STUDENT ID: 311845/414953

DELIVEROO REPORT

NOVEMBER 15, 2016

DELIVEROO
Dubai and Hong Kong analysis

STUDENT ID: 311845/414953

REPORT

To: The Director of Deliveroo

From: Senior consult of business Development for

Deliveroo

Date: 15th November, 2016.

Subject: Deliveroo expansion to Dubai and Hong Kong.

Table of Contents
Executive Summary...................................................................................................... 3
Introduction................................................................................................................... 3
ORGANISATIONAL STRUCTURE..................................................................................... 4
FUNCTIONAL STRUCTURE.......................................................................................... 4
DIVISIONAL STRUCTURE............................................................................................ 5
General external Environment...................................................................................... 6
PEST:.......................................................................................................................... 7
Side-effects............................................................................................................. 7
Deliveroo PEST analysis:............................................................................................7
Dubai and Hong Kong analysis:.............................................................................. 7
Political factors:...................................................................................................... 8
Economic Factors.................................................................................................... 8
Social Factors.......................................................................................................... 9
Technological factors............................................................................................ 11
Competitive Environment........................................................................................... 12
Threat of new Entrants:........................................................................................... 12
Power of buyers:...................................................................................................... 12
Competitive arrivals:................................................................................................ 12
Power of Supplier:.................................................................................................... 12
Threat of Substitutes:.............................................................................................. 13
5 forces Analysis...................................................................................................... 13
SWOT analysis:........................................................................................................... 13

Executive Summary
The following paragraphs, it will conduct a PEST analysis on Dubai and Hong
Kong cities, also it will emphasize the factors that may distress Deliveroo
expansions plans for 2016.
Furthermore, in this report will analyse the internal/external factors environment
for both cities, such as the economic and the culture aspects that might affect
the connection with foreign companies.
At the end, it will be concluded by apply the SWOT analysis relate to Deliveroo.

Introduction
The main purpose of the following report is to support board directors to make
the right decision on whether Deliveroo should expand its activities to Dubai or
Hong Kong. This report address the strengthens and weakness of both cities.
Deliveroo has expanded tremendously since 2013; but the decision to invest in
different cities always bring doubts about companys capability in survive in a
different location, recently addition fundraise, gives the necessary force to
continually expansion. This considerable fundraising from the investors
demonstrate Deliveroo credibility among the investors.

Main Body / Finding:

ORGANISATIONAL STRUCTURE
Companies needs to stipulate a structure that can provide guidance to its team
members. Without it, the company may find difficulties to performance at full
potential. Deliveroo is growing 400 % year, the company must develop a well
organised structure to cope the demand.
By designing its departments with the intention to organise its team members
and positions; the company developing an internal work environment which will
be exclusive and unique.
The organisation structure is the way organisation put the right employee, with a
specific task in the right position; consequently, employees can work together
and pursuit a common goal. This process of allocating the responsibilities into
different functions determine the companys structure. The company structure
can influence the way employees perform their tasks, moreover can benefit the
internal communication among the organisation. A well-developed organisation
structure can bring many aids to the company, such as coordinate the
employees, delegate responsibilities and increase productivity. In contrast of it,
poorly organisation structure might cause confusion and/or distress the
companys performance.
As Deliveroo expands its activist into different markets the company needs to
implement a unique and efficiently organisation structure. Thill (2014) stated
that, companies need to categorise the core competencies, simplify job
responsibility, define the chain command and arrange the workforce to a certain
extent that maximises productivity.
Organising the workforce can be done by combine a variation of vertical and
horizontal sections. It is important that the Deliveroo create a structure that is
simple and clear. Above all, Deliveroo must develop conditions that allows the
company to constantly adapting to different realities. There are 2 majors of
organisation structure: Functional structures and divisional structures.

FUNCTIONAL STRUCTURE
Divide the responsibilities per the companys needs, this type structure, is for
organisation that trade in a stable environment, with less changes or less

improvements. Each part of the organisation is assembled to its determination.

This type structure find difficulties in communicate with other departments; that
is because departments are restricted to their own task.
By working in separately, Deliveroo boundaries may affect the flexibility and
create internal conflict.

