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International Logistics Inc. is a conglomerate company located in the United States. The company deals with manufacturing and transporting of high technology equipment in over 200 countries around the world. It is rated as one of the best companies in providing logistics assistance to its clients. There were many challenges that the company prevailed over. Despite the fact that the company tried to get into a wider market and delivered services to the clients competently, other companies have also taken advantage of an opportunity in a similar industry, and they seem to pose a threat to the firm. One of the most probable measures the company needs to take is to expand its market through the identification of a potential region to which its products can be exported. This paper seeks to inform the senior management of the company about the feasibility of a new export region, which has been identified after conducting a research.
Company’s Situation Overview
There is an urgent need to identify a new export region for International Logistics, Inc. Identification of a new region will facilitate market expansion. It is a factor that is likely to spearhead successful cushioning of the company from stiff competition of other international competitors. The major asset for the company is the clients. It must always aim to satisfy them through offering better services. The most probable export country has been identified as the United Arab Emirates. The area is likely to offer a profound ground for maximization of profit. First, there has not been extensive investment carried out in the region. Second, the UAE has been chosen because it is still preparing to host the Expo 2020, which will be a great event that requires different technology facilities. High technology equipment will be required in the country before and even after the event. It is expected that there will be a lot of international technology companies that will take advantage of the opportunity that is likely to be created to invest in the area and will establish their subsidiaries in the country. International Logistics, Inc. should ensure that it capitalizes on the opportunity to provide both high technology products and transportation services to other individuals and companies around the globe to the region.
Numerous motivations can be highlighted to strengthen the idea of the company trying to expand its operations to the UAE. Most of the facilitating factors were found to be market related. The factors are either reactive or proactive. Since the business will need to be established in a fully new market, an assessment of the possible advantages and drawbacks was carried out.
Advantages of the Chosen Area
There are several advantages that support the reasons for choosing the identified region. First of all, there are minimal barriers that can prevent successful trading in the UAE. There are no political sanctions or civil war. In addition, there is a developed infrastructure, which can facilitate efficient movement of the company’s products. In addition, the UAE has a transparent legal system regarding exports. In addition, there are ‘free-zones’ for foreign investments, especially in Dubai, where the company can start operating before it gains roots.
Secondly, competition in the area is low while there are very many opportunities. The UAE has a wealthy economy because of the crude oil and gas exports. The country relies a lot on the imported technology, and the research undertaken ascertained that it has been receiving low quality technology, which is a gap that the company can comfortably fill.
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In addition, there are various entry options available. The main customers that were identified for the products and services provided by the company are oil-dealers and investors who are expected to come to the area after the Expo 2020 event (Ali-Knight, Fyall, Robertson, & Ladkin, 2009). Furthermore, the growing population coupled with the growth of the economy can facilitate the expansion of more opportunities for the company. Successful establishment of export with the UAE could also create further chances for more economic and trade relationships not only with the UAE, but also other regions bordering the country. Thus, the UAE is a critical focal point for determining trade patterns within the region.
In addition, most of the sectors in the UAE economy use dollar as a flexible currency in their trading activities. It will be convenient for the company because dollar has been identified as one of relatively stable currencies.
Another advantage of entering the market is that the new export market, the UAE, will provide a great opportunity for maximizing profits. The UAE does not readily access the products and services that the company is likely to offer. Therefore, the company’s products are likely to be highly attractive in the UAE because the country values technology as a part of its development process. Moreover, the domestic market does not produce high technology products that the company produces, making the region a favorable market target.
Because of the magnitude of the potential available in the UAE, the company expects to obtain economies of scale. This is because it can produce many technological products at a relatively low cost when it manufactures in bulk.
One of the challenges likely to be faced in the area is that the UAE has some specialized transportation facilities that are likely to compete with the company. Since the company will be attempting to offer transportation services to a region where it was not present before, it is expected that there will be stiff competition.
There are likely to be other challenges. Firstly, local services providers are expected to benefit before foreigners are given the chance to provide the same services. Language barrier is also likely to be a hindrance towards the success of the company in the region. While most of the company’s employees are English-speaking, local residents of the target region speak Arabic. Although language barrier can be a hindrance, the company plans to utilize the available Arabic speakers currently working in the company to be able to communicate with local industries that may require the services of the company.
