Pestle Analysis Of Dubai Essay

Question:

Discuss about the Pestle Analysis of Dubai.

Answer:

Introduction

Dubai is one of the most populous city and an important business hub of the Middle East. The economy of Dubai is based on the revenue earned from oil industry. Dubai enjoys competitive cost and market advantages which has helped to create an attractive and ideal business environment for the fashion industry. It is one of the major trading and export hub. It is also one of the major tourist destinations which will also help in the business expansion of Potpourri. The trading partners of Dubai i.e. U.S and China will also help in the expansion of business. Dubai is one of the fastest growing economies in the entire world. The macro environmental factors of Dubai are favorable and thus it will help in expanding the business of Potpourri (Inhorn 2016.).

PESTLE Analysis

PESTLE analysis is useful for the business organization to get an idea of the various macro environmental factors. It will help the management to know whether the business will be profitable in that particular country where it wants to expand. The pestle analysis of Dubai will be highlighted in this paper.

Political

Dubai is a very stable economy and offers a very suitable environment for any new business to enter into their market. It is one of the most prosperous economies in UAE where people enjoy a decent standard of living. Dubai shares a close political relation with USA and China which will be an additional benefit for Potpourri. This will help Potpourri to enter into the market of Dubai without any political restriction. The retail market in Dubai attracts many foreign investments from various brands and thus it will also be profitable for Potpourri and other fashion leaders (Khan, Rodrigue and Balasubramanian 2017). The designers of Potpourri are innovative and they can fulfill the demand of the customers with their latest designs. Dubai does not have political turmoil with any other countries which will not lead to any disruption in its supply chain. The friendly political environment will be advantageous for Potpourri to expand its business in Dubai and be a global leader in the fashion industry (Al Shama 2014).

Economic

Dubai is a highly developed and a wealthy economy. The GDP of Dubai is 2.84% and its inflation rate is 2.94% (Alajoutsij?rvi, Juusola and Lamberg 2014). It has least market barriers and thus offers an open market environment for any business. The economy of Dubai is known as the financial hub and high security market for the shopping malls. The economy of Dubai earns major revenue from real estate, tourism and financial services. The cross border trade will also facilitate Potpourri to set its business easily in Dubai. The revenue earned from natural gas and petroleum contributes a very small proportion to Dubai’s economy (Carbonell 2015). Dubai also earns huge revenue from the tourism industry and this offers a large customer base for Potpourri. The inflation rate of Dubai is very high and it will rise further in this year. This will be challenging for Potpourri to expand its business. The impact of subsidy cuts is also very low and thus this has raised the value of the currency of Dubai. There is 100% repatriation of profits and capital and this will be beneficial for Potpourri.This economic growth in Dubai will help to keep the inflation rate very high. The currency rate fluctuation is a boon for the economy of Dubai (Orcao and Perez 2014). The custom duty in Dubai is very low and it is about 4%. The foreign exchange control in Dubai keeps a close monitoring and control of the exchange rate fluctuations. Moreover, the import duties in Dubai are also very low and it will be profitable for Potpourri. There is no direct tax on personal income or corporate profit in the economy of Dubai. Potpourri can expand its business and it will be advantageous for the company to expand in this country. Dubai ranks 5th on the “Ease of doing Business” which will also attract Potpourri to establish its business in this country. It is expected that it will grow more exponentially in the near future. This will help in the foreign direct investments as well as the local businesses (Maletic et al. 2016).

Social

The people of Dubai try to preserve their traditions along with the acceptability of the modern tradition and values. The literacy rate is very high, which accounts to 91.3% because of their great preference for education. As a result, the economy has grown fondness for modern means of shopping. This is a beneficial factor for Potpourri as it will be easily accepted by the customers. The people of Dubai prefer to wear such clothing which does not offend the sensibilities of anyone (Orcao and Perez 2014). The cultural attachment of the local people to foreign goods will facilitate the export business of Potpourri. Though they prefer and accept modern dress and culture, but they are orthodox in preserving their religion. The native women are expected to wear their traditional dress when they attend any social or religious functions. The designers of potpourri can design the dress accordingly for the people of Dubai. They must also hire specialist who will design the dresses according to the needs of the people (Waninger 2015).

Technological

Dubai is known for its continuous innovation and technological growth. It stands 15th on the Global innovation Index. It has improved its innovation technologies and thus this has attracted new companies to start their business in Dubai. All these factors will positively impact Potpourri as they will facilitate the company to take up new innovation from time to time for their growth. The increasing use of internet will also help the customers as well as it will also benefit the company (Masarrat, Jha and Dash 2014). The manufacturing and distribution decisions also depend on the infrastructure of the company. Potpourri will use high technologies in designing and fashion so that they can fulfill the requirements of the clients within the stipulated time. Dubai is also connected to 130 global destinations via 85 airlines. It is also served by more than 120 shipping lines and thus this will help in the expansion of business of Potpourri. It will also help in the expansion of export and import business of Potpourri (Choi et al. 2014).

