SWOT Analysis of UAE’s Tourism Industry: Strengths, Weaknesses, Opportunities, and Threats

Strengths | Weaknesses | Fast decision making|   Negative image of the Middle East|   Oil money, booming economy|   Barren desert, the lack of natural resources|   Political neutrality and impartiality|   Only 20% of UAE nationals|   Unique beauty, hotels and attractions|   The lack of fundamental infrastructure: transportation, water|   Luxury experience includes relaxing beaches and invigorating sport and exploration opportunities|   Luxuries might appeal too small a segment|   Safe environment|  | |  | Opportunities | Threats |

Increasing oil price|   Strong competitors: within the region: Abu Dhabi, Qatar; outside of region: Singapore, Hong Kong|   Increase job opportunities for immigrants and natives|   Oil running out in 30 years|   Growing luxury market|   Terrorism and war could further negative image of Middle East, UAE|   Increase in foreign investment|   Limited media coverage|   Proactive attitude|  | Well-developed MICE environment|  | A successful small business should communicate to the customer why they should pick you among the myriad of options in your industry today.

For that A SWOT analysis should be done from a realistic point of view and keeping in mind a very discerning customer. The analysis should also consider the standards of the industry and your major competitors. A basic SWOT analysis should be Strengths Anything that the industry requires, that you do well and your competitor doesn't do can be your strength. For example your company's distribution channels, your direct marketing approach, your patented high end product. Weaknesses We can all list strengths, but can we be realistic and list weaknesses?

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This might be the take off point for any small business. Weaknesses can be anything from non efficient staff to a lack luster front end office. Opportunities Successful business turns threats to Opportunities. Opportunities abound today's ever dynamic world, where new markets are being formed and the customer is being provided with revolutionary products. Opportunities can come as new business regulations or even a wrong move by your competitor. Threats How you identify and tackle threats will pave your path to success. A new competitor with a more sophisticated product can be a threat.

Being aware of this in advance and making a better package for the customer to stand up against the competitor's new product is how a threat becomes an opportunity. SWOT is simple and like all simple and age old strategies very powerful. SWOT is a starting point and is also plays a major part in strategic planning. Pest analysis of UAE Name: United Arab Emirates. The Emirates are: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah. Government: Federation of the seven Emirates, each with its own ruler.

President: Sheikh Zayed Bin Sultan Al Nahyan. Area: 83,600sq. Km (including 200 islands) Location: Middle East, bordering the Gulf of Oman and the Persian Gulf, between Oman and Saudi Arabia Population: 2,407,460 and includes 1,576,472 non-nationals July 2001 Language: Arabic (official), Persian, English, Hindi, Urdo Religion: Muslim 96% (Shi’a 16%), Christian, Hindu, and other 4% Climate: Desert; cooler in eastern mountains Currency: The UAE Dirham (Dh) or (AED), 1Dh = 100 fils Exchange Rate: 3. 671 Dh per US $1 (http://www. uaeforever. com) Political factors:

The political situation in the UAE is stable. The Emirates banking systems have developed; relationship based banking and monetary system that is capable to fulfill later stage funding supplies, whether it is equity, loans or leasing. Almost banking organizations, represented by almost every major financial institution in the world can either invest or assist in accessing UAE’s emerging capital markets. Gaining commercial loans in the UAE is based on established credibility and relationships with influential people to create a more stable political atmosphere.

The government mainly sets up the financial politics but there are organizations such as the ADCCI (Abu Dhabi Camber of Commerce and Industry) that serve as a bridge between the private sector and the government. ADCCI provides a wide range of services, such as setting up the Sheikh Khalifa Fund to provide technical and financial support for small-medium enterprises set up by the youth, they also organize trade fairs, sending delegations abroad to promote Abu Dhabi as a commercial center and initiating training programs that train nationals to join the private sector.

The strong banking system increases presence of venture capital and government funding provide substantial financial resources to foreign and local entrepreneurs. The most crucial factor is raising capital for a new foreign entrepreneur is to establish good relationships with local guarantors or other established foreign entrepreneurs. The best thing to do here is to get a network of contacts essential for successful business in the system Political risk factors Four types of political risk factors must be examined in assessing the climate for investment in any given country.

They are: 1. Regime change: A change in key government personnel through normal electoral or authorized political processes, or through illegal means. 2. Political turmoil: General levels of politically inspired violence, including violent strikes, guerrilla action, or civil war 3. Government policy: Decisions with respect to fiscal and monetary policies, trade restrictions or foreign investment regulations. 4. External events: other countries actions that affect the country of concern. (book: Global Investing page 89). Taxes The UAE does not have any enforced federal income tax legislation for general business nor is any such tax envisaged in the foreseeable future. Taxation on trade or business income would be, in theory, based on income tax decrees issued by the individual Emirates prior to the crediting of UAE as federation in 1971. To income tax decree has been enacted by each Emirate, in practice the enforcement of these decrees is restricted to foreign banks and oil companies. To incant investors there is no personal taxation in the UAE.

