Emerald Emerging Markets Case Studies

Fuala: a success story of an entrepreneur

Mohamed Al Hosani Syed Zamberi Ahmad
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Mohamed Al Hosani Syed Zamberi Ahmad , (2013),"Fuala: a success story of an entrepreneur", Emerald Emerging Markets
Case Studies, Vol. 3 Iss 8 pp. 1 - 6
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 Fuala: a success story of an entrepreneur
Mohamed Al Hosani and Syed Zamberi Ahmad

Mohamed Al Hosani based Introduction

at the AD University,
‘‘Fuala’’ is a word that reflects the concept of hospitality of the United Arab Emirates (UAE).
Abu Dhabi,
United Arab Emirates.
The quality of such a chocolate shop started first by choosing a unique name that is familiar
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Syed Zamberi Ahmad to all Emirati in this area of the world. In spite of being considerably new in the market,
based at the Management Radwan Al Hosani (Fuala’s founder) managed to establish a concrete base in the UAE by
Department, College of offering a variety of high-quality selections in his chocolate products. The story of Fuala’s
Business Administration, success resulted from hard work in identifying customers’ requirements as well as
Abu Dhabi University, continuously following the latest developments in the chocolate industry. Since its opening in
Abu Dhabi, 2002, Fuala Chocolates has cultivated good quality and excellent flavor. The state-of-the-art
United Arab Emirates. manufacturing processes, in addition to the style of products’ presentation, distinguished
the Fuala brand from all others. Moreover, it was the great care in the selection of raw
materials that made Fuala products one of the best in comparison with similar shops. As for
the staff, Fuala makes sure to select professional and fully committed employees. To ensure
the highest standards of service, Fuala provides training on a regular basis from globally
renowned chefs. As a food product, Fuala pays great attention to all aspects of its products
from shipping and delivering to the final product’s presentation. This involves many storing,
handling and treating processes as well as managing on-time delivery concepts, which is no
easy task, especially when considering the wide variety of ingredients that come from more
than 20 suppliers in different countries. In this case study, we will explore the story of an idea
started from a dream and developed into an example of successful entrepreneurship.

Radwan, the founder

After finishing his bachelor’s degree in accounting, Radwan went to the USA to earn his
master degree in administration development from Western Michigan University. After that,
Radwan decided to work in the banking field. For him, it was the most appropriate job for a
At the completion of this case freshly graduated student seeking some experience before moving on to the next level of his
study, the authors would like to career. A few years later, Radwan came across a better opportunity in the government
give thanks to Mr Radwan Al
Hosani and the entire staff of sector. The experience that Radwan gained in that job ignited his desire to start a new
Fuala Chocolate. Without their business, as he had always wanted to run his own business. Actually, as he stated:
help, this case study would
have never come into its We had plenty of time after work that we, as young fellows, used to spend in playing sports;
present form.
however, after this age, it was important for us to do something useful for our life, which meant, for
Disclaimer. This case is written me, starting a private business (Interview Informant, 2013).
solely for educational purposes
and is not intended to represent The second motivator was the market condition at that time. It was in 1992 when Radwan
successful or unsuccessful
managerial decision making. managed to persuade his friends to start a small business; at that time, the UAE market was
The author/s may have extremely active with considerable investment opportunities, especially for local
disguised names; financial and
other recognizable information
entrepreneurs. For Radwan, this was a once-in-a-lifetime opportunity and, as he said, it
to protect confidentiality. was the most important decision he ever made.

DOI 10.1108/EEMCS-06-2013-0114 VOL. 3 NO. 8 2012, pp. 1-6, Q Emerald Group Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
 Radwan and the chocolate factory (Fuala)
The idea started very simply with the introduction of a new product to the UAE market.
Government policy was to encourage locals to invest in the private sector, which is
dominated by expatriates, accounting for approximately 80 percent of the population (Ryan,
2012). Part of this policy was to secure the country’s economy by minimizing outgoing funds;
in this way, the government makes it easy for locals to issue trading licenses as well as
associated procedures. Radwan wanted to choose something with value while
simultaneously targeting a wide range of customers. Chocolates were just the thing that
Radwan was looking for; he believed that there was a strong relationship between chocolate
and people of different ages and genders. He also believed that many customers appreciate
quality chocolate and, hence, a good price will not be the main competitive advantage for his
business, especially as a new entrant into this industry. With no experience in the field,
Radwan thought that it might be more feasible to enter a franchise of some well-known brand
of chocolate as a starting point. He initially made this decision because establishing brand
identity can take a long time. He also wanted to focus on customer value to allow more
flexibility in product pricing. This value-based pricing strategy is more customer-oriented. In
the traditional pricing strategy – namely, cost-based pricing – the product is priced
according to its costs plus a fair margin of profit. However, in value-based pricing, the
customer’s perceived value is the driving force for product pricing (Levis and Papageorgiou,
2007). After surveying the local market, Radwan found a gap in the quality of chocolates
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being offered in the market at that time. He believed that he could fill this gap, at least in Abu
Dhabi, the UAE capital. With hard work, Radwan managed to get franchises from Caffarel
Chocolate, a confectionary founded in Italy in 1826, as well as Wittamer Chocolate, a Belgian
brand founded by Henri Wittamer in 1910 (Plate 1).
Opening a small shop called ‘‘Pistache’’ in the centre of Abu Dhabi, Radwan’s journey in the
chocolate business began. As Radwan stated:
Pistache was a unique shop at that time presenting new chocolates brands. We were surprised
by the amount of customers and interest in our products, and our focused moved from the
marketing issue to how we could best meet customer demand (Interview Informant, 2013).

