3 Businesses in UAE - Essay Example

Part A Introduction This part of text looks into the business functioning in the United Arab Emirates (UAE). It tries to identify the strengths and weaknesses of three randomly selected companies to a way of generalizing the business environment of the UAE. The three randomly picked businesses in the UAE that have been used to characterize the business atmosphere are, namely: Zouari hair salon, Emirates airways and Pic N Save hypermarket. On visiting the Pic N save hypermarket located in Dubai, the hypermarket appeared well stocked with essential products. Food products and personal effects were well stocked and in addition to this, the hypermarket specialized in clothing more specifically footwear. The hypermarket had good hypermarket attendants who would help the customers in finding products they were looking for within this huge retail store. The attendants were uniformly dressed so that one would identify and distinguish an employee and a fellow customer in the hypermarket. However, there was a problem in communication as some attendants at the retail store could only speak their indigenous language of Arabic and thus it became a little difficult in conveying messages. It sought the intervention of attendants conversant with English to communicate what I needed. Nevertheless, the cashiers were fast as they worked on their clients quickly by calculating and handing back change to the customers so that there would be no occasions of long cues at the counter. The hypermarket, Pic N save seemed to have a competitive edge in their business practice. The hypermarket was involved in a reward scheme where customers who bought products worth a certain limit of money, they would win some specific points that after accumulation would make the customers redeem them for gift products that were on offer. This seemed as an innovative way of pulling customers to this retail store. Therefore, the future of this company seems to be bright as the company focuses on attracting its clients who are the customers to its retail store. The disadvantage that would be a hindrance to the effectiveness of the company as mentioned earlier is the communication barrier in some of the employees that are working in the hypermarket. Additional, the easy of doing international business with the market is hampered as it only has physical and mailing contacts which become time consuming when business deals of timely nature are concerned. The second business that was investigated was a rather big one, the Emirates airlines. The Emirates is one of the major airlines the United Arab Emirates. In investigating the business, I had to book a flight and get a feel of the transportation comfort and efficiency. To begin with, the booking process was fairly easy as I could make my booking through their website which is http://www.emirates.com. In the website were a variety of services among booking that made the problem of moving up to their permanent offices being unnecessary. Thus their services appeared well put and convenient for many people who would have difficulty in moving to their offices to make inquires and or bookings. Furthermore, their services were in internationally recognized language of English despite the fact that the company is of Arabic origin where the language and writing is Arabic. This was convenient for international customers who wanted to seek it services as English is an internationally recognized form of communication in speech and writing. The company has a high competitive advantage over all the other airlines in the UAE. The reason for this is that it has a wide spread coverage of its services within and outside the boundaries of the UAE as its planes fly into over 60 countries across the six continents of the world. In addition to this, the company uses the Boeing 777-200LR as its model for its fleet of planes. This model of the Boeing plane is considered to be fuel efficient considering the high costs of fuel that we are witnessing in this current time. The plane holds the record for its ability to make long journeys across the world and hence is a reliable plane. On the aspect of comfort, the plane is designed to be large and offers enough sitting space and has consequently been partitioned into three sitting categories because of its spaciousness. The unreported cases of incidences and/or accidents involving the fleet of Emirates airlines further adds the competitive advantage of this company from its rivals in the UAE. In general therefore, the future of the Emirates airline looks promising. The other business venture that was investigated was the Zouari hair salon. This is a hair salon located in Dubai. The business is a small one as it is located in a shopping mall in Dubai and does not have any other branch. The business offered services that were moderately good. They were not that effective in their work. Despite the high number of customers that were found in the hair solon, the salon attendants did not take good care of those who were waiting on line to be attended to. There were no enough seats in the salon to accommodate those prospective clients who were waiting to be served and thus many could be found standing just waiting to be served. However, the fact that the clients were found standing gave the idea that the hair salon provided good treatment of the hair as nobody could stand for long just waiting for a hair cut that takes a few minutes yet he can go to another salon that is less occupied. In general, the courtesy services were not well exercised by the attendants in the hair salon. They did not show a high level of professionalism in taking care of their clients. The company's business appearance was not satisfactory to what would be required in any other business of the same field of practice. The competitive advantage that the company portrayed was not easily established