Competitive strategy analysis of the Arabian perfume market: case in focus: Al Haramain perfumes.
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Report
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Armies (Cases)
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Product counterfeiting (Cases)
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Cosmetics industry (Market research)
Cosmetics industry (Cases)
Cosmetics industry (International marketing)
Cosmetics industry (International trade)
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Essences and essential oils industry (Market research)
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Corporations (Cases)
Toiletries (Market research)
Toiletries (Prices and rates)
Toiletries (Cases)
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Authors:
Gilani, Syd
Gilani, Berina Esra O.
Pub Date:
09/01/2008
Publication:
Name: International Journal of Business Strategy Publisher: International Academy of Business and Economics Audience: Academic Format: Magazine/Journal Subject: Business Copyright: COPYRIGHT 2008 International Academy of Business and Economics ISSN: 1553-9563
Issue:
Date: Sept, 2008 Source Volume: 8 Source Issue: 3
Topic:
Event Code: 980 Legal issues & crime; 240 Marketing procedures; 640 Foreign trade; 740 Commodity & service prices; 242 Advertising Advertising Code: 94 Legal/Government Regulation; 84 Global Marketing; 34 Research Findings; 52 Advertising Activity Computer Subject: Company legal issue; Company pricing policy; Marketing research; Company Web site/Web page; Knowledge management; Sales management; Electronic commerce
Product:
Product Code: 9912250 Diversification Analysis; 9900010 Corporations; 2844000 Toiletries; 3559143 Drugs, Soaps, Toiletries Ind Equip; 9912100 Planning; 9914300 Sales Management; 9980000 Diversified Companies NAICS Code: 32562 Toilet Preparation Manufacturing; 333298 All Other Industrial Machinery Manufacturing SIC Code: 2844 Toilet preparations; 3559 Special industry machinery, not elsewhere classified; 2899 Chemical preparations, not elsewhere classified; 5122 Drugs, proprietaries, and sundries
Geographic:
Geographic Scope: United Arab Emirates Geographic Code: 7UNIT United Arab Emirates

Accession Number:
190699856
Full Text:
ABSTRACT

The GCC perfume market is worth Dh11 billion per annum, accounting for approximately 20 per cent of the worldwide market with a per capita consumption of cosmetics and perfumes which is amongst the highest in the world. The perfume industry deals primarily with companies that produce oils, nonalcoholic perfumes, and alcoholic perfumes that are targeted mainly toward the local and Arab market segment in the UAE. It is currently in its maturity stage with only four large surviving market players, given the earlier shake outs due to the instability during the Gulf War. These players not only dominate the Arabian Perfume market but also have a competitive edge due to their distinctive strategies and dynamics. The study explores and analyzes this market further with the aim of understanding its structure, dynamics, players, and their competitive strategies from the perspective of western and eastern competitive philosophies, and with a special focus on Al Haramain as one of the key market players.

Keywords: Competitive Strategies, Industry Structure Analysis, Intense Rivalry, Product Life Cycle, Market Signals, Strategic Groupings, Sun Tzu's Art of War, Knowledge Management, Strategy Stretch Model, Value Chain Analysis

1. INTRODUCTION

When it comes to looking and smelling good, GCC (Gulf Cooperation Council) residents seem more than willing to loosen their purse strings. With an average purchase at approximately US$334 per person, consumption of cosmetics and fragrances in the GCC is one of the highest per capita in the world (Ditcham, 2007). The UAE (United Arab Emirates), where tax-free incomes are the norm, has had a population growth of 6% per annum, 60% of which are under the age of 25 (as reported in AME INFO, 2008). Simultaneously, purchase of beauty products in the UAE have been rising at over 12.5% per year, accounting for a 30% expansion in beauty and perfume retail space in the past three years (as reported by Messe Frankfurt, 2008). According to Gulf Beauty Expo (as reported by Schmid, 2005), the money spent by GCC residents on beauty products in 2005 alone exceeded US$2.1 billion.

2. AIM OF THE STUDY

This study aims at exploring and analyzing the UAE Arabian perfume industry, in which Al Haramain Perfumes will be the case in focus. The study analyzes Al Haramain's current competitive strategy and where it stands in comparison to its main competitors. The study also depicts Al Haramain's current market share and whether it will live up to its slogan, "Best in Fragrance" in the future Analysis is also undertaken for competitors such as Ajmal Perfumes, Rasasi Perfumes, and Swiss Arabian Perfumes in the UAE market. The study uses various tools to highlight the differences between Al Haramain and its competitors, and it recommends what steps Al Haramain can take to improve its competitive position in the market.

3. LITERATURE REVIEW

3.1 Definition and Types of Competition

The Merriam-Webster dictionary defines competition in business as "the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms" Competition is the pillar of capitalism that stimulates innovation, encourages efficiency, or drives down prices (Furrer and Thomas, 2000).

According to the microeconomic theory, pure competition is the most efficient system of resource allocation because it causes companies to develop new products, services, and technologies, which in turn gives consumers greater selection and better products (Ball et al, 2006). This greater selection causes product prices to decrease when compared to what the prices would be if there was no competition, in the case of a monopoly, or little competition, in the case of an oligopoly. Business and economic competition in many countries can be limited or subject to legal restrictions such as government-granted monopolies, tariffs, subsidies, or protectionist measures to prevent or reduce competition (Ball et al, 2006).

In his article "Business Competition", Kurtus (2007) defines a business as an organized effort to sell products and services on a regular basis. A company's goal in competition is to become more successful by achieving a greater market share. Kurtus classifies three main models for competing in business; manufacturing competition, competing for sales, and 'competition models'. In manufacturing competition, companies making similar products compete in the areas of wholesale price, innovations, marketing, and distribution (Kurtus, 2007). These businesses sell their product to retail outlets and stores that handle a range of similar products. Thus, a sale to one store or business is not really a win over the competition, because competitors may also sell to the same store. The success of manufacturers depends on who makes the most appealing products at the lowest prices, and who has the best distribution channels. In competing for sales, an individual sale determines a winner and loser among businesses. The total sales determine the success of the business in the competition When a customer considers buying a product or service, there is competition among all businesses offering that item or something similar. They are competing based on price, availability, location of the store, and the quality of the extra service provided, among other factors. The purchase determines the winner and the losers in that particular sale. The number of wins and loses are a determination of which company is more successful in competing for customer sales. Companies that are behind the leader may change their marketing strategies or even location in order to move ahead. Some businesses will do so poorly that they will go out of business or change to a different product-line. The 'competition models' approach allows businesses to compete through performance, head-to-head, and predatory types of competition. Kurtus also states that most businesses follow the affected performance competition model. That is, the knowledge of what their opponent companies are doing affects their own strategies. In selling the same product, their performance determines their success Some companies go into a head-to-head competition, where they not only try to beat the opponent in performance, but they also take actions to prevent their opponent from making sales.

3.2 Competitive Advantages And Added Value

Setting a competitive advantage is one of the most important factors for any product to be successful in the market whilst facing fierce competition. Porter (1998) defines a competitive advantage as "an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices." In order to be one step ahead of the competition, a company must keep on identifying new potential advantages and introduce them one by one to keep competitors off balance (Porter, 1998).

Cateora and Graham (1999) stated that companies are moving from a product and selling philosophy to a customer and marketing philosophy. Companies that want to keep up with the competition must be customer centered and "be adept in building customers, not just building products" (Cateora and Graham, 1999). Companies must understand how customers make their choices and determine which product gives them the most value.

Porter (1998) suggested three winning competitive positioning strategies: overall cost leadership, differentiation, and focus. Overall, cost leadership occurs when a company works hard to achieve the lowest costs of production and distribution so that it can offer lower prices than its competitors and win a larger market share. Differentiation occurs when a company concentrates on creating a highly differentiated product line and marketing program so that it comes across as the class leader in the industry. Focus occurs when a company focuses its efforts on serving a few market segments well rather than going after the whole market. Porter claimed that companies that pursue one of these three strategies are likely to perform well, while companies that do not pursue a clear strategy do the worst. When choosing its positioning strategy a company should not under position, over position, or have a confused positioning strategy, all of which can deter customers from buying their products (Porter, 1998).

Businesses are also encouraged to master the art of attracting and keeping profitable customers. As competition increases, companies are offering more lucrative packages to keep profitable customers Examples include adding financial benefits, adding social benefits, and adding structural ties to its product offering. Cateora and Graham (1999) defined three fundamental levels of customer. partnership: 'basic', where the company salesperson sells the product but does not follow up in any way; 'reactive', where the salesperson sells the product and encourages the customer to call whenever he or she has any questions or problems; and 'accountable', where the salesperson phones the customer a short time after the sale to check whether the product is meeting the customer's expectations. In the 'accountable' level of partnership, the salesperson also solicits from the customer product improvement suggestions and specific disappointments. This information helps the company to continuously improve its offering (Cateora and Graham, 1999).

As such, whether a company is a market leader, challenger, follower, or nicher, it must watch its competitors closely and continually adapt its strategies to the fast changing environment. Today's companies must be market-centered companies, watching both their customers and their competitors (Keegan and Green, 2003). They must not let competitor watching blind them to customer focusing. A market orientation pays big dividends; one recent study found a substantial positive relationship between a company's marketing orientation and its profitability, a relationship that held regardless of type of business or market environment (Hooley et al, 2004).

