Social and economic development in the Gulf - Myassignmenthelp.Com

Question: Discuss about Social and economic development in the Gulf. Answer: Introduction Strategic business development is basically an investment made in organised mapping and networking of the surrounded ecosystem so that it yields transformational opportunities. Theoretically, every company is exposed to transformational opportunities but very few manage to undergo and identify themselves with the change. It might come into practice through equity financing, divestiture and acquisition of various products, companies, technologies and appropriate partnership (Hill, Jones Schilling, 2014). In this highly competitive environment it is more difficult to balance the stardom and uniqueness among competitors. Strategies are formulated to shape and polish the action plan so that long term goals and objective could be timely met. This newly added dimension represent a pivotal role in the increased coverage of business for any company. One of the prominent name and the largest hotel chain operator in Ireland is of Dalata Hotels. Throughout the country it has over 38 hotels, including the renowned name of Maldron and Clayton chains (Mattimoe, 2013). All the hotels under the brand name are rated as three or four star, which on a joint account include over 7,114 rooms. Initially, Dalata was customary In June 2007 by Pat McCann with an investment from TVC holdings plc. And Davy property holdings. In 2008, Dalata came out with the rebranding of its leased hotels under the shadow of its own brand (Maldron hotels brand). Dalata management services abbreviated by DMS was set up in 2009 in order to promote hotel operational as well as management expertise to its customers and banks. Dalata raised up to 265 million by the issuance of existing ordinary shares listed on AIM and ESM. In the meantime of May 2015, the group had ten of the hotels rebranded in its own portfolio by the name Clayton Hotels. In this regards, Moran Bew leys Hotel is one of the largest acquisition by the group representing the net value of 453,000,000 (Dalata hotel group plc. 2018). Main body: This report is prepared in context of Middle East region, country chosen as Dubai. The investable MENA Which is abbreviated form of Middle East/ North Africa region comprises of 11 diverse countries within it. Dubai is rated as the largest city of UAE, cosmopolitan and truly sinking city with diverse population of (2,106,177) from worldwide (El Mallakh, 2014).The country have young workforce in high ratio, rapid economic factor of growth, political and societal transitioning. Dubai enjoys the location of strategic importance and highlights as the biggest re-exporting hub bulging in the Middle East (Buckley, 2013). Its low operative logistical cost, outstanding infrastructure, liberal policies of government, zero crime rate and international outlook are key indicators for attracting investors. The economy of UAE is ranked as second largest in Arab with the gross domestic product rate of 3.4% in 2017. The standard of living of people is also high. Apparently by 2018, hotel occupancy in Dubai is expected to expand by whopping 77% (Katiri Fattouh, 2017). The industry will be pushing to limits by targeting over 20 million tourists by the end of 2020. General external environment In strategic forecasting, PESTLE analysis technique should be used for studying the long term repercussions. It will help to great extend in decision making process and allocation of resources. These factors are beyond the control of an individual, however after the careful analysis the former can mould the actions towards the schemed planning so that objectives are met (Paul, Yeates, 2014). PESTEL stands for Political factors The political environment is highly stable, rationally young and sovereign. Also, there are laws which govern the minimum wage rate for the labour, prevention of discrimination and sexual provocation. The tax rate vary depending on the star category of hotels and luxury granted. The ownership rate to foreigners are permitted up to 49% for limited liability companies and 100% in case of rest (Pestle analysis, 2018). The ruler of Dubai acts as vice presidency and have been governing the working of hotel industry in emirates. Economic factors Economic factors include dynamics such as taxation charges, economic growth, and rate of interest, inflation besides exchange. The economic environment which prevails in Dubai focuses upon capitalization of travellers, since they outflows great amount of money for services rendered in five star hotel property. The main source of revenue flow in Dubai is from tourism, financial services and real estate business. On corporate profits, the amount of taxation is nil. Custom duties are minimised to 4% with several exemptions. There is permission of 100% repatriation of capital and profits (Niblock, 2015). No control on overseas exchange, trade barriers and quotas. Social factors Dubai is the land of diversified cultures wherein people differ on the basis of demography, beliefs, and values. Variations in social factors have strong impact on demand of services by customers, which will be rendered by industry. Crime rate is near about to zero. Allowance of more than one marriage. Male contribute more than 70 % of expatriate population (Wolfsfeld, Segev Sheafer, 2013). Their preferences, language, culture followed, thoughts and background is also uneven, which provides hotel industry a diversified platform to serve and expand more in areas left untouched. Technological factors In order to prevent obsolescence and be technologically updated, the hospitality sector new to undergo the process of timely change. The prosperity which is possessed by this country allows it for procurement of newly added equipment and be in frontline (He Park, 2015). The diffusion of internet is high. Hotel industry should take into consideration that they have defined website and