity and interest made him start new ventures. The start up process includes six steps: Acquiring motivation: Mr. Omar was motivated by his father’s demise to run the company and fulfill his father’s wishes Finding the idea: He found the idea through economic and environmental analysis and due to international exposure through business trips. Validating the idea: He tested the ideas by venturing slowly into the market for example he managed one hotel and then moved forward into acquiring further hotels. He also identified the target market for his ventures which specifically for hotel apartments was rich tourists and for hotels the main customers were business executives and investors. Identifying resources: He had financial resources to start his ventures Negotiating: He negotiated contracts and deals, hired experts. Birth and survival: He developed separate companies for separate endeavors so that there could be separation of processes and organizations as the brokerage, school, hotels and contraction companies all have different management and are separate from each other legally as well. The initial investment in the corporation was $1.5 billion and the funding was generated by bank loans. The ideas and opportunities were evaluated in terms of market and competition. Market research was undertaken to identify target market, competition and future trends. Feasibility reports were made and analyzed. The target market segment was determined to be affluent to upper middle class and the competition was other Dubai based companies. Indirect competition was companies in other markets providing the same services. Key elements of success The key elements of success as defined by the entrepreneur are developing the right attitude and excellent communication skills. They include identifying creative solutions to problems and establishing a vision that takes the company forward and sharing it with the directors. Success comes from always looking for new ideas and opportunities, aligning goals, energy and enthusiasm. Regular meetings with the board and brainstorming are necessary to keep the board together and establish a unifying path to success. Company analysis Mr. Omar ventured into real estate in 1970, hospitality in 1980, shares in 1990 and education in 2004. He has always looked towards diversifying the group’s interests to maximize the group’s potential as a powerhouse in the UAE. Mr. Omar’s main interests lie with real estate, hospitality and shares. The group has had the advantage of having ample funds and resources at its disposal. The only major issue that the company is facing is the recession. Dubai’s property boom faced a major downslide and property prices and investment fell. Dubai’s economy was pulled back from its high growth trajectory. The MOBH group which is invested heavily in hotels, real estate, shares and construction faced major losses due to this. Presently the economy is recovering and the group has not stopped its expansion and diversification strategy although it remains vulnerable to economic conditions. The major competitors of MOBH group are other local and multinational corporations with investments in Dubai such as Emaar, Nakheel, British Business Group and so on. The company’s profitability has always been affected by the market trends and recession as well as the influx of competitors. The strengths of the company include its strong finance base which enables it to get funding for its new expansionary projects, diversification into different sectors of the economy, specialized management for every division, high quality service in every division and experience and trained workforce. The weaknesses include susceptibility to market conditions, fast expansion which may lead to unprofitable ventures if not managed properly and lack of coordination between the subsidiary companies. With regards to the ongoing operations, work schedules come under the tasks of the Group operation managers and are planned well ahead of time. Conflicts in the workplace are few in nature and are handled by individual department heads aptly. Employees are hired through an intense recruitment selection process to find the right fit. With regards to remuneration, employee benefits comply with federal and local laws and bonuses are regular in nature depending on performance. Employees are entitled to overtime depending on their working hours and marginal benefits are as per performance. Other benefits are included in the contract such as housing, travel and food. The tactical goals of the company are to develop commercial properties, villas and five star hotels; and expand the real estate segment. The strategic goals of the organization are to expand the educational sector and ensure that 5% of all hotel rooms in Dubai are MOBH owned. Mr. Omar aims to be a catalyst in promoting Dubai tourism. The future plans for the company also include the vision to be one of the Big Five corporations in Dubai. He believes that Dubai is a melting pot of different nationalities and is growing every day; he wants to contribute significantly to this growth and ensure that the MOBH group is at the forefront of this high growth city. The corporation aims to build on its foundations and gain the highest market share in each of its divisions. The education division is a new venture that holds immense potential due to many foreign nationals coming to live and work in Dubai with their families; and it is to be further expanded to develop world class universities. The entrepreneur As an extremely successful entrepreneur, Mr. Omar feels that there are three main things that make a successful entrepreneur are mission, vision and self confidence. According to him, the positive aspects of being as entrepreneur are control and the flexibility of doing business at your own terms although there is great pressure to succeed and the income may be unstable. The most invaluable lesson that Mr. Omar has learned from being an entrepreneur is the importance of making the right decision at the right time. Although he doesn’t feel he would have done anything differently in his career, he believes that each and every choice; no matter how insignificant alters the course of the future. Through research he discovered Create Debate and Essembly which focuses on political discussion and concentrated his efforts on growth of Dubai. He felt satisfied with his career when he realized that he was among the successful businessmen in Dubai and feels his greatest achievements to be in real estate and hospitality. His current lifestyle involves work around 9-10 hours and international travel to keep up with his increasing business commitments. The corporation takes up more of his time now than it used to. His hobbies include travelling and reading and feels that his talents and individuality are the reasons for his standing out. His drive to succeed and self confidence are the cornerstones of his achievements. He handles tough business decisions pragmatically