Opportunity Analysis of New Business Venture
Name
Institution
Introduction
The United Arabs Emirates (UAE) has emerged as a business and tourist destination in the Middle East. UAE, especially, Dubai is a business hub that has attracted global businesses. Although the Emirate of Dubai has a relatively small population, it experienced imports exceeding $14 billion in 2015 (UK Trade and Investment 2015). Dubai is attractive to international business because it has almost free of trade restriction, although the Arab rules of etiquette, culture, and communication still apply. Based on this, the establishment of a cultural consultancy to aid in business negotiation and communication can be effective. According to Embassy of the United Arab Emirates (2015), Dubai has an estimate of 4 billion barrels, while Abu Dhabi has 94 percent of the UAE's oil resources
Business Details
The role of a business feasibility study is to proof whether a concept is viable and expound a business idea. Dubai has emerged as a leading cosmopolitan business centers in the Middle East, as well as a world trade hub. In addition, in comparison to other Middle Eastern countries, it is relatively effective and easy to run a business in Dubai. Dubai has been ranked 22nd in terms of easiness to do business among (Griffioen, 2015). Most of the foreigners investing or travelling to Dubai to invest lack the required negotiation skills and the Islamic traditions when carrying out business in Dubai. The study is related to the establishment of a cultural consultancy firm in Dubai that is to help in reducing language barriers, cultural shock, hence improving business negotiations. In addition, Arabs are regarded as expert negotiators, and they anticipate for tough bargaining power, hence the need for a convincing pitch (Griffioen, 2015).
The business is interesting venture because of a number of considerations. UAE, especially Dubai is a business center where people from different destination move to establish lucrative business, especially in the oil and gas industry, financial markets, health sector, and the insurance industry. Also, the government increased spending for job creation and infrastructure, which creates an opportunity for private sector investment. Players in the private sector investment must negotiate with the local companies and legal authorities in order to gain operation certificates and be legit. Also, the judicial processes in Dubai are efficient, which makes it easy to set a business.
Unique selling position (UPS) plays a role in saving consumers time when considering the purchase of products/services in the market, because stating why the product is different and should be purchased, gives the consumer the opportunity to buy the product (The Chartered Institute of Marketing 2009). UPS helps know the features of the services, why the services shall be used, and features of the competitors. The culture consultancy is unique in the UAE, Dubai because the number of companies providing the same services is limited. Moreover, the entrepreneurs have experience in different cultures and impeccable business negotiation and communication skills,
Industry & Market Analysis
UAE has a population of more than 9 million people, with 2.5 million people living in Dubai (Global Negotiator, 2015). The Emirate of Dubai is a logistics and commercial center in the region. 85 percent of the population is foreigners with the rest being locals (Global Negotiator, 2015). Moreover, Dubai is more diversified economically having and it has become an international and enterprising environment. The Emirate acts as a place for living and working, which makes it attractive place to start a business. Starting as an outpost where people may come to earn some tax free money, it has. The market has international companies that require employees with analytical skills required for business negotiation and operations. Thus, Dubai is attractive place for a business start-up willing to start a culture consultancy.
Product/services
The services to be provided are consultancy services related to business negotiation and cultural and communication aspects of business. Different customers such as foreign businesses and investors can use the services to have better market knowledge required for business negotiation and contracts. The cultural consultancy services will offer the ideal addition to business translation, negotiations, and communication, and help businesses to success in new foreign venture. (Gaskill & Hyland, 1989) For professionals in UAE, the services will be to familiarize people with social expectations, country’s culture, and professional customs. Subsequently, the people will be equipped with skills that can build more productive and successful business relationships with clients and colleagues in the UAE. Notably, cultural aspect plays an integral role in international business whereby issues related to culture shock, workforce diversity, and cultural shock are addressed (Deari, Kimmel, , & Lopez, 2008).
