Dubai has been selected to host Expo 2020 that will mainly focus on Smart City and green transportation. Dubai, being oriented to Europe, Africa, and Asia has played a significant role in constituting a global business hub for many countries (Al Faris & Soto, 2015). It is a place for doing business, gaining inspiration, and sharing constructive ideas. Being a global business center, it is able to enjoy the benefits of higher economic growth than countries in Asia, Africa, and the Middle East.
China and India have also regarded Dubai as a significant partner that enables them to carry out their economic activities in Africa and other countries. Dubai has been called the nexus of global innovation, advancing knowledge and technology (Van den Ber & Pietersma, 2015). Its Sheikh Zayed road, which used to be sandy, has been greatly improved with the help of the latest technology such as a metro system, multi-lane highways, and a tram system (Al Faris & Soto, 2015). A global survey shows that Dubai hosts 200 nationalities that do various errands there every single day.
Dubai has become a global economy that offers employment opportunities and attracts various foreign investors worldwide. In 2012, Dubai was reported to have made a trade surplus of US 128M. It also has the busiest international airport that outdoes its counterparts in London and Hong Kong (Anthopoulos, 2015). In 2015, the statistics has indicated that Dubai international airport accepted over 70.4 million passengers who passed through its terminals (Al Faris & Soto, 2015). The country is in the process of developing its Emirates Airline to make it the largest carrier globally. Both Long Beach and Los Angeles ports are almost equal to the one in Dubai.
Green transportation entails the kinds of transportation that do not negatively impact the environment, such as pollution. Road transportation has greatly contributed to greenhouse gas emissions that have led to global warming and climate change (Van den Ber & Pietersma, 2015). In 2015, Dubai won the Golden Shield Award for Excellence in Smart Cities and Green Initiatives (Anthopoulos, 2015). Dubai, therefore, presents the best place for the Smart City and Green Transportation Expo due to its initiatives compared to other cities such as Hong Kong.
Tool 1: 5 strategy Forces
Porter’s five forces analysis helps to understand the degree of competition within the given industry. It is important to analyze the competition within the industry as it then aids the organization in developing business strategies against negative impacts. The forces analyzed include: industry rivalry, threats of new entrants, and substitutes (Van den Ber & Pietersma, 2015). The other two forces are bargaining power of the suppliers and buyers (Anthopoulos, 2015). The tool is essential for conducting a comparative analysis of Dubai and Hong Kong to ascertain the most suitable city to be smart and apply green transportation.
The application of Porter’s five forces to analyze the suitability of Dubai to be a Smart City and to start Green Production has revealed that other capital cities pose little competition. Dubai encourages green production through the strategic plan to achieve its vision by 2030 (Al Faris & Soto, 2015). The city has identified land transportation, wastes, electricity, and water production as its biggest sources of environmental pollution. It has a vision to be able to reduce such emissions by 16% by 2021 (Anthopoulos, 2015). Dubai has also put in place the Integrated Energy Strategy 2030 to ensure that it uses alternative sources of energy such as solar and wind power. It is already in the process of installing solar panels on rooftops to provide a supportive power source of electricity and facilitate green production and transportation (Van den Ber & Pietersma, 2015).
Dubai also uses electricity for the Tram system that is an example of green transportation. The Tram system has led to a significant reduction of environmental pollution since it is a widely used means of public transport (Anthopoulos, 2015). Dubai may be regarded as a smart city since it has advanced technology in manning its transport system, for example 3G technology, wireless networks, and automated traffic signals. Dubai faces insignificant rivalry from other cities that apply green transportation and technology (Al Faris & Soto, 2015). This may be explained by the fact that the city is situated in the center, providing economic benefits and a channel that countries have to pass to deliver their products to other countries. Other cities do not have such privileges. For instance, they do not host 200 nationalities on a daily basis (Tsui & Fung, 2016).
Dubai also faces no serious threat of new smart cities and green production that can surpass it. The city receives high income from foreign business activities as the Chinese, Indians, and people from other countries pass it to come to other places (Tsui & Fung, 2016).
Dubai also faces low bargaining power from suppliers and buyers. To be more precise, it is not offering any products like other monotonous economies but presents a platform where investors meet to discuss business projects (Al Faris & Soto, 2015). Its source of growth is attributed to its central placement and high sensitivity to technological and environmental change. Dubai is the most suitable city for being smart due to its immense privileges, and it leads the initiative on green production.
