The strategic audit was done on the Swiss Gold Group. The start of this report makes an introduction of the company, its vision, objectives and the vision and embarks on an analysis of the whole strategies of the company, culture, and the organization. Swiss Gold group is vast in size and operations due to the diverse portfolio. Due to this, it was essential to analyze only a division of the corporation that is the Swiss Gold DMCC. An in-depth analysis of the gold business is focused on the operation of the company in the UAE. To analyze the company process in the gold market, the analysis of the competition was essential. The analysis of the external environment is done by the use of the Porter’s five forces analysis and the PESTLE framework in the societal environment. The presentation of the external environment summary is done through the EFAS diagram with the ratings for every threat and the opportunity assigned. The audit also discusses the internal environment in terms of the weakness and the strength as seen in the culture, corporate structure, and the company resources. As part of the analysis of the internal environment, the distinctive and the corporation’s core are identified. The study of the culture, corporate structure, and the resources are done in-depth later on. The TOWS diagram is used for the presentation of the recommendation facilitating the formation of strategies through the utilization of the weaknesses, strengths, threats, and opportunities. The recommended strategies implementations are also looked into. The final part of the audit is the evaluation and control analysis of the Swiss Gold Group and the finishing of the report.
Strategic Audit of Swiss Gold DMCC
From the time it was incorporated, the Swiss Gold is one of the prominent and renowned companies in the precious stones and the gold business in the UAE. The primary business line for the company is the supply of the precious stones for the increased demand in the local and international markets. Swiss Gold Group was established by Mr. RaedTaj as Swiss Gold LLC in 1992 before its consolidation in 2001. The alliance comprised the Swiss Gold Wholesale, the Swiss Gold LLC, Swiss Gold Diamond, and the Swiss Gold DMCC. The operations of the company were an effort of Zain Al Bazaz, MajedTaj, RaedTaj, and James Cross. The first major line for the business was the sale of gold jewelry. In 1992, Mr. Zain al Bazaz came into the picture and facilitated the formation of the company with his expertise in currency trading and precious stones and enabled the expansion of the portfolio for the Swiss Gold Group through the addition of the Swiss Gold DMCC that offers trading. Swiss Gold DMCC allows the customers to trade in precious stones ranging from silver, gold, palladium, and platinum also to the FOREX services offered(Maloney, 2008). The addition of the services was perfect timing for the company as it is the first company to bring such services to the country with competitive rates for the customers. The expertise of Mr. Cross and Mr. Al-Bazaz has enabled the company have excellent skills and operations with the banks and the international markets. The services of the Swiss Diamond DMCC are focused on the dealing with the diamonds in all sizes and types.
The mission statement of Swiss Gold believes in the trust and integrity as the principal values for the industry and that the values make them distinctive from their competitors. The mission of the company is to keep up with the values for them to be the industry pioneers that offer unique products and services to the customers. Through the mission statement, it can be seen that the company values the integrity and trust of its operation. Swiss Gold has over the years aimed to establish a connection with the customers through building trust so as to increase customer loyalty. However, the mission statement of the company is poorly written as it does not mention any of its products. The company needs to restructure the mission statement to include the core products of its operation. The lack of the product aspect can be due to the diversity of the products, and the inaccuracy of the mission will be seen in the mention of only one product line.
The objectives of the Swiss Group is to maintain the good and high reputation in the gold market, maintaining their quality standards, increasing their market share, and maintaining their commitment to their clients in delivery and service. The corporation strategy is to enhance growth. The Swiss Gold Group had established the Swiss Gold DMCC with the aim of diversifying and improving their portfolio (Maloney, 2008). The balancing of the operations was to enable proper timing and increased their geographical location. The venture of the company is in line with the natural and healthy Dubai’s gold tradition and the improved gold environment around the world. The corporate ethos has changed from the integrated approach to the expansion approach making the Swiss Gold DMCC well positioned for the future.
Board of Directors
The boards of directors in the company are mainly outsiders who meted their business in 2001 to form the Swiss Gold Group. The ratio of the insiders to the outsiders is high as the outsiders are the majority of the directors on the board. The two family members on the board MajedTaj and RaedTaj are minority shareholders in the company. The share ownership of the company is dependent on the individual entities of the Group with the different outsiders having various forms of ownership. Mr. Zain Al Bazaz is a majority shareholder and the chairman of the board. Additionally, he is the CEO of the Swiss Gold division. James Cross was a member of the board but left after he sold his shares to Zain Al Bazaz. The outsiders who have no shares in the company hold high positions in the divisions of the business. Mohamed Al- Bazaz is the managing director of the Swiss Gold DMCC, and Mr. RafiqHallak is the managing director of the Swiss Diamond DMCC. As usual, the outsiders on the board do not hold any shares in the company.