Pistache has done very well and continued growing over time; however, Radwan was a
visionary person, and was looking for more than just introducing other companies’ products.
A few years later, after gaining experience in the field of confectionary, Radwan decided to
do something considerably different. He had been dreaming about introducing something
new to the market, something that reflects his identity as a citizen of the UAE, and his
self-esteem as an individual. He believed that it was possible to develop a national chocolate
brand with a quality similar to those international brands. Fuala was first introduced to the
market in 2002 as a chocolate factory under a license from Pistache. This was the fastest and

Plate 1 Samples of Caffarel and Wittamer products

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blogspot.com/-akD8T0f1XSI/Tz-xJOG0e8I/AAAAAAAABZ4/1vvih7dS9vI/s640/v+day+
wittamer.JPG

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PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 8 2012
 the most efficient way for Radwan to resolve the administrative challenges of opening a new
shop at the time. This circumstance remained in pace for two years until Radwan managed
to completely separate from Pistache. His aim was to focus on Fuala after he had secured
Pistache and handed it over to his partners. With a new concept, Radwan began his
exploration of the chocolate industry by visiting different countries, observing the latest
advancements in confectionary, and looking for recognized chefs and equipment for his
factory. In a short period, Radwan managed to establish the biggest state-of-the-art
chocolate factory in the UAE (Plate 2).

Fuala, the new concept

The idea was to present something new and unique to the customer, like having the customer
experience the beauty of chocolates. As previously stated, establishing a new brand takes
time, and Radwan had to have other competitive advantages to enter the market with the new
brand. In this case, advantages can be gained from alternatives such as geographical
location, technology, access to the best raw material sources, and experience (Porter, 2008).
After gaining the necessary knowledge about how chocolate is made industrially, the second
step was to find out the secrets of how to make great chocolate with a focus on flavor and not
on quantity or other economic considerations. Another issue was finding cocoa bean
suppliers and growers. Radwan had to travel half the world to find the right cocoa products
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and secure multiple suppliers, which are mainly based in South America and the middle of
Africa. This shows how much hard work was required in order to achieve excellence.
Additionally, other ingredients received the same level of attention as each of the raw
materials was brought from the best suppliers in the world. Radwan’s only concern was to
provide customers with high-quality products; as he stated:
The nature of UAE society, which is considerably wealthy, hospitable, and passionate about
quality and uniqueness, encouraged us to proceed in our efforts and obtain the best raw
materials for each element of our product.

For him, Radwan wanted to raise chocolate making from a technical process to an art.
The experiments were done one after another, and customer feedback took high priority.
Although this process was costly, it is the normal price when excellence is desired.
Actually, the cost of the product was controlled by buying raw materials from original suppliers
to minimize the commissions. In addition, the cost of labor and overhead were considerably
low in the UAE. Besides focusing on individual customer, Radwan was interested in attracting
bigger customers, like hotels, companies, and governmental entities. To market his national
product, he initially gave away the chocolates for free at different targeted events of those
customers. The result was just as expected, and the shop attracted remarkable attention not
only from regular customers, but also hotels, companies, and governmental workplaces,
which placed huge orders for different events and celebrations (Plate 3).

Plate 2 2 Pistache shop and Fuala shop (Abu Dhabi branches)

Source: Developed by the author

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VOL. 3 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3
 Plate 3 Radwan ensuring the quality of Fuala products, and during a CNN interview (on the
right)

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deployedfiles/Assets/Richmedia/Image/AD201010708139834AR.jpg

