Feasibility Study to explore the potential viability of a business in the UAE - Coursework Example

?Feasibility Study to explore the potential viability of a business in the UAE By Business of Introduction Essentially a feasibility study intended to explore the viability of a business idea or entity involves various considerations. The primary ones include political, economic, social, technology, and legal implications. In addition, market trend forecast on the product under study within the same industry is the epicenter of this paper (MAHMOUD, 2012). PESTEL analysis is intended to be applied in examining the anticipated feasibility upshot in the United Arab Emirates (UAE). The intended feasibility study revolves within the tourism industry. This paper intends to consider venturing in hospitality section in one of the Emirates in the United Arab Emirates (UAE). This is a service industry that will offer all the hospitality services in a 3- star hotel, particularly to tourists both home-based and international (NEYADI, 2002). Hospitality industry in the UAE is one of the competitive ventures. Both the local and global investors have for the past decade invested in this industry, and have continued to sustain the market trends in service delivery and client satisfaction. United Arab Emirates The coverage and vastness of how much the United Arab Emirates has developed in almost all sectors of economy, primarily in the last decade is consummate, even ahead of the global standards (MAHMOUD, 2012). This incredible growth in political, social and economic sectors has put the United Arabs Emirate in the international chart as one of the cutthroat commercial centers in the world. The UAE is situated in the East of the Arab globe. It stretches to the Gulf of Oman and to the North of the Arabian. UAE has an area of 83,600 km2. The area has plentiful islands. Sand dunes, isolated oases, and extensive deserts characterize the region. Abu Dhabi is the largest of the Emirates. It has an area of 67,300Km2, followed by Dubai with 3,900Km2 and Sharjah occupy an area of 2,600 Km2 (NEYADI, 2002). A federation of seven Emirates formed the United Arab Emirates in 197. The emirates include Sharjah, Ras Al Khima, Dubai, Ajman, Abu Dhabi, Fujairah and Umm Al Quwain. The political structure The UAE observes distinctive leadership. It has no legal political parties. The supreme power rests with the seven heritable Emirs sheikhs. The President who is the commander in chief heads the Armed forces. The prime minister heads the defense ministry and he is the ruler of Dubai. Rulers administrate the other emirates. The Federal National Council, which was formed in 1972, is the UAE parliament (MAHMOUD, 2012). The FNC is presumed as the milestone of the federation’s legitimate and legislative process. The FDC is accountable in advising the cabinet arm of the government and the supreme council. However, the FNC has no jurisdiction to take precedence over the arms’ decisions. The principal function of the council is to offer administrative and lawmaking roles as stipulated by the constitution. The UAE was founding associate of the (GCC). The Gulf Cooperation Council (GCC) members include UAE, Qatar, Bahrain, Saudi Arabia, Kuwait and the Sultanate of Oman. This kind of leadership has continually provided a stable political environment, which is conducive for investments. Economic trend Political stability has contributed immeasurably to the economic growth attributed to primary sectors of the economy. Some of these sectors include tourism, agriculture oil and gas. The UAE’s GDP has continually grown due to the unremitting political stability (MAHMOUD, 2012). The consequent economic stability is the significant factor for both home and global investors. It is essential to note that, the projected 3-star hotel and resort stands a better position in developing at a high rate due to the well- established financial backdrop based on sound economic ethics under the management of sound institutions (NEYADI, 2002). The social patterns in relation to the UAE population The UAE’s population is estimated at 8.5 million. Despite having a universal cultural inheritance, the tribal links are sturdy in each Emirate. Particular families rule the emirates for instance; the Al Maktoum rules Dubai whereas Al Nahyan family rules Abu Dhabi. Abu Dhabi, Sharjah and Dubai consist of a projected 80% of the total populace of the UAE (MAHMOUD, 2012). This implies that consideration of the establishment of the intended venture should be focused on the densely populated emirates. This is because a huge population provides a larger market niche and other attributed demand and supply benefits. Use of Arabic as the official language, is embraced in the UAE however, languages such as English, Malayalam and Hindi remain extensively used. English language is used in all the paper communique in business transactions (NEYADI, 2002). On the same regard, the management of the intended venture will have to appreciate the culture of inclusion, particularly when employing workers. This attracts workers from various background set-ups. This culture is beneficial to break in the UAE market in a bid to create and sustain a market niche in the hospitality industry. UAE efforts in ensuring saline features of monetary and business milieu for the international investors are an outstanding advantage for new comers in this Arab world (MAHMOUD, 2012). The forecast on the preliminary and prospect market trends of the intended 3-star hotel in the UAE will be considered based on the accessibility of a well-coordinated infrastructure that is intended to offer all basic requirements to the primary centers. In addition, the virtual absence of taxation remains to be the underlying benefits to reap by the anticipated company in the UAE (MAHMOUD, 2012). These incentives to global investors facilitate substantial profits for the overseas companies. Moreover, doing commerce in the United Arab Emirates has eased registration measures and enhancing proficient operation through free trade zones. Environmental The climatic situation of the United Arab Emirate is characterized by scorching and humid summers with temperatures stretching to 