INSTITUTE OF PROFESSIONAL EDUCATION AND RESEARCH (IPER), BHOPAL

2011 -13

INETERNATIONAL BUSINESS ENVIRONMENT Assignment On UAE

Submitted To: Prof. Uddeppan Chatterjee

Submitted By: Agresh Jain Vikram Jeet Singh Priyank Dabral

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CULTURE
The United Arab Emirates is one of the world's fastest growing tourist and business destinations. Traditional Arab hospitality and comfortable winter temperatures are complemented by sophisticated infrastructure and world-class amenities. The UAE also has become a world-class venue for conferences, regional and international exhibitions and major global sports events such as the Dubai World Cup for horse-racing, the Abu Dhabi Formula One Grand Prix, the Dubai Desert Classic Golf Tournament, and the Fifa Club World Cup, to be held in Abu Dhabi in 2009 and 2010. The United Kingdom's largest online travel agent, expedia.co.uk, selected Abu Dhabi as one of the world's top 10 travel destinations in 2008. And Dubai International Airport won the award for the Middle East's leading airport in the 2007 World Travel Awards. There is much to do in the UAE beyond Dubai and Abu Dhabi. First settled during the Bronze Age, Sharjah is the cultural capital of the emirates. The Heritage Area of Sharjah City includes a Maritime Museum, an Islamic Museum and museums for traditional and contemporary Arabic art, among many others. Ajman attracts international visitors with beautiful beaches, as does Fujairah which also offers snorkeling and diving and excursions to the Musandam Peninsula, renowned for the unspoiled nature of its sheer cliffs, rocky coves and coral reefs Ra's al Khaymah, on the border with Oman, is probably best known among local adventure travelers for the rugged Hajar Mountains.

General Information and Cultural Norms of UAE

1. The UAE is a global business center. New businesses should nonetheless have some awareness of Arabic culture and the ways of commerce in an Arabian business environment. 2. In the Arab world, more than anywhere else, business is conducted on the basis of personal relationships and mutual trust. It is vitally important to build on these.
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Although this is changing rapidly and may not apply to all large firms, companies are often a family affair, with the ultimate decision-maker being the head of the family. Even if this is not the case, it is essential to clearly identify the decision-maker. However, initial meetings will probably be at a lower level.

WORK CULTURE
1. The official weekend in the UAE is on Friday and Saturday. Some smaller private companies only close on Friday. 2. Government offices open at 7.30 a.m. and close at 3.00 p.m. Private offices tend to keep longer hours, adopting either straight shift or split shift. The former normally requires eight working hours beginning between 7:30am and 9:00am with a lunch break lasting 30 minutes to an hour. The latter involves commencing between 9:00am and 10:00am and ending between 8:00pm and 9:00pm, with a three- to four-hour break in between. 3. During Ramadan, working hours shorten by two to three hours, with most of the work accomplished in the early hours of the morning or much later in the evening after the days fast is broken (at sunset).

Language
Although Arabic is the official language, English is widely used in business transactions in the UAE. Print business cards in English and Arabic and make sure that all brochures and presentation material are full-color and well produced.

Cultural Norms
Good manners and courtesy are prized attributes. Always arrive on time for a meeting, however, know that punctuality is not considered a virtue in the Arab world, and people are often kept waiting before, or during, a meeting. Be patient, and do not take it as a lack of respect. Greet the most senior person first when meeting a group of people. You will always be offered refreshments in an Arab home or office. Frequently, this will be Western-style tea or coffee. However, people serve a sweet, milkless tea or a light Arabic coffee flavored with cardamom. You should accept at least one cupful, as it may be considered discourteous to refuse. Take the time to chat and drink the coffee, tea or soft drink and use it as an opportunity to establish relationships. Do not be concerned if your meeting is interrupted by other guests or telephone conversations. The upfront, hard-hitting approach is generally not welcome, so once again, be patient. Be aware that what may seem like evasiveness on the part of your host is usually an unwillingness to say no to your face. Nevertheless, once a deal is made, orally or otherwise, an Arab businesspersons word is his or her bond and you are also expected to perform accordingly, even if the agreement is a verbal one only. Hospitality is a way of life in the Arab world and business is frequently conducted over lunch or dinner more than likely in a hotel or restaurant. It is considered polite to return the invitation. Dress conservatively: men should wear a suit, women should ensure that business clothing covers arms and legs. Avoid scheduling meetings during prayer times or major Muslim holidays.