They key services to be provided are such as:
a. Provide business negotiation services on behalf of the clients with potential investors.
b. Advise businesses and investors on the financial situation in the UAE, and the most lucrative business opportunities.
c. As expert negotiators, our role will be to negotiate with the local companies and legal authorities in order to gain operation certificates.
d. To Educate local and foreign companies in case they required our services, in rules of etiquette, culture, and communication skills in terms of they are supposed to communicate and what not to say or do while in UAE which will ease the negotiation process. Moreover, it will educate them in what kind of starters, food they should serve.
e. To provide training and capability building required by business owners to solve the problems linked to cultural shock and language barriers.
f. Provide market information and local knowledge, which are highly essential and important when doing business negotiation and contracts in Dubai.
Market Segmentation
Segmentation is a marketing strategy that entails division of the larger target market into subdivisions of consumers based on common and shared needs and consumer priorities (Schaper, 2011).the commonly applicable considerations while undertaking market segmentation include age, income, buying attitudes, consumer perceptions, sex, spending power, and social class (Lamb, Hair & McDaniel, 2008). Based on geographic factors, businesses operating UAE are foreign operated and they require cross cultural and communication skills needed for negotiating business deals, signing contracts, merger and acquisition of companies. There small and big companies in UAE and all require culture consultancy services. Thus, global leaders faced with ethical and cultural issues related to business negotiation will more likely seek our services (Al-Khatib, Rawwas, Swaidan, & Rexeisen, 2005).
Target Market
The target market will be business and investors foreigners willing to invest in Dubai, where the business will be headquartered. The business opportunity on cultural consultants also targets employers with already existing companies, employers, and new graduates willing to work in UAE. This is because a report by the National, "Over half [57 per cent] of UAE employers are actively seeking intercultural skills through their recruitment process and almost 60 per cent say they are likely to promote employees with these skills more quickly” (Swan 2013). Thus, employers and employees are targeted because there is demand for soft communication skills, including intercultural skills. Small and big companies and investors in the UAE, particularly Dubai are targeted because effective multilingual communication is important. Moreover, acquisitions, mergers, and start-ups all revolve around communication and the ability to negotiate.
Industry Attractiveness Analysis
PEST (political, economic, social, technological, and legal factors) analysis is applicable to establish the attractiveness of the industry and region.
• Political and Legal
– Dubai operates its own governmental institution.
– The UAE is stable politically and security wise from any form of terrorist activities
– Dubai is strategically located, which makes it a regional hub and emerging commercial capital for North Africa, Middle East, and beyond.
– The legal system is not strict as well as the rules of establishing rules in the country.
– Dubai is a free trade zone, which implies it is not restricted to tax problems.
• Economic
– Oil and gas are the primary economic activities in UAE, although non-oil sectors make 70% of GDP (UK Trade and Investment 2015).
– Dubai is the market leader in non-oil business activities such as insurance, financial, and commercial activities (Alsaloom, 2015).
– The government has increased spending for the development of job creation and infrastructure, thus, a greater opportunity for development in private sector investment.
• Social
– Islamic culture and rules plays crucial roles in business development and investment.
– There is a strong culture and business etiquette that must be followed when operating business in all the Emirates
– Arabic is the first language and all business documentation must be in Arabic. However, English is used when transacting business deals
• Technological
– Technological development and globalization are evident by the increased of TV, internet, telephones, mobile phones, and radio broadcast stations.
Market Potential
To determine the market potential of the business and whether the opportunity is an attractive venture, SWOT analysis is applied. SWOT provides strengths, opportunities, threats, and possible weaknesses.
Strengths: Cultural consultancy services are needed in UAE because there are people from more than 200 countries living in the UAE and Dubai is considered as a business hub (Campbell & Lyons, 2010). These people require communication skills that are crucial when doing business. Developing effective communication and intercultural skills is equally essential to make presentations, communicate message, and negotiate deals in multicultural situations in UAE. Dubai is a free trade zone, which makes it relatively easy for a business start-up (Campbell & Lyons, 2010).