Except for oil and gas-producing companies that pay royalties and taxes on their proceeds and foreign banks that pay 20% of their profits, there are no direct corporate income taxes; there are no preservation taxes. In the free zones, enterprises are granted at least a 15-year tax exemption guarantee regardless of the changes in the laws. The currency is fully convertible and there are no taxes on the repatriation of capital or earnings. Further, there are no foreign exchange controls, quotas or trade barriers and import duties and tariffs are extremely low. (Book: Banking in the UAE) Economic factors:

In the last fifteen years the economy of UAE has move very quickly. The discovery of oil and its development provided the drive to the local trade, which earlier mainly represented the entrepot trading activities of Dubai. The primary trade strength of the UAE has been reconfirmed by the really strong economy, which was almost unconstrained by the Gulf War and other regional events. (book: UAE Economy) The banking system consists of the Central Bank, 21 national banks with 281 branches, 28 foreign banks with around 1,001 branches, one restricted license bank, two investment banks and 10 representative offices.

The Central Bank acts as the government’s advisor on financial and monetary matters, issues currency and controls the banking sector. The national banks have a dominant share of the market. The leading institutions are National Bank of Abu Dhabi, Emirates Bank International, National Bank of Dubai, Abu Dhabi Commercial Bank and Mashreq bank. The foreign commercial banks have about 25% of the market share and hold roughly the same amount in total bank assets.

The regulation of the UAE financial market was taken a further step in March 2000 with the launch of the Dubai Financial Market, which made the buying and selling of stocks official previously, this had to be carried out informally through private investment agencies. With less than 10 companies listed and Volume of $1 million in daily transactions, the Dubai Financial Market is early to provide an environment sufficiently attractive to act as a magnet for the massive overseas reserves (estimated at $600 billion by the IMF). There are even investments for foreigners now in the Emirates.

A recent announcement made by public joint stock company EMAAR properties (owned 32% by the Dubai government) to allow foreigners to own up to 20 percent of shares is a major move towards opening up of the UAE financial market to international capital. Economic analysis in the UAE is difficult as there are delays by the federal and emirate governments in publishing comprehensive and accurate statistics in a timely manner. The private sector institutions including banks and foreign oil companies are not allowed to disseminate statistics directly to the public.

The UAE has an open economy with one of the highest GDP per capita in the world and a sizable annual surplus. (www. emirates. org/economy). This pie outlines the economic sectors GDP for year 1994: The UAE has good economic conditions including strong currency; strong GDP and population growth (present rate approximately 6. 5% per year) therefore, provides significant opportunities for entrepreneurs in non-oil related sectors Porter five force model on Dubai The UAE retail sector continues to grow, supported by the upgrading of existing retail stores and the addition of state of the art new mega retail stores.

The UAE market presents retailers with diverse relatively high-income consumers. Exporters who are willing to establish personal relationships, consolidate shipments, and meet the labeling requirements of the UAE market will find a rapidly growing sector in which to sell a wide range or products. Annual sales in the industry are estimated at $3. 5 billion. The UAE food retail sector continues its aggressive growth. More large type stores are being built. French retail chain already operates in the market while a new one is being prepared to launch its services. Value of retailed products are currently estimated by trades at about $2. billion. The French Retail Giant, Carrefour, has moved aggressively into the retail of food and non-food products in the United Arab Emirates and is expected to open at more locations across the UAE. Other Arabian Peninsula markets are definitely in the cards for this retailer as consumers go more and more for low prices and everything under one roof. The author analyzes the Food Retail Industry in the UAE in Michael Porter's Five Forces Analysis. It uses concepts developed in Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market.

Porter referred to these forces as the microenvironment, to contrast it with the more general term macro-environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace Food Retail Industry in the UAE– Porter’s Five Forces Strategy Analysis The UAE retail sector continues to grow, supported by the upgrading of existing retail stores and the addition of state of the art new mega retail stores.

The UAE market presents retailers with diverse relatively high-income consumers. Exporters who are willing to establish personal relationships, consolidate shipments, and meet the labeling requirements of the UAE market will find a rapidly growing sector in which to sell a wide range or products. Annual sales in the industry are estimated at $3. 5 billion. The UAE food retail sector continues its aggressive growth. More large type stores are being built. French retail chain already operates in the market while a new one is being prepared to launch its services.

Value of retailed products are currently estimated by trades at about $2. 5 billion. The French Retail Giant, Carrefour, has moved aggressively into the retail of food and non-food products in the United Arab Emirates and is expected to open at more locations across the UAE. Other Arabian Peninsula markets are definitely in the cards for this retailer as consumers go more and more for low prices and everything under one roof. Aruvian's R'search analyzes the Food Retail Industry in the UAE in Michael Porter’s Five Forces Analysis.

It uses concepts developed in Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro-environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace

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