The UAE-Dubai Service Sector - Case Study Example

UAE-Dubai Service Sector Name: Number: Unit: Course: Tutor: Date of submission: Table of Content Table of Content 2 UAE-Dubai Service Sector 3 UAE-Dubai Service Sector Introduction General overview United Arab Emirates (UAE) is one of Middle Eastern countries. UAE has seen a remarkable growth for the last couple of years a fact which has placed the service sector on the world service map. The Country’s burgeoning service industry is footed on the fact that the UAE government has invested a lot of efforts in economic diversification (Kerr, & England, 2009). In addition (Mellahi, 2007), the private sectors’ active participation and favorable policy framework of the government has created a nice service industry environment in regards to revenue generation and investment. Moreover, strong consumer confidence, rising purchasing power, stabilizing prices of crude oil, promising tourism and travel sectors, rapidly increasing economy, and population growth are driving forces to service industry progression. Forstenlenchner, (2010) the provision of relaxed tax, Dubai shopping festival events, highly developed free-trade-zones and modern hypermarket fostering: with institution of modern shopping infrastructures like modern shopping malls offers auxiliary growth force to the service industry. Strengths of service industry in Dubai Sustainable economy The economic policies and service industry policies increases thrust to the sector. The nation has a stable economy which plays a major role in boosting and strengthening the service industry. This is because it has effective Foreign Direct Investment (FDI) inflows and trade ties. These factors are fundamental for service industry growth. In addition, infrastructural and social developments offer great support to the industry (Williamson, Jenkins, Coole & Moreton, 2004). In 2008 when other nations all over the world experienced deep recession, in Dubai spectacular economic growth was highly contributed by Dubai Airport Free Zones policy. In addition to supporting to the Dubai’s national economic growth, Airport Free Zones in Dubai attracts a good number of different service providing companies run by a team of professional which in turn ultimately leads to the growth of the emirates economy. Technology Dubai has modern infrastructures commendable for international hub (Robson, 1997). For example in 2009, the Center of Dubai International Convention and Exhibition hosted the 2009 Material Handling Middle East (MHME). MHME offers a substantial platform for international nations showcase for both their service and products to a wide range of visitors (Forstenlenchner, 2010). . In addition, the exhibition gives opportunity to the exhibitors to go in and build up their share of the market in the CIS.H.H, Indian subcontinent, Africa, Middle East and GCC. MHME is the communication and information technology, cargo, freight, automation, supply chain and logistic industries Ultimate International Exhibition. Strategic location Dubai is strategically situated with sufficient and efficient air and road connection to Africa, the CIS countries, the sub-continent of India, Middle East and the Gulf market. This fact supports the reason behind selection of Dubai to specifically hold MHME in 2009. Such transport infrastructures (Robson, 1997), also supports the reason behind robust growth to the service industry. Environment Service involved in environmental forecast play a greater role in the country’s development; Frost & Sullivan’s provides important information regarding insights on how to improve the environment of the country and evaluates on its attractiveness. This is important because it helps decision makers assess the effects regarding non-market forces and new opportunities on market identification. Hence, this service offers a substantial base for coming up contingency plans and investors are able to find out the risk factors specifically associated with a given industry (Williamson, Jenkins, Coole & Moreton, 2004). In addition, it is possible to carry out in-depth micro research in the service industry. Political stability Political instability affects growth of the service industry (Kerr & England, 2009). In UAE service industry supporting the environment is domestically underdeveloped. However, the fact that there has been political stability over the years has made the country perform well in service delivery in relevance to conserving the environment more so in Abu Dhabi and Dubai (Forstenlenchner, 2010). For example, political back up has been seen in coming with master plan of water, putting in place strategy of a robust environment and supporting mandates of green building. Weaknesses of service industry in Dubai Over reliance on imported technology