In the competitory universe, outsourcing peculiarly by a garment industry is likely dependant on the corporate scheme adopted by the company as it has to run into the international criterion of quality and foreign trade policies of the state in operation. A successful garment retail merchant merchandising ladies, gents and kids garments through their branded salesrooms in UK by the name of Texco wants to copy their success in UAE. Following is a brief description of the potency of Texco garment industry to be launched in UAE, the hazard factors that might impede concern proceedings, the retail environment of UAE every bit good as the strategic direction analysis of the prima rivals. All these indexs will critically measure the chances and menaces that Texco might confront with respect to its enlargement in UAE market.
UAE market topographic point:
United Arab Emirates is the hub of 1000s of transnational concern organisations providing both the populace and private sectors. Dubai and Abu Dhabi are regarded as the most outstanding concern chance centres bing in Middle East. Particularly Dubai holding abundant land and pecuniary resources of diverse nature, mounting the country ‘s economic GDP to about 84 % , trade policies and touristry installations makes it extremely favourable foreground for planetary sellers. UAE market has turned rapid due to inordinate competition. Satisfaction of clients is critical for retail merchants to set up house markets in the host state. But still enterprisers should stay by UAE ‘s local Torahs and usage ordinances if the company is seeking to advance or sell its merchandises and services ( Hagerty, 2008 ) .
Laws and ordinances:
In 1985 the authorities of Dubai had promoted foreign investing with the launch of free zone Industry ” by the name of JAFZ Jebel Ali Free Zone ” that addresses the common issues related to offshore Torahs. Varied international companies have registered to this zone in order to better the transshipment processs. Other outstanding zone countries developed by Dubai encompass Dubai Airport Free Zone, Internet City, Dubai International Finance Centre ” etc. Foreign investors who place their concern within free zones get benefitted by having abode visas doing it convenient for them to farther advancement in the field ( Hagerty, 2008 ) . As a regulation Texco will hold to register with the Free Zone Company ” and Free Zone Establishment ( FZE ) ” for come ining into the UAE market. Texco must put in the free zone countries of UAE as it could take advantage of UAE ‘s 100 per centum house ownership, entire capital repatriation and revenue enhancement free operations. Besides in free zones the company is allowed to set up concern without any limitations for currency. The Commercial Companies Law ” requires enrollment for an extension or separate subdivision office of ‘Texco ‘ name trade name in United Arab Emirates. The subdivision office will be treated as a portion of the parent organisation in United Kingdom. The central office in UK will hold to subject a bank warrant that will be renewed per annum with the entire sum of 50 thousand AED to be issued for enrollment in the Register of Foreign Companies ” and in Ministry of Economy and Planning ” ( Grant Thorton, 2010 ) .
However if Texco wishes to originate direct trade with UAE by exporting garments from United Kingdom, a commercial agent favourably a UAE national might be hired who should be expert in measuring UAE market. The principal operator in UK and agent working in UAE should hold to the commercial bureau ” contract nailing the scope of merchandises and retail market countries to be covered. Texco is besides required to follow with the jurisprudence of Federal Commercial Agency ” , mechanized by Ministry of Economy and Commerce, UAE ” , following all legal proceedings illustrated in the jurisprudence ( Grant Thorton, 2010 ) .
In UAE, foreign enterprisers should possess a trade licence ” for importing merchandises from around the universe or from their place state. For Texco to run in UAE, the garment industry should take clasp of the undermentioned licences:
Industrial Licenses embracing permission for get downing a fabrication works.
Commercial licences covering with trade understandings.
Professional licences for employees, craftsmans etc.
Bing a fabrication endeavor, Tesco will necessitate to acquire blessing from UAE ‘s Ministry of Finance and Industry ” ( Grant Thorton, 2010 ) .
In United Arab Emirates the concern Torahs incorporate revenue enhancement policies but still strike responsibilities ( either corporate or personal ) are non implemented in the free zones and market topographic points. Although messenger companies, foreign Bankss and oil industry have to pay revenue enhancements but alternatively of these, formal edicts are provided to the remainder of enterprisers runing in free zones ( Hagerty, 2008 ) . Standardization of import responsibilities is about five per centum but purchase is provided depending on the point to be imported e.g. drugs and intoxicant have high revenue enhancements. In UAE, belongings and municipality charges are besides applicable ( Grant Thorton, 2010 ) .
