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The academic city in Dubai is one of the free-trade zones in the United Arab Emirates. It is a destination for most of the academic institutions in the region. Besides, the city is most developed in terms of communication infrastructure, experience sharing opportunities as well as in terms of technology. The academic City was established under this title after a successful establishment of what was then referred to as the knowledge village in 2006.
The main reason for establishing the Academic City was ensure that the region concentrated more on education than any other undertaking in the area. Thus, learning institutions of all calibers were developed. Focus however, is mostly inclined towards higher learning institutions to promote citizens participation in higher education. The companies in this region enjoy some privileges such as; complete freedom from taxation and most of them are entirely owned by foreigners.
Firms and institutions in the region
All the firms established in this region must have a background interest in education. Some of the industries that have thrived in this region include; food outlets, construction industries and investment institutions such as; TECOM investment. Being an area inhabited by scholars, most of people prefer buying food rather than preparing it in the house. As a result, the area has attracted business people dealing with foodstuffs. There is a specific area set aside for this area consists of more than ten food outlets.
An example of a construction company providing accommodation facilities for students is the Rixama student’s accommodation located in the region. The Rixama student’s accommodations develop the areas’ housing facilities in relation to the growing students’ population as well as the development of their needs. The main idea behind the thriving of this company is that they provide these facilities at affordable prices and in the best conditions possible.
Market Entry strategies
One of the market entry strategies used by investment companies is exportation. This owe to the fact that most of the companies here are foreign and exportation happens to be one of the best ways of ensuring the market grows to the sustainability level. In this case, these investment companies operate at the local level as well as, the international level and the result thereof is the increase in the market capacity.
One of the advantages of extending such services to international levels is that the international markets provide a less risky situation in the industry. This is because these companies do not need to be established in all the regions they are interested in. Instead, they just operate from their location but the services are transferred to many other parts of the world. This has been made possible by the internet technology which has contributed much to the increase in communication networks.
The main disadvantage of this is that the companies offering the services operate virtually and through international agents located in these regions. This means that the agents have a higher degree of control on the activities and hence the company is operating under their mercies. These agents have control over important aspects such as the prizes of these services in their countries.
In some occasions, they might under price the services in their regions, and this might result into losses to the company. The other market entry strategy that is mostly used by the construction industries in the academic city is the development of an export processing zone. ‘This mainly acts as investment incentives to investors in the region as well as the employment creation for the people in that region. It is also considered to be a base for the exchange of skills as well as the flow of goods among different regions’.
The main advantage of the export processing zones is that it ensures that the host country develops owing to the new technologies introduced in the country. The foreign companies investing in these regions bring in more capital, and this benefits both the host and the foreign regions. The main disadvantage on the other hand, is that this strategy attracts so many foreign companies which are mostly well established in terms of capital structure and architectural development to the extent of driving the local investors out of the market.
Challenges of the free zones in future
Free zones are beneficial to mostly the investors in the region and foreign investors as well. However, this may not balance for long as the foreign investors might outdo the local investors. Foreign investors get the opportunity to invest in these areas without having to pay taxes and tariffs; this therefore, attracts many of them.
The region might not be in a position to accommodate the increasing number of investors in the future, and the result of this might be some of the investors might have to be driven out of the market. A good example of this is the construction companies in Dubai’s academic city. These companies are constructing new structures at alarming rates and soon there might be no space for further construction. In other words, these investments made in these regions are not sustainable for a long period of time.
The main idea behind the establishment of the academic city is the provision of education facilities at affordable prices to both locals and the international students in the region. This is why everything has to be provided at subsidized rates to ensure that education in general is affordable.
Education in such a case comprises of many factors including food and accommodation as the most important of them all. These commodities are subsidized by not taxing the investors dealing with such and this ensures therefore, that investors are able to offer affordable prices for them. Strategies should however, be laid to ensure that these services and products can be provided at sustainable levels to ensure that they last.
Bheenich, R & Shapiro M, ‘A Case Study of the Export Processing Zone. In Successful African Development’, EDI Development Policy Case Series, 1, pp. 97-127.
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Keegan, W Global Marketing Management, 4th ed, Prentice Hall International Editions, Paris, 1989.
Piercy, N ‘Company Internationalization: Active and Reactive Exporting’, European Journal of Marketing, 15, (3) pp. 26-40.
- N Piercy, ‘Company Internationalization: Active and Reactive Exporting’, European Journal of Marketing, 15, (3) pp. 26-40.
- R Bheenich & M Shapiro, ‘A Case Study of the Export Processing Zone. In Successful African Development’, EDI Development Policy Case Series, 1, pp. 97-127.
- W Keegan, Global Marketing Management, 4th ed, Prentice Hall International Editions, Paris, 1989, p.47