PESTLE Analysis of Dubai: Evaluating Potpourri's Business Prospects

This report presents a comprehensive PESTLE analysis of Dubai, evaluating its suitability as a market for business expansion, particularly for the fashion industry. The analysis thoroughly examines the political stability, economic growth (including GDP, inflation, and market dynamics), social factors like cultural values and literacy rates, technological advancements, legal frameworks, and environmental considerations. The report assesses how these macro-environmental factors influence business operations, considering the specific case of Potpourri, a fashion house. It highlights both opportunities, such as Dubai's strong economy, openness to foreign investment, and high standard of living, and challenges, including high inflation, strict legal regulations, and environmental concerns. The analysis provides insights into Dubai's business environment, offering valuable information for companies aiming to establish or expand their presence in the region. The report concludes by summarizing the key findings and offering strategic considerations for Potpourri's successful entry into the Dubai market, including the need to adapt to local customs, address high tax rates, and comply with environmental regulations. The report uses several academic sources to support its claims.

Running head: PESTLE ANALYSIS OF DUBAI
Pestle Analysis of Dubai
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1PESTLE ANALYSIS OF DUBAI
Executive Summary
This paper will examine the political, economic, social, technological and environmental factors
of Dubai. It will highlight these factors to check whether Potpourri can operate its business
successfully in Dubai. The ethics and social obligations of the economy are also studied in detail
to find out whether Potpourri can operate its business. The macro environmental factors are
studied to check whether Potpourri can enter Dubai and become a global leader in the fashion
industry.

2PESTLE ANALYSIS OF DUBAI
Introduction
Dubai is one of the most populous city and an important business hub of the Middle East.
The economy of Dubai is based on the revenue earned from oil industry. Dubai enjoys
competitive cost and market advantages which has helped to create an attractive and ideal
business environment for the fashion industry. It is one of the major trading and export hub. It is
also one of the major tourist destinations which will also help in the business expansion of
Potpourri. The trading partners of Dubai i.e. U.S and China will also help in the expansion of
business. Dubai is one of the fastest growing economies in the entire world. The macro
environmental factors of Dubai are favorable and thus it will help in expanding the business of
Potpourri (Inhorn 2016.).
PESTLE Analysis
PESTLE analysis is useful for the business organization to get an idea of the various
macro environmental factors. It will help the management to know whether the business will be
profitable in that particular country where it wants to expand. The pestle analysis of Dubai will
be highlighted in this paper.
Political
Dubai is a very stable economy and offers a very suitable environment for any new
business to enter into their market. It is one of the most prosperous economies in UAE where
people enjoy a decent standard of living. Dubai shares a close political relation with USA and
China which will be an additional benefit for Potpourri. This will help Potpourri to enter into the
market of Dubai without any political restriction. The retail market in Dubai attracts many
foreign investments from various brands and thus it will also be profitable for Potpourri and

3PESTLE ANALYSIS OF DUBAI
other fashion leaders (Khan, Rodrigue and Balasubramanian 2017). The designers of Potpourri
are innovative and they can fulfill the demand of the customers with their latest designs. Dubai
does not have political turmoil with any other countries which will not lead to any disruption in
its supply chain. The friendly political environment will be advantageous for Potpourri to expand
its business in Dubai and be a global leader in the fashion industry (Al Shama 2014).
Economic
Dubai is a highly developed and a wealthy economy. The GDP of Dubai is 2.84% and its
inflation rate is 2.94% (Alajoutsijärvi, Juusola and Lamberg 2014). It has least market barriers
and thus offers an open market environment for any business. The economy of Dubai is known
as the financial hub and high security market for the shopping malls. The economy of Dubai
earns major revenue from real estate, tourism and financial services. The cross border trade will
also facilitate Potpourri to set its business easily in Dubai. The revenue earned from natural gas
and petroleum contributes a very small proportion to Dubai’s economy (Carbonell 2015). Dubai
also earns huge revenue from the tourism industry and this offers a large customer base for
Potpourri. The inflation rate of Dubai is very high and it will rise further in this year. This will be
challenging for Potpourri to expand its business. The impact of subsidy cuts is also very low and
thus this has raised the value of the currency of Dubai. There is 100% repatriation of profits and
capital and this will be beneficial for Potpourri.This economic growth in Dubai will help to keep
the inflation rate very high. The currency rate fluctuation is a boon for the economy of Dubai
(Orcao and Perez 2014). The custom duty in Dubai is very low and it is about 4%. The foreign
exchange control in Dubai keeps a close monitoring and control of the exchange rate
fluctuations. Moreover, the import duties in Dubai are also very low and it will be profitable for
Potpourri. There is no direct tax on personal income or corporate profit in the economy of Dubai.

