The authoritative guide to agency, joint venture XE "joint venture"  & sponsorship

 Kamel Abu Saqr
 Advocate & General Counsel

 

INTRODUCTION

The task of this book is to explore the matter of managing sponsorship in the Arabian Gulf and to provide a general framework of the sponsorship strategy in the UAE as a marketing tool. This is to be based on Capabilities Based Marketing (CBM) and the network relationship to attract companies to open branch offices, representative offices or joint-venture subsidiaries. International companies face both general and specific cultural factors.

Chapter 1 presents a holistic view of the sponsorship system and covers the definition of sponsorship. It explores the sponsorship triangle, consisting of the local service agent “sponsor”, and the partner in joint venture as a sponsor.

Chapter 2 describes the strategic management methodology, which has been selected as a result of earlier research which confirmed the absence of any sponsor’s strategy. This chapter also identifies the importance of sponsorship, and discusses the strategic implications of the sponsorship system from the viewpoint of the host country – this is considered a domestic competitive advantage. Both the sponsor’s and the international company’s strategic implications in dealing with local sponsors, as individuals or organizations, are addressed in analyzing the background of such a system. The international companies’ pre-requisite is to have the opportunity first before they have a sponsorship agreement. Sponsorship, as a domestic competitive advantage for the country, is also discussed.

Therefore the gap, or the problem, must be solved or closed by making use of support from other network actors in developing strategy to enhance capability. This is in line with the focus problem that can be solved by selecting the appropriate direction and, at the same time, by addressing the role of the local sponsor in the UAE and the future implications.

Global companies have a variety of objectives, as do the local sponsor and governments. The problems, which face the global companies and the local sponsors, arise from each party’s expectations of the relationship, which is usually referred to in literature as “cultural problems”. Chapter 3 examines the problem situations such as the lack of data and information, ownership management style, and sponsorship following merger and acquisition.

Culture problems and procrastination problems have been gleaned and derived from unstructured interviews held with many people, including foreign companies’ managers, local sponsors and key public officers in various governmental departments.

Any international company will have its own strategic plan, certain expectations and objectives; in the absence of any strategy, the local sponsor should do likewise. The local sponsor often tends to have his own agenda, and limits his efforts and obligations to government public relations, e.g. obtaining visas and renewing permits and licenses.  Meanwhile the company needs to move from its current situation to the desired situation by using existing resources in order to benefit from the sponsor’s network in the local market. At the same time, most international companies have no other option because, changing the sponsor is very difficult according to UAE and other AGCC laws.

Chapter 4 highlights why strategic management, and not CBM, is used to develop a framework for the sponsor’s firm strategy.

Therefore, this chapter will also address the development of a general framework for sponsorship strategy. After examining and analyzing the external environment (economic, demographic, political, and legal), an internal environmental audit, including personnel, finance, marketing elements and fees; has been conducted.  The chapter continues with a structural analysis, covering the competition of the free zone areas, Jebel Ali, Sa’adiyat and Bahrain State, and highlighting the sponsor’s objective setting process.

Chapters 5 and 7 address the potential strategic directions and the need to evaluate the various options before selecting the appropriate strategy.

The unique approach of this book is to discuss sponsorship, not only for the company and sponsor, but also for the employees sponsored by international companies. In chapter 6 the book addresses the most important issues such as managing sponsorship on labor, immigration and dealing with various governmental agencies. In chapter 8 the book asks every Regional Manager to have a networking strategy with the sponsor, and we suggests; as a method to develop the networking strategy, the joint development method has been selected by designing the sponsorship conversance. Which is in relation to management and ownership and the obligations of both the sponsor and the companies. The hidden obligation when establishing the global culture will turn us to offer the Islamic culture (Abraham Culture Model).

Chapter 8 also discusses the critical role of the sponsor and the principle of liability being attached to gain; this leads to the issue of culture and sub-culture and attempts to frame a new model for a universal culture which has been labelled the Abraham Universal Cultural Model. Interpretative methods have been used to conclude such a model from the Holy Quran by using assumptions. These state that between the different cultures of every nation and a single general culture (Abraham Cultural Model), lies the middle ground in which “Motley Cultures”, in different types of nations, are related to the central motif of Abraham’s behaviour.