Tariff barrier is also expected to be another great challenge. High charges as tariffs may create a great obstacle because the company would not want to overcharge the clients because of inconveniences caused by high taxes for the cross-border transportation of goods.
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The highly growing economy of the United Arab Emirates might also pose a big challenge to International Logistics, Inc. Primarily, this includes an ability to access cheaper technology equipment, which will compete favorably with the company’s products due to their low cost. This means that the company will risk as it does not have a definite knowledge on whether the locals need high quality technology, which can be a bit expensive, or low quality technology that is relatively cheaper.
Supply Chain Assessment
Supply chain assessment will entail streamlining transportation and logistics management processes to maximize efficiency. It will also aim to increase profit margins and customer satisfaction (Manuj & Mentzer, 2008). The supply chain assessment entails the assessment of possible risks, carrier procurement, shipment planning and execution, mode optimization, Freight Bill settlement, and Freight profits.
Assessment of possible risks will be carried out to ascertain any risks that may arise. Some of the identified risks include operational, environmental and technological risks. The company had identified solutions for each of the risks (David & Stewart, 2010).
Supply chain assessment also includes carrier procurement. The company will first be involved in determining whether the transportation will require diverse modes in the course of carrying the products. For instance, some may require both water and land transport (Manuj & Mentzer, 2008).
The next issue of supply chain is shipment planning and execution. The company will be able to process the orders and make sure that they are placed as roads. This will also include a selection of probable carriers and routes that can be used during the transit. The full status of the cargo will be ascertained beforehand. Furthermore, it will be necessary to track goods in transit using the global tracking system. Delivery confirmation notes will be prepared and dispatched together with the loads. The report for the whole process before execution and after execution will be written to provide the necessary records (David & Stewart, 2010).
Mode optimization will involve assessing the most cost effective and favorable means for transporting the products at a particular time. The choice will depend on the nature and time required for the product to reach the client. Both the historical data and real-time information will be assessed to determine the course of action to take (David & Stewart, 2010).
Freight Bill settlement aims to assess whether the client is able to settle the bills. Audits of the provided relevant accounts will be carried out (Manuj & Mentzer, 2008).
Finally, the company must assess and make sure that it will earn profit from making a specific transportation deal. This will also involve the assessment of any related cost, such as, the cost of predicted emergencies (David & Stewart, 2010).
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Transportation planning has encompassed the assessment of national, regional and community needs. The research team for the company identified diverse concepts regarding the region, which can facilitate the company to invest in the area.
Products are expected to move from our warehouses and be transported to various specific areas of the UAE. The company also expects to get orders for picking products from other areas of the world and transporting them to the United Arab Emirates; a center that can be used for further transportation in regional areas. Dubai will be used as the key center. The company expects to utilize the largest international airport in the United Arab Emirates for goods transported by air. It will be able to utilize supply chains inspection and audits in the process of transporting products to the client (Branch, 2009). The global tracking system will always be utilized to make sure that the products are being transported. The system has been efficiently functioning and able to view our transportation systems as they take products to several destinations across the whole world.
The transportation plan has also taken in consideration the demographic characteristics and patterns of travel present in the United Arab Emirates. The plan will work with maximum flexibility and involve community participation (David & Stewart, 2010). The company has assessed different legal and cultural barriers that might pose a challenge in the area and come up with recommendations on how to overcome them (David & Stewart, 2010). For instance, it has identified that the area is prone to congestion sometimes, and thus the company will have to plan transportation and make sure products arrive to the required destination at the right time. Travel patterns for the area have been sufficiently identified. The transportation system for the company will combine multiple alternatives so that it can ensure efficient delivery of products.
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Transport planning will involve integration of road, water and air transport systems (Bookbinder, 2013). Such kind of development will offer both challenges and opportunities for the company. The benefits will be accrued due to the fact that most of the road transportation vehicles for the company will be using updated road networks. It is expected to result in minimal wear and tear of carriages.