The expansion
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A few years later, it was time for Radwan to decide on expanding his business locally. Abu
Dhabi is famous for the diversity of its local and international workforce. Building a reputation
in Abu Dhabi as a chocolate shop means saving the trouble of having to start from scratch in
another emirate. Radwan was very careful in selecting the location for the new branch. He
believed that there were certain aspects that had to be considered in order to succeed in the
expansion of a chocolate business. For example, the rent must be reasonable so that they
could reduce overhead cost. Additionally, the location had to be in a place with a suitable
population density because chocolate is a food product, and demand can fluctuate widely
and quickly. On the other hand, UAE is generally a hot country where temperature can reach
488C in the summer. This is a difficult environment for chocolate products as they easily melt
at this temperature. The availability of car parks in front of the chocolate shop is very
important, so that the customer can immediately move the candy to an air-conditioned car.
All of these factors and more were considered when Radwan started opening new branches
all over the UAE. Within ten years, Radwan managed to open more than 13 branches locally
and two branches in other GCC countries like Oman in 2010 and Saudi Arabia in 2011. All
shops were supplied from the main factory in Abu Dhabi; however, Radwan was seriously
thinking of closing the Saudi Arabia branch because delays occurred on the Saudi Arabia
border due to the security inspection process. The process sometimes takes more than 20
days and the delay in delivery affects the quality of the product even though the carrier was
equipped with all the necessary storage features. This was against the whole concept of
Fuala, and the solution to this problem was either to establish a small factory in Saudi Arabia
or to shut down the branch. Radwan had tried to open a small factory even though the
demands were still below the proper level to do so; however, he encountered many
complications from strict licensing and labor regulations. Finally, the decision was to close
down the branch and proceed with other GCC countries.

Fuala today
Fuala started in 2002 with approximately $US 220,000 in assets, and today the company is
worth more than $US 2.7M, including assets and goodwill. From less than ten employees at
the beginning, Fuala has grown in size to more than 150 employees working in different fields
and branches. The sales rose from $US 540,000 in 2003 to $US 12.2 M in 2012. Due to its high
demand and success, Fuala is planning to shift and further expand the factory premises to
Dubai industrial city. The production unit will be big enough to produce larger quantities and
mass products for the existing demand in the UAE. The new goals have been set as follows:
B to increase the number of production lines to reach potential target;

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PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 3 NO. 8 2012
 Plate 4 4 The variety of products offered by Fuala

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B to cover the supply of the GCC’s demand; and

B to maintain and keep improving the quality and standards.
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Recently, Fuala added new products to its existing line, including snacks, cakes, and ice cream,
to satisfy their customer’s demands and tastes. This decision was due to high competitions in
the UAE market today. Additionally, and to enhance its customer relationship, Fuala launched a
customer loyalty program that awards loyal customers with gifts, discounts, and free chocolates
baskets to name a few. When Radwan was asked about the future of Fuala, he said:
We will keep going with our services and always surprise our customers with new and tasteful
products, which is what we have done so far and will continue to do. Competition is challenging
nowadays. Similar products are evolving every day, but our products provide quality and prices
that are not easy for beginners to offer (Plate 4).

Conclusion
Radwan, as an entrepreneur, managed to overcome most of the difficulties he encountered
during his business journey. This story highlights the fact that it is self-confidence,
persistence, and hard work that leads to success in the end. Radwan’s management
strategy was to combine all the ingredients of success in order to place his ideas into
practice. Radwan adapted practical strategies, searching out and gaining the required
Keywords: knowledge, and surveying the target market before starting his business. Most
United Arab Emirates, entrepreneurs follow these steps, however, failure may occur either in implementation
Entrepreneur, phase or afterwards. Follow-up and continuous innovation is required when dealing with the
Chocolate, confectionary business because customers are always looking for new and creative
Fuala, products. This case study examines a real example of a successful entrepreneur who
Small business management managed to convert his dream into practice.

References
Interview Informant (2013), with Mr Radwan Al Hosani, The Founder of Fuala Chocolate.

Levis, A.A. and Papageorgiou, L.G. (2007), ‘‘Active demand management for substitute products
through price optimisation’’, OR Spectrum, Vol. 29 No. 4, p. 551.
Porter, M.E. (2008), ‘‘The five competitive forces that shape strategy’’, Harvard Business Review,
January, p. 25, If you read nothing else on strategy, read these best-selling articles.
Ryan, G.D. (2012), Persistence in Expatriate Academic Assignments in the United Arab Emirates:
A Case Study, Northcentral University, Arizona, available at: http://search.proquest.com.adezproxy.adu.
ac.ae/docview/1021196898/abstract/1408DCC7B1E54025FC5/32?accountid¼26149

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VOL. 3 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5
 About the authors
Mohamed Al Hosani is a Military Officer holding a Master of logistics management from
Royal Melbourne Institute of Technology, Australia. Currently, he is a DBA candidate at Abu
Dhabi University, Abu Dhabi, United Arab Emirates. His current research interest is in family
businesses and economic security in the United Arab Emirates.
Syed Zamberi Ahmad holds a PhD from the Hull University Business School (HUBS), UK. His
research interests include firm evolution and growth strategies including alliance, market
entry and internationalisation strategies of SMEs and multinational firms. His research
interests also focusing in the areas of entrepreneurial management, entrepreneurship
education and small- and medium-sized business strategies. He is currently an Associate
Professor of international business and entrepreneurship management at College of
Business Administration, Abu Dhabi University, United Arab Emirates. Prior to entering
academia, he had several years’ industrial experience in international banking and treasury
of several reputable banks in Malaysia. Dr Ahmad had served several universities in
Malaysia, Yemen, and Saudi Arabia. He can be contacted at: Management Department,
College of Business Administration, Abu Dhabi University, Abu Dhabi, United Arab Emirates.
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