ABOUT BORJAN

Borjan previously known as prestige was launched in 1986 with the head office in Lahore. It’s a private
limited company. Borjan manufacturers Gents and Ladies foot wear and other lather products .It’s one
of Pakistan’s bestselling fashion footwear chains with 78 outlets in 49 cities of Pakistan with 1000 - 1500
employees.borjan has also introduced its new brand known as Nayza (market share 10%) offering sports
footwear. Sports footwear segment constitutes of 20% of Pakistan market and it’s expected to grow. Its
major competitors are servis,bata,cheetah, and power.

HORIZONTAL INTEGRATION

Due to great demand of the brand in Pakistan Borjan is increasing it’s no of outlets across Pakistan but
it’s also aiming for going abroad. Country selected for the expansion is UAE United Arab Emirates and
city selected is Abu Dhabi. Borjan is the name of comfort and luxury and well-known brand which will
not disappoint its foreign customers. There is large no of competitors in the shoe business there but deep
market analysis and growing shoe market share in UAE will give insight about how to survive and enter
into the new market.

WHY UAE

The UAE is known to be one of the most active countries in the Middle East. In the world's leading
nations, positive planning and vibrant initiatives have developed a first-class set-up and metropolitan
lifestyle in complete parallel. The easy lifestyle of the UAE is also a major factor in attracting
investment from abroad. A strategic location is available to the UAE making it the attractive hub for the
investors in order to reach the key world markets. Durable financial reserves and it’s banking sector
makes it safe option for the investment.

CULTURE OF UAE

UAE is considered as a hub of business globally. For the new businesses entering the market should
have a know how about the cultural norms of the country. UAE is a Muslim country thus the material
used in the product should be taken into consideration but as Borjan is a Pakistani brand a Muslim
country so nothing to be worried off. In Arab world businesses are conducted on the basis of mutual trust
and honesty.

WORKING HOURS:
In UAE weekends are on Friday and Saturday. Weekdays start from Sunday to Thursday. Offices open at
7:30 and closes at 3:00pm.some organizations have 8 working hours with a lunch break from 30 mind to
one hour. But during Ramadan working hours are reduced and work is finished early before the sunset.
LANGUAGE:
Arabic is a official language of emirates. Although English is also used in business transactions.
CULTURAL NORMS:
good manners are really of great importance there. Other than that, arriving on time is part of basic
etiquettes. Even the agreement is made verbally or written it will be considered as agreement because
integrity is of high importance in UAE.Arabs are known for their hospitability, courtesy and politeness it
should be made sure this factor should not be ignored.as far as dressing is concerned man wear suits
while doing businesses and women should dress in a way that covers arms and legs.

EASE OF DOING BUSINESS

UAE is becoming on the top in ease of doing business. It was ranked on 11th number in ease of doing
businesses has improved by bring regulatory reforms in the business sector. Other 10 top improvers are
Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India, and Nigeria. According
to a world bank report two countries have entered the top 20 this year including UAE and Malaysia by
maintaining a reform momentum implemented different reforms related to ease of doing business e.g.
getting electricity, registering real estate, gaining access to credit etc. Electricity was made easier by
cutting down all costs related to commercial and industrial connections up to 150 kilo volt amperes
KVA.by introducing new and improved online procedures which will not only help in businesses startups
but also property registration process is also made easier.by giving access to credit by creating a register
of moveable assets by making it easier for the banks to lend money.

LAWS AND REGULATIONS

1.ESTABLISHING PERMANENT PRESENCE IN THE U.A.E

ncorporating a Limited Liability Partnership International shareholder are allowed to hold stock interests
in U.A.E. businesses as long as U.A.E. citizens own 51 percent of the assets at all times.

2.ESTABLISHING A BRANCH OR REPRESENTATIVE OFFICE

Foreign entities can establish a presence with significantly less U.A.E participation than is required to esta
blish a Limited Liability Company through either a liaison office or a branch office.
3.TRADE REGULATIONS
Ten Free Trade Zones ("FTZ") have been established by the U.A.E. and two specialized FTZ
targeting IT, e-business and media.
conducting business within the U.A.E. market itself is prohibited. The FTZ’s were established to draw
in foreign capital and investors by providing incentives such as:
1. 100 percent foreign possession of the enterprise;
2. 100 percent import and export tax exemptions;
3. 100 percent return of capital and profits;
4. No company taxes for fifteen years, renewable for an extra fifteen years;
5. No income taxes.

4.PUBLIC SECTOR PROCUREMENT

Under the Federal Regulation on Terms and Conditions of Purchase, Tender and Contract, (the "Public
Tenders Law") only U.A.E citizens, foreign entities represented by a U.A.E. representative or foreign
entities with U.A.E. affiliates (i.e. a U.A.E. company with at least 51% U.A.E. interest ("national
entities") can offer for public services.