Hong Kong, which is situated in China, serves as an administrative center for the Chinese government. In 2015, the world statistics indicated that Hong Kong was one of the most densely populated cities in the world, and its residents come from various countries (Tsui & Fung, 2016). It is a really cosmopolitan town. The government in Hong Kong has been implementing various initiatives to ensure green transportation and the development of Smart City based on its advanced technological projects (Tsui & Fung, 2016). Hong Kong is a congested city with tall buildings and a high level of air pollution, especially vehicle emissions. The initiatives to ensure green transportation in Hong Kong encourage people to use public transport. There is also an educational program that informs the public about the perils of using cars because they cause air pollution (Tsui & Fung, 2016).
Porter’s five forces analysis indicates that Hong Kong faces many negative effects in the process of becoming Smart City and applying Green Transportation. There is intense rivalry in the transportation industry since the city has traditional methods of solving transportation issues (Tsui & Fung, 2016). Dubai applies technology, wireless technology, 3G network, and automated traffic signals, to solve transportation challenges unlike Hong Kong that lacks such solution for its transportation issues (Al Faris & Soto, 2015). In 2011, Hong Kong Transport Department implemented pilot programs that included using solar power and air conditioning systems in public buses, which are still far below Dubai’s technological development.
New entrants of the green transportation industry pose a considerable threat to Hong Kong since it has not been adapted to new technological ways that can solve its transportation issues such as congestion and air pollution (Tsui & Fung, 2016). Hong Kong has to deal with high bargaining power of suppliers and buyers. The bargaining power in this case symbolizes the resistance that the city is likely to face from its citizens, users of its services, and rights groups as it implements changes regarding green transportation and the attainment of the status of a smart city (Tsui & Fung, 2016). International organizations such as the International Monetary Fund and World Bank may also be asked for support due to the benefits that other countries may get there (Al Faris & Soto, 2015). However, investors would prefer to support Dubai due to its strategic location and the possibility to improve world trade because the development of Hong Kong would mainly assist China.
The comparative analysis of Dubai and Hong Kong, which is based on Porter’s five forces analysis, shows that Dubai has more potential to become a world class Smart City with green transportation than Hong Kong. The advantages that Dubai has over Hong Kong include: the central location in Asia, Africa, and Europe. It is also a global economy with over 200 nationalities that visit it daily. Dubai has also been praised for applying green transportation, using 3G networks, automatic traffic controls, and the tram system.
Tool 2: CPM
CPM means Corporate Performance Management that measures the overall performance of a given business organization. It uses key performance indicators to estimate business intelligence. The indicators that may be analyzed to show the performance of the organization include: return on investment, revenues, expenditure, and operational costs among others (Van den Ber & Pietersma, 2015). Using key performance indicators, a comparative analysis of Dubai and Hong Kong on the basis of CPM can be done when the two cities are considered institutions.
In 2014, American Brooking Institution moved Dubai from 18th to 5th position as it was the fastest growing economy in the world (Van den Ber & Pietersma, 2015). This was mainly done due to the increase in the Dubai employment rate by 4.7%. There was also 4.5% GDP growth and 1.6% overall growth of UAE (Al Faris & Soto, 2015). Brooking institution that did the ranking also emphasized that Dubai grew rapidly because it was a cosmopolitan city with many foreigners who were ready to invest in it and do business there.
The reasons behind the growth of Dubai include: a diversified economy, strategic location for business re-exportation to the Middle East, attractive government laws, developed infrastructure, and low logistical as well as operational costs among others (Van den Ber & Pietersma, 2015). Numerous companies, from India, China, and others, find Dubai ideal for their international businesses as it is a re-export center. In order to serve its customers well, the Dubai government has passed attractive laws (Van den Ber & Pietersma, 2015). It has also developed a smart city with wireless technology and green transportation using electric and solar power. Dubai is much more cosmopolitan that Hong Kong. The latter has not yet fully embraced green transportation, but it is on a piloting stage (Van den Ber & Pietersma, 2015). Corporate Performance Management clearly shows that Dubai has more attractive opportunities for investment and growth compared to Hong Kong.
