Maldives Market Entry

This document provides an overview of the market entry opportunities in Maldives, focusing on the challenges faced by Australian Cinema company. It discusses the political, economic, socio-cultural, and technical aspects of the country, along with recommendations for successful market entry.

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Maldives Market Entry
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Executive summary
The Maldives is a great country majorly characterized with tourism and fisheries and
economic activities. Other sectors such as film industry experience slow growth rate, thus
failing to offer tourist the best real-time experience. Australian Cinema company desire to
move into Maldives might face challenges such as unavailability of skills and another support
system such as infrastructure, however, the company can collect and great since there is little
going on in the industry. Through the use of transnational strategy and direct investment,
Australian has high opportunity to succeed in Maldives market.

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Table of Contents
Background- of Maldives Market..............................................................................................2
Company's industry in Country..................................................................................................3
Considerations before entering the market.............................................................................3
Maldives Country analysis.........................................................................................................3
SWOT analysis of Political System.......................................................................................3
Weakness............................................................................................................................4
Opportunities......................................................................................................................4
Threats................................................................................................................................5
SWOT analysis of Economic aspects.....................................................................................5
Strengths.............................................................................................................................5
Weakness............................................................................................................................5
Opportunity.........................................................................................................................5
Threats................................................................................................................................6
SWOT analysis of country’s Socio-Cultural aspects.............................................................6
Strengths.............................................................................................................................6
Weakness............................................................................................................................6
O..........................................................................................................................................6
SWOT analysis of technical aspects.......................................................................................7
Strenghts.............................................................................................................................7
Weakness............................................................................................................................7

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Opportunities......................................................................................................................8
Threats................................................................................................................................8
Legal...................................................................................................................................8
Environment...........................................................................................................................9
Demographics.........................................................................................................................9
Strategy of operation in Maldives............................................................................................10
Mode of entry...........................................................................................................................12
Direct Investment.................................................................................................................12
Recommendations....................................................................................................................13
Conclusion................................................................................................................................13
List of Reference......................................................................................................................14

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Background- of Maldives Market
The Maldives is a republic lying on the south-west of the Indian Sub-continent with a
population of about 324,000 people dispersed in an area of about 298 sq. Km. The Economic
freedom scores of Maldives stands at 53.6, making ranking the country at number 141 in
terms of the free market in the world in 2019. The Maldives receives most of its revenue from
tourism that comes to feel the experience of the numerous islands in the country as well as
infrastructure related constructions that is currently surpassing tourism as an economic
growth factor (Gordon and Hussain 2015). Other sectors such as fisheries and financial
sectors are also driving the economic growth of the country. Both the expert and import of
the country equal to 150.4% of the GDP. Maldives market trends are on various sectors such
as cinema and videos industry with focus in the 360-degree videos and virtual reality to
provide tourists with best real-time experience. The captured videos and images
Company's industry in Country
Maldives Film industry is still young with about four decades old irrespective of the
rich culture and several beautiful scenes that can provide a crew to have a perfect background
for great movie capture and recording. The film industry only contains a handful of well-
known actors and actresses are one of the major contributors to the slow growth of the
industry. Secondly, the industry lacks enough funding to enhance movies and cinema
production. Maldives film maker’s revenue inadequate opportunities to submit their
productions to other international festivals, thus leading to stagnant growth of the industry.
However, over the past years, Maldives film industry is receiving international attention over
the past growth of the country’s infrastructure, hospitality, and tourism industry, attracting a
lot more tourists.

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Considerations before entering the market
The major considerations before entering into the market are Political nature, the
occurrence of any natural disaster such as tsunami and the nature of the competition in the
country. Additionally, any investor needs to know the sources of all the resources to be used
such as skills, raw materials, and labor among others that tend to inadequate among the
citizens.
Maldives Country analysis
SWOT analysis of Political System
Strengths
The Maldives is a presidential representative democratic republic; thus, the president
serves as the head of the country and government, after the removal of the Sultan government
in 1968. The government has three branches: executive, judiciary, and legislative. In 2013
presidential election led to the election of President Abdulaa Yameen after a second round
off. This was perceived as the democratic exercise in the country after a long period of
dictatorship, and political instability since Nasheed was able to accept defeat thus reduced the
risk of political unrest enhancing investors trust on the venturing into the country.
Weakness
The Maldives is characterised by political protest from numerous young men who
frequently stage spontaneous demonstrations through the capital mostly at night. However,
the country is considered as democratic; democracy is in its infancy leading to numerous
protest. Most of the presidential elections have been faced with turmoils excepts Mohamed
Nasheed’s lections of 2008 that is perceived as the first democratic election ever since
however later resigned as a result of the three weeks protest from the opposition(Kothari

