http://archive.gulfnews.com/articles/06/02/14/10018701.html

A recent multi-billion bidding war on shipping giant P & O was won by local port operators Dubai Ports World. They clinched the deal at a staggering USD6.8 Billion after outbidding Singapore’s PSA.

Many of Hamel’s Business Concept Innovation (BCI) components can be applied to the acquisition, from both the DP World and the P & O perspective. DP World Chairman Sultan Bin Sulayem stated that “It (the acquisition) is a vote of confidence in our ability to manage the company”. This is a direct reference to the company’s core competencies, which is defined as the skills and unique capabilities that the company possesses.

Additionally, the acquisition completely redefines DP World’s product and market scope, allowing it to operate in a much larger coverage area than before. This is evident in the fact that DP World jumped up from being the seventh to the third largest port operator in the world. Likewise, the scale factor grew significantly.

Porter’s trusted five forces model also pops up in this occasion, since DP World strengthened its position by buying out one of its competitors, effectively reducing competition in the market and enlarging its asset base.

The one thing I did find interesting though is that DP World is still looking at expanding further, thus indicating an aggressive core strategy of providing large scale shipping services coupled with rapid expansion, i.e. growing their most important strategic asset – ports. Nevertheless, they do not intend, at least in the eyes of the media to become a monopolistic port operator, as mentioned by Bin Sulayem: “We respect PSA and are aware of the competition… I think it is healthy for the industry”.

As a final note, it is important whether this growth is organic or not, since sometimes too rapid growth is not a good thing. DP World may be following the general “Dubai” trend of lighting fast growth, but with an organization that large, it is critical the DP World use the services of top business consultancy firms to ensure that their moves are properly calculated and analyzed.

The backlash throughout the Muslim world against a series of Danish cartoons caricaturing the Prophet Muhammad is having a severe impact on prominent Danish products. The region is buzzing with text messages and e-mails promoting the boycott. Concerned citizens have been checking supermarkets for Danish goods and then asking for them to be removed. Islamic tradition explicitly prohibits any depiction of Allah and the Prophet.

As this incident shows, consumers really do have a very high power to bring businesses to their knees once their wrath has been aroused, since the buyers in this case are Muslims and they account for an estimated population of 1.2 billion people around the world. According to Porter's 5 model, buyers can posses a credible backward integration threat, by buying products from other competitors. Please note that most of the Danish products in the market are dairy products and considered as fast moving consumer goods where substituting those goods are easy, no switching costs are incurred and are standardized products. This will cause a very large decrease in their sales, if their primary consumers are in the Gulf/middle East area.

In addition, regarding the customer interface business components, there are couple of elements that have been affected which are ‘Information and Insight’ and ‘Relationship Dynamics’. The first element had a high negative impact on the products, whereas a lot of supermarkets have removed all Danish products from their shelves so it cannot loose its consumers and to show them that they support their boycott. In case the stores kept the Danish products on shelves, then the boycott will also affect the stores with severe losses as this is what happened with a couple of stores. Stores have also given out flyers specifying that Danish products are no more in their stores, taking into a concern that the media plays a crucial role in the business. The second element ‘Relationship Dynamics’, shows that initially the consumers perceived Danish products as high quality products although they are considered expensive compared to local products, but those products were in high demand. Now after the boycott, the relationship between consumers and producers is a pure hate relationship. So any product that is imported from, or produced in Denmark is a considered as an unwanted product.