Common Mistakes and Important Lessons

Foreign companies face similar challenges and make comparable mistakes when trying to do business in the UAE. Common mistakes that foreign companies make include:

Underestimating time: establishing a business in the UAE takes more time than in most Western countries
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Patience is key, from the time of corporate formation to the expense burn period before turning profits

Miscalculating the expense needed to launch properly

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Plan a longer launch period

Hiring experts based in the US

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It is recommended to hire UAE business development consulting firms Courts are undergoing significant changes, laws can sometime appear opaque and ambiguous. Local support can be invaluable

Assuming that free zones are by default the best option

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Depending on the companys ambitions, a joint partnership might be a better option

Launching with too big an overhead, instead of in phases Mispricing products/services

ECONOMY
UAE Economy

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The UAE has one of the most open economies in the world. This tradition of welcoming business and trade goes back to early Gulf history, when ships sailed to India and along the coast of East Africa as far south as Mozambique. The UAE continues to be a strategic hub, with business-friendly free zones and a quickly growing economy. The country has experienced significant economic growth. Average GDP growth over 2000 to 2006 in the UAE was about 8.4 percentthe highest in the Gulf Cooperation Council, which averaged 6.5 percent. The nominal GDP for 2007 was $192 billion. This reflects the rich natural resources in the UAE, which has 10 percent of the total world supply of oil reserves and the worlds fifth largest natural gas reserves. As a mainstay to the economy, oil exports now account for about 30 percent of total UAE gross domestic product. In addition to being an important supplier of energy, the UAE is now becoming an increasingly relevant consumer of energy. The UAE will continue its long tradition of responsible energy stewardship as it develops and diversifies its economy, accelerates the development of additional hydrocarbon reserves and contributes to the development and implementation of alternative energy sources.
2.

Diversification Creates Trade Opportunities

The UAE launched a diversification and liberalization program to reduce reliance on oil and transform its economy from a conventional, labor-intensive economy to one based on knowledge, technology and skilled labor. The federal and individual Emirate governments have invested heavily in sectors such as aluminum production, tourism, aviation, re-export commerce and telecommunications. This resulting infrastructure boom sees virtually every economic sector undergoing rapid redevelopment and expansion. The UAE accounts for most of the ongoing and planned
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infrastructure projects among the GCC countries, amounting to an estimated $300 billion in investments over the next five years, according to Dubai-based Khaleej Times.

3.

Recognized Leadership

A number of global business indexes have recognized the advantages that the UAE brings to international business. AT Kearney ranks the UAE as one of the top 20 best places in the world for global service business. And the UAE is ranked in the top 30 on the World Economic Forums most-networked countriesahead of all other Arab nations, as well as countries like Spain, Italy, Turkey and India. The UAE also gets positive rankings from Transparency Internationals corruption index, ranking in the top quarter as a least corrupt country. US business has also recognized the importance of the UAE-US economic relationship. In May 2007, the US Chamber of Commerce launched the US-UAE Business Council, whose members include 36 companies from both countries.

At $360 billion in 2012, the GDP of the UAE ranks second in the CCASG (after Saudi Arabia), third in the Middle EastNorth Africa (MENA) region (after Saudi Arabia and Iran), and 30th in the world. There are various deviating estimates regarding the actual growth rate of the nations GDP, however all available statistics indicate that the UAE currently has one of the fastest growing economies in the world. According to a recent report by the Ministry of Finance and Industry, nominal GDP rose by 20.8% in 2012 to $360 billion, compared with $298 billion in 2011. Although the United Arab Emirates is becoming less dependent on natural resources as a source of revenue, petroleum and natural gasexports still play an important role in the economy, especially in Abu Dhabi. A massive construction boom, an expanding manufacturing base, and a thriving services sector are helping the UAE diversify its economy. Nationwide, there is currently $350 billion worth of active construction projects. The UAE is a member of the World Trade Organization.

