Impact of Market Forces and Global Factors on Maldives Tourism Sector

This report comprehensively examines the impact of market forces and global factors on the tourism sector in the Maldives, with a specific focus on Atlantis the Palm Jumeirah. It begins with an executive summary and introduction, followed by an analysis of market structures, including oligopoly, and their influence on pricing and output decisions. A PESTLE analysis evaluates the political, economic, social, technological, environmental, and legal factors shaping the Maldives business environment. The report further investigates the significance and adverse effects of international trade on Maldivian businesses. Finally, it delves into various global factors and their specific impacts on the selected business, culminating in a conclusion that synthesizes the key findings. The report utilizes the provided sources to support its analysis, offering valuable insights into the dynamics of the tourism industry in the Maldives.

MARKET FORCES AND GLOBAL
FACTORS
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EXECUTIVE SUMMARY
The report consists a study related to the global and market forces which affect the
operations of a business. The report revolves around the tourism sector of Maldives. The report
provides in depth study of the Business environment by using PESTLE analysis of the tourism
industry in context to Atlantis the Palm Jumeirah resort. The report covers the market structure
analysis and its impact on the pricing and output decisions. The report studies the impact of the
global factors and international trade on the business organizations at Maldives.
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Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
A. Elaborate the ways in which the market structure of Maldives limit the pricing decisions of
the Atlantis the Palm Dubai Jumeirah islands products or services. ..........................................4
B. Elaborate the ways in which the Maldives market structure affects the output decisions of
Atlantis the palm Dubai Jumeirah islands products or services..................................................5
TASK 2............................................................................................................................................6
A. Explain the Pestle Analysis of the Maldives Business Environment.....................................6
B. Explain the impact of Environmental factors in achieving the business objectives of
Atlantis the Palm.........................................................................................................................7
TASK 3 ...........................................................................................................................................8
A. Enumerate the importance of International trade to the business organizations at Maldives.
.....................................................................................................................................................8
B. Explain the adverse effects of the International trade on the organizations of Maldives.......8
TASK 4............................................................................................................................................9
A. Explain in detail the various global factors- ..........................................................................9
B. Explain the ways in which these factors affect the selected business..................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
It is very crucial for the business organization to monitor its environment in order to
adjust the prices in accordance with the affordability of its customers and competitors.
Monitoring the market forces helps in targetting new demographic and geographic markets and it
also helps in adjusting product and services according to the needs. The global forces are those
which affect the business around the globe. The factors which are affected by global factors are
Raw material availability, labour supply, customer demand, government regulations, worker
expectations and wages. Atlantis the Palm Jumeirah is a human made island group in Dubai,
United Arab Emirates (Allais, Etilé and Lecocq, 2015). It is created by Land filling which further
extends into the Persian Gulf. It is located at the coastal area of Dubai Emirate. Atlantis The
Palm is planning to incorporate a subsidiary in Maldives. Despite the COVID scenario, Maldives
witnessed over 555000 foreign tourists in 2020. In January 2021, the number of tourists
travelling to Maldives was 92103. It has recorded a daily average of 2923 tourists (Maldives the
sunny side of life, 2021). The study revolves around the Global and Market forces which will
affect Atlantis the palm Jumeirah islands at Maldives.
TASK 1
A. Elaborate the ways in which the market structure of Maldives limit the pricing decisions of
the Atlantis the Palm Dubai Jumeirah islands products or services.
In Maldives, the hospitality structure is segmented by types of hotel, whether chain or
independent hotels and by the segments like- Resorts, hotels, Guest house. It can be understood
that hospitality industry of Maldives has an oligopoly market structure. Hence the pricing
decisions of Atlantis the Palm will be affected in various ways as being a part of oligopoly
market. The Pricing decisions of Atlantis the Palm is discussed below-
 Deep Discounting: Deep discounting is a pricing strategy wherein the organization can
provide heavy discounts to its customers. The rate of discounts is calculated on the basis
of the cost of the competitors or at least the average cost. In this situation, the competitor
can not reduce the prices further as it will lead to incurring of losses to the organization.