3.3 The Tao of Business Success

Tan, Haley and Haley (2004) claimed that the Tao has been used by numerous firms to establish competitive positions and business success. According to Chinese philosophy, the Tao is the path to harmony where yin represents the more passive and accepting side of a business, and yang is the active and aggressive side of an organization (Tan et al, 2004). When analyzing a business' operations and structure, the yin signifies "anticipating change, creating an adaptive organization, and adapting to change" whereas the yang represents an idea of "being different, creating change and changing the name of the game." Companies must balance opposite spectrums of balanced growth, which includes efficiency improvement on the yin side versus venturing and speed on the yang side (Tan et al, 2004). Opposite sides of the Tao of management are working in the business versus working on the business. For leadership, the Tao recommends employee empowerment on the yin side versus coaching and energizing on the yang side. For balanced processes, a company must balance managing operations on one side versus managing innovation on the other. For customer success, a company should balance listening and tailoring to customer needs versus leading and co-innovating For making the best of opportunities, one must anticipate and search for opportunities on one side versus pursuing and experimenting opportunities on the other. Tan and his co-authors also claimed that by leveraging the diversities within the organization and finding the delicate balance between each side of the spectrum, a company can make the most of its organization. For instance, there is no point of planning competitive strategies and encouraging employees to become competitive when there are so many flaws within the company. Consequently, balancing the internal organization before planning competitive strategies will help a company to make use of the strategies in a better way and put the strategies to effect.

3.4 The Sun Tzu of Competition

While Sun Tzu's The Art of War was originally written for winning strategies in war, it has now been successfully applied to creating winning strategies in business competition (McNeily, 1996). The first section in the strategy concentrates on field positioning with these two strategies: "Know your enemy and know yourself--your victory will be painless" and "Know the weather and the field--your victory will be complete". McNeily (1996) stated that a company should know who its competitors are and where they stand; know what its advantages and disadvantages are compared to its competitors; and know the surrounding environment, which may include any other potential competitors, allies, threats, and opportunities. The second section in The Art of War is planning an attack, which includes these strategies: "the best policy is to attack while the enemy is still planning," "the next best is to disrupt alliances," "the next best is to attack the opposing army, " and "the worst is to attack the enemy's cities." According to Sun Tzu (as cited by McNeily, 1996), the optimum time for a competitor to attack, or come up with a new product, is while its enemy, or main competitor, is still planning innovations For instance, first mover advantages give companies the opportunity to release new products to the market while other companies are still doing R&D to find new innovations or researching new locations to distribute their product. Sun Tzu (as quoted by McNeily, 1996), stated that the next best action to take is to disrupt alliances and ensure that strategic blocks do not form. If a company is unable to come up with products while its competitor is still planning, it should stay in line with market signals and ensure that competitors are not planning to create alliances, which can be destructive if the market only has a few large competitors. The next best step is to directly attack the opposing army. An example would be for a company to innovate and bring new products into the market immediately after a competitor does, to compete head on with a specific product that the competitor has released. Finally, Sun Tzu also stated that the worst is to directly attack the enemy's cities. This is what Hooley, Saunders and Piercy (2004) referred to as "disruptive" competitors that do not favor a stable and healthy industry, do not set reasonable prices in relation to costs, do not motivate others to lower costs or improve differentiation, and do not accept reasonable levels of market share and profits. Imitation perfume companies are an example of this type of competitor. Although they steal market share from original perfume companies in the short-term period, they are headed for disaster in the longer-term due to hefty lawsuits. The next section in the Sun Tzu's Art of War concerns handling weaknesses and strengths. The strategies in this section are: "When you form your strategy, know the strengths and weaknesses of your plan," "When you execute, know how to manage both action and inaction," and "When you take a position, know the deadly and the winning grounds." Once a company has developed a strategy, it should look at the strength and weaknesses of implementing the strategy, and as time passes, it should improve the strategy depending on the company's capabilities. According to Andrews (1994), recognizing weaknesses are also important so that companies can develop risk management plans to fight those weaknesses. In addition, the company should understand how to manage action by fully understanding the steps it will take to implement the strategy, and inaction by justifying the steps that it will not perform. Furthermore, when taking a position, a company must recognize the deadly and winning grounds. When a company attacks a competitor, it should take into consideration the retaliation it will receive from competitors and find tactful ways to deal with the hostility. The last section of Sun Tzu's The Art of War concentrates on adaptability. It consists of the following strategies: "Do not trust that the enemy isn't coming. Trust on your readiness to meet him" and "Do not trust that the enemy won't attack. Rely only on your ability to pick a place that the enemy can't attack." The first step refers to adapting a strategy after the strategy has been fully implemented. A company should have back-up strategies in place for emergencies and always be ready to meet the enemy. Sun Tzu also warned not to trust that the enemy will not attack and advises to pick a place where the enemy cannot attack (McNeily, 1996). A company should plan strategies in areas where it will be difficult for competitors to enter and retaliate.

4. THE PERFUME INDUSTRY IN THE GCC

Jack (2008) claimed that the global fragrance market in 2006 was worth Dh 60 billion. The GCC perfume market alone was worth Dh11 billion per annum, accounting for approximately 20 per cent of the worldwide market. Per capita consumption of cosmetics and perfumes in the GCC region ranked among the highest in the world, with average yearly purchases at around Dh1,225 per person (as reported by Emirates Industrial Bank, 2006).

According to the 2003 Dubai External Trade Statistics (as claimed by Schmid, 2005), perfume product exports from the UAE accounted for approximately 83.5 million AED worldwide. The Netherlands (24.6 million AED), Saudi Arabia (16.5 million AED) and Kuwait (10.7 million AED) were the biggest export destination of perfumes, toilet waters and eau de Cologne with over 60% of total exports. Total exports from the free trade zones amounted to 97.2 million AED. Most exports from the free trade zones areas were exported either to Gulf states, with Saudi Arabia (18.9 million AED), Kuwait (11.7 million AED.) or Bahrain (10.6 million AED) leading the field. The US was the largest western country among the importers of UAE perfume (ranked fourth after Bahrain with 10.5 million. AED).

In addition, Schmid (2005) stated that the 2004 sales at the Dubai Duty Free were AED 849.6 million (US$236 million), representing a 43 percent increase over the same period in 2003. The breakdown of the sales in the first half of 2004 showed dramatic increases in the top categories including perfumes, which rose by 50 percent (Schmid, 2005).

With a high standard of living and a booming economy, the UAE enables growth for potential perfume manufacturers. The UAE GDP per capita is approximately US $18,400 per annum and thus provides opportunities for higher sales, as individuals are more willing to spend on luxury items, such as Oudh (as reported by AME Info, 2008). Due to higher disposable incomes and the tradition of using rich perfumes, demand for perfumes is expected to grow at an average of 10% per annum. The domestic population growth has been increasing at 6% every year, with over 60% of the population falling under the age of 25. This young market has proved to be an opportunity for perfume companies. On the other hand, only about 20% of the UAE's population comprises of UAE nationals, while expatriates characterize the remaining 80% of the population.

The perfume industry being analyzed in this study deals primarily with companies that produce oils, non-alcoholic perfumes, and alcoholic perfumes that are targeted mainly toward the local and Arab market segment in the UAE. The perfume industry in the UAE is at the maturity stage. There are only a few large market players because the smaller companies were shaken out by the instability of the Gulf War. Consequently, these smaller companies either went out of business or their sales at present are negligible. According to the 2006 Emirates Industrial Bank report, there are four main players that dominate this market: Ajmal is at the top position, followed by Rasasi, Al Haramain, and Swiss Arabian. Ajmal not only dominates the market with regard to its annual turnover of AED 1 billion per year with a 37.74% market share, but also has a competitive edge due to its distinctive strategies and dynamics. Rasasi follows as second with a turnover of AED 750 million per year with a 28.3 % market share, primarily because it caters more to an international market and thus has gained a competitive advantage by supplying goods to an untapped market. Al Haramain is third in the market with regard to its annual turnover of AED 500 million with an 18.87% market share because it lacks the ability to adopt certain strategies carried out by the other two market leaders. Swiss Arabian holds the least market share of 15.09% with an annual turnover of AED 400 million due to being the last to enter the market.

Between the 1950s and the mid 1980s, essential oil perfumes were in high demand by Arab nationals. During that period, consumers preferred heavy, concentrated perfume oils with elaborate, colorful boxes and wrapping. The same market today prefers light and mild oriental fragrances with a touch of floral notes or French freshness. Perfume boxes in the olden days were standard for every company, and the only difference in competing products was the color. Nowadays, consumers prefer boxing that is modern and simple. Shapes of bottles used to be very standard, but now bottle moulds and designs are created to become the signature marks of companies and brands. Adapting to changing consumer tastes is vital for a company's survival in the UAE perfume industry.

The special ingredient in many Arabian perfumes is Agarwood, also known as Oudh in Arabic Agarwood is the resinous heartwood from the Aquilaria trees, large evergreens that are found in humid, dense forests, and high raised locations. Countries from which Agarwood is imported include India, Indonesia, Malaysia, Thailand, Laos, Cambodia and other Far Eastern countries that have heavy forests, monsoon weathers, and high raised locations. The oil for perfumes cannot be extracted from the entire Agarwood plant. Only the parts infected with fungus and bacteria produce an aromatic resin. This is the section that is used for extracting the oil; so the more infected the tree, the more distinctive and precious the fragrance. Most companies import the Agarwood and use their own extraction chambers to extract the essential oil ingredients from the Agarwood. The process itself takes at least six months and is very complex.

Each company has different strategies of buying, categorizing, and selling perfumes to the end consumer. For instance, Oudh-based perfumes fall under different grades like Grade A, B, and C where each grade has its a unique quality. The grades of Oudh are then priced accordingly depending on the target customers. The primary buying factor for the middle-income class in the UAE is price. This market segment is served through small stores and shops in traditional markets. Al Haramain management claimed that retailers in this sector operate under negligible margins of about 1% or 2% and rely on volume of sales. On the other hand, the high-income segment comprises of the majority of UAE nationals, business visitors, and tourists where price is not a primary buying factor and retail margins are exceptionally high. This segment is serviced through specialty cosmetics retail stores that stock brand names. Well known designers or glamorous personalities who lend their names to perfumes gain instant attention in a market where dozens of new brands of perfumes and toiletries come out every year. Top brands with skin care products in the same line as cosmetics and perfumes are also popular (Schmid, 2005).