Each of the members of the board contributes heavily to the strategic operations of the company as they have a rich knowledge in business and special stones. Zain Al-Bazaz who is the chairman of the board and the CEO of the Swiss Gold have over 30 years experience in the gold industry and is known in the local and international markets due to his expertise in the industry. James Cross, who is not longer a member, was an experienced banker with international monetary experience and served as the board chairman for some years (Maloney, 2008). The chief of Swiss Gold LLC, RaedTaj is an experienced jewelry trader. MajedTaj gained experience from his father and was born into the jewelry business. The board of directors is active due to their constant contribution to the operation of the company.
The top management comprises of the owners of the individual entities and the outsiders who head the bodies of the Swiss Gold Group. The chairman of the group is Zain Al-Bazaz, who is also the CEO of the Swiss Gold Division and the majority shareholder. The other heads of the other divisions of the organization occupy positions of managing director. Each of the directors is tasked with the handling of the different divisions of the group. The management at Swiss Gold Group changes as seen in the leaving of James Cross as chairman to Zain Al-Bazaz. The current administration of the group has had their positions for more than five years. The board of directors is tasked with each division, and the strategic growth of the company is dependent on the individual contribution to the operations. The management of the group is polite and interactive with the other employees as they are dedicated and courteous in their daily activities.
The top management gets involve in the business, unlike the other corporations who have board members from outside. The top administration of the group as seen earlier comprise of the majority being the startup individuals for the different entities. The involvement of the top management is due to the high stakes that the business holds for them. Most of the top administration of the group has shares in the company and it is essential that they provide adequate input for the direction of the business (Maloney, 2008). The experience of the top management enables the company to be steered in the right direction and maintain sustainable growth. Most of the top management has over ten years in the industry, and their inputs are crucial for the strategic orientation of the corporation. There is an open environment for interaction between the top and the bottom management. The top management is ready to tackle the future challenges of the company while changing economic conditions.
External Environment: Opportunities and Threats
Economic-The UAE GDP is expected to grow by 4.4 percent in the coming years. The currency rate for the country will remain stable in the coming period with the place it is with the US dollar. The UAE economy is expected to stabilize in the coming years. However, the unemployment rates in the country are still a record high with the government pledge to curb the menace is not seen. Moreover, the gold market around the globe has seen a reduction in demand. The interest in the people for gold around the world has reduced. The gold import limits that have been imposed in India are bad for business apart from the lowest demands that the gold market has ever seen. The Chinese market have lost the interest in purchasing of gold, thereby, hurting the exports of the company to the Asian continent badly. Most of the people in the current economic front seem to prefer an investment in stocks and have changed their purchases for gold and its accessories (Maloney, 2008). The weak gold market in the country is also due to the Iran sanctions that limited the investors from Iran to buy or invest in the gold industry in UAE. The sanctions have reduced the purchases and investments by the Iranians.
Technological-New methods of mining gold have been developed that are easier and fast by gold miners. Therefore, the slow supply of gold is likely to be solved by the new mining technology will speed up the acquisition of the gold from deep underground depths. The efficiency of the current gold mining process has been increased, and the use of upgraded stability and shaft pillars can be used. The new method of mining gold is also safer for the workers and the seismic stability allowing for constant and fast gold to be retrieved from underground. The new method of mining was developed in South Africa, and different mining contractors are adopting the same to increase the manufacturing and distribution of the gold. The new gold mining system will boost the availability of gold material for the company and to the consumers.
Political-legal-The UAE is indicating a growth from the recovery of the financial crises in 2009 that hit most of the world economies. The economy of the country is open with a score of 71.4 by the 2014 Index Economic Freedom making UEA the 28th freest economy in the world. The UAE is in second place of the open economies in the North Africa and the Middle East region. The increase of the business, labor, and monetary freedom resulted in the overall economic freedom of the country. The government spending and the freedom of corruption also resulted in a favourable political environment of doing business in the UAE. The existence of tax regulation on gold indicates that is safe and profitable to do business in the UAE. Dubai is the gateway to the world into the global business. The emirate is a duty-free area for gold with the favorable tax system. There are a sound and proactive governance (Maloney, 2008). The gold export regulations are favorable for companies dealing with gold and their subsidiaries. Gold inspection quality is done by government officials to confirm the presence of the acceptable standards in the country.