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2013). The uncertainty of protest and the country’s political instability tends to reduce
investors continue into the country’s market stability, thus shying away. Additionally, during
such instability various countries such as the USA, China tends to issues advisories against
travelling to the Maldives, leading to huge loss of revenue from tourism.
With a strong mixture of the legal system, human rights remain a concern as many
people face abuses that are not addressed, such as arbitrary arrests, incommunicado detention,
an inadequate independent judiciary, and ill-treatment. Lastly, the country majorly depends
on tourism and fisheries that are vulnerable to the external shocks such as advisories from
various countries, leading to poor revenue collection; for example in 2005, Maldives’
revenue amount dropped as a result of the tsunami.
Opportunities
The new constitution is paving the way to numerous benefits such as improvement of
human rights, thus improves the confidence of numerous potential investors (Scheyvens
2011). Through this, the country can grow rapidly as a result of foreign investors who are not
afraid of any uncertainty, such as arbitration.
Threats
The major threats are the weak political system between the hands of the government
that at times tend to have misunderstanding leading to poor implementation of the
constitution. The uncertainty can result in the inducement of unrest among the residence, thus
leading to poor business operations in the country.

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SWOT analysis of Economic aspects
Strengths
Maldives economy is largely dependent on the tourism and fisheries that not only
contribute to the counties GDP but also form the source of employment to numerous people
in the Maldives. The tourism industry contributes about 11% of private employment and 27%
of the country's GDP (Ahmed 2018). Maldives is a member of the South Asia Free Trade
(SAFTA) that encourages bilateral reductions of tariffs and trade barriers to all member
states. This encounter free movement of goods and services among the members without any
charges incurred. Maldives government is working on numerous investment policies that are
perceived to enhance investors into the country. For example, in 2010, the Tourism Act was
amended to allow investors to lease the island for 50 years, and the act was approved in 2014.
Weakness
The Maldives have inadequate land-based natural and mineral resources; thus, the
economic production majorly depends on the importation and foreign exchange (Pisapia,
Sweet, Sweatman and Pratchett 2015). Maldives agricultural potential is low due to the high
alkaline level in the soils and the limited agricultural land thus leading to the importation of a
large number of food items that are used to feed a large number of tourists that eventually
ends up into wastes.
Opportunity
Maldives economic environment is projected to grow due to the increased
diversification of the sectors. The country that initially focused on tourism and fisheries is
now embarking on other economic activities such as cinema, film, agricultural, arts,
technological, and fiancé. The projected growth is attributed to political stability and
increased trade partnership with other countries such as India and China.

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Threats
The major threat that might face the Maldives economy is increased dependence on
the importation of products, especially the agricultural and food products aimed at feeding
both the citizens and tourist. The country inspiration leads to high loss of revenue since most
of the foods end up into wastes by the end users.
SWOT analysis of country’s Socio-Cultural aspects
Strengths
With a population above 300,000 people, Maldives is regarded as one of the most
advanced among the South-Asian countries concerning the progressing towards achievements
of the Millennium Development Goals. The poverty rates have continued to drop from 40%
in 1997 to 16% in 2005 and are continuing to drop despite the political and economic
challenges. Similar improvements have also been registered among other human
development indicators such as infant mortality and maternal mortality (Apsalone and Šumilo
2015). The Maldives is considered as a young construed since most of the population is under
14, thus provides a good film industry growth since the young are attributed to entertainment.
Weakness
Most of the population are experiencing social and health disparities that eventually
lead to low labor supply, as well as slow economic production rate. Additionally, most of the
population are youths that have fewer skills that any international organization can nee; thus,
it forces any investor to incur much money in training the domestic labor.
Opportunities
The small population has a high probability of attaining diverse skills and positive
behaviors from numerous people across the world. Both investors and the tourists make a