5. AL HARAMAIN PERFUMES

Al Haramain Perfumes is a limited liability company that was established in 1970 in Makkah, Saudi Arabia. The company focuses on high quality, oriental, Agarwood-based fragrances targeted to Arabs all over the world. Al Haramain's head office is in Dubai, UAE, and it has 25 retail outlets throughout the Middle East.

Al Haramain first began manufacturing in-house in 1982, and by 1990, its manufacturing unit had grown to 177,000 square feet, which includes numerous extraction chambers for extracting the Agarwood. It is currently increasing its capacity by two-folds to become the largest manufacturing plant for perfumes in the Middle East. Al Haramain's most modern manufacturing plant is located in the Ajman Free Zone in Ajman, UAE, and it has a capacity to produce 20,000 units a day. Al Haramain claimed that it has leading-edge technology supported by specialists who keep abreast of global trends and adhere to high quality standards.

Al Haramain has a centralized structure and senior management makes the majority of the decisions Al Haramain employees stated that the company has a wide, rigid structure with functional managers leading their respective teams. The communication channels are hence very complex, with employee ideas going through several levels of approval before implementation. However, Al Haramain claimed that it is flexible in dealing with change when different strategies are being implemented. The manufacturing unit consists of a strong workforce with hands on experience, who work under the connoisseurs' guidance. The Administrative Director handles the administrative side of the company while a qualified team complimented with state-of-the-art office set-ups works on monitoring and controlling worldwide operations. The R&D facility is supervised by leading phytochemists in the industry.

Al Haramain's success lies in its skills, experience, resources and detailed knowledge of the industry The Managing Director of Al Haramain has been involved in concocting most of the perfumes in the company and is a proven connoisseur of olfactory senses. He has succeeded in spotting the right talent, and he has nurtured a team of specialists who comprehend the complexity and art of oriental fragrances. This team has helped establish the well-reputed brand name that Al Haramain has today. Al Haramain's perfumes and oils target both men and women. The fragrances are classified into two concepts: Oriental and Floral. Contrary to popular belief, Al Haramain has found that oriental perfumes are just as popular in Europe and the United States as they are in the Middle East. The Oriental Fragrances are categorized into Agarwoody and Spicy segments. The Oriental Agarwoody perfumes represent the heaviest fragrance contents with a combination of citrus contrasted with Agarwoody scents. The Oriental Spicy perfumes have either a high percentage of floral accords, such as Amber, Sandal, Rose, and Jasmine. The Floral Fragrances are categorized into Floral Fresh and Floral Sweet segments. The Floral Fresh fragrances, which use pure eau de perfumes, include all floral themes that incorporate spring-time scents, like 'impressions based on hyacinth', 'lily of the valley', and 'orange blossoms'. The Floral Sweet perfumes are heavy, intensively fragrant creations.

6. METHODOLOGY

An exploratory research approach is used in this study where Al Haramain's and its competitors' current situations are assessed. This research approach is chosen because of the versatility and wide-ranged approach it offers to the preliminary investigation. The exploratory research approach in this study draws upon interviews and secondary data sources.

6.1 Interview Technique

Four people are selected from the Al Haramain Perfumes Headquarters in the UAE. The selected interviewees are the General Manager, Business Development Manager, and two Marketing Coordinators. A qualitative interview technique is used. Armstrong and Kotler (1996) stated that there are numerous advantages of using qualitative interviewing. For instance, it allows the participant to describe what is meaningful or important to him/her using his/her own words rather than being restricted to predetermined categories, so participants may feel more relaxed and candid. It also provides high credibility and face validity, and it allows the evaluator to probe for more details and ensure that participants are interpreting questions the way they were intended. Furthermore, interviewers have the flexibility to use their knowledge, expertise, and interpersonal skills to explore interesting or unexpected ideas or themes raised by participants.

6.2 Tools for Analyzing Secondary Data

The Perfume Industry being analyzed in this study deals primarily with companies that produce oils, non-alcoholic perfumes, and alcoholic perfumes that are targeted to the local and Arab market segment in the UAE.

Several key tools and models are used to help analyze Al Haramain's and its competitors' strategies Porter's Five Forces model is used to ascertain the industry structure attractiveness of the perfume sector in the UAE. In his 2004 edition of "Competitive Strategy: Techniques for Analyzing Industries and Competitors", Porter built a framework that models an industry as being influenced by the risk of entry of potential competitors, the intensity of rivalry among established companies within the industry, the bargaining power of the buyers, the bargaining power of the suppliers, and the closeness of substitutes to an industry's products. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. Porter stated that the stronger each factor is, the most likely established companies will be able to raise prices and earn higher profits.

The CLC (Company Life Cycle) and the PLC (Product Life Cycle) is analyzed. PLC has to do with the life of a product in the market with respect to business costs and sales measures. Hill (2005) pointed out that to say that a product has a life cycle is to assert four things: products have a limited life; product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller; profits rise and fall at different stages of product life cycle; and products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stage.

Next, a SWOT analysis on Al Haramain is used to give a brief and compact review of its strengths, weaknesses, opportunities and threats. The BCG (Boston Consulting Group) matrix is used to analyze Al Haramain's product lines. According to the Boston Consulting Group, the goal of this ranking exercise is to help corporate analysts decide which of their business units to fund and by how much, and which units to sell (Ghosal et al, 2003). The Boston Consulting Group (as cited by Johnson and Scholes, 1997) emphasized that only a diversified company with a balanced portfolio can use its strengths to truly capitalize on its growth opportunities. In addition, the strategic grouping tool is used to group Al Haramain and its competitors based on the level of technological leadership and price policy, and also based on their geographical scope and product range. Lastly, the market signals analysis is used to portray how Al Haramain devised strategies based on competitors' market signals.

7. ANALYSIS AND FINDINGS

7.1 Porter's Five Forces

Potential entrants are companies that are not currently competing in the oriental perfume industry, but have the capability of doing so. Established companies in the industry, like Al Haramain, try to dissuade potential competitors from entering the industry to protect their market share. The greater the costs to enter an industry, the greater are the barriers to entry and the weaker are the competitive force. Therefore, high entry barriers may keep potential competitors out of an industry even when industry profits may seem to be high. Established companies such as Ajmal, Swiss Arabian, Rasasi, and Al Haramain have an absolute advantage because of their lower cost structure. This advantage is due to superior production operations and processes from experience, patents, or secret processes (e.g. Al Haramain); control of particular inputs required for production, such as labor, materials, equipment, or management skills (e.g. Ajmal); and access to cheaper funds from banks because existing companies represent lower risks than new entrants (e.g. Al Haramain, Ajmal, Rasasi, and Swiss Arabian). Although the process of filling the bottles with the oils and materials is not expensive, the cost of manufacturing and making the oils are massive. This is the highest barrier to entry that most entrants will face. Consequently, the above advantages reduce the likeliness of threats from outside entrants.

Al Haramain does not have economies of scale, which partly explains its lower market share. On the other hand, Ajmal can produce the quantity demanded for its products and consequently benefit from economies of scale due to its larger manufacturing units and well-established distribution networks Rasasi caters to the international mass market by providing international quality, cheap and reasonably priced perfumes, which has enabled it to also achieve economies of scale. In addition, Swiss Arabian benefits from economies of scale due to catering to the mass market by manufacturing standardized products. Al Haramain management stated that it would also like to attain economies of scale by using Ajmal's strategy rather than lowering the quality and mass-producing like Rasasi and Swiss Arabian. Achievement of economies of scale by several players in the perfume industry has made it harder for new competitors to enter the market.

To achieve a high market share, manufacturers must have good access to distribution channels Porter (2004) claimed that the lower the access to distribution in an industry, the higher the barriers to entry. The established companies in the perfume industry have access to their own distribution channels and have built loyalty making it difficult for a new entrant to compete with these same distribution channels. However, companies who plan to own their individual retail stores may have easier access. Al Haramain is an example of this category of company because it has its own retail outlets in addition to other outlets.

The intensity of rivalry is the competitive struggle between companies in an industry to gain market share from each other (Czinkota et al, 1998). The competitive struggle can be fought using price, product design, advertising and promotion spending, direct selling efforts, and after sales service and support (Cravens and Piercy, 2006). As intense rivalry lowers prices and raises costs, it squeezes profits out of an industry. Alternatively, if rivalry is less intense, companies have the opportunity to raise prices, which leads to higher profits. Perfume manufacturers in the UAE compete based on the quality of the perfume and the unique blend of its fragrances. Al Haramain concentrates primarily on product differentiation when competing with Ajmal, Rasasi, and Swiss Arabian. (A detailed analysis on competitors within the Arabian perfume industry will be discussed in the later part of this paper).

When the industry has many small companies and a few large buyers, the buyers have bargaining power (Porter, 1998). When buyers purchase in large quantities, they can use their purchasing power to bargain for price reductions. In this type of industry, there are very big and established distributors as well as smaller ones. The perfume industry in the UAE has concentrated distributors such as Paris Gallery, Misbah of Saudi Arabia, and Al Tami Group. For instance, Al Tami Group has agencies and distributors for ten thousand suppliers of goods. Al Haramain management claimed that the distributors and manufacturers in the UAE perfume industry have equal bargaining power. Al Haramain has cleverly placed sales executives to serve its buyers in all seven emirates to ensure that it supplies to the large and small retail outlets. Al Haramain also distributes its products to the huge retail outlets that have a well-established presence in malls and bazaars. Some retail outlets include Paris Gallery, Dubai Duty Free, and the Duty Free outlets located at the Sharjah and Abu Dhabi International Airports. Al Haramain also manages its own showroom network, which has 25 showrooms all over the Middle East. In terms of segmentation, Al Haramain uses traditional segmentation to deliver high quality, competitively priced products to its larger target market consisting of 80% Expatriates and only 20% Emiratis. Al Haramain also uses value-based segmentation to cater to its high-end customers mainly the Emiratis and Arabs.