Examinations of the UAE population indicate that the nationals are of a smaller percentage of the large portion of the residents being the expatriates. The current statistics show that the people of the UAE National are only 1.3 million. The sales statistic for gold in the UAE indicates that the expatriates are the primary buyers of gold and its products in the market. The local market of the national is low with only 20% of the total sales of gold. An average of 80% of the gold sales in the country is by the expatriates. The demand for gold will, therefore, increase as more expatriates continue coming to the United Arab Emirates.
The threat to New Entry– The media indicates that the gold markets in the United Arab Emirates are still experiencing high demands. However, the claim is an overreach of the real situation. Therefore, the threat of new entry is small. Since the fall of the gold price in 2013 by $200, people are still afraid to invest in gold and no one can blame them. Since 2013, the market for gold has reduced; the demand for gold has never reached that little in a lengthy time. The appeal for the gold investment as a haven has broken with the much stock market having more returns for the investors than the gold. The only growth was in the sales of jewelry that is not that much. Investors are shying away from investing in gold, and it is not likely that there will be new entries in the gold business in the UAE.
Rivalry Among Existing Firms– The competition among the existing companies in the UAE is little. The operation of Swiss Gold is unique. There are some retailers who sell the products of Swiss Gold. There are no wholesalers in the UAE market, and this gives Swiss Gold an edge and advantage in the industry. Gold bar traders are few, and most of them do not do wholesale (Maloney, 2008). The competition for Swiss Gold DMCC is only on the platform of dealing with the physical gold. However, Swiss Gold DMCC has an advantage due to its collaboration with the other subsidiaries of the Swiss Gold group.
Threats of Substitutes– In the current environment, there are some companies that offer similar services with the Swiss Gold. However, the reputation is essential in the gold industry and is important to keep the trust and reliance with the consumers. The threat of substitutes is low. Many people prefer to keep the status quo through the purchase of the same product from the same company. The buyers of physical gold do not go to new businesses and this is why the threat of substitutes in the industry is small. The security issues involved in the gold market has deterred the introduction of new products that act as a threat to the company’s operations. The issue of trust is the barrier for substitutes in the industry.
Bargaining Power of Suppliers and Buyers– Swiss Gold purchases its gold from many suppliers. The bargaining power of many suppliers is low due to the availability of the gold. However, the major suppliers have high bargaining power due to the providence of differentiated products. Therefore, the major suppliers have the capability of setting the prices they want due to their unique products. The bargaining power of the buyers is little. The purchasers of the Swiss Gold products are many, and they are in different continents. Thus, many of the buyers are willing to cough whatever price is set by Swiss Gold for their products.
Outside Factors (complementary products) – Swiss Gold has achieved the success mark in the diversification of its products with the increase in the clientele portfolio. The company has tapped into the Gulf region and the Asian continent. The possibility if lifting sanctions against Iran on the gold imports is likely to increase the sales of the company and enhance strategic growth. The company is confident that the ending of the sanctions will enable it retains their past clients.
Internal Environment: Strengths and Weaknesses
The analysis of the core and the distinctive competencies of Swiss Gold are essential for this section. The skills of the organization can be seen in the top view of Swiss Gold. The band name and the wholesale perspectives are the distinctive and the core competencies of the organization. Through the use of the VRIO analysis, it can be said that the two competencies enable the company have a competitive advantage and thus are necessary for the direction of Swiss Gold. The rarity of the competencies is that they are no magnitude of gold bar wholesalers in the UAE and the uniqueness of the brand name. The competencies cannot be imitated due to the unique image of the company that cannot be duplicated, and the aspect of being a gold bar wholesaler is expensive to imitate (Maloney, 2008). The maintenance of the competencies is due to their diversity, the active board, and their divided structure of operations. The paper is focused on the competencies that Swiss Gold is the sole distributor of wholesale gold bars in the United Arab Emirates and the use of different trading platforms (e.g. FOREX) to trade for the gold. The first competency is distinctive and core. The second is a key competency as it enables the increase of gold customers and has adequate staff to the asset in the services. It cannot be distinctive as it can be imitated.
The Swiss Gold group has a divisional structure that is the best for an organization of that size with a big portfolio. The managing directors who report to the CEO of the group are in charge of the individual units. The chairman or the CEO of the group is the primary decision maker who makes major decisions impacting on the whole group. Decision making is centralized with only a few instances that guidance and proposals are encouraged o facilitate that process of decision making. The incomplete representation of the organizational chart of the Swiss Gold Group is highlighted below.