SOCIAL LIFE IN UAE

1.

Women in the UAE

The Constitution of the UAE guarantees equal rights for both men and women. Under the Constitution, women enjoy the same legal status, claim to titles, access to education and the right to practice professions as men. They are also guaranteed the same access to employment, health and family welfare facilities. The rights of women to inherit property are also guaranteed and ensured.
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Education and Literacy

The literacy rate of women in the UAE was 90 percent in 2007. The number of UAE national women enrolled in higher education is actually 24 percent more than the number of UAE national men enrolled in higher education and reflects a staggering statistic: 77 percent of UAE females continue on to higher education from high school.

Three of every five students in the public higher education system are women. The UAE has begun training women as muftis, or Sunni Muslim scholars who interpret Islamic law.

3.

Women in Government and Business

Women graduates in the UAE can now be found working in government, engineering, science, health care, media, computer technology, law, commerce and the oil industry.

Four UAE cabinet ministers are womenincluding Sheikha Lubna Al Qasimi, Foreign Trade Minister, who was on Forbes magazines 2007 list of the 100 most powerful women in the world.

Women form two-thirds of government sector workers. In October 2008, the first female judge was sworn in. Women make up 20 percent of the diplomatic corps.

Nine women hold seats within the Federal National Council, accounting for 20 percent of the membership. The FNC is a consultative parliamentary body.
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In 2003, for the first time, the Abu Dhabi police trained 32 women to work with the special security forces. The UAE has four women fighter pilots, the first to serve in UAE military forces.

Women finance one-third of the transactions in the financial and banking sector.

RELIGION RELIGIOUS BELIEFS: Islam dominates all aspects of life. Most Emiratis are members of the Sunni sect. Matters relating to marriage, divorce, inheritance, economics, politics, and personal conduct are affected by Sharia (Islamic) law. Emaritis are tolerant toward other religions, and immigrants of other faiths are allowed to have their own places of worship. Large numbers of Asian and Arab immigrants also follow Islam. RITUALS AND HOLY PLACES: The main Muslim religious ritual is prayer five times a day. This requires wodou (ablution) for purification. Usually people go to the nearest mosque or pray at home. The rituals involved in the pilgrimage ( Haj ) to Mecca are the most elaborate. One must remove the shoes before entering a mosque. In large mosques, there are separate areas for women.

Education in the UAE

One of the UAEs highest priorities has always been education. As President His Highness Sheikh Zayed Bin Sultan Al Nahyan, founder of the UAE, noted, The greatest use that can be made of wealth is to invest it in creating generations of educated and trained people. The UAE has focused on educating both men and women. In 1975, the rate of adult literacy was 54 percent among men and 31 percent among women. Today, literacy rates for both genders are nearly 90 percent. New initiatives are being launched at all educational levels. A key area of focus has been to transform K to 12 programs, to ensure that UAE students are fully prepared to attend universities around the world and compete in the global marketplace. In addition, some of the worlds best universities are creating programs in the UAE, attracting talented students in the Arab world and globally.