Tool 3: Intensive Strategy
Intensive growth strategies are business plans that are focused on increasing the performance of the business organization. One of the main aims of intensive growth strategies is to ensure improved company performance, using minimal costs. Intensive growth strategies include: market penetration, product development, and market development (Van den Ber & Pietersma, 2015). Intensive growth strategies in this case will be used as a tool to compare Dubai and Hong Kong and determine where there will be increased performance when an organization applies them.
The figure above shows Ansoff matrix. The first segment indicates a scenario where there are current products within current markets. The strategy is employed to penetrate the market and increase sales. Segment 2 shows current products in new markets. As markets are new, the market development strategy is employed (Van den Ber & Pietersma, 2015). The third segment shows a situation where there are new products in new markets. In such a scenario, the product development strategy is used.
Companies that have invested in Dubai market have great chances for success due to the growing nature of the Dubai economy whose advantages include a strategic location where the Far East, Europe, and Africa are served (Van den Ber & Pietersma, 2015). This means that when companies launch products within the Dubai market, they are able to use the market penetration strategy to be profitable. Companies may device methods to boost demand and increase its sales as well as profits (Van den Ber & Pietersma, 2015). As Dubai is a place where there are so many businessmen from various countries, companies are able to experience high demand that may lead to export to other countries (Al Faris & Soto, 2015). Businesses may market products and services to various nationalities and raise their awareness. To ensure effective penetration, branding and quality can be improved to satisfy consumer needs. Satisfied consumers become not only loyal but also suggest that others buy from the company in Dubai.
The market development strategy can be simply explained as developing new markets for existing products. The current market may be saturated with existing products, but development of new markets generates additional demand. Dubai is the best city where new markets for existing products can be created (Van den Ber & Pietersma, 2015). This is possible because Dubai is a local economy and foreign businessmen have more chances to achieve success and forge partnerships there than in their home countries. Thanks to its central location, new markets may be found in Europe, India, China, Africa, and Asian countries (Al Faris & Soto, 2015).
The product development strategy is used for selling new products within the current market. This may involve modification of new products so that they fit the needs of the current market. The company should also conduct market research to ascertain if the market needs new products. As Dubai hosts more than 1.5 billion people and has more than 120 shipping lines, it is able to accommodate new products (Van den Ber & Pietersma, 2015). This market is very dynamic because there is changing tastes and preferences, which product development must satisfy. Dubai, being a cosmopolitan city with more than 200 visiting foreigners daily, presents cultural changes that have to be addressed with new products (Van den Ber & Pietersma, 2015). Intensive growth strategies enable Dubai to possess great potential for business development, especially in profits and sales.
Hong Kong, on the other hand, experiences numerous challenges such as congestion, pollution, slow rate of technological advancement, and declining economy. According to International Business Times of March 2016, Hong Kong faces the worst economic times for the last twenty years. In 2015, its GDP growth rate was 2.3%, which was described as sluggish (Van den Ber & Pietersma, 2015). It has also been reported that it has huge long term debts that decrease the economic development. In 2016, Hong Kong economy is predicted to grow by 2.5%, which is an improvement of 0.2% when compared to the previous year (Van den Ber & Pietersma, 2015). This shows that its economy is not attractive to foreign investors, who prefer stable and growing economies such as Dubai. Ansoff matrix of the intensive growth strategy shows that Hong Kong would provide negative results for the overall business growth.
In case a company has exiting products in the Hong Kong market, there might be negative results when the market penetration strategy is applied. This may happen because it is difficult to create new demand for the same products in the same market. Hong Kong economy is struggling and is not able to accommodate new demand for existing products (Van den Ber & Pietersma, 2015). The market could be already saturated, hence the products may quickly reach the declining stage of its life cycle.
Market development where new markets are to be created for current products in the Hong Kong market may be achieved only to some extent. New markets may be found outside Hong Kong, where neighboring economies are more robust. The investors may shy away due to the negative perception of the declining economy of Hong Kong (Van den Ber & Pietersma, 2015). Some products and services might be perceived as low quality products and might not satisfy consumer needs. The product development strategy, where new products are created for the same Hong Kong market, may deliver negative results due to the decreasing economic growth rate that may not absorb new products.
