UAE: Market and Country Research - Case Study Example

Question 1 Strengths The country has a perfect geography, making it ideal for construction activities and infrastructural changes. Ideal location for foreign investment; situated between the continents of Europe, Africa, and Asia and has a thriving local market. Educated and knowledgeable workforce that reduces the need for more training. This saves a lot of money. The UAE has no restrictions on the importation of labor from all over the world. Labor is therefore cheap and easy to obtain. Weaknesses Roberta’s current capital reserves are still well short of the amount she needs.

This will slow her down. Roberta still has no concrete business plan. This is the first thing that should have been created to provide direction in situations like this. Current UAE quotas and tariffs could limit the number of components she can import from China. The amount of business the company can do when it re-exports the building blocks could be limited. Opportunities A couple of Emirati sponsors might finance her business, giving her a launch pad for setting up her business. Roberta wants to maintain ownership of her business as much as possible.

Total ownership provides Roberta with the freedom to implement her ideas and steer the business according to her preferences. Importing materials from China. China produces large quantities of materials which can be taken advantage of by importing in large amounts to gain economies of scale. Basing her new business in the UAE. The UAE is one of the fastest-growing markets in the world; it provides the perfect location for setting up a business. Roberta has a good rapport with the business men and women that she has met.

Good relations and interpersonal rapport is essential for the business to grow together with its entities. Converting materials into prefabricated building blocks that can be sold locally or exported to international construction companies. Threats Local sponsors must own fifty percent of Roberta’s business; she does not want this. Ownership by external investors limits the amount of control the founder has, and gives external investors some power. Sharing profits with any local sponsor. No business owner wants to share profits with other investors unless the returns justify such a move.

Sharing profits infringes on the business owner’s original objectives when establishing the business. Roberta only has forty percent of the capital needed. Ideally, she should have all the capital required to launch the business. Question 2 It seems that Roberta has not carried out enough market and country research to arm herself with the necessary information she needs to set up. Most of her weaknesses are unfounded, and some of her threats are limited. For instance, she has not identified who will be her major rivals in the market and what she can do to gain an advantage over them.

She has also not identified how she will run her business in order to maximize profits. She has not determined how she will cope with the cultural change when she moves to the UAE. This factor appears trivial on the surface but it has the potential to inhibit her ability to operate. Her first order of business should be to harness enough capital for the business and make sure she is ready to set up whenever the opportunity arises. After that, she should identify the Free Trade Zones available in the country and determine which one is perfect for her business.

The zones will eliminate some of her weaknesses and threats involving tariffs and quotas, limits on re-exports, and the ownership of her business. Since she is not well-informed, she thinks that she must sell part of her company to the Emirati businessmen. In summary, once she is ready to set up (capital and good business plan) the zones will solve most of her problems. The most important part is to make sure is ready when the idea is feasible. She should start viewing her plan as one big opportunity instead of a path filled with challenges, because some of those are nonexistent.

Question 4 UAE’s Free Trade Zones have been one of the most important and promising steps undertaken in the quest to attract foreign direct investment (FDI). The Free Trade Zones, which have been increased consistently since the first one was created in Dubai, will play the biggest role yet in opening up the UAE. The first zone in Dubai was located at Jebel Ali. The zones provide 100 percent external ownership, meaning foreign investors do not have to worry about the government owning a percentage of their entities before they can do business (Rogmans, 2012).

100 percent ownership also reduces bureaucracy by allowing foreign investors to focus on their businesses instead of government interference. The zones provide no restrictions on profit repatriation; this has been frequently cited as the most important advantage offered by the zones (Hayes, 2013). Foreign companies can “export” profits back to their mother countries without facing penalties from the government; they can do this with all their profits and no repercussions would occur. The zones also offer no exchange controls and a guarantee of no personal or corporate income taxes for 15 to 50 years starting with set up.

This move has triggered an massive influx of companies to the UAE, akin to prospectors rushing to a place after hearing the possibility of striking gold. This is pure gold in business terms however. The zones also provide efficient communication modes and infrastructure. Internet, communication hardware and software, as well as stable frameworks to support communication among business have been put in place in the zones. The zones have no import and export duties, another major attraction for foreign investors (Rogmans, 2012).

Typically, foreign investors shy away from countries with high import or export duties unless the returns justify the investment. Most foreign companies are used to working with high duties and maximizing returns in their businesses to counter the effect. It is easy to imagine what the impact of no duties is; and there are not many places in the world with such privileges. The impact has been huge. The zones have no restrictions on recruitment, and do not compel foreign companies to seek special aid when obtaining work permits for foreigners (Jaffer, 2012).

This means that no multiple visits to consulates are required and no bribes are needed for expatriates to gain work permits. Foreign investors detest the hassle involved in getting important staff to work comfortably in other countries; the zones provide this. The zones have plenty of offices, warehouses and factory locations. These guarantee the availability of space for numerous foreign companies without needing to move to more expensive areas that affect their ability to do business. Space is one of the most vital features in most “ease of doing business” rankings.

It is the same as location. Finally, the zones offer excellent road, port and airport infrastructure to facilitate movement of good and human resources within the UAE and across the world (Bains, 2011). The infrastructure is well-maintained and is often upgraded every now and then to suit changing business and economic needs. Foreign investors in the UAE take pride in the level of quality the infrastructure they use is. The zones have managed to provide foreign investors with the best environment do business without worrying about other inconsequential factors.

References Bains, E. (2011). A guide to doing business in the UAE. Dubai: Meed Media. Fenn, M. (2013). Inspiring global entrepreneurs: Discover how to successfully set up and run your dream business. S.l.: Live It. Hayes, B. (2013). Business continuity Playbook. Oxford: Elsevier. Jaffer, S. (2012). Investing in the Middle East and North Africa (MENA) region fast track opportunities for growth. London: Euromoney Books. Rogmans, T. (2012). The emerging markets of the Middle East strategies for entry and growth.

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