Porter (1998) stated that the suppliers are powerful if the industry is dominated by a few supplying companies which are far less in number than the amount of companies that they sell to. Al Haramain locks in its suppliers by signing exclusive contracts. An example is RCR, its glass bottle manufacturer in Italy. Al Haramain specifies in its contract that its designs must be different than those supplied to other companies. Heinz Glass, Brosse, and Bormoli are other large and professional European glass suppliers that abide by Al Haramain's contract. On the other hand, suppliers from Taiwan and China do not abide by contracts. To avoid this, Al Haramain gives small companies in Taiwan and China a particular design and buys all the bottles for the whole year in advance to ensure that its bottles' designs are not given to other companies. Al Haramain can bargain with the smaller suppliers in the Far East, but not with the larger companies in Europe. Al Haramain buys its fragrances from Firmeinch in France, Quest in the UK, and Charbonel in Spain. These companies are huge suppliers, much larger than Al Haramain itself, so Al Haramain does not have any bargaining power. Al Haramain buys its machines from APV in France and Terilli in Italy, which are both huge companies, limiting Al Haramain's bargaining power as well.

Prices from suppliers are set on a quantity basis. European suppliers reduce the price per item as the quantity increases. Al Haramain claimed that it negotiates with Far Eastern suppliers regardless of quantity. Porter (1998) stressed that suppliers are powerful if they pose a credible threat of forward integration. Since supplying companies are large, they possess the financial capabilities to integrate and manufacture perfumes. However, they do not have the technological expertise, which can take years to achieve. In addition, the perfume suppliers from Europe do not have the Arabian fragrance knowledge (i.e. Oudh extraction) so it will be difficult for them to concoct a fragrance that suits the needs of the Arabian market. As such, it is not easy for suppliers to integrate forward into the Arabian perfume manufacturer business.

7.2 Company Life and Product Life Cycle

Even though the UAE perfume industry is at its maturity, Al Haramain is in its growth phase. Al Haramain focuses more on oil based oriental fragrances, which are only truly appreciated by Arab consumers whose culture has used Oudh-based non-alcoholic perfumes for many generations. In the UAE, however, other nationalities are slowly becoming interested in buying oil-based oriental perfumes. One reason might be that Muslims prefer to use non-alcoholic-based perfumes. Oil-based perfumes are also considered more hygienic than alcohol-based perfumes because they cause fewer allergies. Al Haramain has targeted this niche segment, which is growing to include non-Arabs as well.

In the Arabian perfume industry, and especially between the four main players (i.e. Ajmal, Rasasi, Al Haramain, and Swiss Arabian), there is no 'product for product' competition. There is not a specific product in a company that directly competes with a competitors' product because the perfumes are both of a broad range and a broad category. Competition is primarily based on different types of smells such as floral, oriental, and Agarwood-based scents. Furthermore, the majority of the competition is based on price, quality, and brand loyalty. Al Haramain, like its competitors, produces a wide range of perfumes within each category, which compete with other companies. For example, all four companies have over a dozen ranges of alcohol-based perfumes, Oudh-based perfumes, and deodorants. The life cycle of any launched product usually lasts from 3 to 10 years.

Al Haramain's strategy is to differentiate the products it manufactures and to create a product that is perceived industry-wide as being unique. The introduction of the new product range is simply to compete effectively with its competitors. So one can conclude that Al Haramain is not innovative by itself, but its innovation is a result of retaliating against competition. Al Haramain's product differentiation strategy can earn above-average returns by creating a defensible position for coping with the five competitive forces. Usually the cost advantages of a firm act as a defense against competitors because lowering costs result in higher returns. Al Haramain does not have this advantage due to its high advertising, R&D, and labor costs. Since its initial start-up costs are high, its end product becomes relatively high as well. Rasasi and Swiss Arabian have a cost advantage over Al Haramain because they focus on mass-market products. In addition, Ajmal has cheap labor and raw material costs

7.3 SWOT Analysis

The following SWOT analysis illustrates Al Haramain's strengths, weaknesses, opportunities, and threats

7.3.1 Strengths

Al Haramain follows a product differentiation strategy and highly focuses on quality. It does not compromise on costs so that it can keep its quality optimum. It has its own retail stores and it also has good relations with its distributors. Al Haramain has a state of the art manufacturing facility, which also comprises of a large air-conditioned storage warehouses. It has a lot of expertise in the Oudh section, especially the Dehnal Oudh section. Al Haramain claims to have the best skilled labor force, which can create the Oudh particles from raw materials. The employees who handle Oudh have over 35 years of great expertise and experiences. Al Haramain's team tries new methods and creates new concepts for Oudh extracting processes. Moreover, Al Haramain uses its financial power to hire competitors' employees. This gives Al Haramain inside information on how competitors work, what new projects are upcoming, and how certain issues are tackled. Al Haramain claims that its product designs are so successful due to the extensive market research carried out by the company. The sales team links the company to its retailers and they are the front face of Al Haramain. The higher-level management's open door policy allows the sales team and other employees to provide feedback regarding its products. Al Haramain's sales team has met competitors' sales teams, and they claim that the competitors' employees only know their direct managers, and do not know their top-level management. Al Haramain's open door policy and monthly meetings allow the senior management to interact with all levels of employees. Al Haramain management claims that it has large financial assets and that it is financially sound. Full payments are done upon receiving raw materials, and three-month credit facilities are provided to retailers. Furthermore, employees' salaries are paid on time and reviewed on a quarterly basis.

7.3.2 Weaknesses

Al Haramain bears a lot of unnecessary costs. For instance, although Al Haramain does not have to involve itself in capacity expansion, it continues to do so, simply to follow its competitors' strategies The cost of labor adversely affects Al Haramain's profit margin because its manufacturing plant in the UAE pays the minimum wage standards, which are higher than competitors' labor costs abroad. For instance, Ajmal can benefit from cheap labor, lower labor housing, lower medical costs, and lower insurance costs in India. Consequently, the high labor costs limit Al Haramain's ability to hire more laborers to produce more perfume, and to benefit from economies of scale (a vicious cycle). Oudh and essential oil manufacturing requires chambers that run on gas. Al Haramain buys its gas in cylinders, as there are no pipeline infrastructures where its manufacturing plant is currently situated This is more costly than paying a fixed rate on pipelines. Not only does Al Haramain pay more in terms of cylinder costs but it also incurs higher gas rates in comparison to its competitors. For example, Ajmal, whose manufacturing plant is in India, pays a fixed rate for gas supplied through pipelines and benefits from cheaper gas in India. As a result, Al Haramain's profit margin is much less when compared to Ajmal. In addition, a significant portion of the operating and manufacturing functions at Al Haramain are being carried out manually and it is less automated. Also, Al Haramain's employees only know the operations within their own department and are unaware of operations being conducted elsewhere in the company. With globalization at its peak all over the world, Al Haramain lacks a global strategy. Ajmal is the leader in the market and Al Haramain has a "follower" strategy by over-relying on Ajmal's strategies. Al Haramain does not engage in online selling of products, which is a great opportunity to reach customers in a more efficient way and in locations where it is not present. Al Haramain loses marketing employees to competitors who give better packages and salaries. These employees take all their skills, experiences, and insider information to direct competitors. Al Haramain has set up a plantation of Oudh, but the plantation has not matured yet, so it has to still pay higher rates for Oudh bought from agents at marked-up prices. Although Al Haramain's R&D efforts well exceed those of its competitors, its marketing standards are still not up to par. Al Haramain does not have a strong marketing strategy and simply concentrates its marketing efforts on advertising through the newspaper and magazine mediums.

7.3.3 Opportunities

A great opportunity for Al Haramain is globalization. Also, the economy in the UAE is growing and this provides an ideal opportunity for Al Haramain to increase it profits and in turn, expand its market share. Since the Internet has become a global communication medium, Al Haramain should take advantage by setting up online selling and online advertising. Stensgaard (2005) stated that the IBM Lotus Domino System, which Rasasi adopted, allowed it to bring new products to the market at a shorter period of time, reducing its communication costs and increasing employee efficiency through enhanced collaboration. Al Haramain should take advantage of such technological innovations to upgrade itself and stay in line with competition. In addition, Al Haramain should not overlook their most important segments, especially younger consumers who account for 60% of the growing UAE population (as reported by AME INFO, 2008). This generation shares cultural concerns. They care about the environment and respond favorably to companies such as The Body Shop, which have proven records of environmentally and socially responsible actions. They care about fitness and having a healthy lifestyle. Al Haramain should devise strategies to target this growing market from a young age and nurture them as loyal customers for a lifetime.

7.3.4 Threats

Al Haramain's major threat is large competitors like Ajmal, Rasasi and Swiss Arabian. Natural disasters could also prove to be a threat because it would affect its operations with regard to the Oudh plantation in Bangladesh. In addition, Oudh-based perfumes are Al Haramain's main product line. Furthermore, a major threat is imitation perfumes as the UAE is facing challenges from counterfeit products. A skilled fragrance chemist with Gas Chromatography and Mass Spectrometry equipment can analyze a fragrance and pretty closely duplicate it. Copies of expensive, exclusive fragrances are now available at a fraction of the cost. Young teenagers and low-income groups usually fall prey to the products offered in the 'grey market' (Ramkumar, 2005). In the last six months of 2005 alone, Dubai Customs seized AED 9 million worth of counterfeit products (Rahman, 2006) Though the government is alert, copyright violations do take place and some popular brands are under regular attack. These imitation fragrance suppliers have the ability to undercut Al Haramain's prices and sell its perfumes at a fraction of cost.