Market research might present negative feedback from consumers since they face tough economic times and cannot afford new products available in the market. There might be fear that the price of new products increases and residents would not be able to buy them (Van den Ber & Pietersma, 2015). The comparative analysis, on the basis of intensive growth strategies, of Dubai and Hong Kong indicates that it is better for companies to invest in Dubai than in Hong Kong.
Tool 4: Integration Strategy or any other Tool
The integration strategy is defined as the process when the company strengthens its competitive position in the market with regard to its business rivals. The methods of integration may involve merging different firms or stages within the supply chain (Van den Ber & Pietersma, 2015). There are two forms of integration: vertical or horizontal. Vertical integration happens when two or more firms are combined, especially when they are at different stages of distribution (Van den Ber & Pietersma, 2015). For example, a producer combines business operations with a wholesaler.
Companies are able to experience a more positive impact when they merge in Dubai than in Hong Kong. This can be explained by the Dubai’s growing economy that is able to absorb new businesses and investments (Van den Ber & Pietersma, 2015). Dubai’s GDP growth rate of 4.5% per year presents greater opportunities for vertical integration than 2.2% of Hong Kong. The Hong Kong’s economy is already struggling, which is not promising for new investments (Al Faris & Soto, 2015). Mergers of vertical integration may have lower rates of return in Hong Kong that in Dubai whose economy is growing.
Horizontal integration takes place when companies that operate within the same levels of distribution merge in order to better their combined output. For instance, two wholesalers dealing with the same line of products merge to form one company (Gr?nig & K?hn, 2015). The main reason for merging in Dubai or Hong Kong is to ensure that the output becomes higher. The improved output of the two companies can be measured by increased sales and profits. Horizontal integration favors companies in Dubai more than in Hong Kong (Al Faris & Soto, 2015). Dubai is preferable due to its strategic location for re-exportation, improved infrastructure, advanced technology, and green transportation (Gr?nig & K?hn, 2015). Hong Kong does not have such privileges as the largest airport in the world and at least 200 foreign visiting businessmen per day.
Tool 5: SWOT Matrix
The SWOT analysis is an auditing tool that can be used to examine both the internal and the external environment of the business organization. SWOT stands for strengths, weaknesses, opportunities, and threats (Van den Ber & Pietersma, 2015). The SWOT matrix lays the emphasis on the internal environment before the external environment. It can be used to examine Dubai and Hong Kong in order to ascertain the best investment place for a productive business environment.
The SWOT analysis of Dubai reveals that it has strengths such as projects supported by the governments, good leadership, attractive business laws, strategic business location, and green transportation among others (Gr?nig & K?hn, 2015). Its identified weaknesses as a business center include: high debt burden from other countries and its significant role of an International Finance Centre, which many countries rely on. The negative impact on Dubai IFC would adversely affect its investors and neighboring countries (Van den Ber & Pietersma, 2015). Dubai has immense opportunities created by its tourism boom, increased inflows, and high rates of relocation (Al Faris & Soto, 2015). The threats that Dubai may face include: global financial downturn spillage, debt restructuring, and prevailing political tensions in the Middle East.
The SWOT analysis of Hong Kong, on the other hand, shows the following strengths: a gateway to China, diamonds, white tea, leather, a profitable tourist industry, and advancing technology among others (Gr?nig & K?hn, 2015). Its weaknesses are high labor costs, high rates of pollution, congestion as well as little fertile land. The opportunities that investors may grasp in Hong Kong include liquefied natural gas. Hong Kong also faces threats such as pandemic outbreaks and high minimum wage among others. The comparative analysis of Dubai and Hong Kong clearly shows that Dubai has more attractive business opportunities that investors may use (Gr?nig & K?hn, 2015). Investors and the international community should consider Dubai more desirable for business opportunities due to its growing economy and profitability.
Tool 6: BCG
The BCG model helps business organizations to determine which products are preferable for the company’s product portfolio (Gr?nig & K?hn, 2015). If a firm wants to generate good profit, it should distribute its products in such a way that there are those that generate cash and those that fit the High Growth Segment. The matrix has been created with two dimensions where one is the market share versus the market growth (Gr?nig & K?hn, 2015). The larger the market share for a specific product is and the bigger the market growth rate is. Consequently, it is better for the company. The BCG matrix can be used to compare Dubai and Hong Kong.