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great contribution to the country’s social composition that comes along with other skills such
as communication and technical skills.
SWOT analysis of technical aspects
Strenghts
Technology is a significant aspect in providing a competitive advantage to business
organizations, countries as well as the driver of globalization. Technological changes have
become one of the weighty aspects in the globe due to its impacts on production,
communication, supply the other today’s environment. Most of Maldives sectors such as
finance, tourism, and film use technology to enhance business operations to eliminate and
manage risk and provide excellent customer experience and satisfaction. Maldives ICT is
largely growing internationally, ranking the country to position 93 from 133 in less than a
decade (Zahir andGharleghi 2014). The Maldives has the highest telephone per capita in
South Asia thus posing it to catch with most of the middle-income economies in terms of
telephone penetration to attain the 2020 vision
Weakness
Maldives weakness is based on the small population, makes it difficult to establish
educational institutions and universities to provide higher educational opportunities that can
provide enough ICT development and industry. The country has a weak broadband capability
in the national backbone, thus prevents the atolls from fully participating in the activities
organized by the information societies, thus restricting the functionality of applications such
as E-Learning. The inadequate fiber optic connection for the international internet bandwidth
is also a setback to the technological growth since the country cannot receive optimal quality
and pricing of satellite connection.

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Opportunities
The Maldives has more opportunity for technological growth in major sectors such as
tourism, fisheries, and film due to the government investment into internet access as well as
the development of policies that foster high speeds; lower prices increase the number of
people to access regular and world-class speed internet.
The Maldives has a great opportunity to thrive in technology due to their trade and
India that is one of the known software oriented countries. The geographic proximity between
the two countries thus offers a great opportunity for Maldives technological advancement.
Over the past Maldives has been receiving and getting support from the India expertise over
numerous sectors such as ICT industry and construction, and India is still willing to offer the
expertise for software development.
Threats
However much there is a great opportunity for Maldives technological advancement;
there are some threats that might stall the industry. One of the major threats is lack of
commitments among the stakeholders brought about by opinion difference and political
instability. Secondly is the lack of resources to implement the technology and the ICT
industry growth that needs many funds, and since the country is considered as a young
country, it might not be able to raise the required finances as well as the required skills to
implement the same.
Legal
Though drastic changes and democratization characterize the Maldives in the past few
years, the new constitution provides a well-structured legal system that governs all sectors
and the daily lives of the country (Zulfa 2018). The new consititution is under the judicial

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power and the executive headed by the president. The constitution led to the development of
other independent institutions such as Auditor General, Prosecutor General, Human Rights
Commission, Elections Commission, Anti-corruption Commission, and Judiciary Service
Commission that have contributed to the good governance. The Maldives currently
experience good legislation and governance attributed to the mixed legal system of Sharia
Law, English common laws, Civil laws, and Personal laws (Hirsch 2017). The country new
opportunities provide a good business environment since it formalized the adoption of the
trade unions and application of Employment Act of 2008 as well as enhancement of the
country's entry to the International Labour Organization.
Environment
The Maldives is rich in natural resources such as reef resources, islands, and land that
support touring, fisheries, and considerable agriculture. Both fisheries and tourism form the
basic economic growth of the country; the Maldivian government tends to be strict on
conserving the valuable heritage of the country’s natural resources (Ahmed, Herve and Zhao
2012). Through the established ministry of Planning and Environment, unfavorable
environmental projects are terminated since they end up creating water into the land and
water, thus reducing the revenue collection of the county as tourism gets driven away.
Maldives environmental strategic goal of 2020 is to attain a zero-carbon nation; this will
provide good endearment for tourist to have their best experience.
Demographics
Maldives birth rates are considered among the highest in the world, resulting in
overpopulation of the area. According to the 2014 census data, Maldives population was

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402,071 with 338,434 Maldivians and 63,071 foreigners. Among the population, youths of
less than 25 years old contributed the highest number of about 47.5 % (Cowburn 2018). The
poverty headcount of the country by 2016 stood at the ratio of 8.2% thus meaning that about
6.6% of the pollution is under poverty lines, attributed to high youth unemployment that
stands at 15.3 %.Islam is considered as the state religion, while Dhivehi is the widely spoken
language and mostly by the Maldivians. Other languages include Portuguese, Chinese, and
English.
Figure 1 shows the Maldives population growth rate, obtained from (Cowburn 2018)
Strategy of operation in Maldives
Transnational business strategy will be adopted by the Australian company to conduct
the cinema business in the Maldives. Transnational strategy refers to the procedure used by
the company to attain a middle ground between multi-domestic strategy and the global
strategy to enhance efficiency and adjust to the local preferences (Romano 2018). Maldives
film industry is still young; thus cannot match the global film industry. Thus the Australian