7.4 BCG Matrix Analysis

According to Andrews (1994), the BCG Growth Market Share Matrix is a good way to analyze a company and its offerings. Figure 1 below illustrates an analysis of Al Haramain's BCG Matrix:

[FIGURE 1 OMITTED]

Dehnal Oudh Ateeq Eau De Toilet, or popularly known as Ateeq, is a 'star' product for Al Haramain Analysts claim that French perfume dominates the world, but consumers with Arabic origins or expatriates living in an Arabic country have shifted toward perfumes with woody, heavier notes. Ateeq was concocted after thorough market research, which compelled Al Haramain's team to create a fragrance consisting of Dehnal Oudh and a minute touch of a French note. Al Haramain management claimed that the product was designed and priced amazingly, and consumers got real value for money. During the introduction of Ateeq, other competitors came out with Dehnal Oudh based fragrances, which were priced higher than Ateeq. As a result, Ateeq sold out several times in a year, and sales were only restricted when Al Haramain could not cope up with the suppliers' re-orders.

Numerous local and expatriate consumers are shifting from French noted floral perfumes to oriental ones, but the process happens gradually. Consumers who found Ateeq too strong chose Sedra, a lighter perfume, which is also a 'star'. Sedra is the opposite of Ateeq because it is French based perfume with a touch of Dehnal Oudh. The bottle is very classical looking, and it is one of Al Haramain's best selling products.

Al Haramain positions itself as never compromising on quality and thus is able to sell at a premium profit. When it launches products that are dedicated to the mass market, which are cheap and standard, it usually does not sell well. In addition, the launch affects Al Haramain's reputation. The product Excellent, which is a 'question mark', is floral with a modern note, but also has a touch of Dehnal Oudh. Al Haramain had originally anticipated that this product would become a bigger hit than Sedra. Unfortunately, Rasasi and Swiss Arabian have more power and a more established reputation in the mass market than Al Haramain. Consequently, Excellent did not do well in the market even though the mass market demand for this type of a product was increasing.

Al Haramain used the raw materials in making Dehnal Oudh to make Mukhamria Maliki, which is a 'question mark'. The name and the ingredients are not patented nor created by Al Haramain. The perfume mixture itself is called Mukhamria Maliki in the Arabic dialect. Other than having a nice smell, Mukhamria Maliki is also used for medicinal purposes. It is readily available in the market, and customers can buy it in normal, cheap jars. Al Haramain assumed that it could sell this same mixture at a premium by adding a classic touch to its bottling and boxing. Unfortunately, it did not do well because Mukhamria Maliki was just too common, and consumers did not feel the urge to buy it as a branded product at a much higher price.

Al Haramain was the first company to create Oudh Ma'al Attar, an example of a 'cash cow'. Due to being relatively well priced and of high quality, Al Haramain gained the maximum market share in this product's field. Many other products tried to compete with Oud Ma'al Attar, but there was no match After repeated efforts by competitors, the market became saturated and growth stopped. Al Haramain ended up holding the majority of the market share, which now accounts for more than all three of its competitors' shares combined.

Dehanl Oudh Seufi, or Seufi, is another example of a 'cash cow'. The product is Dehnal Oudh based, it is alcohol free, and it is pure oil. Dehnal Oudh products normally have a very heavy note, but this product has a milder oriental note. Other Dehnal Oudh products have woody notes, but this one has a freshness added to it. Consumers love the creative product design, which includes a crystal bottle, a wooden box and a beautiful exterior paper box. Dehanl Oudh products are a high contributor to turnovers of all the Arabian perfume companies, which is why many companies try to specialize in Dehnal Oudh. These companies try to attract consumers and lock them in for repeat purchases. Consequently, the management of Al Haramain claimed that Seufi is selling really well and mostly to repeat buyers.

An example of a product that fall under the 'dog' category is the empty bottles that Al Haramain sells to the local market whenever a demand arises. Al Haramain mainly targets small businesses and retailers who wish to manufacture their own products, but are not able to do so because of high costs of minimum order policies. On the other hand, some companies are exclusive customers, who are very big branded companies and retailers who wish to make an exclusive perfumery section yet do not want to involve themselves with the hassle of dealing with too many suppliers. These companies prefer to buy crystal bottles from Al Haramain. Al Haramain management claimed that there are numerous companies who deal in providing small quantities of bottles to retailers. Furthermore, big bottle manufacturers have started to set up offices in the UAE to offer better deals and sell directly to the retailers. Market growth is very little and Al Haramain holds a very small share of the empty bottle market. This segment has not proved to be a success, but Al Haramain has not discontinued it.

Al Haramain deodorants are another example of 'dogs'. The deodorant market is huge, and there are numerous deodorant manufacturers, ranging from very large to relatively small. The market is not restricted by any boundaries, which is why Al Haramain justifies entering it. If Al Haramain proves successful in gaining a market share of such products, then various other products can follow.

7.5 Competitor Analysis--Strategic Groupings

Johnson and Scholes (1997) defined a strategic group as a group of firms in an industry following the same or a similar strategy. An industry can have one strategic group if all the companies follow the same strategy. At the other extreme, each firm can have a different strategic group. Usually, there are a small number of strategic groups, which capture the essential strategic differences among firms in the industry. The strategic grouping is an analytical device designed to aid in structural analysis. It is an intermediate frame of reference between looking at the industry as a whole and considering each firm separately (Johnson and Scholes, 1997).

Methods by which strategic groups can be defined for analytical purposes are by breadth of product range, price, technological advancement, geographical scope, distribution channels, degree of vertical integration, differentiation versus low cost production, and innovation versus imitation. Figure 2 below helps to illustrate the Strategic Groupings of the UAE Arabic Perfume Industry and Al Haramain's competitive positioning:

[FIGURE 2 OMITTED]

[FIGURE 3 OMITTED]

Figure 3 above helps to illustrate the strategic grouping of all four companies based on pricing policy and technological leadership. Ajmal has a wide product line, from perfumes to it special Oudh products, and its prices are relatively high. Since its origin in the Middle Eastern market, Ajmal has made significant investments in R&D and has been more technologically advanced than its competitors that lack the expertise and the funds to do the same.

Al Haramain offers an extensive product line, and its prices are at the same level as Ajmal's prices Being a follower in the industry, Al Haramain differentiates itself by increasing the quality or increasing the appearance of its products. Al Haramain's costs to produce a bottle of perfume are approximately AED 18, and it sells it for AED 25. Rasasi, on the other hand, can produce the same unit for only AED 4 to AED 8 and sell it at the same price. A significant portion of the operating and manufacturing functions at Al Haramain is being carried out manually and is less automated. However, Al Haramain management claimed that they plan to buy technologically advanced machineries for its manufacturing unit.

Rasasi delivers moderately priced local and international brands to a wide range of international customers. Rasasi's plant has a state-of-the-art filling section with a combined annual capacity of 7 million bottles. This includes an assembling and packaging section, a fully equipped Quality Control Department, and an MRP-2 computerized system to streamline operational procedures and enable planning of production up to six months in advance. Rasasi's plant also has a comprehensive in-house printing division for its complex perfume boxes and packaging.

Swiss Arabian undergoes continuous efforts to improve quality and maintain a highly competitive pricing strategy. Its perfume prices online range from $5 all the way to $50, attracting individuals from all income levels. Unlike Ajmal and Al Haramain, Swiss Arabian follows Rasasi's strategy by appealing more to the international market through mass-producing standardized products for the general international audience.

Consequently, as illustrated in Figure 3 above, Rasasi and Swiss Arabian belong to the same strategic group, where the products are moderately priced and there is a relatively moderate level of automation. On the other hand, Ajmal's grouping has high automation and high price, whereas Al Harmain's grouping, has a low automation and a high price.

Figure 4 below helps to illustrate the Strategic Groupings of the UAE Arabic Perfume Industry and Al Haramain's competitive positioning based on product range and geographical scope:

[FIGURE 4 OMITTED]

Al Haramain's headquarters are located in Dubai, and it has 25 retail outlets in the Middle East. As new brands were introduced and the company grew, Al Haramain started to sell in the Far East, Europe, and the USA. Al Haramain recently began an Oudh plantation in Bangladesh as well. Al Haramain caters primarily to the Arabian audience, thus the majority of sales are from its Oudh products. Al Haramain offers a wide product line and has a regionally focused geographical scope.

Swiss Arabian follows the regionally focused strategy while also carrying out a certain portion of its operations internationally. Swiss Arabian provides customers with a range of cosmetic and perfumery items such as perfume sprays in various categories, quality perfume oils, cosmetics, and body sprays.

Swiss Arabian products are exclusively positioned to appeal to the diverse needs and requirements of price conscious consumers and the mass-market segment. It has a narrower product range in comparison to Rasasi and Ajmal, and it operates mostly on a regional basis.

Ajmal's primary manufacturing plant is located in Assam, India and it has a chain of 86 exclusive retail showrooms and over 500 dealerships across the Middle East. Ajmal products are also retailed through the leading Duty Free shops in the region like the Dubai and Abu Dhabi Duty Free, and are available on the in-flight Duty Free in Kuwait Airways. In addition, it also makes exclusive fragrances for Gulf Air and Saudi Arabian Airlines. Ajmal has a wide range of products and it caters to customers on a global basis. It is the only company among the competitors to operate globally by having warehouses and production facilities located in different areas of the world.

Rasasi has firmly established itself as a premier manufacturing unit of oriental and alcohol-based spray perfumes. The company has a product retail network across 25 countries including 11 shops in the UAE, 2 shops in Oman, 2 shops in Kuwait, and distributor networks in Saudi Arabia, Bahrain, and Qatar. Rasasi's oriental perfumes and perfume oils cater to Arabic tastes and are very popular in the Middle East, and the alcohol-based spray perfumes are targeted to the highly competitive international markets. Rasasi has a middle range product line and it focuses its strategies globally.

7.6 Competitor Analysis--Competitive Strategies

There are four large market players that dominate the UAE Perfume Industry and many small, powerless manufacturers. The larger companies try to maintain a positive relationship with other large companies and block the expansion of the smaller manufacturers. For instance, Al Haramain used to supply raw materials to Ajmal, and it still sells bottles to Ajmal and Swiss Arabian.

