1 Introduction
The specific multinational corporation under focus in this report is Alfanar, a global firm that is involved in the management of some industries across the globe. For instance, the ability of Alfanar to operate in diverse and complicated global business environments can be attributed to the company’s strategic management practices, especially in its international operations (Reiche, Harzing and Tenzer, 2019).
Further, the report will also elaborate on the extent to which Alfanar leverages strategic plans to address culture and economic environments for competition and viability. Moreover, other goals include assessing the organisation’s mission and vision statements and objectives and carrying out a SWOT analysis and PESTLE analysis to assess the macro-environmental forces. Besides, a competitor analysis by applying the Porter Five Forces model will also be conducted to analyse the conditions within host countries.
Therefore, these tools will assist in the determination of the strategic position of Alfanar and how it can sustain competition. Likewise, Alfanar must understand the effect of national culture in making its HRM decisions, especially since it is now going international. Thus, the report will also offer the necessary actionable advice to help Alfanar expand further and become more competitive in the global market within the context of implementing measures for addressing cultural factors.
2 Background of the Company
Alfanar is an international company that was established in 1976 in Saudi Arabia; it began with a small contracting company in electrical projects (Tetteh et al., 2023). For instance, Alfanar (2024) stated that it ventured into many sectors through acquisitions and development and is now in many different business sectors in the world. Further, some of the important domains of business for Alfanar are the energy sector and the manufacturing as well as construction segments (Armstrong, 2024). In the energy segment, the firm manufactures and sells electrical products such as transformers and cables as well as engaging in renewable energy undertakings. In manufacturing, Alfanar provides a large assortment of industrial products satisfying high-quality requirements. Moreover, Crawshaw, Budhwar and Davis (2020) described that its Construction Division targets large construction and infrastructure industries, making it stand as an EPC service provider. Currently, Alfanar is active in more than 30 countries in the Middle East, Europe, Asia and Africa. Hence, its solutions are local and are tailored to the needs of the specific market, with a specific emphasis on infrastructure (Stephens, 2022). Besides, the manufacturing company has achieved a competitive advantage in its main areas of specialisation due to strategic partnerships and a focus on quality and innovation.
3 Mission,Vision, and Objectives – Critical Review
Alfanar aims to supply energy, manufacturing, and construction services and products efficiently and professionally with integrity and of the highest standards (Al-Doghmi, Nashwan and Alkhatib, 2023). However, Mustafawi et al. (2022) argued that the mission could encompass a more apparent focus on innovation, which can be related to cultural sensitivity towards different markets. According to Mousa, Massoud and Ayoubi (2020), the vision for Alfanar is to grow into a giant company that offers products and services that are environmentally friendly and advanced in terms of technology. While good and precise, the vision could be enhanced by outlining certain measurable goals and tactical objectives in the organisation’s global outreach initiatives. Moreover, Al-Hadabi (2020) stated that Alfanar’s goals align with its mission and vision with concepts such as operational and customer-centric objectives in the short term and strategic setting, including expansion to new regions and development of sustainability in the long term. However, Akaak et al. (2023) mentioned that these objectives could be written more narrowly and coherently, with clear indicators and dates to measure the desired progress and enforce responsibilities. Further, the inclusion of the cultural sensitivity in the objectives would improve Alfanar to deliver its goals in other countries.
