pestal analysis of_UAE

PESTEL Analysis of United Arab Emirates

By:Srishti Tekriwal 212Gaurav Joshi 219Harshit Ajmera 238Shivani Khullar 243Gaurav Khullar 244Ashutosh Goel 263

Political

Flow of the PresentationPESTEL Analysis consists of the analysis of :

P

E

S

Economic

Social

Technological

Environmental

Legal

T

E

L

Political Analysis of UAE

Over The Emirates - U.A.E..avi


• An Arab country in the southeast of the Arabian Peninsula on the Persian Gulf.

• Borders Oman to the east and Saudi Arabia to the south, as well as sharing sea borders with Qatar and Iran.

• A Federation of seven emirates each governed by a hereditary emir. The emirs choose one of their members to be the president of the federation.

• The constituent emirates are Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain

Introduction


• Capital : Abu Dhabi | Largest City :Dubai

• Official religion : Islam • Official language : Arabic• President : Khalifa bin Zayed Al Nahyan• Prime Minister : Mohammed bin Rashid Al Maktoum• Total Area : 83,600 sq Km (Rank : 116th)• Total Population : 8,264,070 (Rank : 93rd)• UAE oil & natural gas reserves are ranked as the world's

seventh-largest.• It is one of the most developed economies in Western Asia.

Key statistics

86.7%

0.3%5%

1.5%2.2%3.3% 0.9%

Total AreaAbu Dhabi

Ajman

Dubai

Fujairah

Ras al-Khaimah

Sharjah

Umm al-Quwain

84.8 % of the population lives in Abu Dhabi, Dubai, and Sharjah.

Ajman has the highest population density of 996/sq.km. among the emirates.

The country's net migration rate stands at 21.71, the world's highest.

The male/female sex ratio is 2.2

UAE's gender imbalance is second highest in the world after Qatar.

Political AnalysisArea distribution in UAE


• The United Arab Emirates is a federation of absolute hereditary monarchies.

• It is governed by a Federal Supreme Council made up of the seven emirs, one from each emirate. The FSC is the highest constitutional authority in the UAE. It establishes general policies & sanctions federal legislation and meets four times a year.

• The country's governing structure includes the Supreme Council, President, Cabinet, Judiciary and Federal National Council(FNC).

• All responsibilities not granted to the national government are reserved to emirates.

Government


• A percentage of revenues from each emirate are allocated to the UAE’s central budget.

• According to the Constitution, federal draft laws first have to pass through the FNC for review and recommendations and later should be sent back to the Cabinet for consideration and approval.

• The United Arab Emirates (UAE) eGovernment is the extension of the UAE Federal Government in its electronic form.

• eGovernment consists of an online portal of the government offering various eServices and allowing the population to participate through eParticipation channels and give valuable feedbacks and suggestions.

Government

Economic Analysis

Economic Analysis

• Gross Domestic Product : $360 billion• GDP Growth : 3%• Per Capita Income : $48,158 (7th highest in

the world)• Inflation(CPI) : 1.4%• Labour Force : 3.705 million (7% Agriculture,

15% Industry, 78% Services)• Unemployment : 4.6%• Doing business Index : 26th rank• Major Industries : Petroleum & Petrochemicals,

Fishing,Aluminium, Cement, Fertilizers

Key Economic Parameters

Economic Analysis

• Total Exports : $360 billion• Export goods : Crude oil, natural gas, dried fish,

dates• Main Export Partners : Japan (17%), India(13.6%),

Iran(6.9%),South Korea(6.1%),

Thailand(5.6%)• Total Imports : $161.4 billion• Import goods : Machinery and transport

equipment, chemicals, food• Main Import Partners : India(17.5%), China(14%),

U.S.A(7.7%)Germany(5.6%), Japan(4.6%)

Key Trade Parameters

Economic Analysis

• The UAE has a relatively high Human Development Index among Asian continent, ranking 30th globally.

• The UAE has been spending billions of dollars on infrastructure. These developments are particularly evident in the larger emirates of Abu Dhabi and Dubai.

• The northern emirates are rapidly following suit, providing major incentives for developers of residential and commercial property.

• Successful efforts at economic diversification have reduced the portion of GDP based on oil and gas output to 25%.

The positive side of UAE Economy

Economic Analysis

• The government has increased spending on job creation and infrastructure expansion and is opening up utilities to greater private sector involvement.