(Slideshare.net, 2016)

DIVISIONAL STRUCTURE
In contrast to the previous organisation structure, divisional can divide the
company in different partition such as per the region or areas. It is more suitable
for big companies that operate in an extensive area, or for middle size companies
but with a great product variety. This type of structure allows the organisation to
be more flexible, the reaction process is quicker than any other structure; in
addition, divisional structure offer better customers service. However, the cost
of this structure is higher.

(Keywordpictures.com, 2016)
As Deliveroo expand its deliver service to Dubai or Hong Kong, this enlargement
process usually brings confusion between team members. Functional structure
and Divisional structure are both emphasis on the vertical organisation, (the
structure is already pre-setup who report to whom, who has responsibility and
authority.
It can be determined, by analysing the above organisation structure in relation to
Deliveroo business, that the most appropriate type of structure is the Divisional
structure,
Deliveroo has a very powerful technology system that flattening the structure and
allows the team members to communicate with each other with ease (intranet);
therefor, Divisional structure fulfilled the company needs as company grow overseas.

General external Environment

Businesses are always affected by some factors that could be internal (those
aspects that the company has full control) or external (out of the business
control). The external factors have the hardest effects on the company and are
characteristically political, economic, social cultural and technological.
External factors can dictate Deliveroo performance and potentiality; to, minimise
the external factors effects is to applying PEST analysis method.

PEST:
PEST is acronym Political, Economic, Social and Technological. This are external
factor (those that the company has no control of it) that usually affect the
business performance. Is important to highlight that Pest analysis is not 100%
surely, for different types of business or industry PEST analysis has different
points to consider. But is an important method to compare two or more different
options.
The advantage of PEST analysis is to guide managers and directors to t hink
beyond the company activities and making connection in relation to external

environment.

Side-effects
The weakness of this method is that is not precisely, and the analyse can lead
managers and directors to abandon the company expansion plans by basing in
the outcome of the study.
Despite of negative sides, PEST analysis has been helping companies that going
international to take risks into account.
Allan M. Rugman (2016) stated that foreign investments in emerging countries
usually represent a risk, the reason for it, is that emergence markets have rapid
growth, strong policies towards foreign companies, immature government
system and above all, an unstable economy.

Deliveroo PEST analysis:

Those facts can demonstrate that, before Deliveroo decide to invest in a different
market, it must to analyse the internal/external influences.

And PEST analysis

might provide a frame guidance, that can support Deliveroo in examine and
comparing the condition of the countries and/or cities thats present investment
opportunity.

Dubai and Hong Kong analysis:

Both Hong Kong and Dubai are, without no doubt, the most attractively cities in
the world for any company. The reason for it, is that both cities offers large
benefits to international corporations.
Hong Kong is part of Peoples Republic of China since 1997, under the one
country, two systems agreement; this system allows the city to have full
autonomy with a few exceptions. Those conditions together making Hong Kong
one of the most transparent and efficient for entrepreneurial environment. Ali F.
Farhoomand (2005) stated that Hong Kong prides itself on its simplex tax system
and low rates. Circumstances that drag many companies to this city.

Dubai is very cosmopolitan city, with a population around 3 million people with a
high GDP per capita, combined with millions of tourists visiting the city every
year, makes the city, one of the Middle Easts important economic power. The
past decade Dubai having an incredible growth all economic sectors, with
emphasis to the tourism (government plans is to rely on the tourism sector after
oil reserves finish) and construction sector (with recently significant government
investments in the real estate and property). (Ali Tawfik AlSadik, 2012).

Political factors:

Government policy can have a hung impact in the company activists that can
determine whether the business is welcome or not to a certain market. Political
factors analysis helps to demonstrate the government stability (election might
lead to uncertain environment), government plans and Labour legislation.

Hong Kong Political factors: (Government regulation and legal issues)

Hong
Kong
factors

Political

Opportunities
Threats
Stable
Political
Strict
Labour
Situation
laws, difficulties in
hiring.
No impose tax
Recently rise of
and low corporate
the
minimum
tax rates.
wage.
Government

incentive
to
foreign business
Lower level of

corruption

The Hong Kong government working undependably from China, fact that allows
the city government to create condition to many international companies to
invest. Hong Kong is a free port, which mean that the government does not
impose any tax on trade and above all no tariff on import and export goods.
Government support and promote multilateral trading system.