4 SWOT Analysis of Alfanar
Alfanar has many assets such as expertise in technological enhancement, a well-established brand image, and human capital. For instance, Hopkyns (2023) stated that it also covers competitiveness through investment in new technology in the energy, manufacturing as well as construction industries. Therefore, this has a positive effect on customer loyalty because consumers weigh their options based on the reputation of the brands they handle (Hawatmeh, Abu Hashish and Alazzeh, 2024). Further, Al-Attari (2021) described this strengthens the support of Alfanar’s professional team which has revolutionised its industries and enhanced operational efficiency. However, Al-Muftkah and AlKhateeb (2020) asserted that Alfanar has internal threats which include issues arising from the management of a global diversified firm, culture, and lack of innovation or flexibility. Besides, these challenges could have detrimental effects on sustaining long-term success and competitiveness in fast-growing markets (Arundati, Tamara and Pramusinto, 2024). Similarly, Doyle (2022) mentioned that opportunities for Alfanar outside are the growth of the energy, infrastructure, and manufacturing sectors wherein Alfanar can offer energy and infrastructure solutions, innovation in technologies to increase operational effectiveness, and collaboration with key industry players for entry points and insights. Thus, these opportunities can form the basis of future growth and balance and diversify company portfolios (Saeed and Zhang, 2023). Aside from internal threats, Selim and Kee (2022) observed that Alfanar has also external threats including new entrants competing in the energy, manufacturing, and construction sectors, fluctuations in the global economy affecting demand and costs, and failure to meet environmental and safety requirements internationally.
5 PESTLE Analysis and Competitor’s Analysis Using Porter’s Five Forces Model – Host Country
5.1 PESTLE Analysis
The political atmosphere in Saudi Arabia is stable as the country continues to advance economically as led by Vision 2030 (Sarji, Yusuf and Wibowo, 2021). For instance, the government supports sectors that are strategic to the country like energy and Alfanar has benefited from such support for such sectors. However, Elhawa (2021) stated that political stability can be attributed to the monarchy which may present certain effects on business policies. Further, Zayter (2022) mentioned that Saudi Arabia’s economy depends on oils but attempts at diversification under Vision 2030 open new opportunities in the country for Alfanar. Moreover, the economic risk depends on the global oil prices and the operations are made less unpredictable by the Saudi Riyal (Akkad and Henderson, 2024). Besides, Alfanar must track compilations such as the rate of inflation and spending by the government. In addition, Jakob Sadeh and Mair (2024) outlined that culture and traditions are important aspects of the company’s social environment, specifically in Saudi Arabia. Similarly, Alfanar needs to be aware of culture and cultural differences as a factor for successful HRM and customer satisfaction. Therefore, Belhamiche and Iguer (2022) clarified that the Saudi youths in the workforce have both strengths and liabilities that need investment in learning and development to support the industry.
Technological advancement is being embraced in Saudi Arabia, an aspect that will favor companies such as Alfanar (Badran and Badran, 2020). For instance, policies in smart cities, renewable energy, and automation are in line with Alfanar’s plans and require constant R&D and advanced technologies. Further, Milton (2022) stated that another reason regarding the legal environment of Saudi Arabia is that it is highly formalised with an emphasis on legal compliance. Moreover, Kissi et al. (2023) described that Alfanar faces various legal risks in production and operations that influence the legal structures affecting labor, the environment, and corporate governance. Additionally, Mason (2023) conveyed that environmental issues are in the process of becoming a concern with certain legislations that seek to limit carbon emissions and the promotion of green energy in the Kingdom of Saudi Arabia. Therefore, sustainability through green technologies and renewable energy projects is critical to ensure the company achieves its environmental objectives and supports the greater sustainability agenda by supporting environmental goals.
5.2 Competitor’s Analysis Using Porter’s Five Forces Model
The risk for new entrants into the markets in which Alfanar operates such as the energy and manufacturing industries is relatively low because of high fixed costs and governmental barriers (Ali and Bazzi, 2023). For instance, Allam, Buttorff and Shalaby (2023) stated that some of these include brand reputation, customer loyalty, years of experience and relations with various customers which is a strong entry barrier, however, technological development might bring down this barrier in the future. Moreover, Badiozaman, Ling and Sandhu (2023) mentioned that the bargaining power of suppliers in industries related to Alfanar is said to be moderate because industry inputs are specialised and the availability of few suppliers. However, Daou, Naufal and Hammoud (2024) argued that Alfanar has a large amount of scale, well-developed relationships, a good reputation, and large purchasing power to overcome this power. Furthermore, fluctuations in the supply chain might affect the company, hence the need to have other suppliers in place (Aziz et al., 2024). In addition, bargaining power is moderate among buyers in Alfanar’s markets of operation, although this is mitigated by factors such as brand image, product quality, reliability, performance, and providing customised solutions. Therefore, higher competition and the availability of alternative suppliers might improve buyer power in the future.