• The country's Free Trade Zones like Jebel Ali Free Zone, Khalifa Industial Zone etc offer 100% foreign ownership and zero taxes are very helpful in attracting foreign investment.

• As a member of the Gulf Cooperation Council (GCC), the UAE participates in the wide range of GCC activities that focus on economic issues. These include regular consultations and development of common policies covering trade, investment, banking and finance, technology etc.

The positive side of UAE Economy

Economic Analysis

• The global financial crisis, tight international credit, and deflated asset prices constricted the economy greatly in 2009.

• The crisis hit Dubai hardest, as it was heavily exposed to depressed real estate prices.

• UAE authorities tried to blunt the crisis by increasing spending and boosting liquidity in the banking sector.

• Dubai lacked sufficient cash to meet its debt obligations, prompting global concern about its solvency.

• In December 2009 Dubai received a $10 billion loan from the emirate of Abu Dhabi.

Global economic crisis and the UAE

Economic Analysis

• Key Economic Challenges for UAE are• Dependence on oil

• A large expatriate workforce.

• Growing inflation pressures

• The UAE's strategic plan for the next few years focuses on diversification and creating more opportunities for nationals through improved education and increased private sector employment.

Challenges and Prospects

Social Analysis

• The United Arab Emirates has a diverse and multicultural society.

• Etiquette is an important aspect of UAE culture and tradition, to which visitors are expected to conform.

• Islam is the largest and the official state religion of the UAE, though the government follows a policy of tolerance toward other religions and rarely interferes in the activities of non-Muslims

• Islam plays a large role in business.

• It is illegal in the UAE to spread the ideas of any religion apart from Islam through any form of media as it is considered a form of proselytizing.

Social AnalysisIntroduction

Social AnalysisPopulation Distribution

76%

15%9%

Religion

Islam

Christianity

Other Re-ligions

17%

23%42%

12% 6%

Ethnic Distribution

EmiratisOther AreasSouth AsianAsianExpatriates

Social Analysis

High Power Distance (PDI) 80

•It is indicative of a high level of inequality of power and wealth within the society.

High Uncertainty Avoidance Index (UAI) 68

•Indicates the society’s low level of tolerance for uncertainty for which strict rules and regulations are adopted. Society does not readily accept change and is very risk adverse.

Masculinity index (MAS) 52

•Only slightly higher than the 50.2 average for all the countries included.This would indicate that while women in the Arab World are limited in their rights,

Individualism (IDV) 38

Compared to a world average ranking of 64. This translates into a Collectivist society as compared to Individualist culture . Loyalty in a collectivist culture is paramount, and over-rides most other societal rules.

Greet Hofstede Analysis

Current Strengths

Liberalised Labor Immigration

• Ministry of Labor passed new rules in 2007 to make it easier for foreign workers to work in the country.

• Foreign Labor Participation in the labor force is 75% of the total workforce.

• Dubai is a major employer because of construction business.

Social AnalysisStrengths And Challenges In Social System

Current ChallengesLow Literacy Rate

• Literacy Rate : 77.9%• An obstacle to

availability of highly educated native workers.

• Low Education Expenses: 1.2% of GDP (2009).

Blue Collar Labor Abuse• Common practice for

managers and employers in the UAE to hold employees' passports for the duration of their employment contract.

• The UAE government has been criticized by many human rights agencies. (eg: Government not acting when discrimination against Asian workers in the emirate is present).

• Visitors are expected to abide by local standards of modesty however, do not adopt native clothing. Traditional clothes on foreigners may be offensive.

• Despite the heat, most of the body must always remain covered.

• A jacket and tie are usually required for men at business meetings. Men should wear long pants and a shirt, preferably long-sleeved, buttoned up to the collar. Men should also avoid wearing visible jewelry, particularly around the neck.

• Women should always wear modest clothing in public. High necklines sleeves at least to the elbows are expected. Hemlines, if not ankle-length should at least be well below the knee. A look of baggy concealment should be the goal, pants or pant suits are not recommended. It is a good idea to keep a scarf handy, especially if entering a Mosque.

•

Social AnalysisBusiness Etiquettes : Appearance in the UAE

• Avoid admiring an item to an excess, your host may feel obligated to give it to you. When offered a gift, it is impolite to refuse.

• Often shoes are removed before entering a building. Follow the lead of your host.

• Alcohol and pork are not consumed by those that observe the Muslim religion.