but the probable advantage was its pull of customers due to its low prices that it offered. The future of the company is not so well shaped unless high level of professionalism and courtesy is injected into the functioning of the business. Part B Introduction This part of the text examines the concept of microfinance and micro credit. It looks into the definition of these terms and there application in the economics of the world. The part looks in the history and development of microfinance and micro credit right from the early seventeenth centaury where it was initiated in Ireland and its development in Europe and to the rest of the world to this recent time. It looks at various examples of micro finance institutions and the factors that are used by these institutions to grant loans to the poor people who are the ones targeted for micro credit. Microfinance refers to the giving of financial help to persons who are unable to raise finances to engage in their independent business ventures because of their low social status. The practice is directed to the low income persons of the society by financial institutions so as to raise their living standards by setting their own businesses. This method of financing is predominant in developing nations (Puglielli 23) where the poverty levels are high and it is thus used to bring a state of equity among people. Thus micro credit is a part of microfinance as it gives the poor people money in form of small loans that the low earning people can be able to start their own businesses and repay back to the financial institutions once their business start bearing profits. The history of micro finance is a financial strategy that came up as a result of the prevailing poverty levels that were evident in Europe in the early seventeenth centaury. The population of the rural poor was extremely high and to counter this problem Jonathan Swift came with this idea of micro finance to help the Irish people. He formed the Irish Loan Fund system that would allow the poor people access loans that they would use for entrepreneurial purposes so as to develop their lives. The loans at this time were not attached to interests; therefore the people could get the loans and pay back exactly what they had been given. The money for this venture was coming from money that had been collected from donations of well wishes and directed towards helping the people. (Helms, Hirshland) This method of micro financing had not been adopted by commercial backs because there was no gain being made in terms of profit if money was lent to the people. However, a piece of legislation was passed in 1823 in Ireland which sought to introduce the aspect of interest on the micro credits that were being offered. This made the people who took the loans on micro credit terms is subjected to payment of interest. Because of this law, commercial banks started entering the microfinance sector so as to make money. Their focus was to give the small loans to people that would earn them interests within short periods of time. This law made the access to the micro credit loans become easier and thus money started becoming in excess in the economy. This high lending initiated the government of Ireland to introduce a law that would regulate the activities of banks in microfinance. These happenings in the development of micro finance were similar with other nations of Europe and by the twentieth centaury laws regulating the financial institutions had been created thus making micro finance a formal part of banking. (Frankweitz) The development of the microfinance in Europe saw it be adopted by nations of South America and Asia during the nineteenth centaury. In these regions, microfinance was initiated with the intent of uplifting the financial status of farmers. In uplifting them, this would allow them to produce more food in terms of agriculture which was the major economic activities of these regions that dictated their gross domestic product. This approach has now been extended to developing nations more so in Africa which depends on agricultural practices are the source of their livelihoods and economic growth. The approach is now considered as a method of alleviating poverty in this modern world unlike during its growth in Europe in the eighteenth centaury where it was used by financial institutions as a means of getting quick interests on loans. (Dowla) Microfinance organizations offer their services to poor people in the society to help them reach an economic status where they can cater for them selves and be able to repay back the loans that they took from the micro financing institutions. The realization of micro finance as a key to alleviating poverty around the world has seen the creation of many micro finance lending institutions. Many of these institutions have been recently formed with the main objective of bridging the gap between the rich and the poor nations of the world as well as their communities. Caja Los Andes is one such micro financing institution that is exhibiting its presence in h4elping the poor people of the community. This institution in Bolivia has been seen to provide loans to the rural people of Bolivia with concern to various agricultural activities. The micro fianc institution provides a flexible mechanism that would enable the persons who partake of the loans can easily repay them. Kiva is another international micro finance organization based in the US that focuses its work in providing loans to poor people specifically to women as it believes the uplifting of women's economic status in the society is the key to uplifting the whole society's living standards. Others within national jurisdictions include: ICICI Bank of India, MABS in the Philippines, ADOPEM in the Dominican Republic, SICREDI in Brazil, Equity bank in Kenya among others. However, the popularly known micro finance institution in the world is