Ajmal first opened in a small trading cell in India in 1950, and since then, the Ajmal family business has grown into a multifaceted organization with links all over the world. The introduction of Ajmal coincided with the time when the Arab world was highly intrigued by Indian culture and by 1976, Ajmal had shifted its headquarters to Dubai. Based on its persistent drive to excel, Ajmal's line of products includes light orientals, heavy orientals, florientals, contemporary perfumes, customized perfumes, and essential oils. Ajmal's decades of experience and conformity to the quality standards enabled it to receive awards from the Saudi Arabian Standards Organization (SASO), the authority for ensuring International Quality Standards in the region. Furthermore, Ajmal is also authorized to issue Quality Certificates on behalf of SASO. In addition, Ajmal is the first perfume manufacturer in the region to launch an e-commerce site. It was able to successfully launch this service through ties with Etisalat, E-company, and Aramex.

Ajmal's competitive strategy is to have first mover advantages in every market it enters. For example, Ajmal opened its first exclusive showroom in each of the countries before any other competitors were able to enter the market. In addition, Ajmal launched a massive forestation program in its Aggarwood plantations in Assam, India in 1976. To day, Ajmal claims that over 160,000 trees have been adopted under this program, which will benefit the industry by maintaining a consistent supply of high quality Oudh for the years to come. Furthermore, Ajmal's primary manufacturing plant in Assam, India has a territorial border with the Middle East. This allows for easy import and export of Oudh when needed While the regulations of India prohibit the importation of Oudh into the country, Ajmal is able to operate through India due to political backing from the Indian government. Because of the connections with higher authorities, Ajmal exclusively offers products to the Indian market and is the sole company that sends exports of Oudh to India. Also, Ajmal has a labor force of 1500 workers, which allows it to enjoy cheap labor and benefit from Indian workers who are the pioneers in Oudh plantation and production. In Assam, Ajmal has approximately 900 chambers to produce essentials oils from Oudh. The extraction process is 90 days where the chamber is ignited at all times. Ajmal pays for the gas consumption at a fixed rate through exclusive ties with the government, while other companies are required to pay for gas according to the meter rates. In addition, gas prices in India are significantly cheaper than the UAE or other regions where Ajmal has competitors. Furthermore, Ajmal is known for its strong advertising and marketing, which it is able to establish due to its financial capabilities. In 2000, Ajmal celebrated its 50th anniversary by entering its name in the Guinness Book of World Records for making the biggest "Madhkhan". Its aim of entering the Guinness Book of World Records was to enhance brand awareness internationally, which eventually lead to an increase in sales and profits.

Rasasi Perfumes is a limited liability company based in Dubai. It was founded in 1979, and due to its rapid success, it established a modern, full-fledged manufacturing facility in Jebel Ali Free Zone, Dubai, in 1985. Rasasi has a product retail network across 25 countries including 11 shops in the UAE, 2 shops in Oman, 2 shops in Kuwait, and distributor networks in Saudi Arabia, Bahrain, and Qatar. Rasasi's manufacturing facility consists of 275 employees and 12,500 square meters of facility area. The plant has a state-of-the-art filling section with a combined annual capacity of 7 million bottles. Rasasi's oriental-based spray perfumes and perfume oils cater to Arabic tastes and are very popular in the Middle East, while their alcohol based spray perfumes are targeted at the highly competitive international markets. Rasasi's competitive strategy is to cater to the international market through its high quality products at cheaper prices. Rasasi can afford to sell at cheaper prices because it enjoys economies of scale, while its competitors focus on customized products. For instance, Rasasi produces perfumes for AED 4 to 8 each, and sells them for AED 25. As such, it has the potential of obtaining profits of 200 to 400% on each unit sold. Furthermore, each product is accompanied by unique marketing campaigns including complementary point of sales materials at the time of launch in order to augment total sales. Rasasi focuses highly on marketing and advertising because it has the financial capabilities to endure the costs. However, Rasasi is weak in the Oudh sector because it does not own any Agarwood plantations. In comparison with competitors, it is also less experienced in the Oudh market and does not possess enough understanding of Oudh manufacturing and production.

Swiss Arabian Perfumes was founded in 1974, in association with the French-based Swiss Company, Givaudan Roure. Givaudan Roure is currently the world's largest and most respected manufacturer of exclusive perfume raw materials. Swiss Arabian provides a complete range of cosmetic and perfumery items such as perfume sprays in various categories, quality perfume oils, cosmetics, and body sprays. Swiss Arabian began on a relatively smaller scale than its competitors did, and it has not yet gained a significant share in the market. Furthermore, it was the last among the four main players to enter the UAE Perfume Industry. Swiss Arabian products include French and Arabian alcoholic perfumes, Oudh, oils, and oriental perfumes. In an effort to appeal more strongly to the international market, Swiss Arabian recently changed its label to SAPIL (Swiss Arabian Perfumes International Limited). This was done to provide a more French image to the company in the international market.

Swiss Arabian's competitive strategy is to appeal to the diverse needs and requirements of price conscious consumers and the mass market. Like Rasasi, it produces standardized products for the general international market. Swiss Arabian's target market's primary motive for purchase is price, with a secondary emphasis on quality. As such, Swiss Arabian undergoes continuous efforts to improve quality and maintain a highly competitive pricing strategy. Furthermore, Swiss Arabian has followed Ajmal by conducting online selling and delivering of its products. Prices are stated in dollars and range from $5 to $50, attracting individuals from all income levels.

Al Haramain's competitive strategy is to produce customer specific products for each niche segment of the market. As stated by the Al Haramain's founders, "Fragrances are as varied as individuals". Al Haramain's majority of sales are generated by its Oudh products. Due to this, Al Haramain bought an Oudh plantation in Bangladesh, the founder's hometown. However, it will take approximately eight to ten years before Al Haramain can benefit from the plantation (i.e. the amount of time it takes for the Agarwood to mature). In addition, to create each perfume Al Haramain undergoes enormous research efforts, which take many years. For example, the making of Dehnal Oudh Maliki Ateeq, one of the costliest perfumes in the market, underwent years of experimenting and testing, and was finalized after twenty years.

7.7 Market Signals Analysis

Market signals are actions by competitors that provide a direct or indirect indication of intentions, motives, goals, or internal situations; an indirect means of communication in the market place (Porter, 2004). Market signals are not always accurate, and some signals are used to mislead competitors. Before taking action, Al Haramain should analyze whether its competitor is bluffing or making a decision based on market conditions. It is vital to assess whether the move that the competitor claims it will make is reasonable considering the current market conditions.

7.7.1 Attempts to stake out a commitment to take an action for the purposes of pre-empting other competitors

This is market signal is used to inform consumers that a new product is in line, which makes consumers wait for the product rather than purchase a competitors' product. For example, whenever Ajmal has a new product in line, it advertises it heavily before even having the product in stock. This causes a bubble demand where many consumers become eager for the new product thinking that it was available in the market, but has sold so well that it is out of stock. Meanwhile, Ajmal estimates the amount of demand for that particular product and adjusts its production accordingly. Al Haramain, Rasasi, and Swiss Arabian do not use this strategy because it is very costly. However, they use Ajmal's strategy as a market signal and manufacture perfumes to compete with Ajmal's product.

7.7.2 Announcements can be threats of actions to be taken if a competitor follows through with a planned move

Each year during the Dubai Shopping Festival, Al Haramain lowers its prices substantially, offers special packages, and gives away perfumes as gifts on certain perfume purchases. Al Haramain management explained that this is mainly to get rid of old inventories and make space for new products. Products that have been in stock for a long time are sold at a minimum profit margin, cost price, or at below cost price to liquidate the inventory at hand. Rasasi and Swiss Arabian have products that are sold at a very minimum or low price that are doing very well in the market. So far, they have cut prices or given special offers regularly for promotional reasons and for competition. On the other hand, Ajmal usually does not cut on prices, but it provides exciting promotions. For example, during the 2005 Dubai Shopping Festival when Al Haramain reduced its prices, Ajmal ran a campaign where customers could enter a draw to win diamonds.

7.7.3 Announcements can be tests of competitor sentiments, taking advantage of the fact that they need not necessarily be carried out

This market signal is used to see competitors' reactions based on an announcement. Swiss Arabian recently made a press release claiming that it plans to invest a further AED 120 million in expansion by opening 11 new showrooms in the UAE and many more around the Middle East to increase production and invest in new product ranges. This press release was not taken seriously because all of Swiss Arabian's competitors including Ajmal, Al Haramain, and Rasasi did not believe that this is feasible and dismissed the signal as a bluff. To this day, the market has not witnessed any new Swiss Arabian retail outlets.

7.7.4 Announcements can be a means of communicating pleasure or displeasure with competitive developments in the industry

If a player in the market adopts the same strategy as one given in a market signal, it is a sign of pleasure while adopting a counter strategy is a sign of displeasure. One of the biggest perfume exhibitions, Cosmoprof, takes place in Bolouna, Italy every year and all four companies participate in it. Cosmoprof has not proved to be a success for any of the companies, but since one competitor is present, the others feel the need to participate as well. In 2006, Ajmal withdrew from the exhibition and Al Haramain withdrew in 2007. There is a high chance that the remaining competitors will also withdraw from the competition by following their competitors' footsteps.

7.7.5 Announcements can be used to avoid costly simultaneous moves in areas like capacity additions, where bunching of new plant additions would lead to overcapacity

In 2005, Swiss Arabian massively expanded its manufacturing unit and its productions. In early 2006, Rasasi attempted the same, but instead of increasing its operating area, it changed its machinery to include more automation. Subsequently, Ajmal increased automation and underwent a massive refurbishment of its manufacturing unit. Currently, Al Haramain is undergoing a massive expansion, doubling the size of its operating area and starting to focus more on automation.

