Ace Hardware Store Entering Bahrain Market Essay Example for Free

complete ironw atomic number 18 Store Entering Bahrain Market EssayWe open endeavoured to emphasize on the suggested strategies which leave alone each(prenominal)ow star ironw ar to consider venturing into the Bahraini merchandise. at that placefore with the information get outd and composed, we have the opportunity to examine com custodyts of wholeness computer hardware which allows us to noblelight differentiate issues faced. Organisations need to recognize and meet demands of the exterior federal agents which include threats and opportunities to uphold their com kissitiveness in the merchandise. Henceforth, the intention of this report is to essentially check over and assess the aspect of bingle hardware Corporation in relation to expansion and growth in the Bahraini securities industry. . 0 Introduction Bahrain is one of the incomparable countries in the Middle East. It alone has a stable economic climate and accepts foreign investment with a highly c hampionship friendly culture therefrom making it an efficient realm to start condescension. Introducing Ace Hardware to the Bahraini merchandise because of a numerous aspects frequently(prenominal) as retaining 100% foreign self- result and low taxation, provides a free, open and transparent environment that fosters growth, legal system protects companies rights, while their free market environment allows businesses to thrive. . 0 assiduity craft translation The nail push down Hardware Corporation is a well- cognize wholesaler of hardware and home-related products the organisation religious offerings include safety equipment, plumbing products, out gate vogue living products, pet supplies, door handles, electrical tools, lawn and garden accessories, furniture, home appliances and many much than. pass has been affianced in the wholesale hardware business and has offered dealerships to retailers of hardware and associated items since the company in Illinois commenced incorporating in 1927.To daytime, wizardry is the largest retailer-owned make and vibrant leader in the convenience division of the hardware business in terms of wholesale and retail gross sales and strength of the brand. 3. 0 bon ton description According to (Irwin, 2012), Ace Hardware ranks highest in satisfying home improvement retail store customers for a sixth consecutive year fit in to the J. D. Power of Associates blank space improvement Retail satisfaction Study of 2012. This measured customer satisfaction with home improvement retail stores, based on the executing of five dollar bill factors merchandise, price, sales staff, sales amp promotions and store facility.The organisation emphasizes on service and modern retailing techniques and has protagonisted local anestheticly owned operated champ retail stores inhabit intense competition from Home computer storage and Lowes. In improver, it provides numerous value-added work such(prenominal) as marketing, adver tising, merchandising and design services to its retail members. sensations 4,600 stores in all 50 states and more than 60 countries generate annual retail sales of some $12 billion (ACE Hardware Corporation, 2012). 3. 1 shell of businessRetail Sales ACEs 4,600 stores in all 50 states and more than 60 countries generate annual retail sales of approximately $12 billion (Ace Hardware Corporation, 2012). Dubai, Shanghai, Canada etcetera Applying a Teradata warehouse permitted 2,500 Ace Hardware retail stores to transmit daily a point of sale (POS) proceeding detail. According to (Murphy, 2007), Teradata is the world leader in data warehousing solutions with a proven track record in retail, as we discovered when we sought vendor references.That experience, including customer relationship management, category management and business intelligence, make Teradata the right choice for Ace Hardware. Basically, Ace relies on active warehouse data from Teradata, which has delivered a sin gle repository for retail and wholesale sales, acquire, customer information, financial data and inventory to essentially support large varied workloads. Wholesale In addition to its 14 retail support centres in the join States and freight forwarding operations on the West Coast and East Coast, ACE features three outside(a) distri scarceion centres in Dubai, Shanghai and Panama.The international distribution centres provide 1. Easier access to core stock of leading brand products and certified ACE products through their global supply warehouse 2. Online ordering systems 3. In-market fully operational support offices. It is very useful to have Ace as a leave-takingner for this type of market. It is pleasant to be able to replenish your inventory on a weekly basis, which makes it easier to control. Our goal is to be a one stop shop for everything in your home, and we endure do that with Ace. The people in the community can buy the Ace brand with confidence because its proven t o be a good character product. Jorge OssaCommercial Manager, Cemaco Guatemala (ACE Hardware Corporation, 2012). ACE has formal an accurate and demonstrated operating model for effective and efficient distribution allowing ACE Hardware retailers the wholesale turn a profit they require to be triumphful and profitable. Below are the some of the wholesale favours available for ACE Hardware store owners- * Lowest cost of goods * Named 1 electrical distributor according to Home Channel News in 2009, 2010 and 2011. (Home Channel News, August 2011) * 1 in wholesale sales at $3. 5 billion (Hardware Retailing, celestial latitude 2010 ) * The combined buying power of over 4,100 locations To support the growing number of international ACE retailers and leverage international wholesale opportunities, ACE opened the Ace Global Distribution (ASG) warehouse in Shanghai, China 2006 (ACE Hardware, 2012). 3. 2 Legal Structure Each Ace Hardware store is individually owned and operated by local entrepreneurs hard-working, passionate business owners who are involved with and, many times, exist in the communities where their stores are based (Ace Hardware Corporation, 2012). . 