4PESTLE ANALYSIS OF DUBAI
Potpourri can expand its business and it will be advantageous for the company to expand in this
country. Dubai ranks 5th on the “Ease of doing Business” which will also attract Potpourri to
establish its business in this country. It is expected that it will grow more exponentially in the
near future. This will help in the foreign direct investments as well as the local businesses
(Maletic et al. 2016).
Social
The people of Dubai try to preserve their traditions along with the acceptability of the
modern tradition and values. The literacy rate is very high, which accounts to 91.3% because of
their great preference for education. As a result, the economy has grown fondness for modern
means of shopping. This is a beneficial factor for Potpourri as it will be easily accepted by the
customers. The people of Dubai prefer to wear such clothing which does not offend the
sensibilities of anyone (Orcao and Perez 2014). The cultural attachment of the local people to
foreign goods will facilitate the export business of Potpourri. Though they prefer and accept
modern dress and culture, but they are orthodox in preserving their religion. The native women
are expected to wear their traditional dress when they attend any social or religious functions.
The designers of potpourri can design the dress accordingly for the people of Dubai. They must
also hire specialist who will design the dresses according to the needs of the people (Waninger
2015).
Technological
Dubai is known for its continuous innovation and technological growth. It stands 15th on
the Global innovation Index. It has improved its innovation technologies and thus this has
attracted new companies to start their business in Dubai. All these factors will positively impact
Potpourri as they will facilitate the company to take up new innovation from time to time for
their growth. The increasing use of internet will also help the customers as well as it will also

5PESTLE ANALYSIS OF DUBAI
benefit the company (Masarrat, Jha and Dash 2014). The manufacturing and distribution
decisions also depend on the infrastructure of the company. Potpourri will use high technologies
in designing and fashion so that they can fulfill the requirements of the clients within the
stipulated time. Dubai is also connected to 130 global destinations via 85 airlines. It is also
served by more than 120 shipping lines and thus this will help in the expansion of business of
Potpourri. It will also help in the expansion of export and import business of Potpourri ( Choi et
al. 2014).
Legal
Dubai is regarded as one of the safest cities in UAE with 0% crime rate. The laws, rules
and regulations of the country are very strict and severe punishments are given to the law
breakers. The economy of Dubai charges a corporate tax of 55% on the total revenue of the
company. This tax rate is not applicable to all countries. The tax rate is very high compared to
the other countries. This will be challenging for Potpourri as it will have to earn higher profits
after paying off the tax (Chipulu et al. 2014). According to the law of the country, people are
allowed to wear western clothing but they cannot go out with much exposure in the public. The
customs duties of the country are also very strict. People cannot carry unwanted or illegal things
anywhere and if they do so, it is considered as a serious breach against the law of the country.
The people also cannot click photos or pictures according to their own will in the country
without taking any government permission (Dallabona 2015). Potpourri also needs to design the
clothes according to the laws framed by the government. They must consult the legal advisory
body before establishing the business in Dubai. A close monitoring of the entire fashion industry
is essential to compete with the other competitors and run a profitable business (AbuElEnain and
Yahia 2017).

6PESTLE ANALYSIS OF DUBAI
Environmental
Dubai is one of the highly polluted nations and the severe impact of air pollution has led
to several diseases among the people. The rapid urbanization is one of the main reasons for the
poor environmental condition of Dubai. There is no effort by the government to control
pollution. This will affect the business of Potpourri. The business operation of Potpourri may not
be harmful to the people of Dubai. The company should abide by the rules and laws of the
country so that it can control its environmental pollution (Paris, Baddar and Stephenson 2016).
Steps must also be taken to improve the sewage treatment operation. There are also certain
ethical obligations in the economy. Potpourri needs to consider all these obligations to operate its
business in Dubai. This will also help in improving the environmental sustainability of the
economy (Buckley and Hanieh 2014).
Conclusion
Thus, it can be said that there are certain opportunities and challenges which are to be
faced by Potpourri for establishing its business in Dubai. The people of Dubai enjoy high
standard of living and thus they prefer to buy costly and fashionable items. Potpourri can sell the
items at an affordable cost so that it will be preferred by a large section of people. They must
design must exclusive items for the wealthier class who prefers unique products. The political
condition of Dubai is favorable to Potpourri to expand its business. Though there are certain
challenges in the economic factors, but Potpourri can establish its business effectively. Potpourri
will follow the legal, technological and environmental laws of Dubai to establish its business
successfully.

7PESTLE ANALYSIS OF DUBAI
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