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company has to choose a strategy that will help it fit in the Maldives market. The operations
of the transnational strategy thus will be implemented according to the diamonds model.
Diamond Model, developed by Michael Porter, aims at explaining why particular
indicators are more competitive in a particular location of either national or international
level (Riasi 2015). The diamond model contains majorly four determinants that are:
Factor conditions-that entails the nation factors of production, such as natural
resources such as the reef and beautiful scenes found in the Maldives. The Australian
company will also draw some skilled labor from the existing expertise from various countries
such as China and India that are f-greatly supporting the Maldives industry.
Demand conditions- entail the home demand of the product/ technological devices
that can capture videos and pictures of tourists enjoying themselves along the Maldives
beaches ( Kharub and Sharma 2017). The demand for cinema will be created largely by a
large number of tourists who comes from various parts of the world.
Related and supporting industries-refers to the availability of suppliers of the related
industry. In the Maldives, the ICT industry is greatly supported by the partner India and
China that are currently investing in the country’s ICT industry. Additionally, the Australian
cinema company will also receive support from the Maldives government that is currently
seeking to invest in the technological growth of the country, especially by impacting the
youth to secured future technological competitive advantage.
Firm strategy- entails the availability of rivalry and how the rivalries are organized.
Maldives film industry has no stiff competition as the industry is still young and the country
trying to establish relevant technological infrastructure.

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Figure 2: Shows Anatomy of the Diamond Model, obtained from (Riasi 2015).
Mode of entry
Market entry modes refer to the organized product distribution and delivery into the
new markets. There are different types of market entry modes: licensing, franchising,
exporting, direct investment, and joint venture, among others.
Direct Investment
The Australian Cinema company will adopt direct investment. Direct investment
mode refers to the market entry method whereby a company makes a physical investment
into a foreign country by opening a branch Ang, Benischke and Doh 2014). There are two
major types of foreign investment: brownfield that entails the mergers and acquisition of the
local firms, and the Greenfield investment requires the firm to invest from the beginning.
The direct entry mode is the most favorable because the Maldives film industry is still young;
thus needs both infrastructure constructions; Maldives labor does not have the required skills

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(Ishikawa and Horiuchi 2012). This will force the Australian cinema company to have its
skilled workers from Australia and most important, government regulation that offers cheap
land for foreign investors all was the company to build its infrastructures.
Recommendations
From the above exploration, Maldives has a great opportunity for foreign business
expansion, especially on the tourism and entertainment that is attributed to the high number
of tourists. Thus it is recommended for the Australian company to take the opportunity and
have full market information before venturing to avoid any obstacles such as political
instability.
Conclusion
The paper objective was to SWOT analysis of Maldives film industry to accept and
support the growth of foreign investors, such as the Australian Cinema Company. From the
above, it is clear that Maldives has a great business opportunity since Film and ICT industry
are not well developed. Thus the Australian company can seize the opportunity and thrive.
Major challenges such as political instability and low level of technological advancement
might affect the business. However, the government and other international governments
such as India are making considerable contributions to its success. Through the application of
the transnational and the diamond model, the company should directly invest in the country.

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List of Reference
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Environmental Pollution and Economic Growth of Maldives Using Environmental Kuznets
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Ahmed, M., (2018). Guesthouses in the Maldives: Towards Community-Based
Tourism. International Journal of Innovation And Economic Development, 4(1), pp.44-50.
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Apsalone, M. and Šumilo, Ē. (2015). Socio-Cultural Factors and International
Competitiveness. Business, Management and Education, 13(2), pp.276-291.
Cowburn, B., Moritz, C., Birrell, C., Grimsditch, G., and Abdulla, A. (2018). Can luxury and
environmental sustainability co-exist? Assessing the environmental impact of resort tourism
on coral reefs in the Maldives. Ocean and Coastal Management, 158, pp.120-127.
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Kharub, M., and Sharma, R. (2017). Comparative analyses of competitive advantage using
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Kothari, U. (2013). Political discourses of climate change and migration: resettlement
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Pisapia, C., Sweet, M., Sweatman, H., and Pratchett, M. (2015). Geographically conserved
rates of background mortality among common reef-building corals in Lhaviyani Atoll,
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Zahir, M., and Gharleghi, B. (2014). Adoption of Internet Banking in the Maldives, the Most
Important Determinants. Asian Social Science, 11(2).

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Zulfa, M., (2018). Is the Domestic Law Regime of the Maldives Sufficiently Developed to
Deal with Non-International Armed Conflicts (NIAC) in the Maldives?. SSRN Electronic
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