Same way Atlantis the Palm can use the pricing strategy of deep discounting to eliminate
the efficiency of their competitors. This will cause a dilemma for the competitors to
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sustain in the market. This can be applied by Atlantis the palm Jumeirah as it is a leading
hospitality chain and can compensate its losses in the beginning through their existing
businesses (Aloui, Hammoudeh and ben Hamida, 2015).
 Limit Pricing: The pricing strategy of limit pricing is used to eliminate the risk from the
new entrants. The organization will keep the price of its services already lower than their
competitor who will be a new entrant. In this case, the efficiency of Atlantis the Palm
resorts will not be disturbed by the new entrants (Bowden, 2017).
 Yield Management: Yield management refers to keeping the prices at the organization
flexible in order to take advantage from the customers who are willing to pay more rather
than creating a situation of Consumer surplus in the Market. Hence this strategy at
Atlantis will restrict the management to pre announce its prices.
B. Elaborate the ways in which the Maldives market structure affects the output decisions of
Atlantis the palm Dubai Jumeirah islands products or services.
Oligopoly is a situation where there are limited, big organizations of similar nature. In
most of the cases, the organizations under Oligopoly work on the basis of an agreement known
as cartel. The output decisions affected by the Oligopoly market structure in Atlantis the palm
Jumeirah is as follows-
 Profit maximisation is not the sole aim: At organizations like Atlantis the palm, profit
maximisation can not be considered as the only main motive due to their market
structure. The organization will have to function in order to achieve the safety
maximisation and sales maximisation.
 Interdependence: Under the oligopoly market structure the output decisions of Atlantis
the palm will be dependent on the decision of their competitors. Every competitor's
decision is dependent on some of its rivalry firm to sustain the cut throat competition in
the market.
 Uncertain conditions in Oligopoly: The output decisions are very uncertain of the
organizations in Oligopoly market. As the organization will have react and cope up with
the sudden decisions of the competitors and hence it needs flexibility in order to save
itself from the losses during the time period (Broihanne, Merli and Roger, 2016).
 Rigid Prices: The organizations under oligopoly mostly have the strict pricing strategies
as they aim at keeping the same consistent prices for long term. This strategy can be
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adopted by Atlantis the palm Jumeirah to minimise the competitive efforts in the
oligopoly market.
TASK 2
A. Explain the Pestle Analysis of the Maldives Business Environment.
The pestle analysis refers to the Political, Economic, Social, Technological,
Environmental and legal factors which affect the operations of the business at Maldives. The
business environment refers to the surroundings whether internal or external which affect the
working of the businesses. The pestle analysis of Maldives business Environment is explained
below-
 Political factors: The political factors which occur due to the political instability in a
country or due to the political decisions are termed as political factors. The political
factors which affect the Maldives Business Environment are trading policy,
Administrative division, Wars terrorism and conflicts, elections, foreign relations and
corruptions (Düll, König and Ohls, 2017).
 Economic factors: The economic factors are those which are caused due to the economic
situations and they further affect the business environment. The economic factors which
affect the business environment of Maldives are the Local economy, Inflation rate and the
International trade.
 Social factors: The social factors are the factors which are based on the segments of the
society of the country. The social factors of Maldives are the Demographical factors.
 Technological factors: The technological factors are factors which occur due to the
adaptation of updated technology or practising with the obsolete technology. The
technological factors which affect business environment at Maldives are energy,
transportation and communication technology.
 Environmental factors: The environmental factors are the situations of the
environmental conditions which have an impact on the businesses of the location. The
environmental factors of Maldives are the environmental issues occurring at Maldives
such as ozone layer depletion, carbon footprint etc.
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 Legal factors: The legal factors are those which have to be abided by all the business in
a locality or a country. The legal factors which affect the operations of businesses at
Maldives is their taxation policy (Geyman, 2015).