Porter ‘s Five Competitive Forces:
In 1980, Michael E. Porter proposed a theoretical account to develop concern schemes known as Five competitory Forces Model ” . This method is widely used for doing an assessment of the construction within an organisation and the strategic procedure adopted by the house. The theoretical account chiefly focuses on the construct that a company ‘s concern scheme should follow with every bit good as the menaces and chances prevalent in the outside environment. A thorough apprehension of theses five competitory forces ” will assist Texco to find the grade and nature of rivals in UAE so that net income appraisal can be made consequently. The theoretical account is represented as follows:
Figure: Porter Model of Five Forces
Dickering power of providers ”
Suppliers encompass all stuff and human resources required to offer merchandises and services. Harmonizing to Miles ( 1999, p.23 ) the garment industry of United Kingdom that are seeking to excel local boundaries are confronting troubles related to the providers that provide natural stuffs like engineering, fixingss and cloths. Together with this, the market status of UAE extremely encourages competition related to the undertakings associated with the web of mediators ” involved in the supply concatenation as new challengers from other developed states like USA are besides seeking to research UAE by practising outsourcing ( Graham, 2005, p.359 ) . The abnormalities of supply concatenation that Texco might confront will chiefly be posed by deferred proviso of cloths from the United Kingdom. The premier ground being extended transportation distance. Some times the normal proceedings might acquire delayed due to the export statute laws of UAE. Although the state has efficient foreign trade supply system but still state of affairs could be improved by a valid communicating form established between possible and bing providers. For Texco UAE ‘s local providers can be tried to increase the operational efficiency of garment fabrication. Online coactions could farther beef up any clogging spreads in the house ‘s supply concatenation.
Dickering power of clients ”
With the addition in buying power of clients in UAE, Texco might confront challenges associated with the altering demands of the clients. Such menaces can be tackled by strategic policy induction that determines the involvements of clients in relation to the company by transporting out consumers studies. Customer feedback from the web site might besides assist to model Texco ‘s garment fabrication methods. Differentiation could be a major factor that Texco must implement in its merchandise scope to act upon the purchasing patterns of clients therefore retaining a good market portion.
Menace of new entrants ”
In United Arab Emirates, possible and bing rivals influence the sum market portion of the garment sector. The hazard of new entrants in a concern is normally incumbent on the trade barriers practiced in the state. But in UAE ‘free trade ‘ is encouraged hence hazards associated with the entry of new garment enterpriser is high. The major restraints that can act upon the public presentation of new concerns in UAE include the economic systems of graduated table ” , trade name repute as perceived by clients, production costs and non handiness of of import resources. It has been suggested that debut of IT in concern proceedings of Texco could cut down the menaces associated with come ining the UAE market ( Graham, 2005, p.360 ) .
Bing based in UK, Texco will probably hold high economic systems of graduated table ” in a manner that it might take advantage in the UAE retail market by cutting costs on garment fabrication as the UAE currency i.e. Dirham is weaker in relation to lbs. By deviating some of the production units in the free zone parts of UAE, Texco can offer cheaper garments by extenuating production costs therefore carry throughing major grosss. Besides by engaging local persons for retail shops will assist Texco salvage labour costs. Bulk purchasing can be practiced by reaching UAE ‘s national cloth providers or readymade garments can be imported from the place state in extended measures to salvage transportation costs. Establishing a web portal will assist the company to decrease advertisement costs as more clients could be motivated to buy online ( Graham, 2005, p.360 ) .
Menaces related to Government Legislations ”
It is feared that with any farther change of current foreign concern Torahs, Texco ‘s market place could be weakened.
The company ‘s hallmarks in UK are consecutive collar blouses with skirts but in United Arab Emirates the frock codification is diverse yet people might prefer some different manner of vesture.
Menaces of replacements ”
In UAE, assorted international garments have maintained a solid market portion. Among the major option available included Gionardo, Ltd, a garment industry with central offices in Hong Kong. The entire volume generated by the company yearly is 1 to 2.5 million AED. Other garments industries established by developing states like Pakistan, China and India are making challenges as they offer cheaper merchandise scope in relation to the monetary value criterions defined by Texco ( Graham, 2005, p.359 ) . Currently India is come oning at a rapid graduated table in footings of exchanging costs scheme employed in UAE market industry accounting garments exports of India upto 10 % of their entire industry.
