Strategic Analysis of the Abu Dhabi Department of Finance

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The Abu Dhabi Department of Finance and Customs Administration were formed in 1966 under the rule of His Royal Highness Sheikh Zayed bin Sultan Al Nahya. Slowly but surely the department grew both in size of operations and number of people employed as the department had 15 people in 1968 as compared to just 3 in 1966. In 1969 the Emri Decree was issued which exempted certain goods from customs taxes like dried dates which increasing the taxes on other socially undesirable goods like cigarettes.

From 1970 onwards, the department began to gain momentum and by 1984, it employed 71 people. In 1984 it was also relocated to its current location. In 1991 Customs department was made independent from Finance department.

The organization aims at maintaining safety and security of the country by ensuring that safe goods enter the country and collecting revenues on these goods for the country. It must thus, balance revenues on one hand and social welfare and security of the country on the other hand.

Why is it important for your organization to use appropriate strategies in this competitive business world?

The customs department of any country is a very vital and important part of the economy of that country. The finance and customs department of Abu Dhabi controls and monitors the export of dates and oil, two major exports of the country as well the import of goods, some desirable and some undesirable. In today's world, any and all goods can and are made available given that buyers and sellers are aware of the needs of each other and find each other. While in theory this might seem to benefit the economy, by making trade more efficient, it might actually be detrimental to society. E.g. people might want to consume drugs, they could afford drugs and could probably find people willing to sell them drugs but the effects of allowing people to consume and sell drugs will be more devastating than the satisfaction they derive from consuming them. Also many countries have laws and regulations about what can and cannot be legally consumed in an economy. In most Muslim countries, the import and consumption of alcohol is forbidden. In such a scenario, there needs to be an independent body which can monitor the transfer of goods. And finally, customs department is an important revenue generating department for the country.

Explain the strategy your organization is currently using?

At present the organization is using a reactive strategy with some proactive elements. It is focusing on differentiation in some areas to maintain a competitive advantage but overall the strategy is to observe international events and then formulate a strategy which minimizes the effect of any negative components of those events while at the same time trying to maximize effects of strengths and capitalizing on opportunities.

The department of finance customs administration's focus on responsiveness is also due to the culture of the organization. No organization works in vacuum. And a department as important as the customs department definitely does not. In fact many of its actions are dictated not by rational thinking but by political motive and foreign policy hence it becomes important to respond to changing scenarios, because the existence of so many variables makes it hard to focus on trying to predict future outcomes all the time.

Discuss the strategy of the department you are presently working at. In what ways does your department and other operations strategically aligned with the organization's strategy?

The department of finance customs administration has the vision to protect the country and allow for a safe as well as beneficial trading arena. Within this department, the department of arrival and departure focuses on the need to establish and monitor set patterns of entry and exit into the country. By observing who and what enter when and how, this department is able to provide the department of finance customs administrations the necessary tools and information needed for future policy making. It also helps the department of finance and customs administration to follow its responsive strategy by focusing on these statistics.

Discuss the strategy school that your organization currently uses? How does the concepts of this strategy school helpful your organization?

The department follows the school of thought which emphasizes that the whole point of a strategy should be to create a competitive and sustainable advantage over a long period of time. For this very purpose the department of finance customs administration focuses on gathering data to study trends which have occurred in the past to create models of future outcomes and predict results for these scenarios. By doing this they are able to in advance gauge to a certain extent what exactly the future will be like. Once they are able to do this they can then proceed to making strategies accordingly. While the predictions might not be 100% accurate, historical data is usually a good starting point to try to understand and predict future trends.

Conduct a SWOT analysis of your organization's strategy.

The SWOT analysis of any organization is the combined analysis of both internal factors i.e. strengths and weaknesses and external factors i.e. opportunities and threats. The aim is to maximize strengths, avail opportunities and minimize the effects of weaknesses and threats. Some factors can be both a strength and a threat e.g. the Department of Finance Customs Administration is a government owned body which means that it has the advantage that most government agencies have and that is that the government is there to back it up. On the other hand however, since it is a government organization the problems of bureaucracy and nepotism which plague any government body also plague it. Its major opportunity is that it can expand and become a separate entity from government control, which is still monitored by the government but is free to make its own policies so long as they are in accordance with the policies of the country. However the biggest threat it faces is that due to the recent codependence between countries, many countries' foreign policies now affect their local affairs, and if that is the case then the foreign policy might not be in the best interest of the country.

How is your organization's industry changing? Does the organization's strategy translate into a series of aligned changes and behaviors leading to strategy implementation?

The industry for the Customs Administrations Department is the international economy as well as its own local economy. Both are advancing at high rates. The world, powered by huge economies like India and China is growing, albeit a bit slower than former years. Though the rate of growth might be slower, the rate of globalization is definitely not. As MNCs realize that their own economies become saturated and demand dwindles due to excess competition they move onto developing countries and gulf countries with their products. And these products have the benefit of economies of scale. So they are relatively priced lower than goods which are available in the local market. So the job of the customs department becomes even more important to ensure that local industry and trade is protected and not exploited by foreign entities.

Being a government organization the organizations strategy does not necessarily lead to a series of aligned changes and behaviors for strategy implementation. This is because like any government organization, this organization has to work with bureaucracy, which means working around red tape.

How does the significance and complexity of culture in international trade will impact your organization?

The significance and complexity of international trade is one of the major components of change for this department and organization because it is one of the factors which will most likely affect this department. As the volume of international trade grows so does its culture which becomes increasingly complex. As the culture becomes more and more complex it becomes that more difficult to monitor the movement of goods in and out of the country. This is why as the international arena becomes bigger and more complex it becomes that much more important to increase vigilance of both goods coming inside and leaving the country. Some goods might be high revenue earners for the government but they might not be in the best interest of society so it becomes important to monitor them to maximize social benefit and social welfare.

Where do you think your organization might go in future?

In the future the department will move towards greater autonomy in functioning as the pace at which the international arena is changing it will become very difficult to manage the inflow and outflow of goods while trying to work with the government. True the goals, vision and mission of the department will remain the same but at the same time it is important to focus on a responsive and proactive strategy as suggested earlier.

Define and develop a competitive strategy that would help your organization achieve greater success in the future.

The organization needs to focus on a more responsive and proactive strategy. This is because as the century has unfolded, international borders are becoming murkier and it is becoming harder by each passing second to monitor and control the inflow of goods into the country, especially when so many countries export to this country.

The success of the organization will be gauged by the change in social welfare and revenues generated for the country by the department. The department has to balance out government revenues with social welfare and hence must focus on bridging the gap between tangible and intangible benefits. Hence it must consider short term and long term benefits and short term and long term costs before making any decisions and consider the many implications of those decisions, particularly if they lead to considerable amounts of externalities.