CHALLENGES FACING FOREIGN COUNTRIES

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RESEARCH PROPOSAL ON THE KEY
CHALLENGES FACING FOREIGN COUNTRIES
ENTERING IN UAE

Chapter 1 Introduction:
UAE (United Arab Emirates) is ranked among the riches states of Gulf Nations. Right
after the exploration of oil reserves in the country, it has shown remarkable growth
in business market and accordingly in living standards. There was a time when it
was a country dependent on oil and gas resources only (Haouas. and Heshmati,
2014). However, now it has diversified its income into banking, tourism, trade,
manufacturing, logistics and real estate businesses and they reduced the portion of
oil and gas on overall GDP of the country. Such a diversified organizational
environment provides ample opportunities for the establishment and growth of
different businesses (Rasanen, 2010). Moreover, the geographical location of UAE
provides ad its liberal climate has helped it to establish extensively cooperative
relations with other countries as well as to get access to more efficient
infrastructure with developed air and sea connections (Haouas and Heshmati,
2014).
The state of UAE has seven emirates namely Abu Dhabi, Dubai, Sharja, Fujairah, Ras
Al Khaima, Ajman and Umm al Quwain. Amongst which, Abu Dhabi and Dubai
provides the greatest opportunities for business due to established infrastructure
and trading environment. However, the emirate of Sharja provides attractive
opportunities for establishing heavy industry while Ras Al Khaima has established
free trade zone and Fujairah is a billionaire market for oil and gas reserves
(Rasanen, 2010).
Thus, the region carries high opportunities for foreign firms to establish their
businesses into any of its emirates. As for instance more than 200 companies of
only Dutch operate at UAE in various sectors. The entry to UAE business market is
also easy, however, to get the business started and have it well established is a very

challenging task. In this regard, the main challenges faced by foreign firms include
the cut throat competition faced due to running businesses in the market, the great
diversity of cultures at UAE as more than 90% urban population of the country and
almost 75% rural population consist of foreigners, so, their habits, life style all will
be changed from each other. Thus, the establishing business at UAE is a
challenging task and the foreign firms wishing to enter and establish their business
in this market need to cope up with all such challenges ad should adopt the right
strategies to enter this market (Schiliro, 2014).
This research will be carried out to examine the various challenges faced by foreign
companies to enter and start business at UAE and how these challenges are
managed by foreign firms. The results of study will contribute to business
community by providing useful insights to potential entrants of UAE to establish
business in that attractive market. It will also make its contribution to literature by
adding to the existing body of knowledge the current and latest challenges UAE
market is presenting to new entrants.
Research Objectives:
The aim of this research has been discussed in detail in introductory paragraphs. In
order to achieve its division has been made in the following objectives. Thus, this
research will be carried out:
 To examine the percentage of foreign firms as a ratio to total firms working
in UAE;
 To analyze the potential barriers to entry for foreign firms in UAE;
 To investigate establishment challenges the foreign firms are facing in UAE;

 To figure out the number of foreign firms successfully dealt with challenges
the UAE market is presenting to establish business;
 To examine the ways o how to overcome the challenges in order to enter the
attractive market of UAE
Scope of Study:
The scope of this study is limited to few firms operating in United Arab Emirates
that too which have successfully managed the challenges of entering and
establishing business in UAE. The results of study are also useful for only those who
want to establish business in UAE.
Chapter Two Literature Review:
The business market of UAE is very attractive yet presenting numerous challenges
as highlighted in previous researches and reports. In this regard, Global Analysis
Report, (2014) has investigated that the UAE market is vulnerable to any occurrence
across the region due to its geographical location and increased trade relations
with other countries. The currency and oil price fluctuation, incidents of terrorism,
economic crises etc. all have significant impact on UAE business market. Another
issue which the foreign firms face is the lack of clarity as to application of certain
regulations announced by the government. It is because the regulations of
government do not apply to all emirates of country so a misunderstanding is
usually created which may further lead to penalties and fines. The report has also
highlighted another big challenge which is perhaps the most important challenge
for foreign firms to enter and run business in UAE market is the highest level of
competition which the existing firms are posing as they are also not only domestic
but well reputed and well established American, Australian and European firms.

HSBC, (n.d) has investigated the restriction on ownership of company as another
challenge the foreign business firms have to face while starting business at UAE
(Haan, 2004).
Damyanova and Singer (2003) have identified the fact that there is greater cultural
diversity of customers of UAE market and it is very difficult to address the needs of
all types of customers having different demographics and cultural background.
Thus, the firms which want to enter the UAE market need to be very cautious as to
the cultural factors and to exactly hit the demand of majority of customers
(Damyanova. and Singer, 2003; Al Alawai. and Kuzic, 2008).
Chapter Three Methodology:
Sample Size and Sampling technique:
The sample size of this research will be 10 foreign firms successfully operating in
UAE selected under convenience sampling technique from different sectors.
Data Collection Techniques:
This research will make a thorough review of literature to investigate the critical
challenges faced by foreign firms in UAE. After this semi structured questionnaires
will be used to collect data from representatives of foreign firms successfully
operating at UAE.
Data Analysis techniques:
The collected data will be analyzed using SPSS 18 and spread sheet program of MS
excel with the help of different data analysis techniques like frequency distribution,
graphs, chi square distribution.

References:
Global Analysis Report, 2014, Business Environment United Arab Emirates,
Available at: http://www.agr.gc.ca/resources/prod/Internet-Internet/MISB-
DGSIM/ATS-SEA/PDF/6469-eng.pdf [Accessed: 29th
October, 2016]
HSBC, (n.d), Doing business in the UAE, Available at:
https://www.pwc.de/de/internationale-maerkte/assets/doing-business-in-the-
uae.pdf [Accessed: 29th
October, 2016]
Damyanova. B and Singer. t, 2003, The Role of Multinational Companies in Dubai:
Balancing Tradition and Modernization, Available at:
http://tiglarchives.org.s3.amazonaws.com/sites/default/files/resources/nimep/v2/I
NSIGHTS06_DamyanovaSinger.pdf [Accessed: 28th
October, 2016]
Al Alawai. A and Kuzic. J, 2008, EB Challenges and how to overcome them in Dubai,
Communications of the IBIMA Volume 4pp. 127-134
Haan. C. H, 2004, Small Enterprises: Women Entrepreneurs in the UAE, CLMRI,
Dubai, United Arab Emirates.
Schiliro. D, 2013, Diversification and development of the UAE’s economy,
Available at: https://mpra.ub.uni-muenchen.de/47089/1/MPRA_paper_47089.pdf
[Accessed: 29th
October, 2016]
Rasanen. P, 2010, INTERNATIONALIZATION PATH TO THE UNITED ARAB
EMIRATES, SAVONIA UNIVERSITY OF APPLIED SCIENCES Press, KUOPIO
Haouas. I and Heshmati. A, 2014, Can the UAE Avoid the Oil Curse by Economic
Diversification?, Discussion Paper No. 8003

CHALLENGES FACING FOREIGN COUNTRIES

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