The use of the divisional organization is essential for the organization as the units have their specialized departments that facilitate the operation of the business. The functional structure is impossible for the organization due to its size and the expense incurred for such a structure. Swiss Gold is a big organization, and the use of a functional structure would have resulted in many performance errors. The communication of the organization structure is clear to all the internal stakeholders. However, only the white collar workers have the knowledge of this as the causal workers have no idea of the existence and the structure of the organization. The corporate structure facilitates local and international growth.
New divisions can be added to be units of the group with their operations and the department just like the other units. Important decisions will still be centralized and passed through the chairman. The flexibility to expand is in line with the goal of Swiss Gold Group to expand internationally. Similar structures are seen in the organizations like the Swiss Gold Group, large with a big portfolio. The levels of centralization of the company, however, are different from the other groups. To maintain efficiency in the organization, the Swiss Gold Group has ensured to strengthen the powers of the chairman of the group.
The beliefs that are shared in the organization are in the quality, integrity, and trust that the Swiss Gold Group holds for their operations. The organization is profit oriented but also focuses on building the confidence with the customers through the delivery of quality products. The general cultural background of the Arabs is incorporated in their traditions for human performance and inputs matter. The corporate culture respects the cultural diversity and maintains a cultural diverse business environment. The employees at the Swiss Gold are from different ethnic backgrounds, and the size of the organization enables the employing of many cultural diverse employees and workers. The management of the organization has beliefs cultural diversity allows bringing together of ideas from all the fronts. The corporate culture is compatible with the cultural belief of the employees to some extent. Due to the diversity of the employees, it is not likely that the compatibility be 100 percent. The organization maintains high regards for the environment, sustainability and ensures that the environment is protected. The company expansion strategy will enable its presence be strengthened in the international markets.
Marketing– The primary marketing tool for the Swiss Gold DMCC is the aspect of it being the sole wholesale gold bar distributor and the different trading platforms for the gold. The platforms for trading with the gold are one of a kind in the UAE and include the FOREX trading using the gold in the foreign markets. The trading platform enables the doing away with cash and equating the value of the gold with the money needed for the trade. The gold bars from the Swiss God DMCC are unique from that if the competitors and it they are sold at wholesale. The marketing can be seen in the social media and the websites. The advertisements are aimed to give the customers a view of the quality of the products. The marketing is outsourced to an outside provider which makes use if the inputs from the employees of Swiss Gold.
Marketing Mix– There are different sizes and weight of gold produced by the Swiss Gold DMCC. The gold is of high quality with increased inspection to ensure that they are pure ad meet the required standards (Maloney, 2008). The gold are sourced from some suppliers and hence the difference in price is seen in the products if the company. The pricing of the gold products is high due to the value of the commodity. The gold products are available in major retail outlets around the UAE.
Research and Development (R&D) – Swiss Gold group has the R & D department to deal in product research to enable them stay ahead of competition. Research and development are essential for the gold market as the purity and quality of gold products determines the amount of sale and the attractiveness to the customers. Objectives of the R & D are relevant and up to date products. The investments in the R & D have seen the company increase their profits, market value, and the reputation of their products. The Department of R & D enables the organization comes up with sustainable environmental solutions.
The distribution of the gold bars includes the importation of impure gold from the manufacturers to the plants. The purification and the shaping of the gold are done in the different plants of the Swiss Gold. The cost of distribution from the European suppliers is easier and hence less costly for the organization. The Swiss God DMCC ensures that they invest heavily on the timing and delivery of the products to the clients and the UAE. During the importation of some of the gold materials, the organization ensures that they follow the regulations and policies due to the critical nature of dealing with suppliers. The time of the shipment is dependent on the ratio of the purchase order with the availability of the materials. The inventory is managed by the purchasing and the warehousing employees with requests made when the inventory is low. The use of market orientation is seen in the company due to the localizing and the demographics of the target customers. The importation process is prone to risks of hijack due to the high value of gold, therefore, hampering the shipments. The import fluctuations marked the profits and costs projections difficult for the organization. The management is informed of the raw materials and the politics of the country of supply.