3 History ACE Hardware organisation was founded when Richard Hesse, Frank Burke, Oscar Fisher, E. Gunnard Linquist, William Stauber unified to form a purchasing and advertising enterp try out among their Chicago-area hardware stores. Moreover, their combined buying power allowed the store owners to negotiate demean prices on merchandise acquired from wholesalers. therefore, embracing the ACE name in 1927 and in incorporatedd the succeeding year. Frank Burke served as president of the group and was succeeded by Richard Hesse in 1930.Over the next deuce years the firm progressed into a hardware organisation, obtaining callly from producers and storing merchandise in its own warehouse in Chicago. This outline allowed ACE to further reduce cost by removing middlemen wholesalers (Anonymous, 2012). More over, during its graduation half-century of operation, ACE was fundamentally a conformist wholesale group, and its profits were distributed equally among shareholders. The companys low-priced purchasing and distribution procedures quickly enticed forward-looking employees and franchisees.By the mid 1930s, the organisation had 41 members and sales of more than $650,000. Throughout history, ACE has accomplished to solidify their identify as one of the strongest and leading competitors in the hardware perseverance. 3. 3. 1 Mission The mission of the ACE team is to ensure that their customers are satisfied. According to (Anonymous, 2012), When something goes other than the way it was planned, we do everything in our power to make it right. You have the ACE promise on that. In relation to corporate social responsibility (CSR), ACE Hardware has partnered with the CMN hospitals to give back to communities.The ACE Foundation has raised over $50 million since 1991 to help sick and nee dy children through partnerships with Childrens Miracle realise profit (CMN) hospitals. ACE a same(p) supports the American Red Cross Natural Disaster Relief Fund through donations of work gloves, shovels, mops, bottled water and more (ACE Hardware Corporation, 2012). Once again, ACE is proud to serve as a sponsor of the Champions computer programme. The retail stores and ACE foundation organise a myriad of fundraising initiatives, many of which our generous customers are wel bonk to get involved.Furthermore, these fun and unique experiences raise much-needed funds that essentially dissolving agent in the power to change lives and treat sick children at the Childrens Miracle Network Hospitals around the United States. Miracle Jeans Weeks is a program where employees throughout the company wear jeans during the companys five designated Miracle Jeans Weeks each year. Furthermore, with a cost of $1 per day and almost 900 people on campus, its never in doubt that thousands of dolla rs are raised yearly from this enterprise. 3. 3. 2 Goals amp ObjectivesOne of ACEs goals is customer satisfaction as they value their customers. We know our customers want to be spoken to in a more personal manner, rather than in a blast says Rich Neal who is ACEs one-to-one manager. So we have robust analytics team, and follow-up purchases with thank-you emails and direct mail, broken down into eight categories, including grilling and lawn and garden (Mahoney, 2011). Therefore, for ACE Hardware customer satisfaction isnt just an idea, its basically the entire purpose. According to (Marketing charts staff, 2011), J.D Power and Associates (2011) U. S Home service Retailer Satisfaction Study, Ace Hardware ranks highest in satisfying home improvement retail store consumers, accomplishing a score of 786 on a 1,000-point scale, for the ordinal consecutive year.. The study, now in its fifth year, measures customer satisfaction with home improvement retail stores which is built on the bo ilersuit performance on five aspects staff and service store facility (including merchandise and cleanliness) merchandise (product information details) price sales and promotions. 3. 4 Company StructureAces Board of Directors establishes guidelines for Ace management. There are between nine to 12 director positions. Ray Griffith assumes the role of president and CEO and David Ziegler as the chairman of the board. 4. 0 Ace Product digest Ace hardware store offers an extensive throw of more than 30,000 quality household products from kitchen mops to garden furniture and camping equipment. Aces product range consists of the everyday items such as sponges and shower curtains as well as occasional purchases such as wall paints and lawnmowers. Aces Products are categorised intoOutdoor Lifestyle Ace has a wide range of outdoor lifestyle products to drive distinct tastes and needs -Outdoor furniture -Camping -Barbeque -Pools and spas -Outdoor constructions Gardening a bear upon selecti on to meet outdoor gardening needs. -Gardening tools -Seeds -Indoor/outdoor plants -Pots and vases -Watering -Fertilizers and chemicals -Landscaping -Fencing and edging -Water features -Garden decor -Garden lighting -Shades and turf DIY With the widest product range, competitive prices and informed staff, ACE is the choice for D. I. Y. enthusiasts. solely ACE stores offer a wide selection of Tools, components and essentials for DIY as well as the biggest range of world renowned brands in power tools. ACE also provides free advice and solutions on any hardware or D. I. Y problem as well as free repairs on power tools under warranty. -Power tools -Hand tools -Hardware -Fastenings and element -Tool Storage -Timber -Electrical -Security Equipment -Safety Automotive Ace has a wide range of quality automotive products. From accessories, cleaning and car care products, sunshades, 4X4 accessories and emergency kits to enhance the looks and performance of your vehicle. 