Complexities and Diversity a Business Face in Multinational, International, and Domestic Environments, UAE

In this essay, we will be discussing the complexities and diversities a business face in multinational, international, and domestic environments.

The UAE(UNITED ARAB EMIRATES) has seven emirates in the federation, and each emirate has its economic policies and regulations to do business in the state.

Although the UAE economy is the most diversified, the most revenue more than 85% generated with petroleum oil and natural gas. Furthermore, The UAE government is looking to invest in other sectors like energy, finance, e-commerce, technology, tourism, and telecom to diversify their economy.

Consequently, The UAE economy is forecasted to improve through firming oil prices, global trading, and the easing of fiscal regulation.

The diversified economy makes it more complex to do business in the UAE. In UAE, we have domestic, international, and multinational companies running and contributing to the UAE economy.

Every business faces various complexities due to UAE’s diversified economy. So here we will discuss them individually.

Domestic business environment in UAE

Domestic businesses run within the geographical boundaries of a country. The buyers and seller are from that country itself. 

The UAE has more than 130 domestic companies running in the country itself. But the diversified economy makes it complex to do business even locally in the UAE. The complexities and diversities the local business faces are:

Legal Framework

Supporting the UAE code, the federal regulations have supremacy above the rules of all the emirates. Nevertheless, each emirate is authorized to establish their legislation except exclusively reserved areas under federation.

Consequently, their legal framework becomes more diversified among federations. Hence, the domestic business must follow the laws enacted by individual emirates to expand their business amongst the other emirates.

Culture and System

The local UAE culture is bounded by Islamic traditions. Business communication, locally, reflects a very conventional approach, and compassion is highly appreciated.

Domestic business must respect the diversified culture the UAE citizens follow. They should market their product or service based on the best-fit culture.

Complexity and Diversity in international business

International business refers to the industry operating between two countries. That involves the trade of services, goods, technology, knowledge, or capital across national boundaries.

Doing an international business in UAE comes with more challenges such as:

 Legal procedure and Starting up

A business considering starting up from or in the UAE with employees’ office space requires registering a valid entity.

A company running in the UAE needs a business/company/firm license connected to the registered entity.

• Free commerce region: The entities in a free trade zone do not need to have any UAE stockholders. It does not require split equity and can own 100% of the business.
• Onshore Jurisdiction: The onshore jurisdictions are governed by national legislation with ruling and administration parties under the Ministry of Economy in individual Emirates. The companies under onshore jurisdictions need to pay taxes as per the federal laws. Regardless of whether the company is a resident of the UAE is or not.

Tax and Credit System

The UAE federation introduced a VAT system of 5% the first time. This low VAT rate has not affected the capital of business in the UAE significantly.

Many financial institutions and banks in the UAE are offering financial products and loans. Considering the business must work with a regional partner to maintain set up expenses and continuous capital demands.

Office space, Language and Monitoring

In the UAE, it is necessary to link the company license with the physical office space for an entity.

In the UAE, the official language is Arabic for employment records and contracts. However, English is used in transactions and business meetings.

Being in a different country, it is sometimes difficult to monitor the progress unless having a trustworthy management team.

Complexity and Diversity of doing multinational business

On the other hand, a Multinational business is the organizations located or operating in more than two countries.

Doing a multinational business comes with its challenges, especially in a diversified economy like UAE. Some of these challenges are:

 Legal Structures

The diversified legal structure of the UAE economy creates complexities in doing business for multinational companies. An individual emirate has their law, controlled by the federal constitution. That makes companies changing their work policies and culture according to the emirate.

Managing relations with clients

A multinational company has various clients across the border. It is troublesome to maintain a relationship with every client due to the distance. Relationships with clients can be maintained using a relationship marketing strategy that requires continuous touch with the clients.

Time Difference

Different countries have separate time zone. It is challenging to arrange meetings, events, seminars for the office in the other country. Sometimes it is difficult to have a conversation regarding the problems or work they are doing simultaneously.

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