Rivalry among bing participants ”
In UAE competition in garment industry is strong due to huge figure of rivals. Product distinction schemes adopted by the challengers, industry cost construction, exchanging costs of clients will probably determine the Tesco ‘s market scheme for transporting out concern operations in the United Kingdom.
A brief market assessment of three major rivals that could be a challenge for the long term sustainability of Texco garment industry in UAE is given below:
It is the Hong Kong trade name founded in 1980 being celebrated for its class of insouciant frocks. Globally the company is considered a leader in voguish dress. In November 2009, the net incomes doubled as Giordano improved and made inventions in its current garment stock.
Merchandise: Giordano usually maintains it attending towards the merchandise line that it introduces for all ages. The trade name mediators i.e. BSX and Giordano Junior are considered major merchandise lines for farther enlargement of the company in UAE. Company majorly excels in denim aggregation. The scheme established in 2009 chiefly focused on cognition of client demands, simpleness in fabric lines and quality service. The kids trade name Giordano Junior ” has been good acknowledged up to 10 % and the gross revenues continue to come on boulder clay day of the month.
Monetary value: To get by with the competition in insouciant garments, Giordano adopted an merger of successful concern schemes from celebrated entrepreneurial organisations like the construct of value pricing ” from the trade name of Marks & A ; Spencer and the oncoming of frugalness ” conceived from Wal Mart. The company chiefly has a client driven attack originating incursion pricing For international market enlargement, the company has to alter its strategic demeanour by the mission of maximising unit gross revenues alternatively of borders ” ( Paul, 2008, p.421 ) .
Promotions: The enterprise by the name of World Without Strangers ” helped the company to keep client portion as in UAE about 200,000 clients get benefitted by the service in twelvemonth 2010, bettering the market gross revenues to about twenty per centum. The trade name by and large relies on word of oral cavity ” advertizements ( Giordano-me, 2011 ) .
Topographic point: The distribution system is indirect as intermediary is involved in the supply proceedings. Garments are circulated to retail shops by selective distribution. The Company possesses a sum of 20 one shops in UAE. With the international stature maintained by holding about two 1000 retail shops. Transporting normally takes topographic point to or from the planetary mercantile establishments in United States, Europe, Australia and UAE together with online shopping installation to provide international client orders.
Giordano-Deira City Centre 2.jpg
Giordano, Dubai retail shop
SWOT Analysis-Giordano, UAE
The nucleus competences of Giordano are POS terminuss ” utilized for entering stock flows on the computing machine to keep a majority of stock stock list. The attack adopted by Giordano is a limited controlled bill of fare ” that is to concentrate on limited sum of merchandises that are best in quality and highest in demand by the mark audience ( BI-ME, 2009 ) .
The company possesses a dedicated work force efficient adequate to understand the flow of gross revenues as attitude preparation ” is portion of the occupation engaging plan. The organisation civilization is level guaranting a rapid flow of communicating between staff forces.
Giordano lacks proper promotion channels. Cargo processs are non every bit efficient as other rivals ( BI-ME, 2009 ) .
Customer prefer purchasing Giordano due to the sole catering of metameric trade names of garments accommodating to the altering demands of consumers. The company decides to offer voguish apparels on discounted monetary values.
Frugality controls its stock lists by passing less on advertisement instead trusting on word of oral cavity gross revenues.
Giordano holds the American Service Excellence Award, ISO 9002 ”
Garments portray the kernel of lastingness and quality. The company besides attracts client attending by acquiring involved in programmes of corporate duty. The enterprise by the name of Giothon ” the company was able to bring forth about 25,000 AED as a charity for inundation victims of Philippine ( BI-ME, 2009 ) .
External forces from China and India seeking to coup d’etat major market portion from the company.
The company has its beginning in Saudi Arabia founded in1988 and is regarded as the most outstanding concern holders in traditional Arabic garments peculiarly for ladies in UAE. Annual gross revenues of the company are about 3 million US dollars ( Al Yashmaic, 2011 ) .
Merchandise: Alyashmac holding a diverse assortment of Abaya, Jalabiya, westerns vesture and Sheila ” . This readymade dress industry is termed as the first coevals of manner ” in the gulf states.