advertising policies representing their existence. It will also reduce the chances of losing the potential customers worldwide. In order to have the competitive advantages, there should very high information system. Hotel ambience should have digital HD TV, high speed internet, cameras of extraordinary quality and basic amenities of modernised technology which distinguishes their individuality. Ecological factors Environment is the leading part of everyones life which have direct impact. It is important to study these factors because the operations of any industry will grow in these ecological layers only. However in context of country like Dubai it has quite a hot, dry climate because of coastal areas (Bauman, Baird, Burt, Pratchett Feary, 2014). Apart from this, the clean and lively environment will drag more no. of tourist towards the country and thus the flow of hospitality sector will enhance. Legal factors The legal system in Dubai is landed upon principles of civil law and partial impact by Islamic Sharia law. Some by-laws are binding on customers safety, health and age law. Hotel industry is affected by possible influence of legal legislative law. However in contrast, the ruler of Dubai enact more of administrative law. The cases are heard by more than one judges, wherein juries do not apply. Dubai also have some free zones where law and regulations are different. These areas are best to conduct business as they have flexible conditions. 100% of ownership is granted to foreign companies, duty exemptions and major tax leverage. Also no limit on earning of profit and nil profit sharing (Davidson, Forsythe Knowles, 2015). Competitive environment The degree of various rivalry forces generating competitiveness in this industry covers their strength of operation, cost, product offering and positioning. The set of five forces which have impact on competitiveness are bordered in Porters 1980 work: barriers to entry, threat of substitutes, bargaining power of buyers and sellers, and the rivalry among existing competitors (Grundy, 2006). Barrier in entry of new competitors: Since forth in Dubai hotel industry is already an established sector, the entrance of any new entrant is a challenging task as recognised players in this field already have upper hand (Desai, 2013). Thus, it is favoured to choose the gateways of merger or acquisition with a renowned name. Alternatively, for survival the emergence of new innovative idea is preferred. In the limelight of legal matters, there is no such complexities on entrance. Threat of substitutes: The extent of threat in this sector is comparatively low as substitutes cannot be much in quantity. The value addition in quality and number of services rendered is the reason for its competitive nature which make distinguished from the rest. Thus, for any new entrant it flourishes as an opportunity as UAE keeps on organizing various events in back to back years. Some of those popular in this list are Dubai international parachuting championship, shopping festival, trade fair, conferences and gulf cup. To cope up with the potency of this industry, strategic proposal is vital. Bargaining power of buyers Here in Dubai, generally people have the power of bargaining in their hands as the facilities rendered by large no. of established hotels are even. The customer have wide alternatives available in case of any dissatisfaction experienced (Alves, 2013). Customers now are finding the internet websites which will determine and negotiate the bargain-basement on their behalf. Thus, it can come out as a threat to new arrivals unless and until they have something extra and defined to serve the targeted customers. Bargaining power of sellers This serene comes into account when for a particular item the number of customers are more and suppliers are very few. Such suppliers include real state builders, suppliers of raw material and crockery, real decorators etc. As hotel industry is already established sector in Dubai, there are large no. of suppliers fulfilling the former requirements, therefore have less of bargaining power (Sharma Sharma, 2015). Rivalry among existing competitors There is massive competition in established names like Burj Al Arab, Sheraton Dubai creek and Dubai 7 star hotel etc. The customers loyalty is the major determinant in this industry which could be a threat for new entrants. For the survival in long run after the entry, the new player needs to provide something distinct and exceptional which could be favoured (Bowie, Buttle, Brookes Mariussen, 2016). The overall threat or power of these forces is high, it depends totally on the Dalata group how it showcase itself. Strengths cover picture-perfect location, an array of hotels, shoppers paradise, business hub and prevailing nightlife. The only weakness practiced is very expensive city. Therefore, cost of living is high. Highlighted opportunities include attractive medical and family tourism, host of worldwide events and real estate. Other growing nearby locations, pollution, excessive no of hotels, drugs and sex aggregate towards threat. Internal Analysis: Strategic Capabilities The new entrant should have technologically forward-looking management, timely procurement of resources, advertising and targeted perspective (Al-Ansaari, Pervan Xu, 2014). Defined channel which maintain database and billing should be formularized. Resource audit, distinguishing between basic and unique resources The variables of basic resources include Dubai is multi-purpose occupational hub and has emerging and dynamic market economies. It is one of the prominent re export center at strategic location. The resources which are common to all the industries operating in Dubai are its world class infrastructure facilities, warm welcoming nature of its residents and liberal political along with economic policies (Collins Mees, 2013). Competitive structure of cost and high standard of living of people. Crime rate is almost