7.7.6 Public Discussions of the Industry by Competitors

Public discussions are used as market signals to competitors or to the general public to give information about the state of the general industry. Public discussion can be a message to warn new entrants that the industry has matured or even to signal opportunities. Al Haramain management stated that it has television releases in Bangladesh for the public and the government. Since Agarwood is not a registered import or export commodity of Bangladesh, there are lots of legal work that need to be completed. If it becomes registered, the whole procedure will become much easier for Al Haramain and other Agarwood business owners in Bangladesh. Al Haramain's television releases educate the citizens on how to plant Agarwood and how to maintain it. Al Haramain management stated that they do risk having new entrants into the market, but these new entrants will be very small and they hope to buy off the plantations when they mature. Alternatively, Al Haramain management claimed that they could also buy quantities of Agarwood directly from the plantation owners. It is much cheaper for Al Haramain to extracts its own Agarwood or buys directly from a plantation owner rather than going through a series of brokers and agents, who add their own profit margin at each stage.

7.7.7 The Cross Parry

A cross parry is used when a firm initiates a move in an area, and a competitor responds with a move that affects the initiating firm in a different area. As mentioned earlier, Rasasi manufactures on a mass-market basis by selling international standard perfumes at a reasonable price. Rasasi's perfumes are mostly alcoholic, which neither Ajmal nor Al Haramain provide. After a certain period, Rasasi noticed the growth of the oriental perfume market segment, and saw that both Ajmal and Al Haramain where growing in market share. Simultaneously, sales for Rasasi in the UAE market were declining. So Rasasi decided to move into the oriental perfume segment, thinking that it can benefit from this boom in oriental perfumes. When Ajmal and Al Haramain saw that Rasasi was trying to enter their market, both companies reacted the same way: they created perfumes that were of international standards and relatively low price (i.e. the type that Rasasi normally manufactures). It was difficult for these two companies to come out with low-priced, standard perfumes, but they had to sacrifice on profit margin to retaliate against Rasasi. Al Haramain management related this as a lose-lose situation for all the three companies. Rasasi found it tough to cater to the high-income consumers because Rasasi branding had convinced everyone that its products are only for middleclass consumers. Ajmal and Al Haramain, on the other hand, had trouble selling standard perfumes because they normally cater to higher-income consumers. In addition, selling perfumes at a cheaper price hurt Ajmal's and Al Haramain's reputation and image.

7.7.8 Private Suits

Private suits are used as a sign of displeasure and are initiated to delay the growth of a competitor's company. In the late 1960's, Ajmal used to buy Dehnal Oudh, a concentrated oil perfume, from Al Haramain. At the time, Al Haramain did not have a full-fledge manufacturing facility, so Ajmal would buy Al Haramain's Dehnal Oudh, pack it, label it, brand it, and sell it at a premium price. Seeing this opportunity, Al Haramain started to pack the perfume, named it Dehnal Oudh Ateeq, and sold it at a slightly lower price than Ajmal's price. In retaliation, Ajmal sued Al Haramain and the court case went on for an extended period of time. Being a relatively small company at the time, Al Haramain concentrated on the lawsuit, while Ajmal used the duration of the distraction to expand its products. Ultimately, Al Haramain won the case.

In December 1999, when the world's only seven star hotel, Burj Al Arab, was constructed, Ajmal created a new perfume. Ajmal branded the perfume and named it Abruj (singular of Burj-tower in the Arabic dialect). Coincidentally, Al Haramain had a new perfume project at hand called Burj. While Ajmal was planning an aggressive marketing campaign and piling the inventory to meet the anticipated demand, Al Haramain had already registered its product and was patenting it. Just before Abruj could be launched, Al Haramain filed a lawsuit against Al Haramain and won. Consequently, Al Haramain was given the rights to sell the product while Ajmal was forced to discontinue any supplies into the market and to withdraw any products that were already supplied.

7.8 Other Competitive Strategies

7.8.1 Offensive Strategies

A frontal attack occurs when a company finds itself confronting the dominant competitors head on (Armstrong and Kotler, 1996). In most cases, it is a price-based attack, subsidized by revenue from the home market place that captures the customer segments of established players. For instance, Ajmal introduced an alcohol-based 50 ml perfume called Oops! priced at AED 50. In response to Ajmal's move, Al Haramain introduced a similar 50 ml perfume called A-one, priced at AED 40. This shows that Al Haramain reacts to the changes in the market only when there

is an offensive move initiated by its competitors.

7.8.2 Flanking Strategies

A flanking strategy is used when a company enters into a niche or geographical area where the dominant competitors are weak or are not present (Cravens and Piercy, 2006). This enables a company to avoid competition and to build up strength prior to a frontal attack. For instance, Ajmal, Rasasi and Swiss Arabian were the first companies to enter the South African and the Indian Sub continent market. Unfortunately, Al Haramain has no share in this geographical market due to lack of financially sound distributors. In addition, Ajmal has first mover advantages in the Canadian and the Middle Eastern market, where it is currently difficult for the other entrants to establish a competitive position like that of Ajmal's. On the other hand, Al Haramain has a first mover advantage in the Bangladesh market, where the only other competitor is Rasasi that distributes to a very small number of retailers in the country.

8. CONCLUSION AND RECOMMENDATIONS

Although Al Haramain currently holds a third place in the UAE oriental perfume market, it needs to reanalyze its competitive strategy. One of Al Haramain's key strengths is its ability to highly differentiate its product offerings from the competitors while focusing on quality. It has its own retail stores and it also has good relations with its distributors and possesses a state-of-the-art manufacturing facility On the downside, Al Haramain bears a lot of unnecessary costs e.g. unnecessary capacity expansion simply to follow its competitors' strategies. Its cost of labor, which is higher than its competitors' labor costs abroad, also adversely affects Al Haramain's profit margin. Losing its marketing employees to competitors who give better packages and salaries is another blow to Al Haramain since these employees take all their skills, experiences, and insider information to direct competitors. Above all, while its R&D efforts well exceed those of its competitors, its marketing standards are still not up to par. Al Haramain does not have a strong marketing strategy and simply concentrates its marketing efforts on advertising through the newspaper and magazine mediums. Unless Al Haramain accepts these challenges and decides to change them, it is feared that Al Haramin will not be able to retain being in the third place within the UAE competitive perfume market.

Several recommendations are put forward for Al Haramain to consider and implement in order to arrest its internal weaknesses and take on the challenges within the UAE competitive perfume market. For instance, Al Haramain's production, sales and marketing, and suppliers are more costly than its competitors are. By implementing the drivers to cost advantage, which includes economies of scale, economies of learning, production techniques, product design, input costs, and capacity utilization, Al Haramain can reduce its costs. For instance, Al Haramain can change its production techniques by increasing mechanization and automation, which will allow it to cut down on its labor costs. Al Haramain can also change its product design to make use of the best quality products and the most efficient use of raw materials. In addition, Al Haramain incurs increasing variable costs through outsourcing for numerous areas, one of which is transportation. Al Haramain should investigate its sourcing relationship model and should invest in establishing an effective supply chain system. At present, Al Haramain is buying bottles from its suppliers in Europe, Taiwan and China. If Al Haramain manufactures bottles in-house, it could save up to 10-15% of costs due to the absence of suppliers' profit margins. Al Haramain also currently out sources packaging and printing of bottles Although Al Haramain has the financial capabilities to conduct these activities in-house, it lacks the technological expertise. Al Haramain should consider vertical integration or quasi-integration, which can significantly lower costs. Furthermore, Al Haramain should reduce its credit sales duration Currently, Al Haramain pays in full upon receiving raw materials, while giving credit sales to its retailers. This makes Al Haramain lose on a substantial amount of finance in terms of interest and liquidity rates. If Al Haramain reduces its credit sales durations, it would be in a better financial standing. Al Haramain should use its financial power to implement a proper marketing strategy. With planned marketing and advertising techniques, the demand and market share for Al Haramain product will increase.

8.1 Incorporating Sun Tzu's Art of War for Competitive Success

Al Haramain should incorporate Sun Tzu's Art of War in implementing its future competitive strategies. In the first step i.e. field positioning, Al Haramain should intensively research the market to thoroughly understand the environment in which it is competing. Its competitive intelligence should include continually monitoring its three main competitors and potential new entrants. Furthermore, Al Haramain should be aware of its capabilities and should not hold false assumptions about it According to the Art of War strategy, the next best action is for Al Haramain to disrupt alliances between any companies in its market. This is vital because each competitor in the UAE perfume industry is huge and if any two were to create alliances, all other competitors would lose massive amounts of profits. McNeily (1996) advised companies not to directly attack their competitors. Al Haramain should not be the company that buys share rather than earning it, takes large risks, and in general, shakes up the industry. Instead, it should be a "well-behaved" competitor who favors a stable and healthy industry, sets reasonable prices in relation to costs, motivates others to lower costs or improve differentiation, and accepts reasonable levels of market share and profits. Taking into consideration Sun Tzu's advice, a company should recognize the strengths and weaknesses of implementing its strategy. Al Haramain should develop risk management plans for the weaknesses of its strategy. Sun Tzu also advised that one should know how to manage both action and in action. For instance, when executing a plan, Al Haramain should fully understand the steps it will take to implement the strategy as well as be able to justify the steps it will not take. Sun Tzu stressed that when taking a position, one should recognize the deadly and winning grounds. When competing, Al Haramain should consider the retaliation it will receive from its competitors and find tactful ways to deal with the hostility. Furthermore, Sun Tzu suggested adaptability after implementing a certain strategy. For instance, Al Haramain should not assume that its competitors will not retaliate and it should always have a "Plan B" of what to do when its competitors retaliate. Sun Tzu also advised to pick a place where the enemy cannot attack, meaning that Al Haramain should plan strategies well in advance and in areas where it will be difficult for competitors to enter and retaliate.

