The United Arab Emirates Diversification of Economy

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Table of Contents

Political Dimension
Cultural Dimension
Economic Dimension
Technological Dimension
Hofstede’s Cultural Dimensions
References

The country is a federation comprising of seven States namely, Ajman, Abu Dhabi, Fujairah, Dubai, Ras al Khaimah, Umm al Qaiwain and Sharjah. It gained independence from Britain in 1971. Each of the States has some degree of autonomy but the country is governed by a supreme council of rulers called emirs. It is these emirs who appoint the Prime Minister as well as the cabinet.

At independence, the country was poor, but within a very short time, it became an economic hub in the Middle East especially due to its oil exports. The oil industry attracts huge numbers of foreigners as well as expatriates. However, as from 2000, the UAE has tried to diversify its economy into other sectors such as retail business, tourism, and construction (BBC news, 2013).

Dubai, in particular, has emerged to be a front runner in economy diversification to become a cosmopolitan center for retail business, construction sector, tourism, and land reclamation. Examples of such projects include the Burj Khalifa building, the current tallest in the world and the palm islands (Neuliep, 2006).

Political Dimension

Although the country has a federal system of government, it is largely authoritarian. It had no elected government until 2006 when it organized an election, which resulted in a ceremonial federal assembly almost fully controlled by the supreme council.

Following the Arabian revolutions triggered by the Tunisia revolution in 2011, the UAE government introduced restrictions on the usage of the social media especially facebook and twitter, which were widely believed to be used by Islamic insurgents to organize a revolution and take over power early this year (Samovar, Porter & McDaniel, 2010).

Cultural Dimension

The country is known for its adherence to traditions and cultural beliefs and values. Ironically, it is one of the few countries in the entire Gulf region which tolerates and accepts other cultures and traditions. In Dubai for example, there is a variety of cultures from all over the world. Being an economic hub, the state of Dubai has over three-quarters of its population being foreigners or expatriates (BBC news, 2013).

Economic Dimension

The citizens of the UAE enjoy high standards of living, owing to its massive wealth from the oil industry. Although there have been fluctuations in oil prices in the global market, the citizens have been cushioned by the diversification of the economy to include tourism, construction, and retail businesses. This makes the country above par with most third world countries which have more than half of their citizens living below the poverty line (BBC news, 2013).

Technological Dimension

The UAE is known for its vibrant ICT sector. The fact that there is a lot of booming business in the country makes it have no alternative other than to embrace technology to make business more efficient. The banking industry, for example, is very vibrant, especially due to various money transfer services which are convenient and user-friendly to the customers. Other sectors which have embraced technology are the hospitality and the education sectors.

Hofstede’s Cultural Dimensions

Power Distance

Power Distance Index (PDI) focuses on the equality or inequality between people in social institutions and the extent to which the citizens embrace or do not embrace it. High PDI means that there are a lot of inequalities in wealth and power distribution within the society as well as that the society has a high degree of embracing or endorsing such inequalities.

On the other hand, a low PDI signifies that there are minimal inequalities in the distribution of power and wealth within a society (Singh, 2005.pp.170-171). The United Arab Emirates ranks high in this dimension at 90% compared to Canada’s 39%, meaning that the UAE citizens widely accept institutional inequalities than Canadian citizens (Hofstede & Minkov, 2010).

Individualism

This model looks at how people emphasize individual or collective success and achievement. A high ranking in IDV signifies that individuality is paramount in that society and that the individuals or citizens tend to form very loose interpersonal relationships (International business center, n.d.). A low ranking in the same means that the people are more cohesive and that they value collective success more than individual success.

The low ranking of the UAE at 25% on this dimension is an indication that the citizens value collective success more than individual success. The UAE can, therefore, be considered as a collectivist society. This is as opposed to Canada’s 80% which means that Canadians are highly individualistic than the UAE citizens (Item International, n.d.).

