PEST Analysis of UAE Market

1. Political Environment

Opportunities

 UAE’s political environment is stable - attract major financial institution that needs to invest
 Dynamic Government structure
 Each emirates has its own government institutional
 Ownership rights: For LLC companies 49% for foreigners within Dubai & 100 % for free zone
companies
Threats
 VAT enforcement
 To start a company inside free zone huge amount of investment is required
 Monarchy
 UAE occasionally has political conflicts with nearby countries about the ownership of oil reserves
or land - UAE cut their ties with Qatar
 To get trade license it is difficult for small companies

2. Economic Environment

Opportunities

 The UAE has an exceptionally high GDP per capita - Dubai’s main revenues are from tourism,
real estate and financial services. Revenues from petroleum and natural gas contribute less than
6% of Dubai's economy. Real estate and construction, on the other hand, contributed 22.6% to
the economy
 The United Arab Emirates also has a very low Unemployment Rate, 60% are in workforce.
 This country also has one of the highest amounts of Foreign Direct Investment in the region. The
steady development of UAE attracts foreign nationals to invest.
 Customs duties are low at 4% with many exemptions
 No foreign exchange controls, No trade barriers or quotas, Competitive import duties (4% with
many exemptions)
 Globalization has helped improve the UAE economy greatly by bringing in thousands of workers,
services and products from throughout the world. UAE has been a member of World Bank, WTO
and IMF for seven years.
 Insurance for residents made complusory

Threat
 Not easy for expatriates to own land, building. Most off all expatriates are on rented flats. As
mentioned earlier 80% of the workforce is made up of expatriates. Many of these expatriate
 workers have no permanent home in Dubai or the rest of the emirates. The majority of
expatriates live in apartments with being the accommodation of choice.
 Cost of living high
 Recession – can lead to unemployment. onset of the global economic crisis
 Emiratization / Localization – unemployment for other nationalities
 Labour costs high

3. Social Environment

Opportunities

 A large expatriate population (more than 80%).

 Crime Rate is almost Zero.
 Male comprises of more than 70% of Dubai population.
 Young population
 Traditional dress of men in Dubai is a dishdash or khandura - a full-length shirt-dress that is worn
with a white or red chequered headdress (gutra) and secured in place with black cord (agal).
Women wear a black abaya - a long, loose black robe that opens from the front.
 There is no dress code and tourists and residents are free to embrace any fashion as long as it
does not offend anybody’s sensibilities.
 Most of UAE citizens have high living standard, a western lifestyle and continues rising financial
positions
Threats
 Localization
 Wide variety of culture and traditions- so marketing must satisfy needs of these different
traditions

4. Technological Environment

Opportunities

 The relatively young population is very tech-savvy, which allows companies all across the UAE to
leverage technology.
 The wealth that this country possesses allows it to purchase new equipment and be in the
vanguard of technological development.
 Free wifi in metro, malls – UAE WIFI
 Effective communication systems- Etisalat and Du. Until 2006 Etisalat lone player
 IT sector – internet city and education sector.
 Fully automated systems

Threat
  Ban on various social networking sites and communication apps

5. Environmental

Opportunity

 This country has quite a hot, dry climate - air conditioners have the potential to sell well.
Laborer working in construction sites are given braks during summer season.
 The UAE also finds itself near a few coastal areas, allowing for easier trade by sea.

Threats

 Productivity might be slightly lower, farming is not so easy – Due to high temperatures