44 adventure -Car Cle aning and Maintenance -Car Interior -Emergency and Safety Painting and Decorating Ace offers more than 16,000 colors of paints customers also can mix their own colors to come up with their ideal paint pallet. Ace provides all the necessities needed to complete the process of decorating homes. -Paints -Paint Equipment -Adhesive and fillers -Wall covering -Arts, crafts and hobbies Home ware ACE home ware has a complete range of lifestyle accessories all under one roof. -Cleaning, Laundry -Storage, Packaging -Living -Bed and Bath -Kitchen -Electrical -WellnessPet Care ACE offers a range of pet supplies and related pet products and accessories catering to dogs, cats, birds and fish. Ranges vary from pet food, toys and other essential pet care accessories. serve Rental service The Ace Rental congeal offers a wide variety of equipment for rent on a daily, weekly or even calendar monthly basis, great for items required for few usages or just to try them out before deciding on the purcha se. All rental items are well maintained with expert customer service. Customers can rent the followers items- 4 Burner Gas Barbeque Upholstery/Carpet Cleaner Generator High Pressure Cleaner Port-a-cool Ladder 16ft Multi-master In store services -Assembly Installation/key cutting -Automotive chip key cutting- Pipe Cutting and Threading -Blade sharpening Screen Repair -Computerized paint color matching- Small Engine Repair -Delivery- Special Order Services -Glass and acrylic sheet cutting -Glass repair -In store lock servicing 4. 1 Customer profile/demand analysis Aces vast range of products and services encourages a diverse range of customers with different needs and wants. Hardware stores in oecumenical often prioritize their target market as home owners as the products they offer are mostly for household use.Ace is more than just a hardware store that just sells tools for men, its a superstore that attracts both men and women who are making decisions in the appearance and uph olding of their homes. Loyal customers As part of a customer retention strategy the Ace marketers have foc utilise their precaution on customer insights, by creating a card-based loyalty club the Helpful Hardware Club (HHC) customers at the store can sign up to the program making them eligible purchase discounts and special offers. Ace targeted the Lifestyle ingredient to boost their retention program causing evenues to rise 5. 4 percent as lapsed customers were enticed by discounts to return to their local Ace stores. (Nielsen 2009) Aces product portfolio also consists of outdoor leisure activities targeting consumers that are not necessarily home owners or gush decision maker with the household. Products for occasions such as camping or barbequing target a segment of active leisure consumers. This segment broadens ACEs target market outside home owners. The demand is not only when in home improvement products but also in the items needed to care for them.This demand has obli gate manufacturers to introduce a large range of new cleaning products which targets upscale shoppers who desire convenience and a more natural, non-toxic product. Current market Bahrain is regionally known for its cosmopolitan lifestyle suggesting sophisticated consumers, with their relatively high purchasing power these consumers have a high exitingness to dribble especially on premium products and brands. 4. 2 Competitive situation (Ellen 2010) Ace Hardware Corp the largest retailer-owned cooperative in the hardware industry by sales and the second largest dealer-owned cooperative in the United States.Aces innovation is what led them to establish the strong position they hold today. With over 4,000 stores in 60 different countries ACE hardware were stratified 8th in franchise directs top 100 global franchises (Francise Direct 2012). Ace hardware store faces intense competition deep down the United States. The US home center, hardware store and home improvement retail industry includes somewhat 23,000 hardware stores and home centers with combined annual tax income of well-nigh $150 billion.The home center segment of the industry is highly concentrated the top four companies account for more than 90 percent of segment revenue (Hoovers 2012) The success of individual companies depends highly on competing low-cost purchasing, effective merchandising, and competitive pricing. The top three competitors of ACE are- Lowes Companies Inc. The Home Depot Inc. Do it Best Corp Despite the intense competition in their internal market, ACE has an opportunity in Bahrain as the Hardware store industry is not as well developed leaving space for entry in to the market.However, there will of course still be some potentiality Competitors in Bahrain that Ace will have to face- Aces direct competitor in Bahrain will be Manazel Hardware store Manazel first opened its doors in October 1995 at Salmabad, Bahrain. It is a family owned business based in Bahrain. Carrying more than 50,000 products ranging in over 20 categories, some of which include Furniture, Home ware, Hardware, Bathroom amp Plumbing accessories, paint and Sundries, Outdoor Living, Garden Furniture and Accessories. Their Materials are sourced from all around the world to provide everything for your home and garden. Manazel 2012) Ace could initially face challenges competing with Manazel due to it be a locally based company, depending on the loyalty of their consumers it could be difficult in convincing them to switch to ACE. Ace has the reinforcement of being a well- effected global brand and with the high rate of expatriates in Bahrain they may naturally prefer to switch to a more recognized brand. Ace will also face competition amongst the small local hardware and tool stores. These stores are popular amongst price sensitive customers. 5. 0 Environmental factors 5. 1 Host Country Business ClimateBahrain offers very distinctive traits in the Middle East. It enjoys a stable economy cl imate and competitive costs. It has an amazingly business friendly climate which is an attraction for ACE and other companies to do business in this surface area, it has an excellent regulatory framework, and supportive political relation policy (Najjar 2011) The Host country for ACE Hardware is Bahrain, Bahrain is an Arab country with a total land Area of 712 square kilometres, a nation of about 1,234,571 (end of 2012), out of which 666,172 are locals, according to the interchange bank of Bahrain.The main towns in Bahrain are Manama and Musharraq, the climate is mainly very hot and humid, language is mainly Arabic, but English is widely spoken. The measured systems used include 1dhara=48. 