the World Bank group which offers its services to a wide network of developing countries where poverty is prevalent. (Kostigen) Micro finance loans have often been described as easy to access by poor people, however the criteria used to give out these loans has been put to the test by a number of people as the issue of whether the person who partakes the loan will be able to pay it back or not. A limited number of factors are considered before giving a poor person a loan from a micro finance institution. This is because it is already known that most of them are illiterate and mostly don't have the skills to run their own businesses. Therefore, the main issues that are usually focuses on in this business prepositions of the poor people is whether they will be able to repay the loans that they are given. In trying to ascertain this issue, the aspect of gender comes in as many experts in micro finance institutions believe that women are more trustworthy in the terms that they work hard and would be able to build their businesses and repay the loans. According to proof that has been gathered on this hypothesis, it has been shown from studies done that probability of women defaulting their loans is slim compared to their counterparts, the men. One of the researches done to conform this was done in the year 2006 with data being obtained from about 700 microfinance institutions. The microfinance institutions where using both the individual and solidarity lending methods to their clients. The study encompassed 99.2% women in the solidarity lending category and 52% of women in the individual category. In the results of the study, it was found that there was a 0.86% default rate in the solidarity lending category that had more women whereas in the individual lending where men ad women were fairly put, the default was 3.2%. This implied that men are more likely to default their repayments and therefore service delivery should be directed more towards women. (Morduch) Another important factor that is considered by the micro finance institutions in lending to the poor is the nature of the business they want to venture in. Different business ventures have different levels of risks attached to them and thus the type of business preposition that the person who wants to partake of a loan will depend on the micro finance institution's decision. If the business venture is one of a risky nature, then the micro finance institution might give the person the loan but with a very high interest rate of even deny the person the loan if he or she does not something for collateral. For example, of recent agricultural ventures around the world have come to be described as risky because of the prevailing global warming that is causing climate change. Climate change which has been initiated by global warming has been show to cause climate variations in different regions all over the world. Areas that were receiving adequate rain are now experiencing severe droughts while areas that were dry are experiencing devastating floods. The weather patterns have change to the extremes and therefore agricultural production has become unpredictable. With this unpredictability in forecasting performance of the agricultural sector, loans to farmers and other people venturing into crop growing is becoming difficult to access because of its high interest rates aimed at protecting the micro fianc institutions. Micro financing helps business to grow in the long run. The easy access of the loans from the micro finance institutions has enable many people get capital to start their own businesses which they put a lot of effort in to see them grow. Already proponents of microfinance are stating that the strategy is bearing fruit as the levels of global poverty are decreasing. This hypothesis has been the center for the recent criticism of micro finance in tackling poverty in the world especially in the developing nations. The 2008 microfinance conference that was held at the Yale University came to describe the effect that micro fianc had on alleviating poverty. According to the sociologist Westover in his presentations in the conference, he described microfinance as having contributed to reduced poverty in the world. He used six articles that had documented their work by providing sufficient quantitative data. In the studies among these articles, it was discovered from the results that microfinance had actually contributed to the reduction of poverty. However, it was said that the studies needed to be peer reviewed in order to ascertain their credibility. (Dale, Parker, Graham) Nevertheless, with such signs, I personally believe that micro finance is playing a big role in eradicating poverty. Part C Introduction This part of the text looks at investment opportunities in the UAE. It first establishes the reason for the current high call for investors into this region as a potential business hub. It also looks into the potential investment sectors of the UAE and the players behind the investment opportunities and the reasons why this is a good region to invest in. It further examines the potential outcomes of the investment offers should potential investors head to the calls of the UAE opportunities. Investment opportunities in the UAE have of recent been airing all over with investors in this region calling for the international community to come and put their finances in this region where business is booming. The reason for this boom in business has been attributed to the high revenues that have been collected by the UAE nations from sale of oil. The UAE is described as the hub for the largest oil reserves of the world. A large percentage of the crude oil that is used in fuelling automobiles and other fuel consuming machinery come from the UAE. Because of this, the UAE makes a lot of money from the sale of oil that is shipped to different nations across the world. The oil