Monetary value: Planing scheme is favored as the cost of dresss range from 200 -600 dollars that merely caters to the demand of Arabian female population who are non witting of the monetary value restraints. Heavy bedazzles and spangles work embellishes the adult females apparel for warranting extended costs.
Promotion: The garment industry conducts manner shows on seasonal footing portraying the assortment of Abayas and Jalabiyas. The online store has a broad gallery of old and approaching designs. Entire information of the company from the past two decennaries have been stored in Alyashmaic book that can be viewed on-line and can be purchased by clients on petition,
Topographic point: In UAE, the company has adopted a selective distribution scheme as more than 50 retail salesrooms with one branded garment fabrication mill are present in this part. The company has its providers or resource distributors supplying both fabric stuff and fixingss from Italy, India, China, Japan, France, China. Retail mercantile establishments are located in Sharjah, Dubai, RAK and Allain ( Marketingta, 2010 ) . Online service bringing can be made possible by clients sing the official web site. As the web portal provides all contact information about the locations, clients can see shops in individual to do a purchase ( Al Yashmaic, 2011 ) .
Al Yashmac Factory in Dubai
SWOT Analysis- Al Yashmaic
Having a good established repute.
The industry has its focal point on advancing Arabian manner vesture throughout the universe. Designs of frocks incorporated Arabic art with heritage and poesy. Seasonal vesture is besides provided with voguish Abayas for modern adult females. Labor working hours are good defined harmonizing to the labour jurisprudence of UAE ( Al Yashmaic, 2011 ) .
Largely lady clients prefer to have on traditional apparels therefore the merchandise line is widely acclaimed by adult females in UAE.
Limited production supply
Apparels line merely for adult females
Located in the Centre of UAE retail centre will assist the garment industry to stand out farther. Having most of its concern literature in Arabic is another plus point for its market net incomes to better. The industry is likely to establish its more mills of readymade garments in Egypt to spread out planetary market portion.
Low costs incentives being put frontward by rivals.
Not providing to all market sections might ensue in pecuniary shortage for the company.
In India the company was initiated as a whole sale export company ” . Fabindia is an Indian company holding a subdivision mercantile establishment in Dubai. In UAE the company expanded its proceedings in 2004 and since so it has been able to catch a good market portion. In India the company is good established since 1960. Annual grosss of the company being 0.5 to 1 million US dollars ( Fabinda, 2011 )
Merchandise: The merchandise scope of Fabinda encompasses ready to have on apparels for adult females, work forces, kids and adolescents ( Saxena, 2002, p.712 ) . Together with this bed linen assortment is besides offered so that clients can buy most of fabric points under one roof. Floor coverings, drapes and upholstery cloths are besides made available. The trade name name is celebrated in Dubai due to its traditional wear and Khadi. Readymade garments are offered demoing a rich assortment of Indian apparels preferred by local people ( ExpressTextile, 2000 ) .
Monetary value: Penetrating scheme is employed. The company tries to cut down its production costs by working in coaction with Indian village-artisans so that traditional fabrics can be promoted abroad. The company prefers to keep a house client portion by the return and exchange policy claiming to offer no via media on quality. If clients are non satisfied they can return their purchase within first 30 yearss.
Promotion: Manner shows, monthly exhibitions, hoardings and media coverage help the company to advance its trade name name in UAE.
Topographic point: Selective distribution scheme is formulated. Minutess can be made online at Fabinda.com as the site is VeriSign secured ” . The company does non hold a mill for readymade garments in Dubai as the orders are shipped straight from the central offices located in New Delhi. Suppliers are efficient plenty and the shop in Dubai prefers bulk purchasing to be delivered with 10 to fifteen working yearss. Customers are non charged excess gross revenues revenue enhancement on orders. Alternatively of UAE, shops are besides operated in China, Thailand and United States of America ( Fabindia, 2011 ) .
The frocks are fit harmonizing to the climatic conditions of Gulf.
Vegetable dyes and hand-loomed apparels together with power loomed gowns embellished with blockprinting and sometimes embellishment are created.
Western population in UAE does non prefer Indian manner apparels. Artisans normally belong to the low socio economic backgrounds and are non paid good harmonizing to their degree of expertness.