26 cm, 1 rafa=254 kg, the straight-lacedty is the Bahraini dinar (BD) = 2. 65 USD, the Time is 3 hours ahead GMT (Bahrain Basic Data 2012). Bahrain is an Arab country and has the monarchy system, the ruler, king Hamad bin Isa al-Khalifa is evaluate to be secure for some ime to come the Al- Khalifa family has control over most of the executive branches of government and legislature remaining weak. There will and always be primary tension over economic and financial inequalities, with the halting pace of political liberalisation of sectarian discrimination. truly GDP growth for Bahrain was expected to thudding down to 3. 1% in 2009, as mainly international demand for Bahrain exports is weakening, but was expected to recover to 3. % in 2010 (Bahrain economy, 2009), and is expected to rise up to 4-5% in 2012 due to increases in crude oil return, manufacturing and government spending according to the Economic Development Board (EDB) (Andy 2012). Bahrains business climate in 2007 attracted almost $1 billion worth of investments in new projects in 2007 as reported by Dr Hassan Fakhro minister of Industry and Commerce, He also went ahead to mention that new investments in the new projects were worth 373. 3m Bahraini currency, which is about $987. 6 million and these new p rojects also created about 13, 536 jobs in the country (Middle East Financial News 2008). Oil production output from Bahrains single aground field is in decline however, and the monarchy government is aware of the countrys vulnerability to changes in oil prices globally, with oil being the study source of government revenue for the country accounting to more than 70% of the economy.The economy of the country also relies heavily on goodwill received from Saudi Arabia, which runs a large offshore oil field whose production it shares with Bahrain. All these limited resources has made Bahraini government to have the strategy of diversification in order to prosper, increase the role of the cloistered sector and provide a wel culmination environment for foreign investment. FIGURE 1. 0 BAHRAINI GDP 2001-2012BAHRAINGDP GROWTH 2001-2012 200120022003200420052006200720082009201020112012 4. 6%5. 2%7. 2%5. 6%7. 9%6. 7%8. 4%6. 3%3. 1%4. 5%1. 8%2% SOURCE global finance Bahrain Country Report 5. 2 SWOT ANALYSIS Strengths ACE hardware is a strong brand both across the USA and the world stage, with more and more expansion into the global markets into several countries across all the continents of the world.ACE has the resources and ability to pursue growth in multiple directions, with the ACE leadership team making a smart decision of focusing on their paint production, which has made them gain a huge customer base and customer loyalty (Bueno 2012). In 2010 ACE hardware has generated in excess of $3. 45 billion in wholesale and retailers enjoyed the added bonus of collective buying power at this volume by getting a decreased cost in goods, which has built the basic foundation for a more profitable option (ACE 2011).ACE produces many DIY products and many changes have taken place in this market over the last 85 years, ACE ownership however still remains the on top in customer satisfaction according to Business week and was ranked highest in customer satisfaction Among home imp rovement stores four years in a row (JD power and Associates) ACE hardware also enjoys major success in the market share with the help of top of the range advertisement and reduced goods cost, it has slowly established itself to be a major player in the global market for hardware products.ACE also expanding its wings to get a piece of the business boom, and with the benefit of an established brand name, it will be relatively easy to penetrate under developed markets as more businesses would want a merger with them as foreign to its rival companies. ACE is a sophisticate and established brand worldwide, and has adopted the new technologies as they come which has better-looking the company a competitive advantage as they are more organised and technologically more advanced, which has led to reduction in production costs for the company.The expansion of ACE into the global market has seen it gain market share, more so than their competitors such as Home Depot, Lowes etc. Weaknesses ACE hardware has relatively small stores, compared to their rival companies like Lowes, Home Depot and Menards on selection ACE Hardware in 2008 reported a net income of $10. 8 million for the first quarter of 2008, which was a decrease as compared to 2007 when they reported $14. 1 million which was a $3. 3 million decrease. The company also reported earning s before inte loosenings and taxes of $13. million in the first quarter of 2008 as compared to $29. 2 million in the first quarter of 2007 (9) ACE hardware has encountered losses resulting from physical damage to bombdown of its computers in the European market, which has led to replace damaged computer hardware, the reinstatement of lost programs or Data and also had to increase working costs as a result of the problems (10). Opportunities Bahrains financial freedom ranking is 77. 7, making its economic system the Tenth freest in this years Catalog (2012).Its overall ranking is 1. 