Chapter 9 discusses strategy implementation and the change factors such as culture, management style, evaluation of performance, control and flexibility and the organisational structure. It is considered that the latter should reflect the organisational strategy, e.g. networking strategy based on some basic principles.

Chapter 10, by highlighting some steps of transformation to this system, provides a self-reflection and critique of the strategic management and a forum for rethinking the sponsorship system.

To summarize, the book discusses the management of sponsorship and explores the role of the local sponsor for international companies. It aims to solve the cultural gap and the absence of sponsors’ strategies, particularly the problems that can arise from each party’s expectations from the project relationship. The book also provides appendices to help managers understand forms of related agreement. 

CONTENTS

ACKNOWLEDGEMENTS  

Forward   

Preface   

ABOUT THE AUTHOR  

Introduction   

CHAPTER I SPONSORSHIP BUSINESS IN THE ARABIAN GULF  

Introduction   

International Strategic Alliance  

 General Cultural Factors   

 Specific Cultural Factors   

SPONSORSHIP ‘KAFALA’ Systems - What is it?  

 ‘Kafala’  

 Holistic View  

 What is Sponsorship?   

 Branches of Foreign Companies in uae  

 Commercial Agency Law in The UAE  

Sponsor’s Triangle  

 National Agent as a Sponsor   

 Local Service Agent as a Sponsor   

 Requirements and Procedures for Establishing a Branch/ Representative Office in The UAE   

Requirements   

Procedures  

 Partner as a Sponsor  

 Features and Procedures For Establishing a Joint Venture/Limited Liability Company in The UAE  

Foreign Company Branches   

 Summary   

Chapter 2 THE IMPORTANCE OF THE SPONSORSHIP INDUSTRY 

Introduction   

The importance of Sponsorship   

Description of Methodology  

Sponsorship Industry Inputs   

The Triangle of Sponsorship   

 Sponsorship as a domestic competitive advantage for the country  

 Strategic Implications for the International Companies’ Division 

Chapter 3 ANALYSIS OF THE SPONSORSHIP PROBLEM  

Introduction   

The Analysis and Interpretation of Data   

Problems  

 Lack of Data and Information  

 Ownership Management Style  

 Sponsorship on Mergers and Acquisition:  

 Culture Problems  

 Procrastination  

 The Absence of The Sponsor’s Strategy  

 Summary   

Chapter 4 DEVELOPING THE SPONSOR FIRM’s STRATEGY  

Introduction   

Why Strategic Management and not CBM  

Applying the strategic Management Methodology  

Environmental Situational Analysis  

  Economic and Demographic Segment 

 Analysis of Economic and Demographic Segments  

 USA   

 UK  

 Political Environment  

 Local Legal Segment  

 Global Legal Segment   

Internal Environmental Audit   

 Personnel   

 Finance   

 Marketing   

 Fees or Consideration Comparison  

Structural Analysis   

 Competition   

 Jebel Ali Free Zone  

 Sa’adiyat Free Zone   

 BahrainState 

Profile of The Professional Sponsor 

SWOT Analysis 

 Strengths   

 Weaknesses  

 Opportunities 

 Threats   

Sponsor Objective and Goal Setting 

 Summary   

Chapter 5 REVIEW AND ANALYSIS OF STRATEGIC OPTIONS  

Introduction   

Strategic Options  

 Do Nothing  

 Withdrawal strategy  

 Consolidation 

 Market Development  

 Product Development  

 Diversification   

 Segmentation and Positioning Strategy  

 Collective Networking Strategy  

 Summary   

CHAPTER 6 MANAGING SPONSORSHIP ON LABOUR, IMMIGRATION AND OTHER GOVERNMENTAL AGENCIES  

Introduction   

Profile of the Governmental Public Relation 

 Staff Members of the Governmental Public Relation Department   

 Internal Matters  

 External Matters  

 Procedures relating to the Ministry of Labour:  

 New Directives  

 Bank Guarantees to Bring Expatriate Staff:  

 Immigration Department  

Conclusion  

Chapter 7 EVALUATION AND SELECTION OF THE STRATEGIC OPTIONS   

Introduction   

Strategy Evaluation  

 Evaluation of Diversification Strategy  

 Selection of Collective Networking Strategy 

The First Question - The Need for a Sponsor 

The Selection of The Right Sponsor  

Analysing the Collective Networking Strategy  

 Summary   

Chapter 8 METHODS OF DEVELOPMENT  

Introduction   

Joint development   

 Designing The Sponsorship Covernance   

The Obligations of Establishing The Global Culture  

 Local Culture  

 Islamic Culture  

 Islamic Calendar, Pillars and Events  

 Abraham ‘Islamic’ Global Culture  

 Why the Abraham Culture?  