The implementation of the transportation plan will try to strike a balance between the plan itself, design and the operations involved in transportation services (Bookbinder, 2013). In addition, transport systems used in the company must ensure that they are environmentally friendly. For instance, it must make sure that it is not polluting the environment (Bookbinder, 2013). With this regards, the company ensured that the freight machines such as the airplanes, ships, and lorries have been well maintained. The engines are regularly cleaned, and the fuel that is used ensures clean and safe air for the residents of the region to breathe. The transportation system for the company will involve both inbound and shipping services (Bookbinder, 2013). Before any transportation of products is done, a special assessment is carried out to ascertain some factors. For instance, there is a special assessment to make sure that less congestion goods will be brought to the warehouse. The warehouse will always be cleared and made available for keeping goods when required. Customers have been offered an opportunity to choose the kind of carriers they wish to use before the company starts prior preparations for transporting the goods.
The plan will also take into account the routes that the carriers will be following. The first step of the process will always involve identifying the needs of the client. Once the needs of the client have been identified and the time needed for the goods or products to reach them is ascertained, then the company will be able to liaise with them through technologically supported communications devices to give the customer an opportunity to suggest the best means that can be used. This will form a platform of bargaining for the cost of transporting products to the region. The destination of the luggage will also determine whether the carrier needs stopovers or uses a direct route (Bookbinder, 2013).
Research carried out by the company’s experts has ascertained that most of the products will not need stopovers unless there are challenges that will require immediate interventions. For air transportation, airplanes will sometimes be expected to land in other major airports when products are urgently needed and the airports in the UAE mainland are busy at that particular moment.
The transportation plan is expected to follow the protocol laid for transportation of such kinds of goods to other areas. For instance, it is expected that goods travelling to the UAE will first be cleared in the local terminal (David, 2013). There are payments that will be made by the company for a fee. The company contacted a manager in the terminal and agreed on a regular fee that will be required in order to use the facility. Clearance will also be required to be made at the destination terminal (David, 2013). Then, the owner will be required to pick his/her products from the terminal. He/she can decide to use the company’s international road transportation services or have local arrangements on how he/she will move the products to the final destination.
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During the whole transportation process, carriers will always be tracked using the global GPS system to ensure both safety and time saving. Operators are always guided appropriately. International Logistics, Inc. has made measures to outsource services from other major international transport offering agencies to ensure that challenges are solved (Rushton & Walker, 2007). The company has planned alternative carriers in case there are technical challenges with the air transport system. For the products transported through water, other international players will be contacted to assist in the transportation process at an agreed fee. The company has made certain that in all parts of the world it has a fair share of accessing all areas or has collaborated with partners who can assist in the process.
Recommendations for Implementing the Transportation Plan
The transport plan ensures that products will be properly handled and reach the clients at the intended time. However, there are several recommendations that would be made regarding the plan. First, the quality of transport services in terms of timely delivery and quality handling of goods will be required. Most of the products need quality packing in special containers. This will ensure that the standards the UAE expect from foreign-based services are met (David & Stewart, 2010).
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Although the company expects that most of the products will be transported by air and water, proper measures have been put in place to make sure that these major transportation routes have been properly complemented with road transportation links within the country so that there are no inconveniences for the clients.
One of the factors that the company should do is to assess the periods that the transport sectors in the country are likely to be congested and find an alternative solution towards fast movement of goods and services so that they can reach clients on time. The greatest challenge expected in the transportation plan is that different routes that have been identified in most of the potential areas might change. This means that the drivers will be expected to adapt to these changes, which sometimes can be tiring and resource-consuming. Therefore, through using the GPS guiding system, the main operator must be able to give a proper direction with regards to changes of international routes.
After consideration of various factors, International Logistics, Inc. has identified a new area of operation, the UAE, as a way to increase the base of operation as well as profit. Competition has been very stiff, which urges the company to try and change its operational techniques. The major amendments that have been incorporated in this paper are aimed at assisting the international logistics to compete favorably in the international market. Some of the issues that have been delineated include community participation processes, such as involving them through first carrying out researches in potential areas. Supply chain assessment will also be carried out to ascertain that the transportation will be viable. Transportation planning and execution mechanisms have also been outlined as a guide for successful implementation.