46 degrees (MAHMOUD, 2012). The winters experience least rainfall. Tourist horde the UAE during the summer season Legal System The UAE is a communal law authority that is guided by a blend of the French, Roman and Islamic laws. However, the continued increase of the entry of global law firms from countries with common Law authority has seen the functioning of Common Law doctrines in commercial contracts (MAHMOUD, 2012). The use of Common Law has constantly prejudiced the legal system of the UAE. Two kinds of laws exist in the UAE. They include the federal, and the local laws. Each emirate has retained its own sovereign legal authority. The civil and business disputes found reprieve in the Dubai International Financial Centre (DIFC), which was established in 2004. Its main jurisdiction is limited on governing universal and business disputes. These courts are made of intercontinental judges from numerous common law nations. This is intended for fair play and respect for cultural diversity. English is official language used in all the proceedings of the DIFC (MAHMOUD, 2012). International firms stand to benefit from the expanse of the DIFC courts jurisdiction inclined to policy shift, which is intended to give the international community unparalleled admission to the DIFC courts. The intended 3- star hotel and resort in the UAE will not meet any permissible impediments particularly contractual disputes. A company with an integrated system of action and the custom of inclusion will boost its operations with narrow line of disputes. Market and competitor analysis The hospitality industry is one of the vibrant industries in the globe. The vigor is closely attributed to copious factors particularly those that derive from the consumer tastes (KARASNEH & FATHELDIN, 2005). The physical products such as the hotel accommodation wake up to new consumer taste dynamics. Regular delivery of the brand characterizes the dynamic customer trend. This trend of dynamism is closely attributed to the continuous projected consumer’s demands in the future times as being sophisticated (KARASNEH & FATHELDIN, 2005). The current market mix of the hotel industry is quite complex due to stiff competition from both local and international companies. It is imperative to note that, a fragmented market strategy is fundamental in penetrating the intended hotel in the market. In most cases, new entrants find it difficulty in creating and sustaining a market niche in the initial stages. The demand for services of the intended hotel depends on numerous factors, which include pricing, quality of the services offered and the ways of occupying the market niche (MAHMOUD, 2012). Financing the enterprise A three-star hotel is an expensive venture, which requires both financial and legal investments. It is an involving venture, particularly when it is done in a foreign country. Finances for this project are budgeted from the retirement benefits scheme (KARASNEH & FATHELDIN, 2005). The estimate for the completion of the hotel is projected at $ 69 million. Marketing strategy Marketing is the epicenter of the success of their venture. All profits made by companies are directly attributed to the efforts done to market the company products or brands (KARASNEH & FATHELDIN, 2005). Being a new venture, it requires extensive marketing campaigns intended to create awareness of the services offered and at what prices. UAE attracts visitors from across the globe. This implies that, the market space is well spread across the world. It requires extensive marketing to reach the clients spread across the world (KARASNEH & FATHELDIN, 2005). The globalised nature of the current market space compels the management of the intended venture to use a globalized approach in marketing the company. Internet marketing is the best approach to create a market niche that is composed of clients with cultural diversity well spread across the world. In addition, internet marketing reaches a relatively large audience within a short period (MAHMOUD, 2012). This is the best channel for swift and extensive marketing. Pricing strategy The hotel industry in the UAE is competitive. The success of hotel companies lies on the pricing strategy. With the numerous hotels established within the borders of UAE, numerous investors in this field have resorted in doing price comparison. Price comparison remains the sure way of pricing in a saturated but competitive industry (KARASNEH & FATHELDIN, 2005). In so doing, the prices set will be at the bar with the rest of the hotels. This reduces over and under pricing which is detrimental in attracting and retaining customers. Summary and recommendation The hotel industry in the UAE is competitive because of the influx of foreign investors who have established highly rated hotels. This implies that, any investment in a hotel industry has to come with financial sacrifice. In addition, the PESTEL analysis indicates that, the UAE milieu is conducive for a business venture. The political and economic stability, technology, legal and social patterns support investments (NEYADI, 2002). However, establishments and sustaining a market niche for a newly opened hotel is a challenge, and it requires extensive marketing strategy such as online approaches (NEYADI, 2002). This marketing approach enables swift reach of the global based clients. On the other hand, this study recommends the new investors in the hotel industry to carry out pricing comparison before settling on a particular service prices. This will enable them avoid over and under pricing which is detrimental in attracting and retaining customers. List of references KARASNEH, I. A., & FATHELDIN, A. M. (2005). Market structure and performance in the GCC banking sector evidence from Kuwait, Saudi Arabia, and UAE. Abu Dhabi, Arab Monetary Fund. MAHMOUD, S. M. (2012). A pilot study to test the feasibility of using action research methods to develop spiritual care by nurses in the United Arab Emirates (UAE). Dissertation (M.Phil. Nurs)--King's College London, 2012. NEYADI, S. A. (2002). The feasibility of establishing a ministry of tourism in the United Arab Emirates. Thesis (M.A.)--California State University, San Bernardino, 2002. Read More