B. Explain the impact of Environmental factors in achieving the business objectives of Atlantis
the Palm.
The environmental factors are the factors which are caused due to the various situation
which take place in the environment such as the climatic condition, atmosphere, weather etc. The
environmental factors of Maldives will lead to achieving the organizational objectives at Atlantis
the palm Jumeirah islands in a prominent way. The main reason behind this is that Maldives has
higher dependency on the tourism sector. Tourism is the largest industry of the Maldives and it
contributes 28% to the national GDP (He and et.al., 2017). The environmental factors which will
help Atlantis The palm Jumeirah in fulfilling their organizational objectives are-
 Accessibility: Maldives is supposed to have a good connectivity with the other countries
and their international markets in the world. The international airport of Maldives has
connectivity with the major countries and also the air travel facility from British Airways,
China Eastern Airlines, Korean Air and Emirates air is available on the daily basis from
the airport. Maldives has a direct connectivity with Sri Lanka. The efficient accessibility
from various countries will profit the business of Atlantis the palm.
 Tourist destination: Maldives is a very popular tourist destination and hence there is
always a demand of hotels or resorts for accommodation purpose throughout the year.
Despite the slow growth of tourism industry, government has made efforts to attract
tourists in the country. Hence this is a positive factor which will help in achieving the
organizational objectives of Atlantis the Palm at Maldives.
 Climatic conditions: The climatic conditions are very suitable for tourists in Maldives.
In monsoon, the climate is volatile due to the rains which occurs from may to July.
Hence, Maldives witnesses high number of tourists from August to January due to the
pleasant weather. The period from August to January is a peak season for tourist and
hence leads to profits for the hospitality industry and ultimately contributes to the
fulfilment of organizational objectives of Atlantis the Palm (Jordan, Lange and Linn,
2018).
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 Tourism Sustainability: Sustaining the tourism industry also helps in future growth and
development opportunities of the tourism industry. Hence this factor has a positive
impact on Atlantis the Palm in fulfilling their business objectives.
TASK 3
A. Enumerate the importance of International trade to the business organizations at Maldives.
International trade is referred to the exchange of goods and services in monetary terms
across the international borders. The trade which takes place between two or more countries is
termed as international trade. There are various benefits which accommodate the International
trade at Maldives. The importance are describes below-
 Performance Of Resort Market: The performance and the markets of the resorts have
shown more stability rather than fluctuations. The international trade has helped in
facilitating the progress or growth of the resorts in Maldives (Kirshner ed., 2018).
 Hospitality transactions: There has been growth in the interest of the hospitality sector
assets at Maldives from Global institutional investors. Therefore the investment market of
Maldives has managed to remain strong and further promotes and facilitates international
trade. Though there is uncertainty in the hospitality sector related to the asset
performance in Maldives.
 Tourism Sustainability: Maldives has a flourishing tourism industry which has a
delicate environmental balance. The evolution of the tourism industry further, often leads
to vulnerability and external challenges. Measures are being adopted in order to maintain
the long term sustainability in the economic, social, legal and environmental aspects. This
will further help in attracting international business opportunities.
B. Explain the adverse effects of the International trade on the organizations of Maldives.
There have been various adverse effects of the International trade on the organizations of
Maldives. Some of the effects have been listed below-
 Solid waste disposal: The disposal of Solid waste includes different variety such as
domestic and industrial waste which are both biodegradable waste and the non
biodegradable wastes. The waste varies in different sizes and it also has negative impact
on the environment as well as the organizations (Leutert, 2016).
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 Sewage Disposal: The disposal of untreated sewage in the large water bodies is one of
the major drawback which deteriorates the environment and further has a negative
impact on the tourism of the country.
 Waste oil disposal: The oil disposal from the waste machines and the machines shops
dealing in the lubricating oils leads to deterioration of the ground where it is disposed. It
might further lead to contamination of the ground water sources. This ultimately has a
negative impact on the organizations at Maldives.
