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PEST analysis will evaluate the success or effectiveness of any business or organization from the angle of political, economic, social and technological features.
Political situation of a country plays a very vital role in the success of any business. Abu Dhabi Tourism Authority’s (ADTA) plans to promote Abu Dhabi as a leader in MICE tourism in the Middle East, the favorable political situation in the country gives them an edge over there competitors. The UAE consists of 7 Emirates with Abu Dhabi as its capital and Sheikh Khalifa Bin Zayed Al Nahyan as the president of the country and ruler of Abu Dhabi. Abu Dhabi is the largest Emirate consisting of 86.7% of the country’s total area. The population of Abu Dhabi was 2.9 million at the end of 2011 and is expected to grow to 3.1 million by the end of 2012. The total population of UAE was 7.2 million at the end of 2011 and is expected to reach 7.6 million by the end of 2012. 88.5% of the total population is made of expatriates and only 11.5% account for Emaratis. The government of UAE has been very successful in creating a very healthy business environment.
The major advantage of the political system in the country is that they have a very stable government. Ever since the formation of the nation in 1971, the country has enjoyed stability in governance. There have never been any instances of political unrest in the nation. Even when Sheikh Zayed Al Nahyan, the first President and ruler of Abu Dhabi passed away, the country has seen smooth transition of power. The harmony between the 7 emirates has been very effective. The country enjoys a very good law and order system and the courts in the country manage to deliver comparatively fair judgments to the huge mix of population living in the UAE. During the Arab spring, when most of the countries in the region have seen political unrest, UAE has enjoyed political stability. The rulers of the country have been successful in taking the country towards major developments by keeping the total population of the country on their side. This very smooth political situation in the country makes UAE an attractive destination for business and leisure travelers from all over the world. Therefore we can conclude that the very healthy political situation in UAE is great news for the MICE tourism industry of Abu Dhabi.
The government policies that control businesses also determine the success of any business or organization. The government of Abu Dhabi has positive approach towards businesses in the emirate although there is still room for improvements in various processes compared to Dubai. The government supports FDI, free trade and globalization. This favorable stand towards businesses taken by the government of Abu Dhabi provides perfect impetus to the MICE tourism industry of the emirate. The government also has clear vision on market ethics and consumer protection. The economic policies of the government are very clear and by coming out with the Abu Dhabi 2030 plan, the government has shown very clearly its intensions of taking the nation forward.
Although UAE is an Islamic country, the government shows tolerance to all the other religions as the 88.5% expatriates living in the country follows different religions. The tolerance shown by the government towards other religions gives UAE and Abu Dhabi a very good image in the world and that is again favorable for growth of MICE tourism in the region. The other major political factors influencing the growth of MICE tourism in the region are involvement of government in foreign trade agreements and laws of employment in the country. Regarding involvement of government in foreign trade agreements, the processes are pretty fast due to absolute power of the leader. There is still space for improvement in government process and communication between various government departments. The employment laws of the country have evolved over the last four decades. From being a very employer friendly law system, it has now moved towards protecting the interests of the employees. These are positive signs which create a very healthy political environment in the country for the growth of the MICE tourism sector.
The economic conditions of the nation also play a very vital role in the success of various businesses. Businesses are always built on capital therefore, interest rates fixed by the central bank of the country becomes very vital for its businesses. The UAE has seen its maximum interest rate of 4.8% in November 2007 and an all-time low of 1% in January 2009. From 2007 till now, the central bank has maintained an average of 1.4% interest rate. The interest rates being very low compared to other countries in the world, provides investors better chance of competing with the best in the world. Inflation rate of .5% in October 2012 and an average of 2.4% from 1990 to 2012 in the country provide a perfect economic atmosphere in the UAE for new businesses to prosper. The per capita income of the country stands at AED 95,000 per annum which is amongst the best in the world. The recession has resulted in reduction of per capita income but still maintains its place among the best in the world. The high per capita income also results in very good business environment in the country. MICE tourism industry which will prosper only by involvement of government and individual business units gains huge momentum in Abu Dhabi due to the very high per capita income. The country’s oil based industry as enjoyed an average of 4.5% growth rate in GDP over the last ten years and now the country is looking forward to diversification of the economy by promoting non-oil based sectors. MICE tourism sector is all set to take advantage of this favorable approach from the government. The very high oil prices during the last decade have resulted in the country’s economy becoming very strong. With a very strong economy the MICE tourism sector of Abu Dhabi has all the resources to compete with the best in the world.
Social factors also provide opportunity for businesses to grow rapidly. UAE is an Islamic country but it has great levels of tolerance for all the other religions in the world. The country gives freedom to everyone living in UAE to practice their religion and because of this the people living in the country lives with mutual respect and harmony. There has never been an incident of religion based riots or any other incidents of that nature. This gives the country an edge over other destinations for MICE tourists within the region. The UAE’s population is very multicultural and this makes them tolerant towards different cultures of the world. When tourists from different parts of the world come to UAE they feel comfortable because of the cosmopolitan nature of the city. Although, Arabic is the official language of the country, English is widely used as a business language. The multicultural nature of the population also results in usage of various other prominent languages like Hindi, Chinese etc. The wide range of languages used in the country also helps in promoting Abu Dhabi as a prominent MICE destination in the region.
Predominantly, the Arab world has been a male dominated society but the trends have now started changing. Female participation in governance and in influential positions has seen a considerable rise in the last decade. The message given to the outside world regarding the country’s transition in approach towards female participation in governance is changing the perception of the world towards UAE. This change in approach will help in the growth of tourism sector in the country.
The country is now focusing on green sources of energy and has invested a lot in sustainable sources of energy. The efforts taken by the government is slowly passing on towards the people living in the country. There has been a considerable increase in green initiatives in the country. This change in positioning of the government gives UAE and image of green nation in the world. Thus overall social situation in the country is extremely favorable for the growth of MICE tourism in Abu Dhabi.
Last two decades have seen considerable amount of improvements in the use of technology. With government support, improvements in technology become even more effective. MICE being a service sector will become more effective with the improvements made in technology. The use of technology in MICE industry helps in reduction of cost without compromising on quality. The advancements made in the online services provided by different service providers in the MICE sector has resulted in continues reduction of cost to the end user without compromising quality. Reduction of cost without compromising on quality is absolutely crucial to remain competitive in the global MICE industry and the advancements in technological innovations in the country fully supported by the government has given advantage to the MICE sector in Abu Dhabi. Technological advancements also results in making Abu Dhabi a hot destinations for business meetings during which delegates from different parts of the world will be interested in coming to the country. The government of UAE is also encouraging innovations by investing a lot in education, R&D etc.
Majority of the hotels in Abu Dhabi follow international standards in terms of usage of technology for various aspects like CRM, Security, Online transactions etc. This attracts more business travelers from all over the world. Usage of modern technology in the field of tourism sector gives confidence to international travelers. When the confidence of travelers increases, it will automatically result in increased number of travelers to the country. The MICE tourism sector in Abu Dhabi is well poised to take advantage of enormous technological advancements in the emirate during the past ten years.
From the PEST analysis of the MICE tourism sector we have arrived at the conclusion that the industry has all the right ingredients to prosper in the region. All the key factors like political, economic, social and technology have seen considerable advancement in the country during the last two decades. The possibility of moving forward with continuous improvements in all the sectors mentioned earlier is also very high thus creating perfect environment for the MICE tourism industry to grow considerably in years to come.
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