Gulf Oil Middle East Limited Case Study
The company seeks to outsource the lubricants manufacturing division to South Africa. Outsourcing is the shift of tasks by companies tothird parties and is done with an aim to increase efficiency (Corbett, 2004). This decision is influenced by the fact that in 2017, Gulf Oil International returned to Africa with its first petrol station in South Africa. Due to the ready market in Africa, the company intends to extend its manufacturing of lubricants to the continent. Decision making is the process that ends in theselection of action among other possibilities. Ease of modification/ flexibility, how easilycan the outsourcing be done. As stated above, there are major steps that are required which include getting the legal rights to venture into the South African Market, and the setting up of the firm as well as thehiring of the task force (Daniella, 2015).
For this reason,therefore, the outsourcing cannot be done instantaneously. Ease of implementation, once all plans and strategies to venture into the new market is done then implementation of the plan will be easily done. Risk levels, what are the risks associated with thedecision to enter the new market. Other risks such as natural calamities and vandalism can be covered by insurance. Although there are potential risks, all can be easily dealtwith. Return on Investment, we have to evaluate the expected returns in venturing into this new market. As stated above, the new manufacturing line will aim as producing lubricants for South Africa and the rest of Africa. With the market being readily available, this means that rise in sales is highly expected.
However, strategic plans have to be put theplacein order to capture the masses against competition. Customer satisfaction, this ensures that the customer is satisfied with the products that we offer. To achieve this, we must ensure that the same technology, equipment, raw material as well as procedure used in the UAE is used in South Africa. This will ensure that the customer will get the same quality product that has been produced near them (Steele, 2015). The company should also focus on ensuring that the products are widely distributed to capture a stable market. The company can choose not to venture into this market but to export its goods to South Africa as well as other African countries. This has assured income,and it is less risky.
However, there will be no increased incomeand there will be no growth in thebrand name. The company can also choose acquisition. This is where they acquire another company operating in the lubricant manufacturing industry, merge the two and have it operate as Gulf oil. For this reason, outsourcing is a better idea as compared to its alternatives. Other than that, the company will need to make a number of considerations when outsourcing, and also engaging in foreign direct investment, as has been evidenced by the plan to move a division to another country. As such, considerations that pertain to direct foreign investment must be made, so as to build further on the information needed to make a decision. ForeignDirect Investment, abbreviated as, FDI, involves investing by owning one division and controlling the same business by this company, but in another country.
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