Opportunities: Increased number of foreigners in the UAE and businesses in other sectors other than oil and gas in the UAE makes Dubai a business center. Also, UAE has become a popular choice for foreign business and investment, particularly financial and banking industries. This coupled with UAE’s open attitude towards western cultural and economic influences have made the UAE a highly attractive location to international visitors (Alsaloom, 2015). Thus, cross culture differences provides a business opportunity for establishing a culture consultancy and management to promote multicultural skills. There is a possibility of expanding the business services to other emirates in the UAE and beyond. According to Khaleej Times (2007) a study conducted established that over 50 percent stated fear of failure in starting business because they lacked knowledge and skills required.
Threats: Existing and new players in the cultural and communication consultancy sector would bring competition and rivalry to the business. Thus, threat of entry by other operators in the near future is most likely to reduce the profitability.
Weaknesses: All business transaction and meetings must be conducted in Arabic, which is the national language. Trust in the UAE must be acquired before any form of business transaction takes place. It is also imperative to network with people so as to expand business opportunities.
Location and Site
Dubai is the ideal place to initiate and start the business venture. This is because the emirate is a market leader in business opportunities and it has large population of foreigners who may require culture consultancy services. For instance, 80 percent of its population is comprised of foreigners (Balakrishnan 2009). Moreover, UAE is accessible by more than 2 billion people from West Asia, Africa, Europe, and America (JAFZA, 2008). The Non-oil sector contributes 70 percent of GDP (UK Trade and Investment 2015). There are more than 5,000 British companies with business operations in UAE, and more than 4,762 British brands have investment in the UAE (UK Trade and Investment 2015). In 2014, more than 13 million people visited the UAE, whereby 1 million of them were British Nationals (UK Trade and Investment 2015). Thus, locating the business in the Dubai will be appropriate because it is the best location in the whole UAE region.
Current and Projected Demand Analysis for Cultural Consultancy Services
The demand for cultural consultancy services in UAE continues to increase as more international companies continue to invest. For instance, more than 57 percent of employers in UAE actively seek intercultural skills when recruiting potential employees (Swan 2013). Other than experience and academic qualification, companies in UAE are in demand for softer intercultural skills. Thus, companies in UAE look for graduates equipped with cultural and social ethics and values, and with the ability to understand different cultures (Swan 2013). Understanding the cultural differences when operating business in the region is vital. Equally important is developing communication skills to make presentations, to communicate in multicultural situations, and to negotiate deals.
Results Based on Questionnaire:
The findings from primary research were collected through the use of questionnaires and they indicated that cultural interpreters and cultural negotiating experts are on demand in the UAE. For instance, 80 percent noted that foreigners were in demand for culture consulting services. With regard to the kind of services provided by culture consultancy firms, the respondents’ findings are presented below.
From figure above, culture consultancy provide services related to negotiation purposes (40%), communication skills (30%), and language and culture learning (20%) among others (10%). Similarly Knuchel (2002) established that language training, cross-cultural negotiations, and improving communication skills for negotiation were important when operating in multicultural regions.
The findings (100%) established that Dubai was a better location for a business in UAE because it was strategically located, it had high non-oil services and businesses, and most of its population was composed of expats and foreigners. New graduates indicated that communication and negotiation skills accompanied with cultural skills were important factors considered by employees in UAE before employment.
Technical Feasibility
The specialized equipment to be included include laptops, desktops, internet connections, smartphones, mobile phones, printers, and other technological tools. Leasing a building for setting offices in Dubai is the most ideal way. The company will employ both local and foreign staff with experiences from different cultures. Nonetheless, persons with knowledge in both Arabic and English will be most preferred because they can easily handle businesses that involve multicultural backgrounds.
Resources are described as virtual or physical entities of limited availability, staff, materials, supply of money and other assets that are used by an organization for it to work effectively. The broad types of resources required in the case of the new cultural consultancy are listed in the table below based on their priorities.
|
Type of resources |
Descriptions and examples |
|
Financial resources |
Start-up capital, money, and other financial requirements |
|
Physical resources |
Tangible property such as office space, equipment, and other technological facilities and equipment |
|
Human resources |
Manpower, experiences, training and knowledge among others human resources. |
|
Technological resources |
Tailored information system architecture, communication systems, and information databases |
|
Organizational resources |
Business systems, routines, and structures |
|
Reputation resources |
Perception of the people in the area of operation |
Financial Feasibility
Total start?up cash required to establish the new culture consultancy in UAE is $100,000. The table below provides the key requirements and respective estimated costs.