4 points high(prenominal) than last year, wit h upgrades in trade freedom investment freedom, work freedom, and freedom from data file crime error. Bahrain is rated 1st out of 17 nations in the focalise East/North African-American area, and its financial freedom ranking is well above the world number (Bahraini economic development Board, 2012) from the perspective of Ace this reduces business constraints giving them the freedom to commercialize their brand and reduces limitations on investment.Situated near commercial establishments in the disjunction with a causeway relationship with Saudi Arabia and the rest of the GCC, Bahrain is seen as a gateway to the Gulf, an industry of over 100 thousand individuals. Bahrains variety and openness keeps presenting opportunities for exporters. It has the most varied economic system in the Gulf Bahrain does not currently have a competitive hardware industry with only a few entrants and one major Hardware store giving ACE the flexibility to enter and the means to operate however they ch oose.The hardware market ACE is involved in is a highly competitive market, it takes a lot of marketing research by ACE and expensive research and new technological accommodateations for the company to stay ahead of competition, couple with the reduced purchasing power of consumers due to economic downturns globally have been detrimental to business for ACE. Threats The law requires that you have a local partner who maintains most majority elicit and can therefore manage the company and can close it anytime he wishes.The local partner, be it an organization or an individual, does not need to give rise to the start-up financial commitment or take part financially at all. (Bahrain, 2010). This could mean lack of security for ACE as there is the chance of being closed down with no warning or notice. The changes in labor Laws and regulations constantly by the US and other countries have been detrimental to their expansion, other interior(prenominal) and international factors also hav e to be considered by ACE before entering into any market in any country, such as culture, corporate social responsibility obligations are all external factors that ACE has to consider.The process of opening a business in Bahrain is complicated and economically dangerous, significance that local information is essential. You must also seek advice from a good attorney from the beginning. A knowledgeable attorney will provide information to you through the subscribe up complications and his help will be outstanding in defending your interests. This is applicable whether you are starting a moderate shop or a big enterprise (Bahrain 2010) The current Political unrest in Bahrain creates an unpredictable business environment.If the unrest becomes worse this could have major effects on Aces business activities in the region, currency fluctuations and could see reductions in the amount of expatriates present in Bahrain causing Ace to lose a large part of their target market. 5. 3 Governme nt constraints in Bahrain Economic growth The economic growth is for Bahrain is likely to slow down in Bahrain it went down to 3. 3% in 2010 as regional growth in the country as government finances are getting squeezed.Local consumption of private homes and offices is expected to slow sharply, with no a real autocratic growth in the employment sector. However government consumption growth in Bahrain is forecasted to also slow down. For ACE however the major demeaning factor of business entry into Bahrain would be the limited fiscal constraints in the country, as well as the subdued outlook for global direct investments head for the hillss. And the demand for exports and of goods and services is also forecasted to decline, ACE might have a hard time penetrating into the Bahraini market (Ace Hardware 2008).Economic policy An advantage for ACE going into the Bahraini market is the countries determination to move away from the oil sector. The government is determined to stimulate the private sector growth and foreign investments, and address high unemployment problems (Bahrain News Agency 2012) this would be an advantage to ACE as the government will give them an advantage of being accepted into the country without many business constraints. They can be assured of government support which is a large determinant of business success or failure for any business going into another country.Inflation and the exchange rate Consumer price inflation is expected to moderate in the climax years because of slower domestic demand growth. But with a relatively strong currency against the Euro and the Dollar inflation is expected to slow down an average of 1. 8% in 2009-2010. The Bahraini government is intending to enter into a currency agreement with Saudi Arabia, Kuwait and Qatar, and with the UAE, which has pulled out though, and the government and the central bank of Bahrain is expected to maintain the dinars value and peg it at the rate of BD0. 67=$1 that has been in plac e for 3 decades (Bahrain News Agency, 2012). Setting up a business in Bahrain For ACE hardware it would be good news for them to know that Bahrain is ranked first in the Economic freedom index finger in the Middle East and North Africa (MENA) region, and is seventh overall globally according to the Fraser institute Report 2012. The report by Fraser classifies these countries by using themes such as government volumes, legal system, and intellectual property rights security, accessibility to sound funds, freedom of international trade and organization recognise, manpower and companies.All these factors are important criteria to be considered by ACE before going into business in Bahrain. 5. 4 PEST ANALYSIS Political Legal Environmental Laws Bahrain has set up a strict law on polluters as fines of up to $133,000 are issues under Bahrains new environmental protection law, this is the first law of it s kind related to anti-pollution in the Persian Gulf state. This law covers everythin g from car emissions, noise and workplace pollution, as well as handling and disposing of hazardous squander materials and chemicals.This is in accordance with what ACE has to achieve to be successful in Bahrain by practicing Corporate Social responsibility (CRS) to maintain the environment in Bahrain or risk serious government and legal issues (Pittsburgh Post, 1996) Stability of the Government Bahrain has entered into an era of instability due to a combination of the Arab spring youngly, longstanding local grievances, the competition of regional powers and other external forces. The solution to this problems can be dialogue between the ruling Al-Khalifa Family and all opposition parties.The crisis has however slowed down in recent times with more and more dialogue and compromises being reached between both parties (Bahrains Quest for Stability 2012). Economic GEP growth in Bahrain In 2004 the Bahraini GDP has been reported by the ministry of commerce to have grown by 5. 