Dubai Political factors: (Government regulation and legal issues)

Dubai Political factors

Opportunities
Threats
Stable
Political
War and conflicts
Situation
No
enforce
Recently rise of
income tax and
the
minimum
low corporate tax
wage.
rates.
Government
International
incentive
to
pressure group
foreign business
Lower level of
autocratic system
corruption

Dubai is part of United Arab of Emirates, which makes the city rely on the UAEs
political government structure, Dubai is ruling by a family which is responsible
for the city policies, Despite Dubai theoretically be consider monarchy system,
Dubai administration is very modern; the city is well known for constantly
creating conditions to grow the economic, another fact of Dubai government
administration is the good relationship the city maintain with many countries.

Economic Factors
The economic reality of the country can have a huge impact in the way
companies do business, to minimise those and others influences is important
that the company take some economic factors into account, such as inflation,
interest rates, economic growth, employment rate / its policies and the economic
prediction for the following years. (PESTLE Analysis, 2016)

Hong Kong Economic factors: (Government regulation and legal issues)

Hong Kong
factors

Opportunities
Unemployment
rates
Bank
Economic
confidentiality
Pro-business

Threats
Inflation

High
foreign
investment.

Market volatility

Natural resources
are limited; food
and row material
must
be
imported.
Linked
its
currency with US
dollar.

Hong Kong is a city with population around 7 million people, this factor makes
the city very attractive for any type of business. The low taxation and free trade
system are encouraging many companies to invest heavily in Hong Kong.
The city-country does not impose a sales tax, so that, most of the restaurant add
a 10 % service charge; fact that can inspire people to order through Deliveroo
app, rather than going to a restaurant.

Dubai Economic factors: (Government regulation and legal issues)

Opportunities
Luxury Market
Pro-Business
Dubai Economic factors

Threats
War and conflicts
Recently rise of
the
minimum
wage.
International
to
pressure group

Government
incentive
foreign business
Lower level of
corruption
Young consumers

Autocratic system

Along with Hong Kong, Dubai is a city with a large foreign population with high
income. Dubai economy has growing rapidly in the last decade due to
government incentive in the tourism industry, construction and international
companies. Those investments, has driven many young people around the world
to base in Dubai. A survey conducted by Master Card shows that young
consumers tend to buy more online or throughout the app in UAE than mature
adults; online shopping is continually increase and become popular in Dubai.
MasterCard survey also highlight that 42% of UAE online shoppers tend to be
loyal to a specific online purchasing website. (MasterCard Social Newsroom,
2016)

Social Factors
Social-cultural Environment focus in how people from a specific region live, and
how their lifestyle can be in favour or against the business. Society habit
changing rapidly, therefor, the people taste, nowadays meals become more
diversity with many options available in the market; specially in big cities like
Hong Kong and Dubai.

Hong Kong Social factors:

Social and Cultural

Opportunities
Threats
High demand for
Strict food law
fast food
(carry food)
High
domestic
Strict labour law
food purchases
(drivers)
High
income
Private domestic
population
helpers
Restaurant

service
charge
usually 10% for
seat in.

(Source the author)

Hong Kong is considered collectivism society that become more and more
individualism which can be good for business. Hong Kong Customers behaving
have been changing in the past decades, they are well known for praise
international brands.
Many middle-class Hong Kong families contract full time domestic helpers, which
can be a threat for Deliveroo business as many of those helpers can also provide
cook service.
Despite of it, many young professionals that working for foreign companies are
into diversity and eat different types of foods every single day is lead a tendency
for many busy young professionals.

Dubai Social and Cultural factors

Opportunities
Low criminal rates

Social and Cultural

Threats
Strict food
(carry food)
High
domestic
International
food purchases
company
restriction.

law

High
income
population
Large
foreign
population
70 % are male
population.