The threat of having substitute products or services for Alfanar’s specialised products and services is insignificant as it deals with expertise, technology, innovation, and quality (Kissi, Aigbavboa and Thwala, 2023). For instance, consumer needs must be fulfilled sufficiently by the product, and the product should stay ahead in terms of technology so as not to be substituted. According to Zabalawi, Kordahji and Picone (2020), competitive intensity in industries such as energy, manufacturing and construction is high due to rivalry of technology, quality and service among competent players. Moreover, Alfanar is experiencing stiff competition from regional and global players, particularly during the downturn in the economy. Therefore, Sareh and Nawawi (2022) stated that it is also important that constant innovation, customer relationship improvement, and operation efficiency enhancement are important for maintaining competitive advantage and delivering higher value through better quality and service.
6 Critically Evaluate Alfanar’s Current Strategy
6.1 Generic Strategy
Alfanar has opted to devise its competitive advantage in the global market based on business specialisation and delivery of quality products and exceptional services particularly in the energy, manufacturing as well as construction industries (Garon, 2023). For instance, Saraf (2023) stated this strategy helps Alfanar to outrun competitors because a company is more likely to propose solutions that address various clients’ needs. Further, investing in its research and development is one of the ways the company can constantly remain relevant through the development of products that cannot easily be copied (Hayek et al., 2023). Therefore, it also helps Alfanar to charge a premium price, achieve reasonable profitability and support sustainable development with eco-friendly and energy-efficient products that add value to the brand.
6.2 Growth Strategies Using Ansoff Matrix
Market penetration is a strategic approach that Alfanar uses in the current markets it serves by increasing marketing activities, improving its customer relations efforts and reinforcing brand appeal. For instance, Akello et al. (2023) stated that a company tends to follow a strategy of low pricing and high promotional activities in its areas of operation in a bid to capture more market share and thus generate higher sales. Further, market developments cover the extension of a firm’s operations geographically targeting markets with high demand for issues such as infrastructure and energy (Fager and Kösanlioglu, 2023). Fundamentally, Alfanar can successfully transact in Africa, Asia, and the Middle East due to an appropriate fit of its products and services. Therefore, Lambert (2023) mentioned that the development of new products is ongoing to satisfy customer needs, especially in the energy and manufacturing industries. Moreover, Alfanar believes in sustainability, which means that resource-saving and environmentally friendly solutions are developed. Similarly, Reinprecht et al. (2021) described this entry as done in an attempt to diversify and spread risk and take advantage of new growth opportunities mainly by venturing into related or unrelated industries.
6.3 Disinvestment Decisions
Some of the strategies that have been applied at Alfanar include turnaround following difficulties such as economic recession, decline in profitability, or organisational instability (Thomas and Osei-Bonsu, 2023). For instance, Menshawey, Menshawey and Mahamud (2023) stated that these strategies include operational restructuring, cost containment, and market focus to regain profitability and competitive advantage. Further, Alfanar may shut down the units that are not generating enough revenue, cut down on too many employees and minimise supply chain costs. Moreover, Rogošić (2024) described that the company may enter into some kind of negotiations for the review of contracts, get rid of liabilities other than the core business, or find some kind of funding. Similarly, divestment strategies entail the sale of strategic business units or product lines, which are either unrelated or poorly performing in the firm’s value chain. In addition, Pearlman (2020) mentioned that liquidation is not frequently used but it is applicable for the non-strategic, non-sustainable business units. Therefore, this involves the sale of all assets and is done when all the other strategies fail, including turnaround and divestment.