Legal

Dubai is regarded as one of the safest cities in UAE with 0% crime rate. The laws, rules and regulations of the country are very strict and severe punishments are given to the law breakers. The economy of Dubai charges a corporate tax of 55% on the total revenue of the company. This tax rate is not applicable to all countries. The tax rate is very high compared to the other countries. This will be challenging for Potpourri as it will have to earn higher profits after paying off the tax (Chipulu et al. 2014). According to the law of the country, people are allowed to wear western clothing but they cannot go out with much exposure in the public. The customs duties of the country are also very strict. People cannot carry unwanted or illegal things anywhere and if they do so, it is considered as a serious breach against the law of the country. The people also cannot click photos or pictures according to their own will in the country without taking any government permission (Dallabona 2015). Potpourri also needs to design the clothes according to the laws framed by the government. They must consult the legal advisory body before establishing the business in Dubai. A close monitoring of the entire fashion industry is essential to compete with the other competitors and run a profitable business (AbuElEnain and Yahia 2017).

Environmental

Dubai is one of the highly polluted nations and the severe impact of air pollution has led to several diseases among the people. The rapid urbanization is one of the main reasons for the poor environmental condition of Dubai. There is no effort by the government to control pollution. This will affect the business of Potpourri. The business operation of Potpourri may not be harmful to the people of Dubai. The company should abide by the rules and laws of the country so that it can control its environmental pollution (Paris, Baddar and Stephenson 2016). Steps must also be taken to improve the sewage treatment operation. There are also certain ethical obligations in the economy. Potpourri needs to consider all these obligations to operate its business in Dubai. This will also help in improving the environmental sustainability of the economy (Buckley and Hanieh 2014).

Conclusion

Thus, it can be said that there are certain opportunities and challenges which are to be faced by Potpourri for establishing its business in Dubai. The people of Dubai enjoy high standard of living and thus they prefer to buy costly and fashionable items. Potpourri can sell the items at an affordable cost so that it will be preferred by a large section of people. They must design must exclusive items for the wealthier class who prefers unique products. The political condition of Dubai is favorable to Potpourri to expand its business. Though there are certain challenges in the economic factors, but Potpourri can establish its business effectively. Potpourri will follow the legal, technological and environmental laws of Dubai to establish its business successfully.

References

AbuElEnain, E. and Yahia, S., 2017. Benchmarking the Egyptian Shopping Tourism Sector against International Best Practices in Dubai, UAE. EJMS European Journal of Multidisciplinary Studies Articles, 4.

Al Shama, N., 2014. Sustainability of the Dubai model of economic development.

Alajoutsij?rvi, K., Juusola, K. and Lamberg, J.A., 2014. Institutional logic of business bubbles: Lessons from the Dubai business school mania. Academy of Management Learning & Education, 13(1), pp.5-25.

Buckley, M. and Hanieh, A., 2014. Diversification by Urbanization: Tracing the Property?Finance Nexus in Dubai and the Gulf. International Journal of Urban and Regional Research, 38(1), pp.155-175.

Carbonell, A., 2015. Dubai: The Political Project of a New Metropolis. Gulf Cities as Interfaces, p.229.

Chipulu, M., Ojiako, U., Gardiner, P., Williams, T., Mota, C., Maguire, S., Shou, Y., Stamati, T. and Marshall, A., 2014. Exploring the impact of cultural values on project performance: The effects of cultural values, age and gender on the perceived importance of project success/failure factors. International Journal of Operations & Production Management, 34(3), pp.364-389.

Choi, S., Chai, S., Nam, Y., Yang, S. and Protoppa, C., 2014. Success Factors for Luxury e-commerce: Burberry’s Digital Innovation Process. International Journal of Information Systems Management Research and Development, pp.1-10.

Dallabona, A., 2015. Luxury fashion flagship hotels and cultural opportunism: The cases of Hotel Missoni Edinburgh and Maison Moschino. Hospitality & Society, 5(2-3), pp.117-143.

Inhorn, M.C., 2016. Cosmopolitan conceptions in global Dubai? The emiratization of IVF and its consequences. Reproductive Biomedicine & Society Online, 2, pp.24-31.

Khan, Z.R., Rodrigues, G. and Balasubramanian, S., 2017. Ethical consumerism and apparel industry-towards a new factor model.

Maletic, D., Maletic, M., Al-Najjar, B., Gotzamani, K., Gianni, M., Kalinowski, T.B., Pacaiova, H., Nagyov?, A. and Gomiscek, B., 2016. The role of contingency factors in physical asset management: An empirical examination.

Masarrat, G., Jha, S. and Dash, S., 2014. College-goers Psychographic Behaviour towar College-goers Psychographic Behaviour towards Luxury Fashion in UAE ashion in UAE. LISTENING TO CONSUMERS OF EMERGING MARKETS, p.94.

Orcao, A.I.E. and Perez, D.R., 2014. Global production chains in the fast fashion sector, transports and logistics: the case of the Spanish retailer Inditex. Investigaciones Geogr?ficas, Bolet?n del Instituto de Geograf?a, 2014(85), pp.113-127.

Paris, C.M., Baddar, L. and Stephenson, M.L., 2016. Young Emiratis’ Perspectives of the Quality of Life Impacts and Long-Term Sustainability of Tourism in Dubai.

Waninger, K., 2015. The veiled identity: hijabistas, Instagram and branding in the online Islamic fashion industry.

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