Human Resources Management– The human resource at the Swiss Gold is always on the move to look for the best candidate to recruit for the organization. The organization values experience as seen in their culture. The department also looks for employees who have an interest in building the trust and the relationship with the customers. In the end, the Swiss Gold looks at hiring the personnel who will implement their mission objectives and ensure sustainability with the adoption of their policies (Maloney, 2008). The recruitment process sets the tone to be used in environment conservations by motivating the employees to adopt the ethical behavior. Upon recruitment, the employees receive their training through in-house and outsourced training of the lower management and upper management respectively. The turnover rate is low due to the demand for the Swiss Gold jobs. The employee’s diversity is essential for the organization as seen earlier. The motivation of the employees is through the incentives.
Information Technology– The information technology in the organization is not that advanced. The company does not rely heavily on the use of advanced technology in their operations. The use of the web 3.0 facilitates the company’s selling, purchasing, and selling process. The uses of the computers are the most relevant technologies for the business. There is not much development in the technology for the business. There is a lack of the integrated technology for the company that may result in the reduction of the profits and revenues for the company. The performance of the organization is, therefore, then the potential of the company.
· Increase market share by strategic alliances
· Use brand name to tap into new markets
· Build a strong global presence to enhance global markets
· Increase their IT and tech logical perspectives
· Maintain strong management during competitions and sanctions by the Iranian government
· Decentralize management to facilitate division sharing
The first strategy recommended is to strengthen the market share and strengthen its balance with the other gold sellers. To increase the market share involves penetrating into the in-depth market share that retailers have taken. The company can seek to extend by partnering with gold bar retailers to capture the customers directly. The second recommendation is to use the brand name of the whole group to penetrate into other new markets. The Swiss Gold brand is well known throughout the world due to its diverse business opportunities. The Swiss Gold DMCC can take advantage of the same to use the group’s name to advance its operations.
Maintaining the strong management techniques is also essential for the company to be safe by the increased competition in the foreign markets. Competition in the Europe market for the company has been on the rise, and the use of the firm management is essential for the stability and growth of the company. Strong and efficient management is critical in such a situation for the company and the management should not fall short as this will affect the whole organization. The lack of sufficient IT systems is a weakness for the company. It should be ensured that the company provides an increased IT system through investment. Taking an immediate initiated to restructure their IT systems is essential for the company. Changing this weakness to be strength is necessary for the company. The visions of Swiss Gold to go global have to be achieved in the process. The lack of a global strategic position prevents the company from doing so (Maloney, 2008). As a result, the common has to build on their name and operations to accomplish global recognition. The decentralizing of the organization is the final recommendation. Efficiency is hampered by the centralization of the management. The slowing down of the decision-making process prevents progression. To maintain a competitive environment, the company has to decentralize its operations.
The major implantation of the company is the adapting of the IT system in its operation. The management has to ensure that they allocate enough funds for the adoption of a more technological business environment. The company can seek the service of Oracle for the electronic registration and service delivery process. Swiss Gold can sign a contract with the provider of the service to ensure quick and efficient implementation of the IT solutions. Once this happens, the management should ensure that they communicate the organization changes to the respective units and the employees. The staff has to be trained in the use of the new technologies implement in the company. The identifications of the economy, regulations, and populations are essential for the penetration into other markets.
An action plan is critical in acquiring the information for a particular market. The penetration process can be by facilitating the legal process, highlighting a marketing plan, or signing agreements with the local retailers in a given market. Maintenance of efficient and stable management will enable the withstanding of competitors and reassure the employees about the visions, mission, and goals of the organization. The strategic alliance with the retailers is an easy implementation and can be achieved through agreements and networking. Building the global presence will entail sponsoring huge events that have global presence and formation of international networks.
Evaluation and Control
The limited use of technology in the Swiss Gold hinders sufficient evaluation and control due to the limitation of performing reports through graphical and digital analysis. There is no real-time business analysis and evaluation. The manual system is unreliable and can be easily manipulated. It is hard for the preparation of a business report that integrates the divisions’ performance. Moreover, sorting through manual reports is time-consuming and tiresome. Limited time hinders efficient control due to the use of the manual systems by the company. The activities of the organization are evaluated by the use of budgets and monetary allocations. The performance and the benchmarks enable the setting of the budgets for the different units of the organization. The performance is monitored by the board of directors and the top management using the business and departmental reports. The implementation of the electronic system will enable real-time monitoring of the employees and all processes of the organizations, information sorting will be fast and convenient, and response time by the management will be fast.
Maloney, M. (2008). Guide to investing in gold and silver: Everything you need to know to profit from precious metals now. New York, NY: Business Plus.