5.APPOINTMENT OF AGENT:

Foreign investors might plan to have associate degree agent represent their interests within
the U.A.E. rather than establishing a permanent presence. The U.A.E. industrial Agencies Law
regulates and governs the appointment of business agents, sales representatives, and
distributors within the U.A.E.

6.TAXES
In UAE there is no federal income tax for general businesses. However, with respect to Dubai only, the
Dubai Income Tax Ordinance specifies that an organization that conducts trade or business, including the
rendering of any services in Dubai, is subject to the following tax scale:

LAWS AND OTHER FACTORS AFFECTING THE ENTRY

In terms of challenges, there are some areas wherever the UAE continues to lag in keeping with the
planet Bank’s easy Doing Business.Severalcommon issues foreign companies could confront, like
delays in receiving payment for completed work, difficulties in terminating industrial agent agreements
even in cases of neglect by native agents. Dispute resolution mechanisms vary in effectiveness among the
seven emirates and might be cumbersome.

2.In January 2018, the UAE obligatory a 5 p.c worth additional tax (VAT). The tax applies
to most product and services except basic food things, education and attention. Most business
functions are wedged, from IT and human resources through to procurance, finance, and promoting, since
VAT may be a demand at each stage within the offer chain. Businesses ought to register for VAT with the
Ministry of Finance.

3.The seven emirates that structure the UAE every have their own rules and laws, which implies doing
business will generally be a challenge.
4. Onshore jurisdiction – the onshore jurisdictions talk to any areas not at intervals a
particular country, they're subject to federal laws and laws with control and authority bodies beneath the
Ministry of Economy in every Emirate.
5.Work permits and visas
The UAE may be a comparatively young country with a various population. All foreign staff need a
piece allow or resident allow to measure and add the UAE. this implies it's vital to pay special attention to
confirm you're compliant with all laws set by the final board of directors of Residence and Foreigners
Affairs and Ministry of Human Resources & Emiratization.

IS THE MARKET ATTRACTIVE

Shoe industry in the UAE is continually growing especially the sportswear. According to the
following report:
• Segment shoe sales exceeding $244 in 2019
Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 0.2%, resulting in a
market volume of US$246m by 2023.
User penetration is 45.9% in 2019 and is expected to hit 58.3% by 2023.
The average revenue per user (ARPU) currently amounts to US$54.43.
UAE is considered one of the top 5 countries where the show business is on the rise.
other than that, the large % of users are between age 25-35 years they constitute 29.1% whereas
from age 35-44 it’s constituted of 26.1%. the market is quite prefererable for the shoe business.as
there are lot of other options available for the users so competition may be quite intense but Borjan
is a quality brand with suitable pricing for the middle-class income. About 49% people are of
middle income. Where as gender distribution for the shoes is about females 52.7% and males 42.3%
respectively
Since the UAE isn't home to a large range of shoe makers thanks to the shortage of native raw
materials and labor, retailers supply their product from varied components
of the world so this can be used as an advantage for the new commers.

COMPETITION IN THE NEW MARKET

"Competition will always impact on you. The trick is to learn faster and act smarter and quicker to
changing trends and customer demands. “It must be noted that price is important in gaining market share,
there are other factors that play an important part, such as quality and service standards.
"Today, value plays a big role in the customers' shopping behavior and all factors that add to that
experience can't be ignored ”. Thus, Borjan being known for providing quality and value products it will
not be a bigger concern for the brand. But the competition will be quite intense due to large no of
distributors ,suppliers, manufactures in the market. Different categories are available like from low cost
shoes to high costs.
SUPPLIERS
China is currently the dominant supplier of footwear in the entire global market. China is also the key source
of imports in the UAE market. The lower segment: The lower end of the market, constituting of casual
footwear made of plastic or rubber, is predominantly catered by Chinese manufacturers who enjoy an almost
60% share of the market. The upper segment: The upper end of the market, constituting of footwear of at least
some leather component (usually the “uppers”), has a considerably different structure. European manufacturers
have almost half of the market share. Italy is the leading supplier (30%),

DISTRIBUTION STRUCTURE

classic leather footwear market is characterized by variety of brands and firms, stylish “sports” footwear
is dominated by the individual distributors of the 3 leading United States brands.
classic leather footwear market is characterized by a number of brands and firms, the
respective distributors of the three leading U.S. brands dominate trendy "sports"
footwear.
MANUFACTURING
After an aborted attempt in the eighties to manufacture branded footwear in UAE, when a plant for this
purpose was set up in Abu Dhabi, there have been no attempts for the manufacture of leather shoes in the
country. However, as in the case of garments, export-based footwear manufacturing is a real possibility.