rather emotionally, he analyzes all aspects of the situation and then makes a decision. He states that tough decisions are a part of the package of being the chairman of such a large group and he has faced tough decision in both his business and personal life. Mr. Omar defines success as a journey that consists of many ups and downs. Successes build on previous successes and to learn from failures is also an integral part of success. He characterizes himself as a successful business man. His greatest inspiration is his late father who started the MOBH group. The biggest mistake he made was starting some businesses that he did not have sufficient knowledge and research about. The one person he wishes he could talk to from history is Sheikh Rashid, the former ruler of Dubai who had actively supported Mr. Omar in the initial stages of the business. Mr. Omar feels that source and opportunity make a business idea and successful and he feels profit is just the final money left over. He focuses on greater vision than profit and turnover. His advice to aspiring entrepreneurs is to do what they love and to turn their hobby into their career. New entrepreneurs should make realistic business plans and budgets and set realistic goals. They should not expect to make a profit from the beginning as it takes at least five years for a new business to turn a profit. The entrepreneur should ensure that sufficient funds are available to carry the business and the entrepreneur the beginning years. Critical Evaluation The MOBH group is a family business and thus fits the family business case study. The MOBH group was started by Mr. Omar’s father, and he became the owner and chairman of the company after his death. As it was a family business, the father and son both shared a vision for the company. There was no succession conflict and Mr. Omar assumed the responsibility as it was his father’s and his family’s wish. The advantages of having a family business are apparent in this case as there is a high level of commitment and great loyalty to the organization. Issues such as nepotism can also be seen as Mr. Omar is not the chairman due to his skills or qualifications but due to his being the son of the late owner. However, this company is not harmed due to this factor. MOBH is a large group with many professionals in its workforce; Mr. Omar is an innovator and guider with all the right tools at his disposal. MOBH is a large organization and not a SME. As a large firm the corporation enjoys many benefits. The owner had government support in the beginning and it is easy to obtain finance for further expansion. Compared to a small company, it has a formal communication and organizational structure, recruitment and hiring processes, strategy formulation, advertisement and public relations and a large customer base. As a large firm, MOBH group is more proactive and strategic with a long term vision. It can hire experts and specialists and has become a reputable company. Although, small companies are easier to establish and run; a large corporation acquires benefits of specialization and standardized processes and focus on the long term. Mr. Omar is a true entrepreneur even though he did not start the MOBH group. He organized the resources that were available and allocated them to profitable sectors in Dubai such as Hospitality, real estate, shares and education. He took risks in investing in such capital intensive industries that are based on tourism and are vulnerable to market changes. He is an innovator and made use of opportunities that came his way by acquiring franchised hotels, starting an elite school and developing hotel apartments. Although Mr. Omar did not face any major issues in setting up new ventures, there were a couple of ventures that he started without sufficient research and thus did not succeed. He learnt from those mistakes and in future endeavors focus on gaining complete information before making decisions. Mr. Omar became an entrepreneur due to the push factor of his father dying but his acquired motivation to make his group one of the top corporations in Dubai is a part of his drive and ambition. The company currently faces two major issues. Firstly, it is extremely vulnerable to economic conditions and the Dubai recession led to major decrease in customers and thus profits. Secondly, the company is expanding at an alarmingly fast pace which may lead to financial over burden and losses. If the focus is only on expansion rather than profitable expansion the company could end up bankrupt. However, the current profitability and performance of the corporation is positive. The module material does not entirely correspond with the entrepreneur’s case as he did not face any start up issues and even though it is a family business; cases of nepotism have not affected the group. As in the case of a family business, high commitment and loyalty are present which greatly benefit the organization. Conclusions MOBH is a Dubai based corporation with various divisions including equipment and engineering, real estate, hospitality, shares and education. The company’s mission and vision is to contribute to Dubai’s growth and become one of the top companies. Mr. Omar has led his father’s company into areas his father had not even envisioned. He expanded into real estate, hospitality, schools and shares. The company now boasts profits of up to $600 million a year. As an entrepreneur, Mr. Omar has the visionary leadership to further expand the company. He possesses the attributes that an entrepreneur should have and the resources at his disposal. The group manages franchise hotels such as Sheraton and Crowne Plaza among many others. The company did not face any start up issues and obtained finance easily. It had the backing of the government as well. The major issue that the company faces is economic conditions which affect property prices and tourism, both major determinants of profit for the company. The company aims to expand further into real estate venture and develop hotels. Mr. Omar feels like he has achieved success and feels his greatest achievements are in hospitality, real estate and share; which are all ventures that he began. He aims to make the company the best at everything. Reflection Upon reflection, further effort to find material on the company from other sources might have led to greater insight on the issues facing the organization. This would have helped in analyzing the success from a broader view. During the interview, it would have been better to stress on competitors and their details, the weaknesses and threats facing the organization. The interview should have focused on uncovering negative aspects of the corporation and its performance as well. The entrepreneurial skills, large corporation vs SME and the start up issues have been covered. Bibliography Gulf News. 20 11 2010 . Haider, Mohammed Omar bin. Exploring Entrepreneurship 10 10 2010. Mohammed Omar bin Haider Group. 2010. 28 11 2010 . Read More