The diagram above shows the BCG matrix where stars are the products within a high market share, a high market growth rate segment. Companies in Dubai are able to increase the value of their products till they reach the star as compared to the companies that trade in Hong Kong. This is possible Dubai has the fastest growing economy while the Hong Kong economy is struggling (Anthopoulos, 2015). The products in Hong Kong may have a large market share but do not experience high market growth rates.
The products in Hong Kong can mainly operate as cash cows and dogs, which have low market growth rates. Since Dubai has advanced technology, green transportation, a strategic location for re-exportation of products, and increased revenue from tourism, its market experiences a high growth rate (Gr?nig & K?hn, 2015). The companies that have products in Dubai will operate as stars, dogs, and cash cows since it has a high market growth rate. They are able to form partnerships with various businessmen as it is a more cosmopolitan city than Hong Kong (Anthopoulos, 2015). The Hong Kong markets have products that may have an increased market share but cannot experience high market growth due to poor economic performance. The products that mainly rely on technological advancement will also be more successful in Dubai than Hong Kong because the late has not fully embraced technological advancements.
Porter’s five forces analysis shows that Dubai has more advantages than Hong Kong. Dubai with its tramp system, solar lighting projects, 3G technology, and automated wireless traffic control system has many competitive advantages (Gr?nig & K?hn, 2015). It faces very few threats from new entrants of the green transportation industry and insignificant rivalry compared to struggling Hong Kong.
The corporate Performance Management analysis reveals that Dubai is more profitable than Hong Kong. Companies would perform better in Dubai due to its numerous advantages. Dubai is growing due to its diversified economy, strategic location for business re-exportation to the Middle East, attractive government laws, developed infrastructure, and low logistical as well as operational costs (Gr?nig & K?hn, 2015).
The comparison, which is based on intensive strategies such as market penetration, product development, and market development, of Dubai and Hong Kong shows that the former presents better economic opportunities for investors. The market researches done on Hong Kong would present negative feedback with regard to consumers since they would be facing tough economic times buying new products in the market (Gr?nig & K?hn, 2015). People may be afraid that new products are too expensive and they may not afford them due to an unfavorable economic situation.
Integration strategies such as vertical and horizontal integration reveal that companies are able to experience more positive impact when they merge in Dubai than in Hong Kong. The former is able to absorb new businesses and investments thanks to its growing economy. Dubai’s GDP growth rate of 4.5% per year presents greater opportunities for vertical integration than 2.2% of Hong Kong (Anthopoulos, 2015).
The comparative analysis of Dubai and Hong Kong, using the SWOT analysis, clearly shows that the former has more attractive business opportunities for investors than the latter.
Recommendations for Dubai only
It is obvious from the comparative analysis of Dubai and Hong Kong that the former has more economic advantages for stakeholders that means also investors than Hong Kong. Dubai should, therefore, follow some recommendations to host Expo 2020, Smart City and Green Transportation.
Dubai is a strategic location for profitable business investments from Europe, Asia, and Africa. Being strategically placed, it is extremely crucial for international businesses, importation, re-exportations, planning operations, and increased tourism activities among others. India and China regard it as an important channel that targets markets in Africa and Asia (Anthopoulos, 2015). It also has the biggest international airport in the world that is larger than two airports of the USA. Being served with over 200 ships, a tram system, and green transportation, it greatly facilitates exportation of goods to various countries.
Dubai is also recommended to host Expo 2020 since it has almost no taxation for most products except for a few subsidiary companies (Anthopoulos, 2015). The absence of taxation attracts lots of investors as they are able to make more profits. Dubai does not have the value added tax, capital gains tax, and corporate tax among others.
Dubai has also been ranked as the safest place in the world with minimal cases of serious crimes such as murder, rape, and assassinations (Anthopoulos, 2015). The safety of Dubai has instilled confidence in foreign businessmen and they carry out their business activities there.
Dubai also has favorable and attractive government laws and policies. For example, any businessman may obtain a resident visa, which also includes his family members (Anthopoulos, 2015). In addition, there are other advantages. Businessmen can easily open bank accounts, acquire visas for other countries, and enjoy leasing property. The reasons mentioned above allow recommending Dubai to host Expo 2020, Smart City and Green Transportation.
About the Author: Jimmy Ruiz is an editor at Best Essays Sites. He has a master’s degree in psychology and more than seven years’ experience as a writer and editor. Jimmy is primarily focused on writing about self-improvement.