Masculinity

This looks at the extent to which gender differences affect the distribution and control of power and wealth among citizens of a country. It also looks at the extent to which men embrace feminine roles and values as well as how the women embrace masculine roles and values.

In countries where MAS rankings are high, roles are highly differentiated along gender lines whereby there are those roles and jobs which are performed or done by women and those which are performed or done by men.

The reverse is true for a country with a low MAS ranking, meaning that both men and women have similar roles and values, which are not highly differentiated (International business center. n.d). The UAE ranks at 50% against Canada’s 52%. This is an indication that the two countries are moderate in role differentiation based on gender (Sutton, 2010).

Uncertainty Avoidance Index (UAI)

This focuses on the degree to which society can tolerate any ambiguous or uncertain situation or event. A high UAI ranking means that the country is guided by clear rules and laws, which are clearly written down and known to everyone, and therefore does not tolerate any ambiguous situation, unclear or uncertain issue (Item International, n.d.).

A low ranking in UAI means that the country is open to different opinions, which may not be rules, regulations or laws governing that country. This means that the society accepts change readily, which may put it at risks associated with some changes which are not part of the countries’ laws, rules and regulations (International business center, n.d).

The UAE’s score for this dimension is 80%, meaning that the country it strongly holds to systems of beliefs, rules, and regulations which try to keep the future as certain as possible. Canada, on the other hand, ranks at 48% on this dimension, meaning that the country moderately embraces uncertainty and its moderately open to new ideas or challenges (Item International, n.d.).

Long Term Orientation

This looks to the extent to which a society emphasizes or fails to emphasize long term dedication to forward-thinking, traditions and values. A Country with a high ranking in LTO implies that it acknowledges hard work and traditions as a basis for the establishment of long term benefits. On the other hand, a low ranking in LTO means that the country does not embrace traditional values which may impede change.

This means that the country is open to new ideas and innovations which may make a business to thrive even for an outsider (Hofstede and Minkov, 2010). There is no score available for UAE on this dimension. Canada’s score, on the other hand, is 23% meaning that the country is not locked into traditions but it’s rather open to any new idea or technology, and thus investors can have little or no challenges in investments.

Type of Business

The type of business which I would establish in the UAE is a construction company. The reason why I would prefer this type of business is because the UAE is experiencing an exponential type of growth and expansion. Many people are moving to the country to seek greener pastures as well as to work there as expatriates. What this means is that there is an unmet demand for housing facilities in the country.

The business would be appropriate because it would be sustainable given that a growing population coupled with the insurgence of immigrants can only help in sustaining a construction enterprise (BBC news, 2013).

To establish the business, I would, first of all, mobilize the physical, financial and human resources. The financial resources would be used for the construction or leasing of offices and office furniture and equipment. I would also register the company so that it would abide by all the legal requirements in the country.

I would then constitute a team of consultants and experts who would help in establishing a business strategy on the logistics, including the advertisement of the company, its location, mission, and vision. I would also come up with human resource personnel to be in charge of the office day to day activities.

References

BBC news (2013). United Arab Emirates profile. Web.

Hofstede, G. & Minkov, M. (2010). Cultures and Organisations: Software of the Mind, (3rd Ed). New York, NY: McGraw-Hill.

International business centre, (n.d.). Geert Hofstede Analysis. Web.

Itim International, (n.d.). Geert Hofstede cultural dimensions. Web.

Neuliep, J. (2006). Intercultural communication: a contextual approach. (3^rd Edn). Thousand Oaks, Calif: Sage Publications.

Samovar, L., Porter, R., & McDaniel, E. (2010). Communication between cultures, (7th Ed). Belmont, CA: Wadsworth/Cengage Learning.

Singh, E. (2005). Caste System in India: A Historical Perspective, Gyan: New Delhi,Books.pp.170-171.

Sutton., M. Q. (2010). Introduction to cultural ecology. (2nd Ed), Lanham, Md: AltaMira Press.

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