crisis that affected the whole world from the beginning of 2002 as a result of a cut in supply of oil from the Oil Producing and Exporting Countries caused the price of crude oil to become very expensive with the highest ever recorded price reaching two hundred US dollars per barrel. Due to this high price of oil, the oil producing and exporting countries the UAE included, made a lot of profits that has created invested opportunities in this region. One of the major investment opportunities that have been marketed by investment companies in the UAE is the tourism industry. Tourism in the gulf region has been sited as a potential investment opportunity courtesy of the RAK investment authority. The authority that is based in the government of Ras Al Khamah hopes to use tourism as a way of boosting its economy and that of its peoples' living standards in the near feature. The investment authority boasts of the environmtal features that it has in the Government of Ras Al Khaimah. The majestic Hajjar Mountain that presents its self as a unique landscape feature in the Gulf region is observed as one of the most captivating beauties of nature in this region. The musandam peninsula and the beautiful waters of the tranquil azure sea enhance the beauty of this region that is additionally filled with endless cultural myths and the hospitality that is accorded by the people of this land. RAKIA investment authority says that investment in its investment ventures are advantageous in many ways because for one, there is no income or corporate tax that is subjected to its clients. There are no import as well as export taxes. Clients who do not live within the UAE are able to repatriate one hundred percent of their capital and profits among an assortment of other benefits. The energy sector is also described as a potential investment industry according to the investment company Abu Dhabi. The investment company focuses on energy sector projects and has keen interest in partnering with other individuals in power production. The rapid growth of the cities of UAE has fostered the need for investment into the energy sector because the current development in construction of this region has seen population increase due to the upsurge of business. In order to cater for the growing demands of business in this region, enough energy supply in form of electricity is needed to cater for the electrical uses of the people. The other major investment opportunities that have been advertised for the taking is the real estate market. A lot of investments in the form of short term and long term opportunities are lurking waiting for investors to come and take advantage of them to make profits. One of the investors Abu Dhabi has been seen to pull millions in real estate investments. Despite of the recent global financial meltdown, the investment authority observed that growth of the real estate business remained stable as prices of other goods increased. The apparent need for investment in the real estate business was fostered by the high costs of housing that was characterized by high cost of rent that made the living standards of the people expensive to go by. Thus investment into the real estate has been focused with the objective of constructing low cost accommodation units that would consequently make the housing costs drop. The oil industry has been characterized as another investment opportunity for people living in and out of the UAE. The oil crisis that began around 2003 has caused for calls in heavy investment in to this industry so as to keep the prices of crude oil stable. The occurrence of the oil crisis was as a result of limited finances that were available to carry out drilling for crude oil which s very expensive. Because the local companies in UAE could not raise enough money to allow a steady supply of oil in the world market for oil, supply had to be cut. According to the concepts of economics, when the supply of a commodity which is on high demand depreciates, then its price rises so as to be able to last longer in the market. This is what exactly happen3ed and the UAE governments have called for investments into the oil industry so that a future occurrence is prevented where prices are exorbitantly high. In conclusion therefore, the UAE has come out as a major investment hub that is seeing many people rush into this region to make profits. Investment opportunities have seen the creation of the wonderful cities such as Dubai and many other estates. The UAE will remain a major investment ground for people as it is just realizing its potentials for development which would consequently require the help of other people in order to achieve its goals of making wealth and improving the living standards of the people. References Dale Peck., Wayne Parker, Jonas Graham. Down seizing Rural Development with Cheap Credit. UK, West view Press 1998 Dowla Asif. Creating inclusive financial mechanisms with a Double Bottom Line. Bloomfield CT Kumarian Press Inc., 1996 Frankweitz Daniel. World Bank and Microfinance. UK, Routledge Press, 2006 Grobin Jonathan, Annette Krouchlat. Meeting the Balance in Microfinance: A Guide to Managing Credits. Cambridge, the MIT Press 2001 Helms Thomas, Madeline Hirshland. What's wrong with Microfinance USA, Springer Press, 1997 Kostigen Mathews. What works in microfinance. Market watch .com, 2008. retrieved on May15th 2009. From http://www.marketwatch.com/story/correct_demand_for_microfiance_looms_around_the -world_outstrip_supply/ Morduch Kim. Microfinance: seeking a proof for its alleviation of poverty. Philanthropyaction.com. 2009. Retrieved on May 15th 2009. From http://www.philanthroipyaction.com/nc/cutting_edge_research_on_microfiance/ Puglielli Mark. Business economics. New York, Wiley and sons, 2002 Ralph Michael, Beatriz Arnold. The Fundamentals of Microfinance, Cambridge, Cambridge University Press. 1997 Read More