The Critical Role of the Sponsor   

 Liability Based on Commercial Companies Law  

 The Sponsor’s Hidden Liability  

 Liability Attached to Gain  

 Summary   

Chapter 9 STRATEGY IMPLEMENTATION  

Introduction   

Culture and Change   

Re-Framing the Organizational Network   

 Straight Way  

 Gratefulness Against Bounty   

 Goodly Word Against Badly Word 

 Wisdom  Trust   

NETWORK Organization Structure   

 Network Organization   

People, People and People Who Perform The Strategy  

Management Styles and Changes 

Evaluation Performance   

Control  

Information Technology and People 

Flexibility  

Summary   

Chapter 10 CRITIQUE AND SELF REFLECTION  

Introduction   

Self Reflection   

 Strategic Management & Strategic Planning   

 Critique to Strategic Management   

Re-Thinking the Sponsorship System  

 The Advantages  

 The Disadvantage   

CONCLUSION 

APPENDIX A FORMS OF COMMERCIAL AGENCY/ DISTRIBUTORSHIP AGREEMENT  

APPENDIX B FORMS OF BOARD OF RESOLUTION AND POWER OF ATTORNEY  

APPENDIX C FORM OF NATIONAL AGENCY AGREEMENT  

REFERENCES 
 

CONCLUSION

The title of this book came about because there was a feeling that there was a need to explore this subject and to identify its challenges.

It was found difficult to cover all the Arabian Gulf because of time restraints and the paucity of research material.

However, this is not a legal research, rather a research of strategic management to sponsorship firms “a unique and perplexing system in the Arabian Gulf”.

This unique system makes the national firms use non-equity co-operation not only in sponsoring the branch offices for international companies but also in increasing the blurriness in joint ventures and limited liability companies. This has led to an increased uncertainty about who is or who is not the  actual owner or partner or shareholder in the organisation.

The only people who know are the legal counsels and the public when the company fails to repay its debts and the foreign partner leaves the country to go to Beverly Hills or London.

At this time, the public become certain who are the actual partners and the sleeping partner, “the sponsor”.

It is research into strategic management, and the managing of the practical problems encountered in practice and the ways in which they have been solved and managed.

International business risks are seldom dominant. The objectives are to make them manageable and acceptable by developing a strategic plan for the sponsors in a systematic way. This should result in the company and the sponsor jointly having an integrated and co-ordinated set of commitments and actions. These are designed to explore capabilities and competencies and gain a competitive advantage.

This book should make sponsors answer the following questions:

• 1. Where are we?
  2. Where do we want to go?
  3. How do we get there?

The answer to the first question involves a thorough analysis of the organization and its position within the market place. The external environment is to identify:

• 1. The opportunities and threats or problems in the economy, political, socio-cultural and legal areas
  2. The internal strengths and weaknesses
  3. The structural analysis, the industry itself, including customer, competitors, sponsor profile, his reputation and credibility or image etc.

Once the firm has positioned itself in the market place, the company must have goals and objectives and have the strategic direction and options. Once the strategic direction has been evaluated and selected, there is the need to develop a method to enable the sponsors to progress towards their objectives.

Strategies are conceptual means of achieving goals and are supported by plans and tactics or actions, which are to be used to implement the strategy.

A proposal for strategic implementation needs allocation of resources of the firms and a plan to evaluate performance on a regular basis. A plan is also needed for control to measure the achievement of results and to have feed back.

Finally, the pace of change is fast and the sponsor’s strategy, which has been discussed, tends to be conservative because of the lack of opportunity to test itself under changing environments and conditions.

The environmental change is so rapid, that it is difficult for sponsors to adapt, but to adapt (local governments, international companies) they must.

Therefore, a strategic plan for the local partner in the joint venture should be developed rather than just for the local sponsor. Although, for advocates and legal counsels there will be no difference between them!
 

SUMMARY

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