BUS 401 SLP 4: Factors Affecting Foreign Business in UAE
Module 4 - SLP
Market Selection and Foreign Entry-Mode
Assignment Instructions
For your final SLP, pretend that an American corporation hired you to write a report giving a recommendation on whether or not they should enter the country that you have been researching for your Modules 1-3 SLPs. You have already done a lot of research on many of the cultural, financial, legal, and political aspects of doing business in your country which you can use as part of your overall recommendation. However, you also need to consider other factors such as the potential size of the market that your country has to offer. No matter how strong a country’s legal or political system, if your country has very few consumers that it will not be a wise decision to enter your country.
One resource to use for your report is Michigan State University’s Market Potential Index (http://globaledge(dot)msu(dot)edu/mpi/2014). This index focuses mostly on various aspects of the size or growth of the consumer market in each country which should provide some valuable information to use in making your recommendation. But don’t rely just on this index. Do some additional research on factors that you think make your country an attractive or unattractive market for an American company and use some of Venkateswaran’s (2012) guidelines on country evaluation as part of your paper.
When you have finished your research, write a two to three page paper with the following information:
- What are the positive aspects of your country that would make it an attractive market for an American corporation? Consider all of the main factors that you researched regarding your country for Modules 1-3 plus additional research for Module 4 on market potential.
- What are the negative aspects of your country that would make it an attractive market for an American corporation? Consider all of the main factors that you researched regarding your country for Modules 1-3 plus additional research for Module 4 on market potential.
- Overall what is your recommendation for the American company that hired you to write this report? Do the positives outweigh the negatives? Or vice versa? Explain your reasoning.
SLP Assignment Expectations
- Answer the assignment questions directly.
- Stay focused on the precise assignment questions; don't go off on tangents or devote a lot of space to summarizing background materials.
- Make sure to use reliable and credible sources as your references. Articles published in established newspapers or business journals/magazines are preferred. If you find articles on the Internet, make sure they are from a credible source.
- Reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 13 and 14 on in-text citations. Another resource is the “Writing Style Guide,” which is found under “My Resources” in the TLC Portal.
Factors affecting foreign business in UAE
Name:
Institution:
Course Title:
Instructor:
Date:
Introduction
The United Arabs Emirates is made up of the seven Emirates. Two emirates in particular that is, Dubai and Abu Dhabi has seen a large influx of foreign investments in the recent past. This document discusses some of the positive factors that have made the UAE the preferred destination for foreign investment as well as some of the negative factors that challenges the growth of foreign investment and also my recommendation on the foreign company wishing to invest in the United Arab Emirates
Positive aspects
In order for the UAE to achieve economic growth and attract direct foreign investment it has established certain reforms in its legal systems. According to Tarbuck and Lester, (2009) Dubai- which is one of the major business city in the UAE- has an economy and culture that is based upon a legal and regulatory framework, which has advanced greatly to encourage significant local and international investments. Through the concerted federal efforts to enact legislation promoting a free market business environment, very many foreign companies have been attracted in the UAE major cities by creation of Free Zones specifically designed to boost economic growth various industries (Widdoes, 2012).
According to Ambest.com (2015) the UAE is a part of the six nations that form the Gulf Cooperation Council (GCC) whose objective includes private sector cooperation and formulating consistent regulatory environments. It is a federation of seven emirates and the federal government has the mandate of taking care of foreign affairs, security, health, education and currency. The power over matters not constitutionally assigned to the federal government remains with the emirates. This ensures that there is a smooth delegation of authority.
The economic factors favor the UAE because although oil production makes up a large percentage of its economy, there is a lot of efforts being done to ensure economic diversification. Dubai has also grown to become a regional trading and financier center as well as one of the region’s prime tourist destinations. In addition, the central bank of the UAE is in the process of following cues with the U.S federal reserves in matters concerning monetary policy. Dirham, which is the country’s currency is pegged to the U.S dollar (ambest.com, 2015). The UAE banking sector is resilient and has sufficient capital and liquidity buffers to withstand external negative shocks. There has been timely progress towards international capital standards.
Negative effects
...