The table below represents the total set-up costs required whole starting the new culture consultancy in UAE
|
|
SET UP COSTS |
|
|
|
|
|
|
|
|
Capitalized |
|
Cost in $ |
|
|
Building |
|
8,000 |
|
|
Laptops and Ipads |
|
5000 |
|
|
Screens |
|
800 |
|
|
Website |
|
2000 |
|
|
Internet |
|
800 |
|
|
Equipment |
|
10, 000 |
|
|
Licenses |
|
300 |
|
|
Insurance |
|
400 |
|
|
Business name |
|
200 |
|
|
Computer Equipment |
400 |
|
|
|
Total Capital Costs |
$17,900 |
|
|
|
|
|
|
|
|
Expensed |
|
|
|
|
Phone Connection |
300 |
|
|
|
Inventory Working Capital |
2500 |
|
|
|
Legal fee |
|
400 |
|
|
installation of Equipment |
3,000 |
|
|
|
Salary and wages |
46,000 |
|
|
|
Others |
|
10,000 |
|
|
Total Expensed Costs |
$ 56,200 |
|
|
|
|
|
|
|
|
Total Startup cost |
$ 80,100 |
|
|
Table below presents the estimated annual salary for all employees and staff in culture consultancy service provide
|
|
|
|
Employee Name |
Salary ( costs $) |
|
Secretary |
4,000 |
|
Cashier |
6,000 |
|
Other staff (3) |
10,000 |
|
4 Executives |
20,000 |
|
Total annual Salary |
$ 46,000 |
From the table, the total annual running costs required is $ 40,000.
Resources Required are presented in table below.
|
Laptops and iPads |
|
8000 |
|
Screens |
|
800 |
|
Website |
|
2500 |
|
Internet |
|
1000 |
|
Office Equipment |
|
151700 |
|
Phones |
|
700 |
Al-Khatib, J., Rawwas, M., Swaidan, Z., & Rexeisen, R. (2005). The Ethical Challenges of Global Business-to-Business Negotiations: An Empirical Investigation of Developing Countries' Marketing Managers. Journal of Marketing Theory and Practice, 13(4), 46-60.
Alsaloom, A (2015) Why Doing Business in the United Arab Emirates (UAE)? [Online]
Balakrishnan, M. S (2009), Approaches to enter emerging markets: A UAE case study, 9th Annual Hawaii International Conference on Business, Hawaii, pp. 1-28.
Campbell, H., & Lyons, C. (2010). A hedonist's guide to Dubai. London: Filmer, Ltd.
Deari, H., Kimmel, V., & Lopez, P (2008) Effects of cultural differences in international business and price negotiations. International Marketing Strategy, pp. 177
Embassy of the United Arab Emirates. (2015) Energy in the UAE [Online]
Gaskill, G T & Hyland, J M 1989, ‘Starting and Managing a Small Business, Management Account, vol. 71, no. 6, pp. 28-33.
Griffioen, A (2015). Tips in doing contracts and negotiations in Dubai [Online]
Global Negotiator, (2015) Living & Working in The Gulf [Online]
JAFZA (2008), “Facts and Figures” [Online]
Khaleej Times, (2007), “UAE third most supportive economy, says GEM report.” April 19th
Knuchel, F (2000) What are Corporate Cross-Cultural Consultancy Services? [Online]
Lamb, C. W., Hair, J. F., & McDaniel, C. D. 2008, Essentials of marketing. Mason, Ohio: South Western.
McGinley, S (2011) ‘Dubai ranked as top global business hub’, Arabian Business [Online]
Schaper, M. 2011. Entrepreneurship and small business. Milton, Qld.: John Wiley & Sons Australia.
Swan, M “Cross-cultural skills much sought after in UAE”, The National [Online]
The Chartered Institute of Marketing 2009, How to define your unique selling proposition. [online]
UK Trade and Investment (2015) Doing Business in the United Arab Emirates: UAE Trade and Export Guide
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