2% from the previous year, this has been largely due to increase in foreign direct investment flow (Middle East 2004) and has been growing ever since with a reported GDP of 2. 1% increase in 2012. Currency The Bahraini currency is the Dinar and at 0. 67 Dinar to a US Dollar it is one of the strongest currencies when it comes to exchange in the World. Consumer price inflation is expected to moderate in the coming years because of slower domestic demand growth. This for ACE can only mean good news as it will be a positive currency to work with and no inflation worries that have to be considered by ACE. Social Population distribution in Bahrain The Bahraini age distribution has been as of the year 2010 the kingdom was 1,234,571, part of which 568,399 were locals and the other 666, 172 were non Bahrainis. This from 2001 the population was 650, 604, this is an increase of 89. %. However, the population of the locals has decreased from 2001 to 2010 reaching 46% from the previous 62% in 2001. The proportion of the population of Bahrainis in the total population during the period from 2001 to 2010 decreased, reaching 46% in 2010 while the corresponding figure in 2001 was 62%. The percentage of non-Bahrainis increased 54% in 2010 while it was 38% in 2001 (Census, 2010). This shows an increased number of expats coming into the country which will mean for ACE that products should not only be made to suit the local citizens but the majority foreigners, which means overall business strategy has to change.Religion and Language The official language in Bahrain is Arabic however English is widely spoken mainly in business sees and other social interactions. The non-Bahraini in the country mainly speak Farsi an Iranian language, or Urdu which is a Pakistani language. The main religion in Bahrain is Islam, which is the 2nd largest religion in the world, Muslims in fast for a month every year in the month of Ramadan. The Bahrainis though make use of both the Islamic and western calend ar but mainly use the western calendar for business operations. Business meeting etiquette Appointments are necessary, morning meetings are preferred.However meetings are not advised during the months of August and July because most Bahrainis travel out the country when the heat is at its worst. , they are quite time apprised, so arrive at meetings on time. Personal topics should generally be avoided unless the relationship has developed or there is need to treat matters confidentially. Bahrainis usually have an open door policy, so meetings do get interruptions. Business meetings also start after a long talk about health, family etc. Business Negotiation Etiquette The building of trust is important since trust is required in order to conduct business.Bahrainis are very time conscious and time driven, the actual meeting is more important than the timeliness or outcome. Bahraini organizations are hierarchal, the highest ranking employee or worker reaches decision. Decisions are top down and lower level employees usually have no say. Decisions take a lot of time if you try to rush it will be perceived as rude and disrespectful. Technological The economic system in Bahrain relies upon intensely on innovative petrochemical technology, and many Bahrainis have had or are getting specialized prep at several universities all over the country.Technology is just coming up in Bahrain with many projects being undertaken in recent times, but perhaps the most important is the Bahrain Green Tech EXPO which is dedicated to the green consumer products. Due to the high demand for environmental protection globally, Bahrain has taken this as the only business to business trade show focused specifically on ECO friendly consumer products. 6. 0 Business Strategies 6. 1 Product /service positioning placement is what the customer believes about your products value, feature, and benefits, it is a coincidence to the other available alternatives offered by the competition (Jackson, 2012).Some basic strategies include- By connect or benefit This is the most frequently used strategy in positioning. In this case, Ace hardwares products are mostly house used products, and the benefits they can give to the customers are the after service, and the quality. The after service they give is mostly repairing, assembling and delivery. Level of service and quality of a product offering are the main influences of developing a strong brand image. By user Customers often choose brands that identify with their own self-image. Ace should position itself to suit the image of the end user.Therefore ace should focus on the wants and needs of their target audience and how they perceive themselves and the brand. By competitor Competition wouldnt be much of an issue for Ace since they would be entering a market that is not fully developed in Bahrain with few competitors. But they should remain aware of new entrants which are always a possibility and they need to be aware of the cha nges that may occur. By price or quality Price and quality are directly related in minds of consumers, People are willing to pay premium prices for premium brands that are have high quality.It is very important for Ace to identify where they want to be placed on the pricing matrix shown in figure 1. Ace product offerings vary in brands therefore prices will also vary depending on brand and quality. 6. 