The Premium Industries Group Dubai Swapna Koshy Swapna Koshy is an Assistant Professor at the University of Wollongong in Dubai, Dubai, United Arab Emirates. In December 2009, George Martin, the Managing Director of the Premium Industries Group was reviewing the performance of his company over the past decade. His maiden venture, a steel fabrication unit which he started in Dubai, in 1997 had grown into a conglomerate comprising 17 companies. The change in the economic scenario prompted George to evaluate the company's past growth strategy and consider if it was appropriate for the future. The Premium Industries Group: a profile It was the economic growth of Dubai that inspired George, an Engineer by training, to start a steel fabrication unit in 1997. His reputation for integrity and hard work earned him a steady line of customers including his former employer. In 1999, he ventured into construction which was a booming industry in the country. In the following financial year the profit from the construction company was AED 30 million. In his relentless search for diversification opportunities George discovered the need for a coil coating unit in Dubai and he purposed to set up a plant, the first of its kind, in the emirate. As planned, Premium Industries FZC was started in 2004 and by 2009 became the biggest coil coating factory in the UAE. The success of the construction company inspired George to invest more in construction related activities and he started a fully automated factory for producing concrete flooring in 2005. The plant was spread over 2,500 sq. metres and had two machines producing interlocking tiles. George's plan in 2006 was to expand into Kuwait and Bahrain, neighbouring GCC countries. He also decided to contribute to the development of his home country, India, and started several ventures there. By 2009, The Premium Industries Group had 17 profitable companies under its umbrella with a turnover of AED 500 million and an employee strength of over 2,000. Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names; financial and other recognizable information to protect confidentiality. Expansion strategies George's expansion strategy was to study the market for current trends as well as for unrepresented industries and then to make quick decisions regarding new ventures. Once he identified a viable business opportunity his modus operandi was to then hire the best person available in the market to run the show. He paid competitive salaries and gave his managers stock options and over 5 per cent share in the company's profits. He believed that it motivated managers to nurture the company as their own. It had the added benefit that he I did not have to be involved in the daily running of the companies. He gave utmost importance to keeping workers motivated and during times of low demand he kept up production in order not to de-motivate employees. Every year the company organised a family day for employees when the top executives and their families spent time with them in a fun filled environment. It is a testimony to the success of his approach that the first 13 workers who he employed are still with the group. Keywords: Corporate strategy, Business development, Diversification, Integration, United Arab Emirates George believed he was careful not to "put all eggs in one basket. Yet, he understood that taking risks and planning well were as important as hard work. In 1999, when a neighbouring company Prestige Contracting went bankrupt he bought the company with a token amount of AED 50,000/- after offering to pay the company's long standing dues to its employees. He had acquired a fully operational construction company without much investment of time and finances. Though the diversification into an unrelated industry was risky it was timely considering the construction boom in Dubai. However, the greatest risk he took was when he started the coil coating factory. As it was a new industry in the region even major business groups were reluctant to invest in the facility. Bank financing was difficult to get and he invested his entire life savings as well as profits from all other businesses into this venture. He was careful to work on a shoestring budget and the plant was completed at a much lower cost than estimated. His confidence paid off and the company now had a turnover of AED 80 million and supplies to 70 per cent of the UAE market. Planning for the future As a part of his continuing expansion strategies George was in the process of setting up Premium Polymers for manufacturing polymer resin. The project value of the proposed plant was estimated at AED 16 million. Polymer resin, a raw material essential in many industries, was in high demand both in the UAE and abroad. George had identified a huge potential for export of polymer to Saudi Arabia. He had also hired an expert with several years experience in the industry to manage the factory. However, the change in the economic scenario had caused him to re-evaluate his decision. Would the strategies of the past be successful in a period of economic uncertainty? Was it wise to invest in a new venture at such a precarious time? The factory was in the process of being set up and a considerable amount had been spent on it. Stalling the project would also cost the company dearly. In addition, George was of the opinion that in times of recession industries should continue to invest in the country to keep the economy running. He was confident that Premium Polymers would grow to be the biggest in the industry. The collective decisions taken by the executive had not failed so far. They had taken greater risks in the past and even continued production in a particularly lean season in 2000. It was the amazing growth of Dubai that inspired him to venture into business and he was confident that the success of Dubai would continue for many years to come. Conclusion The Premium Industries Group had experienced exponential growth in the past decade. However, some of the factors that contributed to that success had since changed. There was the global recession to consider and the media was replete with stories about companies going bankrupt. In the new scenario it was important for George to evaluate his past strategies and plan carefully for the future. He wondered whether the plant being built for Premium Polymers should be put on hold. The future of his business empire and that of over 2,000 employees were at stake. It was crucial that he took the right decision.