Since service industry is a cross cutting industry touching and supported by other industries (Robson, 1997), service industry supporting the wellness of the environment in UAE and Dubai suffer from few domestic firms that manufacture equipment for control of pollution. Hence, the environment industry depends on imported technology and equipment from the United Kingdom, China and United States. Nevertheless, the UAE government has put substantial investment on the social and infrastructural sectors offering a room for future solution to waste management (Kerr & England, 2009). The banking industry challenges The sector of banking in UAE is quite fragmented as there are 28 foreign banks compared with 23 domestic banks. In particular Dubai and Abu Dhabi owns the bigger share of domestic assets in total. The country has great ambitions, however, there has been rising domestic deposits cost following competition in the market to 100% and others 120% coupled with minimal access to the capital market of the international debt. This is a great weakness has the banking sector finds a challenge in matching the country’s demands to those of the banking (The UAE banking). Opportunities Upgrading technology Regarding the environment service industry (Robson, 1997), it is acknowledged that coming up with treatment technologies which are friendly to the environment will open doors to well developed industry in the environment. To ensure environmental unfriendly situations are avoided this is supported by the fact that conducive economic and political policies in Dubai are in place. Dubai Chamber Dubai chamber of industry and commerce was started in 1965. It is a non-profit organization privately owned; which plays the mandate of protecting, supporting and representing businesses in Dubai. It aims at creating favorable environment for business growth as well as promotes Dubai being an International Business Center. Dubai Chamber carries the following services, providing access to reports and research updates, drafting contracts, credit rating services, serving business councils and groups, organizing entrepreneurs training programs, organizing economic and trade fairs forums, mediation and attribution, legal services, certificate of origin issuance and ATACarnets. Dubai chamber partners with Chamber of Commerce International (ICC) and as a result Dubai Chamber launched its first ICC for MENA (Regional Banking Commission Middle East and North Africa) a body in the banking industry in 2012. This is a an opportunity for the Dubai service sector to expand greatly due to such opportunities of welcoming investors and reaching them as well as eases their banking in the region (DCCI). Examples of services industries in Dubai Qatar airline Tourism and travel industry Intercontinental Dubai-Festival City Banking services Dubai electricity and water authority Frost & Sullivan’s environment services Hotel Service Intercontinental Dubai-Festival city, Millennium Airport Hotel etc Conclusion Dubai in UAE is one of the prosperous cities. Dubai has well prosperous economic status which has contributed to the progress on the service industries over the years. Stable economy following free airport trade zones, political stability and support, improved technology, geographical strategic location and excellent environment forecast factors are some of strongholds for the robust progress in the service industry like the tourism and travel industry among others in Dubai. However, over reliance on imported technology on some sectors and high rates on banking affects the effectiveness of service industry implementation and executions. Nevertheless, looking into to Dubai Chamber prospects and reviewing technology to avoid technology importation are factors which can solve the weaknesses and shoot the economy of Dubai further. References Dubai Chamber of Commerce and Industry http://www.dubaichamber.ae/ retrieved 28th October, 2013 Forstenlenchner, I., (2010). ‘’Workforce localization in emerging Gulf economies: the need to fine-tune HRM’’. Personal Review, 39(1):135-152 Kerr, S. & England, A. (2009). UAE to Safeguard Jobs of Nationals; Financial times, London. Mellahi, K. (2007). ‘’The effect of regulations on HRM: Private sector firms in Saudi Arabia’’. International Journal of Human Resource management, 18(1): 85-99 The UAE banking industry http://www.deloitte.com/assets/Dcom-Lebanon/Local%20Assets/Documents/ME%20PoV/ME%20PoV%20issue%205/POV%205%20Clearly%20very%20unclear.pdf retrieved 28th October, 2013 Robson, W. (1997), Strategic Management and Information Systems: an Integrated Approach 2nd edition, Pearson; Great Britain Williamson, D., Jenkins, W., Coole, P. & Moreton, M. (2004), Strategic Management and Business Analysis, 1st edition, Elsevier; Butterworth. Read More