2 Pricing strategy Because of Aces diverse product range of brands they would need to use more than one pricing strategy. Using the pricing matrix above ace could use this as a guidance to set appropriate pricing strategies. amplitude Pricing One pricing strategy suitable for Aces different brands is premium pricing. Certain brands offered by Ace are luxurious brands with high quality and high price.It is clear on the matrix for these products Ace should use premium pricing which allocates high prices to those brands Economy Pricing Ace also offers products at more affordable prices h owever they may have lower quality then premium brands. These types of products attracts customers that are not willing to spend excess amounts of money and would rather spend less for less quality Competitive Pricing ACE could also use competitive pricing strategy to set benchmarks on their own prices. This strategy is most effective when there are limited competitors in the market which is the case for ACE and Manazel.Ace has a clear advantage over Manazel as it is a globally established company enabling them to set their prices slightly higher than Manazels. Estimated Selling Price The estimated selling price for ACE hardware products in Bahrain would have to be set under consideration of several factors, such as the GDP of the country, the purchasing power of the country, the competitor prices and the strength of the Bahraini currency The GDP is the value of all final goods and services produced within a nation over a period of a given year.The Gross domestic products (GDP) of B ahrain is the lowest in the Middle East with a reported $32 billion in 2011, however when it comes to consumer purchasing power of Bahrain, it is ranked fifth in the Middle East with a reported $27,900 in 2011. ACE can base its pricing on this and compare to its most similar market which is the UAE which is ranked second on the purchasing power list in the Middle East with $48,800 in 2011 (Index mundi, 2012) The Bahraini currency is a major factor for position prices, comparing to the UAE market which is the closest to Bahrain both geographically and economically 1 Bahraini Dinar = AED 9. 7 so prices can be higher for the Bahraini market considering the difference in currency strength. Bahrainis live a very cosmopolitan lifestyle and would be prepared to buy from expensive and established brands (Numbeo, 2012), which will mean ACE, shouldnt face many issues setting medium to high prices in Bahrain. But for the large number of expats in Bahrain ACE has to adapt itself due to the tar get market it has set for itself when setting prices. Expats are genuinely not price sensitive when it comes to purchasing from known global brands as they capture it easier to trust brands they are familiar with.The most important factor however is comparison of process with its main competitor in Bahrain which is Manazel this company has built its write up in Bahrain as one of the best Hardware stores and offers discounts and promotional vouchers to loyal customers (Manazel, 2012) which will mean stiff competition for prices for ACE. However, due to lack of information on actual goods prices for Manazel, ACE can do further research and sets it prices on information found. 6. Distribution and logistics Ace products will be available to customers through two sources Retail sales as many of its branches worldwide also provide retail shops, similar shops should also be provided in Bahrain in different major cities, to make the products more accessible to customers in more varieties, and as shopping is part of the Bahrainis past time this will be a major attributor to its overall sales. It will also increase overall brand popularity of ACE in Bahrain.Online store catalogue ACE provides this service for many of its branches in different countries worldwide, but as internet commerce is not popular in Bahraini ACE should not expect major traffic on these online websites. Ace currently has distribution centers located in various parts of the world to enable more efficiency for their global stores at different pin-points. This way transport costs can be cut as well as time on delivering inventory. The closest distribution center to Bahrain is currently in UAE being operated by the Al Futtaim group.Ace can extend their current agreement with Al Futtaim for them to deliver across to Bahrain and take care of their inventory as well as the UAE. 6. 4 Promotion and Advertising Promotion ACEs competitor in Bahrain Manazel offers various promotional vouchers and discounts t o its customers, should be a model ACE will focus on that will help it gain more popularity with customers. Coupons, discount vouchers, loyalty cards should all be included as promotional tools by ACE and all promotional activity should reflect the goal ACE wants to be perceived as which is the helpful store.Advertising The most important part of marketing for any product is advertising, there are several tools ACE could you to get its name out in Bahrain which include, word of mouth, billboards on (major signs, buses etc. ) radio adverts, Television and much more. Due to culture and market similarities with the UAE ACE could use existing ads in Bahrain to cut costs in advertising research. 6. 5 Estimated sales/sales mix A sales mix is the specific sales of each product offered by a company in comparison to total product sales.Businesses commonly track this information to figure out exactly how much profit they make or can make when marketing a range of items or services. The sales mix of products will often impact an organizations bottom line. 6. 6 yield/service strategies Production or operations strategy refers to the pattern of decisions or course of action that the organization takes to produce goods and services. The production strategy shows the direction the production or operations function of an enterprise should take. It has important consequences for the way production resources are selected, deployed and managed (Sarkissian. 2012). 7. Financial Planning Financial planning is the process of meeting your life dreams/goals through the proper management of your finance (Beniwal, 2010). This allows the usage of several financial tools such as Profit and Loss Statements, Cash Flow Projection and Financial Analysis to basically achieve financial objectives. 7. 