7 Recommend Strategies to Enter into the New Market
When considering options to enter a new market, Alfanar has a few available choices, each with its advantages and disadvantages. For instance, Spishakoff (2023) stated that FDI refers to the process whereby Alfanar creates an operation in a foreign market or acquires an organisation and expands into that market. Further, FDI gives operational control to ensure that local entities are managed and integrated in a manner that meets global benchmarks (Spencer et al., 2022). However, Koet and Aziz (2021) mentioned that it entails high capital investment and is subject to certain risks including political instability and changes in regulation among others. Moreover, Mergers and Acquisitions are another strategy in which Alfanar can expand to a new market by either buying or merging with another firm. Therefore, Canazzi (2022) described this offers direct entry into usually mature markets and eliminates many barriers to entry, with associated liabilities including integration issues and cultural differences. On the other hand, Joint Ventures (JVs) entail entry into partnership with local companies to bear the risks and costs (v et al., 2021). Furthermore, this strategy relies on the capabilities of the partner in the market but comes with issues of conflict of interest and decision-making. Therefore, Nieduziak (2022) accepted that it helps local operators to leverage on Alfanar brand and business model without much risk involved in entering new markets. However, Hrich et al. (2022) argued that one of the major concerns in this system is to ensure that there is consistency in the quality of the brand across different franchises.
Licensing allows Alfanar to license local companies rights to produce or sell their products laying little or no investment with substantial risks (Hasan, 2022). However, Al-Jarf (2022) asserted that it could produce lower margins on profit and managerial risk to patents. The appropriate market entry method that Alfanar can use depends on certain factors within the market, resource endowment, and objectives. As a consequence, FDI may be suitable for big markets with high entry barriers in line with Alfanar’s differentiation strategy while taking into account local demand (Garrido and Pérez, 2022). Likewise, market coverage involves a change in the marketing mix when Alfanar enters a new market to compete and sell its products to customers. Therefore, Khondker (2022) outlined that this entails changing the product to suit local customer’s tastes and preferences, the method of costing, and channels of distributing the product as well as promoting it. In general, Alfanar should consider certain elements related to market entry strategies and make relevant decisions based on the peculiarities of the target market.
8 Conclusion
The Alfanar strategic analysis outlines a proper positioning and global market understanding. From the mission statement, vision and objectives of the company one gets direction towards its expansion to the global market. The vision relates to being an industry leader, while the mission addresses the key goals of providing quality solutions and using technology. Both the strategic goals and objectives are closely related to the mission and vision statements in determining the strategic endeavors. SWOT analysis reveals that Alfanar has a technological, brand and skilled workforce as its strong factors, while operation challenges and cultural issues act as a weakness. The threats arising from competitors and the opportunities from the expansion into new markets must be carefully managed. The PESTLE analysis of Saudi Arabia is aimed at identifying external factors, that may impact the operations of Alfanar, these include politics, economy, society, technology, laws and the environment. These changes assist Alfanar evade becoming irrelevant due to the above peer factors.
In Porter’s Five Forces model, drivers within markets including entrants, substitutes, suppliers and buyers, and rivalry shape strategies. Market competition means constant changes that require strategic agility and innovation to maintain the company’s leadership. Broad category strategic objectives for Alfanar are based on the company’s market penetration, market development, product development and product diversification. Market entry strategy recommendations indicate that FDI is recommended for businesses venturing into the long term. These sorts of changes are necessary when entering a new market to facilitate business development. Therefore, the future success of Alfanar can be heavily influenced by its strategic management of the focus on innovations, expansion of market presence, and flexibility. Hence, by optimally utilising the external and internal resources and firm-specific factors, Alfanar can implement strengths, counteract weaknesses, exploit opportunities and mitigate threats in the global market to create sustained success and competitive advantage.
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