 Fresh water Availability: The sources of fresh water are currently scarce and few in
numbers also the densely populated areas have lower level of fresh water sources and
they have restricted the aquifer recharge. This has lead to the adverse effects on the
organizations (Mills and Sarikakis, 20195).
 Soil degradation: Soil degradation deals with removal of the top layer of the soil which
further affects the flora and fauna of a particular area. This has a negative impact on
various businesses or organizations along with the environment.
TASK 4
A. Explain in detail the various global factors-
 WTO: WTO stands for World Trade Organization, it is a global organization which
formulates trade rules between the nations. WTO is an intergovernmental organization
which functions to regulate and facilitate the international trade between the countries. It
functions to provide the agreements which are negotiated and duly signed by the
Countries or nations which are involved in the bulk trading across the borders. WTO is
established with an aim to provide smooth, predictable and free trade between its member
countries. WTO was established on January 1, 1995 with its headquarters at Geneva,
Switzerland. At present there are 164 member countries of World Trade Organization.
The main objective of the WTO is to reduce the tariffs and other barriers which create
hurdles in the way of international trade. It also helps in settling the trade disputes among
the member countries. WTO provides principles that form the foundations of the
multilateral system (Suutarinen, 2015).
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 International trade: International trade is referred to the trade between two or more
countries. The buying and selling of goods, commodities and services across borders is
termed as the International trade. International trade facilitates the nations or the
countries to expand their markets in the international market apart from the domestic
markets. International markets provide high level of competition among the businesses.
International trade helps in facilitating competitive prices and this further leads to
availability of the product at the lower prices to the customer. International trade is
facilitated by the intergovernmental organization known as, World trade organization. It
helps in smooth trade across the boundaries in order to promote international trade and
reduce the limitations and hurdles during the International trade (BPP Learning Media.
2010).
B. Explain the ways in which these factors affect the selected business
The global factors such as International trade and the World trade organization has
various impact on the business operations of Atlantis the Palm Jumeirah at Maldives. The effects
of the International Trade and World Trade Organization on the business is described below-
 World Trade Organization: Maldives has also been benefited by the the principles,
rules and regulations of the World Trade organization as Maldives is a member nation of
WTO. The principles, rules and regulations which benefit Maldives as a member nation
directly benefits the organizations established in the country. World trade organization
facilitates the smooth regulation of the business and operational activities at Atlantis the
Palm Jumeirah, Maldives. WTO has helped the business in capturing the foreign tourist
or the foreign visitors which enhance the growth of the tourism industry at Maldives.
World Trade Organization has helped Atlantis the Palm to perform efficiently for its
customers at a global level. WTO helps in providing a strong customer base of foreign as
well as the domestic tourists (Rich. 1992).
 International trade: The international trade will lead to various benefits to the business
organization, Atlantis The Palm in the most accurate ways. The business organization is
facilitated by international trade as they provide job opportunities for within and outside
the business at Maldives. The international trade promotes the operational performance of
the resort and the resort markets of the Nation. International trade facilitates the
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hospitality transactions and they further provide sources to foreign currencies in the
country. International trade has further helped in maintaining the tourism sustainability.
The international trade provides the business with the opportunity to have a wider market
and a strong customer base worldwide (Whaley, Frech III and Scheffler, 2015).
CONCLUSION
It can be concluded from the above study that Market forces and Global factors play a
prominent role in the operations of the business. The study revolves around the tourism Industry
of Maldives by focussing on the business organization, Atlantis The palm Jumerriah which is
leading resort chain in Dubai, United Emirates. The study is about the factors which will affect
the operational activities of the resort in Maldives. This study also focuses on the Pestle analysis
of the business environment of Maldives which will help in shaping the culture and fulfilling the
organizational objectives.
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REFERENCES
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Online:
Maldives the sunny side of life, 2021. [Online] Available Through:
<https://visitmaldives.com/en/>
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