8.2 Applying the Tao of Business Success through Western Business Philosophies

The Tao of Business Success helps a company to leverage its diversities and find the delicate balance between its passive, accepting side called the yin, and its active, aggressive side called the yang. It is important to have a balance within an organization because without balance, a company cannot properly implement planned strategies to its fullest potential (Tan et al, 2004). To balance itself as a whole company, the Tao recommended focusing "outside in" and "inside out." To focus outside in, Al Haramain should use the competitive audit to help read, anticipate, and interpret market signals at a deeper level and decipher market and competitor information early enough to save its market strength. The competitive audit starts with a major focus on competitor, industry, and price information; moves on to perceive and decipher early marketing signals; and finishes by strengthening future orientation and innovative power by setting up a competitive intelligence system This audit will allow Al Haramain to analyze its external environment and work its way inwards to understand how it can improve itself using the best of what the external environment offers. To focus inside out, Al Haramain should use a competitive gap analysis to map its current service provision and business implications, current sourcing management capability, and its ability to change as compared to the challenges defined by the continuous rate of change that is typical of the UAE perfume industry. When mapping the competitive gap analysis, Al Haramain should start by analyzing its own company and then move outwards to analyze its competitors and how it compares to them. Al Haramain can also use the Enterprise Strategy, which will help match its internal capabilities and its external environment by linking its functional strategy to its corporate and business strategy.

Furthermore, the Tao stated that balanced growth is efficiency improvement on one end and venturing and speed on the other. To improve efficiency, Al Haramain can do a business process reengineering audit. The results might persuade Al Haramain to increase automation of the production process and to make orders computer generated, so that when a quantity of a certain raw ingredient falls below a certain level, an automatic re-order will be placed. Currently, laminating its bottles is a bottleneck because there are many production lines and only one laminating machine. Al Haramain should invest in more machinery and automation to become more efficient. As the saying goes, "it is not the big that eats the small, it is the fast that eats the slow" so although Al Harmain is efficient in its processes, it should also focus towards ensuring that operations are conducted with the speed necessary to be a market leader.

The Tao of management recommended working in the business on the yin side, while working on the business on the yang side. To work in the business, Al Haramain should perform a quarterly analysis of the BCG Growth Share Matrix. Depending on the relative market share and the market growth rate of each product, Al Haramain should decide to increase investments in certain products and discontinue production of others. For instance, Al Haramain could opt to change a question mark to a star by investing heavily in R&D and marketing. Adversely, Al Haramain could decide to discontinue an unsuccessful 'dog' to focus its time and money on another worthier product. To work in the business, Al Haramain should also monitor each product's life cycle, which has been shortening at an increasing rate. While monitoring its products' life cycles, Al Haramain should decide which stages of certain products it would like to prolong. For example, Al Haramain may opt to prolong the maturity stage of a product by investing in R&D to renew the product's look or offer an updated or "limited edition" version of the same successful perfume, but with a newer, fresher smell. This will allow Al Haramain to keep loyal customers and high profits rather than losing customers during a product's declining stage. Furthermore, Al Haramain should change its strategy according to the stage of each product's life cycle. To suit buyers' changing behaviors at each stage of the cycle, Al Haramain should adapt its product, marketing, manufacturing and distribution, R&D, foreign trade, and overall strategy accordingly. To work on the business itself, Al Haramain should consider the strategies of its competitors while formulating its own strategy. Because Al Haramain operates in a concentrated industry, competitor analysis is a vital part of strategic planning. Although a brief competitor analysis was presented in this paper, a more in-depth analysis can help predict competitive behavior and decide with which competitors to compete, how the competitors might react to Al Haramain's actions, and how to influence competitor behavior to Al Haramain's own advantage. Al Haramain should use Porter's framework for analyzing competitors, which is based on competitors' objectives, assumptions, strategies, and capabilities. Knowledge about the competitor's objectives will better predict a competitor's reaction to different competitors' moves, and Al Haramain can grow its business more smartly based on its competitors' moves.

Furthermore, the Tao of leadership recommended employee empowerment on the yin side and coaching and energizing on the yang side. To do this, Al Haramain should use the knowledge management matrix to coach and energize its employees. This matrix consists of two primary dimensions: "explicit and implicit knowledge management" and "results with regard to value creation and growth." The matrix shows that companies with limitations in knowledge also have limitations in company growth and value creation (Boisot, 1998). If placed in this matrix, Al Haramain falls under an "Industrial Organization" as it does not practice learning and knowledge management effectively. Its employees are unaware of operations taking place outside of their departments because the top management assumes that employees do not need to know everything. To avoid this, Al Haramain should increase explicit and implicit knowledge management with proper training and coaching. For a start, Al Harmain should allow its older employees to train the newly hired employees, which will make the older employees feel empowered and motivated. By doing this, Al Haramain will grow from and industrial organization to learning organization, then to a teaching organization, and finally to a coaching organization. A coaching organization is one in which everyone is learning; teaching and being taught; and coaching and being coached. This enables further interaction amongst employees and creates a more integrated system of operations and decision-making within the organization (Boisot, 1998). If Al Haramain can reach this stage, it can be integrated to a point where operations and capabilities will be difficult to imitate. As such, competitors will have to work twice as hard to follow Al Haramain's strategy and keep up with efficiency within their operations.

In addition, the Tao of Business Success advised that a company must not only manage operations, but also manage innovation. Nonaka, Ichijo and von Krogh (2000) pointed out that a company should understand how knowledge is created within an organization and how knowledge can lead to innovation and help it sustain its competitive advantage in the industry. Al Haramain should analyze the knowledge to innovation model and see how it applies to its organization. For example, Al Haramain can have an internal environment that encourages innovation. Al Haramain can also develop a system for employees to suggest new innovations for products or for company operations.

In terms of opportunities, the Tao recommended anticipating and searching on the yin side while focusing attention on pursuing opportunities on the yang side. Al Haramain should use the Corporate Strategy Logic model to analyze its strategy. The Corporate Strategy Logic model compares the Strategic Pyramid with the Strategy Stretch model. Currently Al Haramain is using a Strategic Pyramid approach, which is the way old strategies were planned. It includes first coming up with a vision, mission, goals and then with suitable strategies, tactics and action plans. Instead, Al Haramain should use the Strategy Stretch, which is a strategy model that has space for modifications according to challenges and opportunities. The Strategic Pyramid is top-down, whereas the Strategy Stretch consists of top-down and bottom-up and is opportunity driven. Al Haramain should use the Strategy Stretch model so that its strategic planning will be flexible and open to grabbing opportunities, rather than being set in stone. Furthermore, the Strategy Stretch can allow Al Haramain to be more knowledge driven and innovative, and help it to accept change and uncertainty.

In managing change, the Tao advised adapting to change on the yin side, whereas creating change on the yang side. Narayanan (2001) stressed that new challenges for companies are globalization, shortening product and technology life cycles, knowledge-driven economy, volatility, rampant change, complexity and hyper competition. Al Haramain should adapt to these changes by building its strategy in a way that makes the most out of these changes. For instance, Al Haramain can look at the change as an entrepreneurial opportunity like much lower market entry barriers and easier partner search and marketing. Al Haramain should take advantage of the increased technology and use the Internet for online advertising and online selling to improve its customer service and increase its market share worldwide. On the other hand, the yang side states that Al Haramain should create change. An example is for Al Haramain to change its marketing and advertising strategy out of its own initiative. In addition to perfumes, Al Haramain also sells incense burners, empty perfume bottles, trays, sugar pots, charcoal to burn Oudh, and clips to maneuver Oudh over the charcoal that are unique and not offered by its competitors. Al Haramain should implement a strong marketing strategy that invests heavily in advertisements so that consumers are aware that these products are sold at its outlets.

Furthermore, customer success is essential to the overall success of an organization. A company should listen and tailor to its customers' needs in the yin side while a company should lead and co-innovate on the yang side. Al Haramain should actively measure individual customer value and profitability. For instance, senior management should inform its employees that an unhappy customer could cost the company close to AED 73,560 loss of sales. The logic behind this is simply: an average Al Haramain customer spends about AED 1226 a year (as reported by Ditcham in 2007), starts shopping at the age of 15 (assumption based on a heavy tradition of using perfumes from an early age), and stops shopping at the age of 75 (the average death rate as reported by UAE Interact in 2003). The loss can be much greater if the disappointed customer shares the bad experience with other customers and causes them to defect (Armstrong and Kotler, 1996). Stressing this scenario to its employees will enable Al Haramain to explain just how important each customer is. Furthermore, Al Haramain should use the value chain analysis to identify ways through which competitive advantages are developed to create more customer value. Through the value chain, Al Haramain can disintegrate its organization into different business activities and identify the major costs drivers and core competencies. The value chain analysis can also help Al Haramain to see the relative importance of each business activity that an organization is involved in. Once this has been applied, Al Haramain can look beyond its own value chain and into the value chains of its suppliers and distributors, and ultimately, its customers. In addition, Al Haramain should put a system in place to receive feedback from its retailers and agents regarding each product. This can allow Al Haramain to understand how its target market makes its choices when choosing a perfume. Also, Al Haramain's relationship with its customers (the end users) should be an 'accountable' form of partnership where the salesperson phones the customer a short time after the sale to check whether the product is meeting the customer's expectations. The salesperson or telemarketer can then solicit from the customer any product improvement suggestions and any specific disappointments. This information can help Al Haramain to continuously improve its offering. None of the perfume retailers in the UAE currently have this type of customer relationship, so implementing the 'accountable' form of partnership will definitely differentiate Al Haramain as the company that truly cares about its customers and their needs.

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Syd Gilani, Dubai Maritime City, Dubai World Group, United Arab Emirates.

Berina Esra O. Gilani, International Marketing Consultant (Independent), United Arab Emirates

Dr. Syd Gilani earned his Ph.D. at the Edith Cowan University, Perth, Western Australia in 1998. He is currently the Director of Quality and Strategic Planning at the Dubai Maritime City, a member of the Dubai World Group, United Arab Emirates

Ms. Berina Esra O. Gilani earned her Bachelor of Business Administration from the American University in Dubai, United Arab Emirates in 2005. She has several years of experience in the multinational hospitality, tourism, and education sector of the Middle East. Currently she is working as an International Marketing and Business Development Consultant on an independent basis for various companies in Dubai
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