STRATEGIC OPTIONS FOR ENTERING INTO A FOREIGN COUNTRY

EXPORTING

launching an import-export commercial enterprise within the UAE is also very less expensive.
The price of setting up in famous free trade zones may be very reasonable like JAFZA (15,000 dirham) or
Sharjah Media city. In case of warehousing prices are also really reasonable for e.g. per square meter
costs for 350-600 dirhams.so exporting can be a good idea as UAE imports large no of leather products
from other countries due to lack of manufacturing facility in that area. Exporting will be a best option for
experimenting a specific product in the foreign market.
Time, cost, documentation required in UAE is shown below.

LICENSING

Conducting business in the UAE requires specific licensing even if these products are offered through
eCommerce platform it will require licensing. Therefore, I will go for the licensing in case of introducing
the brand in the foreign country otherwise penalties can be imposed. In case of free trade zones licensing
will be a good option because of few costs, and documentation involved in it. selection of free zone on the
cheapest option is always not a good option to pick on as it’s not going to be helpful for every kind of
business. one thing to keep in mind while starting a business in UAE is once you have a license doesn't
mean you can do everything, and anything related to trading. Trading licensing will be required for the
importing, exporting or trade of goods.so anyone intending to do business in UAE license is must.

FRANCHISING

franchising cannot be considered a good option in a way because of some constraints. Although UAE is
considered on top for ease of doing business, but market cannot be always stable. If incase the business
doesn’t go well with the expectations or due to other reasons franchising agreement cannot be terminated
by the franchisor until unless he shows some justifiable cause for its termination. If the franchisee isn’t
convinced with the termination cause the franchisor may appeal to local courts which will take 3 years
making it more difficult for the franchisor. Other than that Franchise businesses are typically very
restrictive. The owner has much less control over how the business is managed.

JOINT VENTURES

While having a startup in the trade zone or free trade zone it is required to work with a local partner in
order to trade with. Without having partnership with the local partners, it will be hard to operate on their
own in the new market. Many entraprenuers,businesses choose to collaborate with the local distributors
like Aramex to handle the logistics.in case of ecommerce selling directly to customers while cutting out
the middle man.It will be considered best option because not only expertise will be shared but also it will
be a quick method of obtaining a local management know how.in this way the firm will have a low risk,
and fewer assets at stake.

ACQUISITIONS
According to the federal law of UAE companies in the UAE can be acquired through two ways:
When a specific merger company time expires so new legal entity is created acting as a legal successor to
the merge entity.
Acquisition by which the buyer buys shares of the company by becoming the shareholder of the company.
Acquisition can be a good step to strengthen one position into the foreign market by acquiring or merging
with the already operating firm. But in case of UAE it cannot be considered a really
good option because according to the UAE laws 51% ownership rights will remain with the local person
or shareholder making the new comer position weak in the new market.

GREEN FIELD DEVELOPMENT

If acquisition is not a safe option one can opt for green field development. Company can go for green
field development in case of if it has high level of technology, multinational experience Borjan being into
the new geographical territory having low experience on hand it will be hard for it to go for the green
field development. It’s such a expensive and complicated process only large companies at large level can
excel in it like Honda, Toyota but not in case of Borjan.

TURN KEY OPERATIONS

Buying a longtime business or franchise needs a considerable investment.

Purchasing an existing freelance business conjointly needs careful investigation.
It is necessary to search out out why the business is purchasable. The company could have recently
lost an oversized contract, incorporates a vast liability, or alternative wise could be in decline thanks
to competition or other factors. Due to the following risk factors associated with the turn key
operations it might not be a good idea for Borjan .

PRODUCTION SHARING

Sharing of different manufacturing strength between high and low wage countries has become one of the
vital strategies for many companies. Cross border production sharing can be a good idea owing to no of
reasons like utilizing each other’s strengths will create a value, gaining access to technology to develop
specialized products, cost will be reduced, can help in the product development. High level of global
competitiveness can be achieved. Thus, going into the foreign market, it is essential to utilize the other
country resources that suit best for the company interest.
BOT CONCEPT

BOT concept mainly applies for the large projects it’s basically green field in nature which is quite
expensive as well as complex.one of the drawback is of ownership and control of operations if a firm goes
for the BOT and after some time operating it , it has to be transferred back to the other entity. This
concept is basically useful for large scale government projects but not in case of small businesses.

MANAGEMENT CONTRACTS

As Borjan is venturing into a foreign country so management talent or expertise from the host country
will be of great help in managing the business.it will help in earning income and expertise of the host
country. The operations will continue to grow until the Borjan management isn’t properly trained.it is
really helpful in getting the insights about the host country management styles,culture,way of dealing
everything. Due to this Bojan will be able to expand in the market after gaining the basic expertise.