• There are several styles of greetings in use, it is best to wait for your counterpart to initiate the greeting. Men shake hands with other men. Some men will shake hands women, however it is advisable for a businesswoman to wait for a man to offer his hand.

Social AnalysisBusiness Etiquettes : United Arab Emirates Behavior

• The left hand is considered unclean and reserved for hygiene. Gesture and eat with the right hand. Do not point at another person.

• In the Muslim world, Friday is the day of rest.

• Do not cross your legs when sitting, showing the bottom of your shoe or foot is offensive.

• The "thumbs up" gesture can also be considered offensive by some.

• Gifts are not necessary, but appreciated. If you do give a gift, it will be open in private.

Social AnalysisBusiness Etiquettes : United Arab Emirates Behavior

• A customary greeting is salaam alaykum. Shaking hands and saying kaif halak follows.

• Do not discuss the subject of women, not even to inquire about the health of a wife or daughter.

• The topic of Israel should also be avoided.

• Sports is an appropriate topic.

• Names are often confusing. It’s best to get the names (in English) of those you will meet, speak to, or correspond with. Learn both their full names and how they are to be addressed in person before you meet.

Social AnalysisBusiness Etiquettes : United Arab Emirates Communication

• Communication is slow, do not feel obligated to speak during periods of silence. "Yes" usually means "possibly".

• Meetings are commonly interrupted by phone calls and visits from friends and family.

• The person at a meeting who asks the most questions is likely to be the least important. The decision maker is likely a silent observer.

Social AnalysisBusiness Etiquettes : United Arab Emirates Communication

Technological Analysis


• The United Arab Emirates (UAE) is known for its opulent seven-star hotels, tall buildings and shopping centers, symbolic of a society driven by aspiration.

• Dubai has a Free Flow Tolling System so drivers are automatically charged at toll gates using Radio Frequency Identification (RFID) technology.

• The RFID chip, linked to a prepaid toll account, rests in a windscreen and deducts the fee when a car passes under the sensor.

• Visitors opting for public transport will find The Modern And Driverless Dubai Metro ahead of the times in comparison to most other countries.

• Passengers in Gold Class can surf the net onboard via wi-fi, while the train itself is connected to the internet using Wimax technology.

Smarter Transportation Systems


• The youth of Dubai has embraced consumer technology and attempts to innovate in this sector have started emerging.

• One company has created a memory stick which paired with a computer can stream the PC's media files as if they were on the stick itself. This means a movie can be played back wirelessly on a media device such as a PlayStation without the need to copy any files.

• Investors would rather invest in real estate than they would in an IT company. The concept of Researching & Developing something out of the Middle East is just not understood. The thinking is why not just buy it in from China and export it?

Young innovation


• International brands have adopted the city as the place to experiment with new designs aimed exclusively at the Arab market.

• The Blackberry in particular has found a cultural niche in what still is a conservative society where pre-marital liaisons between boys and girls are strongly discouraged.

• Distinctive features such as built-in solar charging, compasses pointing in the direction of Mecca and reminders of prayer times, also give international phone brands leverage with an under-served local market.

Design Experiments & Local Markets


• Despite enthusiasm in the smartphone market, the availability of broadband for domestic consumption is still rather limited with only two providers to choose from - Etisalat and Emirates Integrated Telecommunications Company ("du").

• It costs a home £45 per month for speeds of up to 1mbps, and some of the content on the net has also been restricted.

• Dubai has also made it illegal to use voice over internet phone call services(VOIP) such as Skype which could provide a cheaper alternative to costly international calls.

Restricted voice


• As a Muslim country, the UAE still has conservative values when compared to some other parts of the world.

• The country's authorities have blocked access to some websites, including social networking destinations, but not online news.

• The country's web filtering works on a blacklist of sites and individual pages with content considered inappropriate for the region.

• Web filtering occasionally rejects criticism of Dubai's leadership - for instance if a blog contains a cartoon deemed insulting to the Sheikh.

Blacklisted Sites

Environmental Analysis


• Federal Environment Agency (FEA) is the federal governmental body charged with enforcement of environmental standards and pollution control as well as policy setting in the UAE.

• Environmental Research and Wildlife Development Agency (ERWDA) is an Abu Dhabi government body with jurisdiction in Abu Dhabi but its services are on offer to other emirates.