K-12 Programs
The education system of the UAE is relatively new. In 1952, there were few formal schools in the country. In the 1960s and 1970s a school building program expanded the education system. Now, education at the primary and secondary level is universal. In 2006-2007, approximately 650,000 students were enrolled at 1,256 public and private schools. About 60 percent of all students attend public schools. Education reform focuses on better preparation, greater accountability, higher standards and improved professionalism. In addition, rote instruction is being replaced with more interactive forms of learning, and English-language education is being integrated into other subjects, such as math and science. The Abu Dhabi Education Council (ADEC), the Dubai Education Council (DEC) and the UAE Ministry of Education are each tasked with education reform, while preserving local traditions, principles and the cultural identity of the UAE. UAE President His Highness Sheikh Khalifa Bin Zayed Al Nahyan established ADEC in 2005 to develop education throughout the UAE. ADEC takes an entrepreneurial approach to involve the private sector, improve and modernize facilities, reduce bureaucracy, update curricula and take advantage of information technology.
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ADEC enlisted Zayed University (ZU) to help develop English-language skills of elementarylevel students at four model schools. Thirty faculty members from ZU will work with the first and fourth grade students at these schools, observing and evaluating English language teaching methods, and designing modern academic programs. The initiative will be extended to all schools at a later stage. The Dubai Education Council (DEC) seeks to meet global standards, focusing on international accreditation and comprehensive quality assurance programs. A recent initiative is designed to attract world-class international primary and secondary schools to Dubai. The Ministry of Education develops and monitors reform activities, with a focus on standardsbased, student-centered education. These efforts include a partnership with National Association of Elementary School Principals in the United States. Activities include:

Audits of every public school in the UAE Evaluations of the system, from individual schools up through the Ministry Ongoing professional development of teachers and principals

Higher Education
The UAE is home to a wide range of universities, both public and private. UAE citizens can attend government institutions free of charge, and the UAE has one of the highest application participation rates in the world. Ninety-five percent of all girls and 80 percent of boys enrolled in the final year of secondary school apply for admission to a higher education institution. UAE public universities include:

UAE University, where enrollment has increased from 502 in its founding year (1977) to nearly 14,740 in 2006. Women represent 79 percent of the student body. UAE University awards 70 undergraduate degrees as well as some graduate degrees. Many of its programs are internationally accredited.)

Zayed University (ZU), established in 1998 as an all-womens institution, and later expanded to include men. Organized into five collegesArts and Sciences, Business Sciences, Communication and Media Sciences, Education, and Information Systems, the primary language of instruction is English.
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Higher Colleges of Technology (HCT), the largest higher educational institution with an enrollment of 16,000 UAE nationals. Founded in 1988 with four campuses, HCT now includes 16 mens and womens colleges in Abu Dhabi, Al Ain, Madinat Zayed, Dubai, Ras al-Khaimah, Sharjah and Fujairah. The colleges offer more than 80 programs at four different credential levelsDiploma, Higher Diploma, Bachelor and Masters. More than 10,000 of the current students are female.

Private Institutions
Some of the key private institutions include:

American Universities of Sharjah and Dubai, both of which are also accredited in the United States

Sharjah University Ajman University of Science and Technology Abu Dhabi University with campuses in Abu Dhabi and Al Ain Al Hosn University

The Masdar Institute for Science and Technology (MIST) began accepting students in 2009. MIST will be the Middle Easts first graduate education and research university focused on developing the next generation of solutions to the worlds dependence on fossil fuels.

Global Partnerships
A number of international universities have campuses or programs in the UAE. Some are housed in special zones, including Dubai Knowledge Village and Academic City. These are multiuniversity complexes that attract students from the region who are unable to go abroad to study. More than 25 universities are located, or planning to be located, in these special Free Zones. Other special programs include:

The Sorbonne opened its Abu Dhabi campus in 2006 and will award qualifications under French regulations and standards set by the Sorbonne in Paris.

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New York University is the first comprehensive liberal arts and sciences campus with a robust research component to be operated abroad by a major US university. A temporary campus has opened in Abu Dhabi. When the main campus opens on Saadiyat Island, the school will serve over 2,000 undergraduate and graduate students, principally from the Middle East, South Asia, Central Asia, and Europe.

Johns Hopkins Bloomberg School of Public Health is helping establish a public health doctoral program in the Emirates.

Other US institutions include the University of Washington, Boston University and Rochester Institute of Technology.

