Based on the case study “strategic management in cartelized environment: case of Hisham Packaging, Dubai”, answer the following:Advice Hamza on what strategies should be adopted to sustain the growth of the business? base consisting of more than 1,500 (mostly sharing common customers with all of theirsister companies) across 15 countries. The company has strong technical backup from itsin-house pre-press, printing plate production, engineering division along with goodconnections with the local authorities. Being one of the oldest companies in the country, italso has many loyal customers.Hisham Packaging also enjoys the benefits of cartel groups, as they cooperate andmutually support each other whenever they fall short of any raw material or machinery spareparts. It is estimated that, on average, the cartel provides 20-25 per cent price increase forthe larger customers because the smaller corrugated box companies cannot meet theirdaily delivery demand and volumes. If there is no cartel, each converter can decrease theirprices by 30 per cent in an effort to attract the bigger customer which then createsunhealthy competition.Some of the shortcomings of Hisham Packaging include that all of the employees of thecompany are expatriates from South Asian countries such as India, Pakistan, Nepal and SriLanka. Due to the improving economic conditions of these countries, Hisham Packagingcurrently faces around a 40 per cent manpower turnover every year. Because there is nopaper mill in the UAE, it imports about 150 containers of paper every month and, althoughthe company possesses about 1,000,000 square feet of space, it constantly faces storageand logistics problems. Because of the bulky nature of the product and transport costs, itcannot export the corrugated material very far from the UAE.Corrugated packagingPackaging material is classified as primary, secondary and tertiary packaging. Packagingmaterial that comes in direct contact with the product is called primary packaging, whichis the packaging that a consumer uses as a "portion pack"; for example, Coke or Pepsicans, a sachet of tomato sauce or a strip of tablets. Secondary packaging is the materialwhich contains several primary packages, for example, a set of 36 Coke cans packed in acorrugated box or tray or a set of tomato sauce sachets stored in a paper board box.Tertiary packaging is the material that packs several sets of primary and secondarypackages on wooden pallets or in a larger outer carton, for example, 96 boxes ofsecondary packages packed and made ready for transportation on a pallet as a unit pack.A corrugated box consists of parts as shown in Figure 1, including a liner that is asupporting layer of sheet over the wavy fluted paper and a wavy paper sheet known asfluted material. The waves themselves are commonly referred as "flutes". The flutedmaterial is laminated both sides by two liners, one on the top and one at the bottom. If theboxes required are heavy-duty, a second layer of fluted paper and top layer over that islaminated, making the sheet as a five-layer corrugated sheet. The fluted material givesstrength to the laminate similar to how arches give strength to a bridge. The flutes alsoFigure 1 Single wall double-face corrugated sheetE 2 EMERALD EMERGING MARKETS CASE STUDIESVOL. 6 NO. 2 2016 Strategic management incartelized environment: case ofHisham Packaging, DubaiMohammed Laeequddin and K. Abdul WaheedOn 1 January 2015, Hamza joined Hisham Packaging, in Dubai, United Arab Emirates(UAE), as the CEO. Hisham Packaging specializes in the production of corrugated boxesof various sizes, in both plain and printed forms. Most of Hamza's previous professionalexperience was in the automobile industry, where his focus had been on Lean operationsrather than marketing. After joining Hisham Packaging, Hamza discovered that in a serviceindustry, such as printing and packaging, the business focus is more customer-orientatedthan process-orientated. In the packaging industry, each customer has their owncustomized requirements that are unique to them and can vary vastly with regards to ordervolume. What was particularly shocking to him while investigating the business was theinformal cartel arrangement among major corrugated box suppliers in the country and thefact that, without the consent of the cartel members, he was unable to make any majordecisions, such as expanding the business or accepting or dropping a customer. Hamzadiscussed the scenario with his sales manager Ahmad to see what strategy to adopt for thegrowth of the company. He was trying to figure out what direction the company should headin next. Like any other new CEO, Hamza also had his own plans for increasing the marketshare and making the operations Leaner, but he quickly found that it would be difficult forhim to have any major impact on the existing business due to the existing constraints, andhe needed a different strategic move to grow the company.Mohammed Laeequddinis based at Nest SkillsProfiling Pvt Ltd,Hyderabad, India.K. Abdul Waheed isbased at the Departmentof Marketing, Institute ofManagement Technology,Dubai, United ArabEmirates.Hisham Packaging, DubaiHisham Packaging was started in 1984 in Dubai and its main function included convertingbrown and white paper into corrugated boxes of various sizes both in plain and printedforms. These boxes are used for the secondary packaging of fast-moving consumer goods(FMCG), such as water bottles, beverage cans, snacks, cooking oils, soaps, fruits andvegetables, and consumer durables including refrigerators, microwaves, crockery,perfumes and clothes. Hisham Packaging converts about 250 metric tons (250,000 kg) ofpaper into corrugated boxes every day for various multinational companies (MNCS),including Unilever, Coke, Reckitt & Benckiser, Pepsi, Nokia and Black & Decker, and largelocal companies, such as Areej Cooking Oil and RAK Ceramics. About 70 per cent of itsproduction capacity is utilized for local customers in the UAE and 30 per cent of theproduction capacity is utilized for neighbouring countries such as Sultanate of Oman, SaudiArabia, Kuwait and Pakistan. Because of the bulky nature of the product, corrugatedbox-making requires a lot of space for raw material storage, work in progress, finishedgoods and vendor inventories. The Hisham Packaging Plant is established across an areaof 10,00,000 square feet with more than 400 employees and has state-of-the-art corrugatorand printing and converting machines imported from Japan and European countries. As aunit, it is of one of the largest business groups in the UAE and has strong financial backingfrom its corporate head office. In 2014, the group turnover was US$500m, with a customerDisclaimer: This case hasbeen developed solely as thebasis for class discussion andfor education purposes only.The primary data havesourced from the packagingcompanies to illustrate thereal-life situation but thenames are fictitious. It is notintended to ill ustrate eithereffective or ineffectivehandling of an administrativesituation or decision-making orrepresent the views ofmanagement about the topicof the case.DOI 10.1108/EEMCS-05-2015-0076VOL. 6 NO. 2 2016, pp. 1-16, © Emerald Graup Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIESPAGE 1

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Based on the case study “strategic management in cartelized environment: case of Hisham Packaging, Dubai”, answer the following: Advice Hamza on what strategies should be adopted to sustain the growth of the business?

Based on the case study “strategic management in cartelized environment: case of Hisham Packaging, Dubai”, answer the following: Advice Hamza on what strategies should be adopted to sustain the growth of the business?

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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