Who Are Azza Fahmys Biggest Competitors - Case Study Example

In your opinion, who are Azza Fahmys biggest competitors? Explain your choices. How would yourespond to those competitors? Azza Fahmy’s biggest competitors are mostly from the jewelry market. Her company faces competition from traditional jewelers. These retailers are large in number and sell unbranded jewelry by the carat. Azza Fahmy Jewelry faces competition from this segment due to the sheer mass of the market that they cater to due to being so numerous. AFJ also faces competition from international brands such as Cartier and Bulgari. Most of the affluent Egyptian market that is interested in buying jewelry is impressed and attracted by Western culture and thus jewelry. International brands offer them, this western touch that local jewelry in the Middle East lacks. Since this affluent market segment is very important for AFJ’s success, competition with international brands becomes a matter of great concern. In addition to these, Azza Fahmy also faces competition from small jewelry retailers. This is a mostly young, newly emerging small scale production competition. Even though they are not as organized or powerful as established brands or retailers, AFJ has to keep an eye out for them because they are very innovative in their designs and very nimble in their use of various market distribution channels like social networking websites. 2. What, in your opinion, were the most significant steps undertaken by Azza Fahmy Jewelry toward the successful repositioning of the company as a global luxury brand? Azza Fahmy has gone through a massive restructuring process over the last few years in order to expand and remodel itself and consequently move toward the international jewelry market. For this the company has undertaken many steps in two main transitional phases. Azza Fahmy has decided to present her company to the international market as the ‘first Egyptian luxury brand’ and firmly establish the company locally and internationally. The steps taken during AFJ;s transition have been geared towards transforming the company from a small workshop with a small number of operating craftsmen into a full blown business organization. During this process, new departments vital to the functioning of any big business organization were added to AFJ, for example Human Resource Department, Marketing Department, Managing Department and Quality Control Department. Furthermore, Azza Fahmy’s two daughters also joined the business and took up important managerial positions, transforming the business into a family business. During the first part of the restructuring transition, Azza Fahmy opened a new factory in 2003. The company now has around 180 employees working under it with Azza Fahmy at the helm as the founder, CEO and head designer. The second phase of the transition was when one of Azza’s daughters took over as Managing Director. With the help of consultants, she set about making the company more streamlined and efficient in its operations. The older block like organizational structure was remodeled and divided into four main departments, mainly Finance, Marketing and Sales, Operations and Organizational Development. The company is committed towards being a flexible and learning organization. In addition to internal restructuring, AFJ took various other steps to position itself more successfully in the international jewelry market. Substantial efforts were taken on for the rebranding of the company to position AFJ as a global luxury jewelry brand in international markets. More importance was given to the company’s advertisement as a result and collections were presented in important exhibitions and trade shows. Numerous press releases in local and international media were used to increase the brand’s goodwill in the minds of the customers. Efforts were also undertaken to improve AFJ’s product placement. Consequently, AFJ’s jewelry items were displayed on use in movies and by popular icons and celebrities like Rihanna. Another critical step that was undertaken by AFJ was westernizing their jewelry to suit the tastes of the affluent elements in its target market which were also the most critical for its success. Such efforts would help the brand establish itself in the European market more strongly as well and in turn have the added benefit of more strongly attracting its Arab market base too. As an added benefit, Azza Fahmy’s jewelry was also featured in important publications like Times Magazine, Washington Post, Vogue UK, the Herald Tribune and Financial Times etcetera which has helped immensely in helping AFJ in more effectively and thoroughly reaching its target market in Europe and all around the world. 3. What other efforts do you suggest for the company to further establish itself as a global luxury brand? Further efforts that Azza Fahmy can undertake can be broken down into various steps which need critical strategic planning and decision making. International expansion will be costly and therefore AFJ needs to secure adequate financing and this continues to be an ongoing matter of concern for the company. Until and unless AFJ is successful in securing this financing, the way forward will be shrouded in clouds of uncertainty. Another important area that requires immediate attention and considerable efforts is the resistance to change that the company faces internally due the massive restructuring changes within the organization. Though vital for progress, the employees are not used to them and will probably not like them. If this situation is not handled tactfully, the company stands to lose its human capital and consequently much of its knowledge and expertise. Furthermore, AFJ needs to take steps to improve its brand and image management globally. The company’s jewelry draws its main inspiration from Arab culture. In the light of recent world events, the Arab culture has gained a non favorable disposition with the majority of the Western population and this stands to negatively affect AFJ’s business. Therefore, the company needs to overcome this perception that it is solely Arab and establish itself in the West. Inspiration should be taken from various sources that result in bridging the gap between the East and the West. In addition to catering to the European market, Azza Fahmy needs to concentrate on entering the US market. US have important clients in cosmopolitan cities like New York, San Francisco and Los Angeles. Taking these steps will generate increased sales for Azza Fahmy and help strongly establish the company globally. 