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Custom Business in United Arab Emirates essay paper sample

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United Arab Emirates (UAE) has the sixth largest oil reserves in the world and also has one of the most developed economies in the western part of Asia. It is actually regarded as one of the wealthiest nations. This is due to its per capita GDP of US $ 48,597. IMF also classifies UAE as one with high human development economy (IMF Data Mapper, September 2011). According to the statistics shown by the Human Development Report (UNDP, 2008), the country has a high purchasing power per capita which ranks 15th globally. The report also shows that its human development index ranks 13th worldwide, an index that is relatively high for the Asian continent.

The capital city of the UAE is Abu Dhabi. It also serves as the center for cultural, political, commercial and industrial centre. Some of the most important financial institutions are also situated in this city. The institutions include: The Central Bank of the United Arab Emirates, Abu Dhabi Securities Exchange and other multinational corporations. Oil production is the main source of revenue in Abu Dhabi. However, there have been some recent ventures into other source of revenues which include tourism and financial services. Due its high cost of living of the expatriates, Abu Dhabi is ranked the second most expensive city in that region and is the 67th in the world ranking (City Mayors, 2010).

Abu Dhabi is indeed one of the world’s fastest growing cities. Business is one of the important sectors of its economy. It is worth noting that due to the global competition in the business sector, adequate strategies are necessary. This is the best way of ensuring that products remain competitive. Abu Dhabi has proved to be a market where competition is high. New ideas continue to come up from different sectors with an aim of satisfying the consumers. In effect, those businesses with no abilities of keeping up with the rest have always found it difficult to cope up, making them to loose on the consumer preferences of their products.

The rate at which small and medium businesses are increasing in this city has been very high. The reason behind this has been the abolition of the minimum required amount for start-up. Earlier on, companies were required to have a minimum of US$ 40,000 (DH 150,000) before registering a business unit. This is a law that was put in place to ensure that businesses had enough capital and assets to pick up the operations from the ground. This indeed was an impediment to most of the companies which could not attain the set target. It also worked to slow down the increase of the number of businesses in the city. However, this was the Abu Dhabi’s Chamber of Commerce and Industry.

According to a report by Charlie Hamilton on The National on-line newsletter, the scraping of this law in 2008 has led to the increase in the number of the registered entrepreneurial businesses. The report suggests that the increase has been so tremendous that competition has now set in. The situation is expected to continue with the same trend. This means that the only business ventures that will survive are those that are able to strategically plan according to the market survey. Business in Abu Dhabi very much depends on the ability to satisfy the consumers. Any entrepreneurial activity without such a focus is not set to thrive in Abu Dhabi.

The atmosphere exhibited in the city is also an incentive that encourages business. Competition is really high. One of the important factors for this is the economic stability. The recent credit crunch did not affect Abu Dhabi like other cities. Entrepreneurs therefore come from different parts of the world with an aim of setting business in the city. The sectors that realized much growth is the retail and engineering sectors. All these factors explain the kind of competition that exists in Abu Dhabi. The situation has called for the improvements in the service delivery to the consumers as a means of gaining milestones. Keeping up with the technology is also a key factor in doing business in the city.

It is also to be noted that the main backbone of the Abu Dhabi’s economy is the oil business. In fact, it is the leading emirate in its production capacity. This business also serves to set the pace for other small businesses that directly serve the consumers. Besides this, gas reserves also add to the Emirate’s economic growth.

It should however be noted that business in this city depends on those goods and services that are consumed at the lowest level. The ability of entrepreneurs to satisfy a target group is an effective way of beating the competitors. For instance, a United Arab Emirates business report posted on the business week website (May 2011) shows that UAE teens are the global high spenders. They averagely spend US$ 100 per week as compared to other neighboring teenagers. Their Saudi Arabian and Egyptian counterparts spend $56 and $7 respectively. Those who took part in the survey said they expected to spend more than that in the subsequent years. This is actually a target group that if well utilized can keep the business afloat. This depends only on the kind of consumer products that a certain business offers. Doing market survey on the type of products that satisfy a target group works to provide the correct information on what kind of changes to be done on the products.

Modeling

Due to the above stated reasons, there is a need for the businesses in Abu Dhabi to devise ways of keeping up with the situation. The ever increasing competitive market is an issue that requires adequate strategies to cope up with. Any business requires a certain kind of climate to thrive and make profit. However, there are forces that continue to suppress the efforts of maximizing revenue. Resources are always scarce and allocating them should be done wisely so as to ensure that the competing activities are optimally dealt with. Mathematical models are important in aiding the decision makers in the business to make the right choices. This is true, especially where cost is to be minimized, subjects to the constraints that also exist (Karatzas, 1998).

There are two major steps that need to be followed when coming up with such a model. First and foremost, all the decision variables that should be solved in the business need to be identified. This should be followed by the use of the identified variables to formulate objective function and constraints. For example, let us consider a business that manufactures two products: X and Y. These products are from two distinct departments which are responsible for their processing and finishing. For decisions to be made on the two products, a mathematical linear model would be appropriate. Below is the data table for the two products.

Products

 

X

Y

Available units

Assembly in hours

4

8

200

Finishing in hours

6

4

180

CM/unit

$50

$80

 

Table 1: Data of the Products X and Y

Source: Own Computation

For this company to find out and make a decision on the best mix of these two products, it is necessary to first define the variables as shown below:

X- Is the quantity of product X that is to be produced?

Y- Is the quantity of product Y that is to be produced?

This ought to be followed by the expression of the objective function. This is what determines the maximization of the Total Contribution Margin (TCM). This is expressed as shown below:

Conclusion

Such modeling would ensure that the right decisions are made for maximization of the business revenue. Mathematical modeling like has been shown above works to find out the most appropriate and efficient mix that could be used for the product. Due to the high cost of production and the ever diminishing resources, this method provides a way of finding out how to allocate the resources. It should be noted that a decrease in production cost translates to the decrease in the unit price of the manufactured products, something that eventually leads to the decrease in the retail prices to the consumers.

Abu Dhabi has one of the highest cost of living rates. Therefore, businesses with the abilities of using such mathematical models would easily maximize profit by minimizing the production costs. This is done by varying the input levels in the manufacturing system. This remains to be the key to making life better for the Abu Dhabi inhabitants. Accessing the consumer services and products at affordable rates is a key to ensuring consumer preference of a certain company’s products.

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