Private domestic
helpers
Unemployment
levels

Despite all social and cultural factors and opportunities for Deliveroo activists;
the most important one is that Dubai population majority is embraced by many
foreign, per the Dubai Statist Center (part of Dubai government) 69% of the city
population is formed by males, most of them are workers expatriates who left
their family in their native country. This Gender variation, shown that much of
male workers are living by they own, which can lead to Deliveroo potential
customers. Those male workers, who are not into cook home or eat somewhere
alone tend to buy their fast food and eat home.

Technological factors
Per the InterNation.com, Hong Kong have a very good internet connection, that is
given access to everywhere in the city. Furthermore, Hong Kong internet
connection is well known for its innovation and developments; many internets
companies constantly looking for improvement to upselling better internet
package. Thanks to government program launched in March 2008 called GovWifi
the city offers free internet via Wi-Fi to everybody.
Dubai has very conservative values comparing to Hong Kong, the city does not
embrace technologies as other major cities around the world. The government
also seen to be very defence concern tech investment, on the top of that internet
contents are restricted such voice over the internet. (News.bbc.co.uk, 2016). As
mentioned above, the Brightside is that many youngsters incorporated
technology in their routine life.

Competitive Environment
As Deliveroo intending to provide its delivery service to Hong Kong; the following
lines it will analysing the competitive environment that may affect the company,
this can easily be done by apply the Michael Porter 5 force model. Those forces
will assistance Deliveroo to determine the threats and attractiveness of the
market. In other words, the 5 forces analyse determine whether Deliveroo should

stay or exit from Hong Kong.

Free Print Limited (2016).

Threat of new Entrants:

The constantly threat of new companies in the market can reduce the business
attractive. The threat of new entrance is most depending on the barriers. Some
industries have high entrance levels other low entrance. Deliveroo have the
experience and the first mover advantage in Hong Kong, despite of it, Deliveroo
cannot control the distribution channel. This significantly fact can lead others
delivery companies such as UBER EATS to expand its activists and compete with
Deliveroo in Hong Kong.

Power of buyers:
Charles W. L. Hill (2008) stated in his book that power of buyers refers to the
pressure the buyers can exert on the business to persuade the company to
provide lower price and better customer service everything at lower price,
otherwise customers will search for a better option on the market. Hong Kong
Buyers can be very demand as Hong Kong city is happen to offers great quality
of food and service to its customers. Strong Buyers is a threat for Deliveroo, they
(buyers) can make the market more competitive and reduce the Deliveroo profit
margin.

Competitive arrivals:
There is not that can stop other companies to Compete with Deliveroo in Hong
Kong, good example of it, is Uber Eats, the company already trading in Hong
Kong in the taxi industry this means that Uber Eats can reduce attractiveness to
invest in the city. Another factor is that, Food-Panda is similar business that
becomes very popular in the city. (South China Morning Post, 2016).

Power of Supplier:
If we consider the restaurants as supplier, Hong Kong has many restaurants with
similar type of food, and the number of suppliers is essential for Deliveroo, the
more restaurant the lower is power of supplier.

Threat of Substitutes:
Chinese people is well known for having meals with their family, despite of it,
Hong Kong is business city where people have almost no time to spend cooking.
Companies such as Deliveroo is considered a time saver. Although those are
good news for Deliveroo, the company must to concern about some points; Hong
Kong food variety is huge, the city food business has many ways to sell food,
from restaurant collection (customers pre-order and collect by using a mobile
App), supermarket free delivery (many of it can delivery within 24 hours) to food
vending machine (newest ways to sell food).

5 forces Analysis
Deliveroo Hong Kong
Power of Buyer
Power of Suppliers
Competitive Rivalry
Threat of Substitutes
Threat of new Entrants
Total

Medium high= 4
Low= 1
Medium= 3
Medium= 3
Medium High= 4
15

SWOT analysis:
In the following lines, it will conclude this report by using the framework
technique called SWOT, this analyse will help to considerate Deliveroo strengths
and weakness; and, identify the company opportunities and threats in Hong
Kong. By applying this method Deliveroo management will uncover some doubts
and above all formulate a strategy that will cope with the business needs.
Strengths and Weakness are those that Deliveroo has control (internal), on the
other hand opportunities and Threats are usually out of Deliveroo control
(External).

Strengths