Bing cheaper than western trade names, the company is likely to give major grosss. Indians are in greater concentration in Dubai therefore the location of mercantile establishments is executable to provide possible clients.
Switch costs ” of clients doing them more witting sing their purchase determinations would necessitate change in the current policy. Extra promotional schemes as launched by rivals could be a menace for Fabindia.
Immediate loss of employees after development due to low rewards.
Ownned by Branch weavers India General Trading LLC ” Fabinda salesroom is located on Mankhool route in Bur Dubai.
Consumer purchasing behaviour:
Purchase purposes are shaped by the income position of persons their penchants and life style. In UAE one-year per capita is 36,537 US dollars ” as merely 10 per centum of the population fright to be at hazard of fiscal shortage. Tastes differ harmonizing to the lifestyle attack. Peoples make a pick depending on the trade name image of the garment retail merchant. Twenty one per centum consumers believe their buying power to be improved so the old twelvemonth. Highest figure of on-line shopping is carried out in UAE as compared to the full Middle East and Asia Pacific part with local people passing about 1048 US dollars on day-to-day footing. 69 % of consumers are likely to acquire informed about the new merchandises and offerings by sing retail shops or shopping Windowss of the prospective company ( WordPress, 2010 ) .
In order to win in the UAE Market, Texco must plan its market schemes maintaining in head the factors that might pull possible and bing clients. Purchase purposes of clients are usually influenced by the undermentioned factors.
Figure: ” Factors impacting consumer purchasing behaviour ”
Marketing Mix 4Ps for Texco:
Satisfaction and easiness of clients is the premier drive beginning that is determining UAE ‘s market conditions. In UAE the recent tendency is to hold an online concern portal so that possible clients can acquire cognizant of the new offering of a company or become informed of an emerging market trade name. A steadfast market scheme for constructing the industry ‘s repute right from the grass root degree is incumbent. Successful scheme for establishing concern relies on four celebrated P ‘s. The possible demands of clients are of all time altering hence in order to better gross revenues ; sellers should seek to analyse the factors that might act upon clients ‘ determinations. This can be done with the aid of marketing mix that comprise of merchandise, monetary value, topographic point and publicity ” schemes adopted by the company.
In order to win among rivals Texco must present diverseness in apparels line offered to run into the demands of multitudes. For acquiring bigger market portion merchandises and services both touchable and intangible must be introduced for the benefit of consumers so that value can be created. The client research being carried out in UAE will assist Tesco specify its countries of garment production. It is estimated that the primary merchandise offerings will include insouciant dresss for all age groups including Jerseies, abayas, pentaloons, skirts, blouses, denim jackets and denims, shalwaar kameez to provide to the diversified demands of the population.
The 2nd P of the selling mix comprise of all the variables that Texco has to offer. Price does non ever depicts the pecuniary sums involved but the clip, attempt and energy being spent to do the merchandise attractive for the clients. Although Texco already aims to offer better quality in cheaper rates but still it is advised that Texco make witting determinations during the procedure of apportioning monetary value tickets to the on sale garments maintaining in head the buying power of bing an possible clients.
In marketing publicity is the manner of pass oning merchandise value i.e. doing mark audience aware of chapeau merchandises and services the company has to offer. Texco must measure the behavioural traits of clients for inventing successful market runs that are every bit favored by all sections of population.
Supply concatenation direction of Texco constitutes topographic point ” in the selling mix. It will include the abroad transportation methods, local transit of garments at retails shops in UAE so that the concluding merchandise could make the clients in an efficient mode. To fulfill clients to a greater extent, e-shopping portal must be devised by Texco to take orders on-line and guarantee merchandise bringing within three to five yearss for foreign clients and within a twenty-four hours or two dauys for local 1s ( Grewel & A ; Levy, 2008, p.7-12 ) .
Consumer purchasing behaviour is affected by the political societal and cultural hazard factors involved in the market topographic point. The combined consequence of these indexs farther lead manner to the formation of a black box ” from where the behaviour is adapted as a formal client response triping his determination to purchase the trade good, select a peculiar trade name name and set the clip span in which the merchandise will be purchased together with an indicant of how many garments the client will probably purchase.
Model for consumer purchase behaviour for Texco in UAE ( Kotler & A ; Armstrong, 2007, p.122 ) .