zero. Young blood with professional studies background are easily available. The local tradition of commercial business is strong as well as endless choices are available in respect of potential business partners. The foreign network in trade of goods and services is also extensive in nature. Unique resources head covers 100% of proprietorship is allowed to foreign companies, duty releases and major tax leverage (Savino Batbaatar, 2015). There is no limit on earning of profit and its sharing is also prohibited. Establishment of free zones so that weights could be granted to the new entrants. Analysis of core competencies Some other competencies which cannot be copied easily include the pioneering interior design of room, dining hall, reception desk, and outdoor structures like lawns, parking, and swimming pools etc. Competitors are required on their part to get into the process of redesigning and reconstruction which could be unique and of immense value. This could be stretched in specialization of wide variety of food and beverages also. In UAE, efforts should be inclined towards advertising plan for new hotel. Some lucrative packages like free city tours and discounts could be offered (Hejase, Hamdar Maraouch, 2014). Basis of competitive strategy:- Earning of profit over the long run is the sole purpose of any company. Dubai is occupied with endless number of hotels, hence in order to be successive the new entrant must be highly competitive in nature. The functional approach include proper process of procurement, effective and efficient handling of resources and moreover, strategized advertising plan to beat up the competencies (Thorpe Connell, 2013). As long as there are no switching costs, the dissatisfied customer will keep on changing his loyalty. Consequently, competition will continue to prevail. In context of Bowmans strategic clock model which states how a product should be positioned so that it could gain most of the competitive advantage. The prevailing dimensions are price and perceived value (Shakhshir, 2014). Low price and low addition of value This position is not much competitive in nature. The product over here are not differentiated. In case of dalata hotels, this position will not work as a new entrant it need to be inclined towards innovative steps to gain market in Dubai. Low price The framework of business positioning over here is to be the low cost leaders in the market. Initially the profit margin should be kept as low as possible in dalata group so that the volume of sales increases over a period of time generating profit in long run. Hybrid Hybrid positioning encounters low pricing strategy i.e. in relation to competition but on the same end some product differentiation is must. For the determined purpose of building up brand image in minds of consumers dalata group should keep reasonable price and unique product differentiation. The value addition should be in consistent manner. Differentiation The aim is directed towards delivering the highest level of perceived value addition to customers. However in Dubai, dalata group first need to build strong awareness of brand and then focus on achieving relatively prices because the customers over there is expected to have their own brand loyalty. Focused differentiation This position discloses that product should be kept at top most price levels, wherein the targeted customers get attracted by its perceived value. The luxury brands aiming to achieve premium prices go for this kind of positioning. Dubai have the luxury hotels up to 7 star whereas dalata ranges between 4 -5 star group. Hence, keeping the premium prices will not attract the customers as they have alternatives ranging beyond. Risky high margins Under this strategy, the business plans to set extraordinary prices without any value addition. Rarely does it happen that, people contribute towards profit and without serving anything extra. Even if it so, clients will find better positioned product at low price eventually. The market environment for dalata group in Dubai is least expected to undergo such phase. Monopoly pricing Under a monopolist market, the no. of business offering the particular product is only one. As a result they have the privilege of gaining dominancy and setting prices of their own choices. Dubai have highly competitive market penetration, subsequently the visualizing of dalata group to gain monopoly will not be possible in realistic terms. Loss of market share This position stands as a guidelines for any disaster which might occur in any competitive market. Likewise, it is offering of higher value for the same price to beat competitors. On entry, this positioning should not be focused. Dalata group can emphasis on the strategy of hybrid positioning, as it is expected to yield best of the result with the vision of capturing the major market share by offering distinguished services at low or reasonable prices. Conclusion and recommendations: The two vital factors which enable any hotel industry to distinguish themselves is good location for meeting the relative target market and quality of service. Dubai justifies the former part and latter is the story of dalata group. However, Dubai has already well settled hotel industry so the efforts of dalata group to be in highlights requires endless labour. On the same note once the group develops its brand image in the mindset of targeted customers than profits and success stories would be limitless. Dalata group should avail the opportunity emerging in Dubai in terms of scale, revenue and long term growth. The above mentioned forces of model must be carefully studied and actions for the entrance must be drawn in relevant context. In order to capture the market of Dubai, dalata group need to choose the location of free zone so that it can avail the hypnotic benefits, various tax redemption and should plan up tactfully for advertising strategy. 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