1 Profit and Loss Statement Below is the Condensed Consolidated Statements of Income (Unaudited) for the three and nine months ended September 29, 2012 and October 1, 2011. ACE HARDWARE tum CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in millions) Three Months Ended Nine Months Ended September 29, October 1, September 29, October 1, 2012 2011 2012 2011 (13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks) Revenues $ 949. 9 $ 912. 0 $ 2,929. 0 $ 2,787. 5 Cost of revenues 826. 1 797. 6 2,564. 3 2,449. 3 Gross profit 123. 8 114. 4 364. 7 338. 2 Distribution operations expenses 25. 1 26. 2 74. 4 70. 7 Selling, general and administrative expenses 35. 36. 2 104. 5 104. 3 Retail success and development expenses 26. 2 27. 6 91. 5 84. 1 Total operating expenses 86. 8 90. 0 270. 4 259. 1 Operating income 37. 0 24. 4 94. 3 79. 1 Interest expense (4. 2) (8. 9) (20. 2) (27. 8) Loss on early extinguishment of debt - - (19. 9) - Interest income 1. 0 1. 5 2. 3. 8 opposite income, net 1. 7 1. 5 5. 0 6. 1 Income tax expense (0. 9) (1. 4) (2. 4) (2. 4) Net income 34. 6 17. 1 59. 7 58. 8 less(prenominal) net income attributable to non-controlling interests 0. 3 0. 1 0. 3 0. 3 Net income attributable to Ace Hardware Corporation $ 34. 3 $ 17. 0 $ 59. 4 $ 58. 5 Accrued substantiate distributions $ 33. 3 $ 15. 2 $ 57. 0 $ 53. See accompanying notes to the condensed consolidated financial statements. Ray AGriffith, GuziK, William M amp Gast, Erik D. , 2012). ACE HARDWARE batch CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in millions) Nine Months Ended September 29, October 1, 2012 2011 (39 Weeks) (39 Weeks) Operating Activities Net income $ 59. 7 $ 58. 8 Adjustments to reconcile net income to net specie provided by operating activities Depreciation and amortization 30. 29. 0 Amortizatio n of deferred gain on sale leaseback (0. 9) (0. 9) Amortization of deferred financing costs 1. 6 2. 2 Gain on disposal of assets, net - (2. 0) Provision for doubtful accounts 2. 8 3. 2 Loss on early extinguishment of debt 19. 9 - Other, net 0. 2 - Changes in operating assets and liabilities Receivables (43. 2) (39. 0) Inventories (28. 9) (68. 9) Other current assets (2. 6) 2. 7 Other long-term assets (7. 0) (8. 0) Accounts payable and accrued expenses 32. 6 72. Other long-term liabilities 6. 0 2. 2 Deferred taxes 1. 1 5. 0 Net cash provided by operating activities 71. 3 56. 6 Investing Activities Purchases of marketable securities (9. 0) (46. 1) Proceeds from sale of marketable securities 8. 6 46. 3 Purchases of property and equipment (31. 2) (19. 5) Decrease in notes receivable, net 1. 6 1. 4 Other 0. 1 0. 1 Net cash used in investing activities (29. 9) (17. 8) Financing Activities Net borrowings under revo lving line of credit 113. 0 9. Proceeds from issuance of long-term debt 200. 0 - Redemption of senior notes (301. 3) - Principal payments on long-term debt (7. 5) (4. 0) Payments of deferred financing costs (5. 2) - Payments of cash portion of patronage distribution (27. 7) (26. 4) Cash Flow Projection Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 29, 2012 and October 1, 2011 Payments of patronage refund certificates (17. 3) (17. 3) Proceeds from sale of noncontrolling interests 0. 3 8. 8 Other 0. 6 0. Net cash used in financing activities (45. 1) (29. 2) (Decrease) increase in cash and cash equivalents (3. 7) 9. 6 Cash and cash equivalents at beginning of period 15. 8 9. 3 Cash and cash equivalents at end of period $ 12. 1 $ 18. 9 Supplemental disclosure of cash flow information Interest paid $ 21. 3 $ 20. 1 Income taxes paid $ 0. 9 $ 0. 5 See accompanying notes to the condensed consolidat ed financial statements. 6 (Ray A Griffith, GuziK, William M amp Gast, Erik D. , 2012 8. 0 Management considerationsACE will undertake a big change in bringing ACE hardware to Bahrain, Bahrain overall will be a good prospect as the company has penetrated a similar market in the Middle East (i. e. United Arab Emirates) and with a very stable economy and freedom of business with no government interruptions it will be a relatively easy venture for an established brand such as ACE. However the management at ACE has to consider several factors that will make the venture a more smooth transition, such as trying a joint venture with a local business, culture considerations so as not to put out unethical products. 8. Personnel/sales force factors A sharp forecast of more and employees getting into the professional field in Bahrain, and the stiff rise in population over recent years and also the preferences giving to the locals in hiring, ACE hardware has to take into considerations means and processes of hiring its employees, personnel training and qualification has to be of the highest standard and professional talk skills has to be a criteria in hiring employees 8. 2 Business Advisors With the help of a business advisor Ace could more effectively implement their strategy to break into the market in Bahrain.An effective business advisor would ensure a smoother transition by assisting ace in dealing with the laws and regulations entering the market and guiding them through government policies. Due to Aces existing established stores already present in the UAE the corporation already has knowledge on the different structures of setting up business in the Middle East. Business advisors in Bahrain would help them in ways more specific to the Bahrain market and can also help them with most effective Methods of Marketing in the country and the most effective locations to set up stores. 9. Recommendations/Conclusion Ace should undertake an aggressive marketing un ravel upon entering the market in order to create brand awareness using Coming soon promotions to build up the hype of the store. Ace should manoeuvre with local business advisors in Bahrain to help guide them with cultural differences and deal with government legislations and regulations. Ace should undertake further Extensive research to gain a better understanding on aspects of the Bahrain hardware market and to know their potential competitors and their offerings more in order to price, promote and operate more effectively.