Money age and household dealingss are all factors hurt of personal position of citizens in UAE. It might be regarded that the civilization of UAE is attribution orientated civilization ” ( Trompenaars & A ; Hampden-Turner, 2009, p.102 ) . Dress codification is chiefly conservative as bulk of population is still Muslims but UAE might be considered advanced to a certain grade than other Middle Eastern states. Common apprehension and trust among concern opposite numbers can take to acquire a better knowhow of the market state of affairs. The major hazards involved in UAE market encompass unemployment, unequal pecuniary distribution and loopholes in the federal authorities model Intercultural struggles and national differences may impede Texco ‘s steady flow of advancement ( World Economic Forum, 2008 ) . Although the political position of UAE is stable for concern induction and enlargement yet sometimes political boycotts may ensue in lessening in the market gross revenues e.g. the recent crisis of 2006 faced by the state in relation to prohibition of Danish merchandises and exports from Danish trade names by the Muslim community has strongly resulted in diminution of multinationals ‘ gross. In order to last in the crisis state of affairs Texco must pattern grok methods of deriving trust of the local community by demoing regard for the UAE ‘s civilization and traditions ( Paul, 2008 ) .
The Dubai economic system is really dynamic, holding a best strategic location advancing lesser operational costs by foreign bargainers. Infrastructure, international criterion installations and broad policies initiated by the authorities makes UAE a favourable topographic point for Texco to seek its concern venture.
Strategic location: The state is accessible to about one 20 transportation lines doing it possible for Texco to see supply concatenation direction nexus s with United Kingdom. No trade barriers are exerted on foreign investors.
In footings of economic factors the income degree of consumers is better due to the copiousness of oil militias possessed by the state. The fiscal growing rate of UAE is on 2nd rank in footings of Gulf Cooperation council ” as compared to other Arab markets. UAE banking system offers high recognition ” commissariats and sufficient liquidness. The capital markets are formulated with extremely advanced engineerings and proper systems of ordinance. Intellectual rights of belongings are protected by authorities. Economic system is unfastened ( Communicaid Group, 2009 ) .
Based on the cognition gained from marketing assessment of garment industry challengers in UAE and general market conditions ‘ feasibleness for the international trade name of Texco, it can be suggested that version and standardisation in the dresss launched by Texco should be good coordinated ( Taha, 2006 ) . The central office at United Kingdom and UAE subordinates should seek to keep this equilibrium to advance the quality and public presentation of the merchandises for sale. Joint inputs of UK staff and the one operating in United Arab Emirates either through picture conferencing, email correspondence, face to confront interaction or voice conversations could assist to stabilise the international merchandises ‘ balance ( Kotler & A ; Kelvin, 2006 ) . As Texco is about to better its merchandise range to UAE the chief stairss to be followed in footings of maintain an IT scheme includes a little distinction from that available in UK. A proper communicating channel must be established between employees of UAE and the 1s working in place state to keep equal criterions. The site choice and location of the garment industry will probably impact the gross revenues. Outsourcing can be practiced to keep costs.
Well maintained trade name image
Providing to about 13 per centum of UK garment industry
Company ‘s turnover is near 30 five billion lbs that is at least two times more in comparing to its rivals Asda and Sainsbury in UK.
Texco owns a web of two thousand five hundred retail stores around the Earth with a entire work force of 250,000 employees.
In order to keep its low cost position, Texco has to restrict labour costs therefore workers are non being paid their due right.
High economic systems of graduated table ” favours enlargement in UAE. For Texco to present its merchandises and services in UAE, many options are available. Alternatively of set uping trading association via commercial groups, varied benefits can be gained by corroborating operational presence ” . This scheme will assist in transporting out market studies, doing concern contacts, develop communicating forms and relationships with clients and to undertake any secured orders or minutess. One more regional index that might back up the Texco ‘s physical presence in UAE is that the state serves diversified groups therefore the demand perceived by clients is frequently unable to be predicted. Establishing a garment concern in UAE will necessitate top precedence market intelligence ( Grant Thornton, 2010 ) .
Excessive costs on importing natural stuff from abroad could ensue in low coevals of grosss.
Developing states options giving the same degree of quality at lower limit costs will deviate consumer attending off from Texco.
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