• Department of Environment and Protected Areas (DEPA) runs the Desert Park (natural history museum) and Endangered Arabian Wildlife Centre, as well as having responsibility for designating nature reserves throughout the emirate, a process which has already commenced.

Government Bodies for Environment Protection


• The Major Oil Companies in UAE like Abu Dhabi National Oil Company(ADNOC), are bound by rigid Health, Safety and Environment standards thus preventing or reducing waste emissions and working towards zero operation flaring in near future.

• A number of NGOs working in the environment sector exist in the UAE like Arabian Leopard Trust (ALT); Environment Friends Society (EFS); Emirates Environmental Group (EEG), Emirates Natural History Group (ENHG), Dubai Natural History Group (DNHG) and Al Ain Natural History Group (Al Ain NHG).

Non Governmental Bodies


• Kuwait Action Plan (KAP) is a regional initiative for the Arabian Gulf. All GCC countries are party to the convention which aims to reduce pollution, establish national standards and develop research and monitoring programmes relating to all types of pollution.

• The Arabian Gulf and Gulf of Oman are declared Special Areas under the MARPOL (Marine Pollution) treaty, Convention for Cooperation on the Protection of the Marine Environment from Pollution. This is as adopted by all GCC countries, as well as Iraq and Iran, along with the Kuwait Action Plan and works to prevent oil spills and other forms of Marine Pollution.

KAP and MARPOL

Legal Analysis

Legal Analysis

• The Emirates were given the constitutional right to opt for joining the Federal judicial system or to maintain their own independent system.

• Except for Dubai and Ras Al-Khaimah who maintain their own judicial systems, the other Emirates have joined the Federal system.

• The Federal UAE courts, similar to the courts in most of the countries in the Area, are organized to form two main divisions civil and criminal.

• The courts are also divided to three stages of litigation namely

• Courts Of First Instance

• Court Of Appeal

• The Federal Supreme Court (colloquially referred to as Court of

Cassation).

Federal Judicial Systems

Legal Analysis

• The jurisdiction of the third division, namely the Shariah courts initially reviewed matters of personal status.

• They were expanded in certain Emirates such as Abu Dhabi to include serious criminal cases, labour and other commercial matters.

• Important cases with a security aspect are referred to special courts.

Dubai and Ras Al Khaima initially organized their courts on two stages later expanded in Dubai by the establishment of the Dubai Court of Cassation.

Federal Judicial Systems

Legal Analysis

• The Labour law is a federal legislation applicable to all emirates of the UAE, enforced by the Ministry of Labour and Social Affair, with litigations adjudicated by the Federal and Local Courts of the UAE.

• The Labour Law in the United Arab Emirates (UAE) is applicable to all staff and employees working in the UAE, irrespective of whether they are UAE nationals or expatriates.

• For employment of any expatriate employee, an application will have to be made to the Labour Ministry in the UAE. This application should be approved by the Labour Ministry before the employee enters the UAE. Such employment permits have a validity of three years, subject to renewals for the same period. But, UAE nationals can get an employment contract at any time.

Labour Laws : Introduction

Legal Analysis

• There are two types of employment contracts – Limited Employment Contracts and Unlimited Employment Contracts.

• Limited Employment Contracts are for a specified duration of 4yrs maximum. However, it can be renewed with mutual consent.

• In the case of unlimited contracts, there will be a true commencement date, but no completion date. The contract is terminated on mutual agreement by either party.

Labour Laws : Employment Contracts

Legal Analysis

• Standard Workday : 8 hours (6 hours during Ramzan)

• Maximum Workdays per week : 6 days

• Premium for work on holiday : 50% of day’s pay

• Paid Annual Leaves : 26 days

• Dismissal due to redundancy is allowed by law and there is no severance pay on the dismissal.

• The notice period for redundancy dismissal is 27 workdays.

• Since last year, college and university students sponsored by the institute under which they are enrolled are allowed to work part-time under certain conditions, with a part-time work permit provided by the Labour Ministry.

Labour Laws : Key Statistics

Legal Analysis

• Employment of women at night between 10:00pm and 7:00am is prohibited, except under certain situations

• The UAE Federal Labour Law specifies certain provisions for employee safety and healthcare like protection against occupational hazards during work, display instructions regarding fire prevention, provide clean and hygienic working environment, offer medical care, and ban on the entry of alcoholic drinks into the work premises.

• Maximum age for foreign workers to be employed in UAE is now 65 years.

Labour Laws : Key Statistics

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