Technical Education
Founded in 1997, the Centre of Excellence for Applied Research and Training (CERT) is the commercial arm of the Higher Colleges of Technology and provides education, training and applied technology. The company is the largest private education provider in the Middle East and is developing projects throughout the MENA region. Other vocational and technical educational centers are sponsored by the:

Emirates Institute for Banking and Finance Abu Dhabi National Oil Company Career Development Center Petroleum Institute Dubai School of Government Emirates Aviation College for Aerospace and Academic Studies

Special Education
The government of the UAE recognizes the need to support students with special needs. The UAE signed the optional Protocol to the UN Convention on the Rights of Persons with Disabilities and Federal Law 29/2006 guarantees rights for people with special needs. Vocational and rehabilitation centers have been developed throughout the country. In addition, efforts are made to include special needs students in mainstream educational settings. The UAE also participates in the Special Olympics.

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A partnership between the government of Abu Dhabi and the New England Center for Children, a Massachusetts school serving children with autism, established a comprehensive education program as well as trains UAE nationals to provide services in Arabic.

Political System
Government
Under the UAE system of government, the President of the Federation is elected by a body known as the Supreme Council of Rulers. The Supreme Council is the top policy-making body in the UAE, and the President and Vice President are both elected from its membership for renewable five-year terms. The Supreme Council has both legislative and executive powers. In addition to planning and ratifying federal laws, the Supreme Council approves the Presidents nominated Prime Minister and is equipped to accept his resignation, if required. The Prime Minister is appointed by the President. He or she then appoints a Council of Ministers, or Cabinet, to oversee the development and implementation of federal policy across all portfolios of government. In addition to the Supreme Council and the Council of Ministers, a 40-member parliament known as the Federal National Council (FNC) also examines proposed new legislation and provides advice to the UAE Cabinet, as required. The FNC is empowered to call and question Ministers in regard to their own performance, providing an additional degree of accountability to the system. Groundbreaking developments to open up decisionmaking were made in December 2006, with the first indirect election of FNC members. Previously, all FNC members were appointed by the Rulers of each Emirate. The introduction of indirect elections represents the beginning of a process to modernize the UAEs system of government. Under these reforms, individual Rulers select an electoral college whose members total 100 times the number of FNC members held by that Emirate. The members

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of each college then elect half of the FNC members, while the other half continue to be appointed by each Ruler. The process resulted in an FNC in which one-fifth of its members are women. Future initiatives are expected to expand the size of the FNC and strengthen the interaction between it and the Council of Ministers, to further improve the efficiency, accountability and participatory nature of government in the UAE. In November 2008, the terms for FNC members were extended from two to four years, which is more consistent with other parliaments in the world. In addition, the government will report to the FNC about proposed international treaties and agreements, and those agreements will be discussed by the FNC before their ratification. Historically, the political environment of the UAE has been characterized by great affection for the countrys leadership and institutions of government. This is largely in response to the rapid growth and development the UAE has experienced under their guidance in recent decades.

Trade & Commerce

The UAE lies at the heart of a strategic, geographic crossroads where trade, commerce and diverse cultures have co-existed and interacted for hundreds of years. Today, the UAE has one of the most open and dynamic economies in the world. A number of global business indexes have recognized the advantages that the UAE brings to international business. AT Kearney ranks the UAE as one of the top 20 best places in the world for global service business. And the UAE is ranked in the top 30 on the World Economic Forums mostnetworked countriesahead of all other Arab nations, as well as countries like Spain, Italy, Turkey, and India. The UAE also gets positive rankings from Transparency International and the World Banks Worldwide Governance Indicators for control of corruption, ranking in the top quarter of the least corrupt countries in the world. Other clear advantages to doing business in the UAE include:

No restrictions on profit transfer or repatriation of capital No corporate or income taxes

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A currency, the Dirham, that is stable, secure and pegged to the US dollar Very low, or non-existent, import duties Competitive labor costs

These factors, combined with a strategic geographic location, an expanding infrastructure and an extremely safe environment, make the UAE an ideal place to do business. An important trading partner for the United States, the UAE is the largest export market for the United States in the Arab World. More than 750 US firms have a presence in the country, and 30,000 Americans live there.

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