4. What approach did Azza Fahmy Jewelry adopt to target the attractive Arab Gulf state segment? Would you adopt the same strategy? Why or why not? Suggest other ways to attract this segment. To attract the influential Arab Gulf state segment, Azza Fahmy has tried to westernize her products to match the tastes of her market. Elitist elements in the market and society in Arab countries are very attracted towards the West and trust and prefer Western and Western style products over products that are locally made or made to an Eastern style. When Azza Fahmy noticed this she started incorporating the Western culture in her jewelry, her company also made a conscious move to establish itself in the West concentrating more on the European countries. This will be beneficial for AFJ because this way the company will cater to the Western market segment while making itself simultaneously more attractive for the Arab market. I would adopt a similar strategy because based on the audience and the conditions in the market; it seems that it will reap steady benefits for AFJ. Other ways to attract this market segment would build upon the steps that AFJ has already taken as a company. For example, the company could increase Western inspired advertisement using famous models from the West. This would greatly boost its image for the Arab and European market segments by greater market infiltration and added influence of established Western models to in turn influence the audience. 5. What do you think is the companys largest challenge moving forward? What would you do to overcome this challenge? In my opinion the company’s largest challenge facing forward will be overcoming resistance to change. This is because the company’s most vital human capital consists mostly of artisans who are traditionally used to working in organizations with such structure. In addition to structural changes, AFJ is also expanding into global horizons. This puts added strain on the human capital because of the greater degree of the incorporation of changes into the company. These changes will come especially in the form of having to adapt to the new Western markets being entered. What the company needs to do is to induce greater employee involvement and emphasize on greater levels of autonomy for the employees. They should be informed before the company goes through any major structural changes and their input should be seriously considered. This way they will feel that they have a stake and say in whatever changes happen and thus will be less inclined to be disgruntled by the changes. This will ensure that this challenge is effectively overcome. 6. Do you perceive any particular challenges facing Azza Fahmy Jewelry as a Middle Eastern company? How would you recommend that the company respond to these challenges? Some of the particular challenges that Azza Fahmy Jewelry faces due to being a Middle Eastern company are to do with the image of the Arab world globally as a result of the events of 9/11 and consequent terrorist activities and attacks to which the Arab world is closely associated. Due to the halo effect and stereotyping this negative image is projected upon Middle Eastern and Arab businesses and companies even though they have little to do with such activities but are negatively labeled by the West due to ties of cultural or geographical association. Another challenge faced by Middle Eastern companies is due to the fragility and instability of the economies of the Arab world. Recent global and political events have resulted in chaos in the political and economic environment of the Middle East, especially in countries like Egypt. It is difficult for business to thrive in such hostile environments that are not conducive to growth and where investment is not safe. Anything could happen any time and there is no one to be held accountable for such events in an environment as hostile and unstable as that of the Arab world recently. Another issue that Egypt faces is the lack of educated and trained human capital. This puts a strain on the local business operating in the area similar to Azza Fahmy’s company because untrained employees cause inefficiencies and increases in costs and the companies will not be able to achieve economies of scale. Furthermore, if the companies want to train and make their employees more efficient, they have to spend money out of their reserves on the training development of their human capital. There are several ways that Azza Fahmy Jewelry can respond to these challenges. The challenge concerning the halo effect resulting of the Arab image can be corrected by rebranding and working closely on the global image of the company. Moreover, the company should start training its employees on the job so it can increase its efficiency, which it will greatly need once it enters the Western markets of Europe and the US. The problem of instability in the political and economic arenas of the East is a problem inherent to the region because of factors that companies like AFJ cannot control or manage. Therefore the best way to tackle this issue will be to establish the company strongly in the West. This can be done by shifting part of the operations and production to the West, by opening factories globally and operating from foreign markets instead or just franchising, partnering or exhibiting in shows and exhibitions. If adhered to, these solutions will help AFJ combat the adverse situations it faces as a result of being Middle Eastern. 7. How can the company overcome the expected resistance to change from its employees? As suggested earlier, the company can do this by increasing employee autonomy and involvement so that they don’t feel left out of the company’s major affairs and decisions. Also, the employees should be asked their views on a major change or decision to make that change and their views should be incorporated into the final decision. This way they will feel like an integral part of the company and be less likely to oppose essential structural changes the company might want to implement as a part of the globalization process. Read More