Page 157 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

A Piece of the Action: Strategies for Entering the GCC Market 141

TABLE 5.1
The Al-Futtaim Group at a Glance—cont’d

Attribute Description
Operating Divisions Automotive
Electronics
Retail Services
Overseas (International)
Insurance
Industries
Real Estate
Key Retail Brands IKEA, Carrefour, Toys “R” Us, Marks & Spencer,
Seiko, Raymond Weil
Key Auto Brands Toyota/Lexus, Honda, Chrysler/Jeep/Dodge, Volvo, Hertz
Key Electronics Brands Panasonic, Sanyo, Toshiba, Alcatel

Al-Futtaim has managed to build formidable businesses
across a range of industries and has entered into distribution agree-
ments with leading US (e.g., Chrysler), EU (e.g., Carrefour), and
Asian (e.g., Toyota) firms alike. The breadth and depth of their
expertise, along with their capital base, make firms like Al-Futtaim
highly attractive as distributors and franchisees for the multination-
als. In fact, one important reason why straightforward distribution
agreements have thus far been the norm is that there are such com-
pelling local distributors available, as IKEA’s experience with Al-
Futtaim demonstrates.

IKEA and Al-Futtaim: A Match Made in Sweden
European retail brands have long found a home in the GCC, but
few have attained more success than the flat-pack, home furnish-
ings manufacturer IKEA. The company describes its Swedish tradi-
tions of modernism, functionalism, and social equality as follows:
“The IKEA Concept is based on offering a wide range of well
designed, functional home furnishing products at prices so low that
10
as many people as possible will be able to afford them.” IKEA out-
lets tend to be massive—the largest covers over 10 football fields—
and, because of their scale, few. Southern California, with 20 million
consumers, has just five IKEA stores.