Introduction
The UAE Pearl Company is an established date processing and exporting business in the United Arab Emirates. The company’s objective is to become the largest date and dates products exporter in the world. The business aims at processing, packaging, and exporting more than 150, 000 tons annually to over 50 countries globally. So far, the company exports dates and dates products to 15 African countries, most parts of Asia, and Arab countries.
The company offers more than 20 different dates varieties, including the Local UAE Dates and Zahidi Dates. Most of the exported dates products are whole dates and sweets made from the product. The company’s quest to expand the export of its date products follows the fact that most of the global markets have been exploited while Europe has not been fully tapped. Europe, specifically the European Union (EU), is a significant market for the exporters of dates and its products. The EU accounts for not less than 30 percent of dates imports in value, even though this figure represents only 10 percent of the total world imports (Al-Shreed et al., 2012).
This finding implies that import prices in the EU are favorably higher compared to the general world market. On the other hand, the EU has experienced stagnant dates import value for more than a decade now. Besides, the prices of dates imports have deteriorated since 1996. Therefore, it is imperatively viable for the new date products that the company is making to be exported to improve the business export value in the EU market. The decision for selecting the countries to export the products was reached by using a Gravity Two-Phase decision model (Anderson, 2010). The first phase involved screening and eliminating countries that had the least likelihood of market opportunities on the first entry. This process involved five steps:
- Eliminating unpromising countries
- Developing a list of promising countries’ market exports and obtaining sufficient data concerning them for applying the screen criteria
- Actualizing the screening criteria for promising markets to narrow down to a shorter list for further investigation
- Doing a secondary data analysis
- Rationalizing on the chosen and eliminated countries by adjusting judgments on screening for the second phase analysis
The second phase involved also four steps. While the first step was to simulate a list grading criteria, the second one involved doing research on the countries that had been shortlisted in the first phase. The third one included applying the grading criteria to the shortlisted countries while the last one included coming up with a list of the most preferable countries. After this thorough analysis, England and Sweden were arrived at based on the results from the applied criteria.
Economic-Geographic Features of England
As obtained from Marsh (2013), England has one of the largest economies globally. The country is a mixed economy that receives contributions from the government and private sectors. Its economy’s main sectors include agriculture and the services sector. The formal currency is the sterling pound while the main commercial activities are finance, banking, and insurance. The country is one of the world’s most industrialized.
Its main products are aircraft and ships, machine tools, electronics, motor vehicles, petroleum, textiles, food processing, and coal among others. In terms of trade, England is among the leading nations globally. Its main exports include manufactured goods, chemicals, food, and fuels. Its chief imports include food products, machinery, and fuels. Its main trading partners are the US. The larger EU Labor is distributed in a manner where services take more than 70 percent, agriculture less than 2 percent, while the industry has a share of 25 percent of its workforce. In terms of castes and class, social class is more pronounced compared to ethnicity. People classify themselves as wither middle class, upper class, or the working class.
England’s main imports are arms, aerospace, and software manufacturing. The services sector contributes close to 75% GDP, followed by industry, and then agriculture. Tourism brings more than one million people every year. Geographically, England is part of the countries that form the United Kingdom. It borders Wales and Scotland, the Irish Sea to the North West, Celtic Sea to the South East, and the North Sea to the East. It has more than 100 islands.
England’s land cover is roughly 13, 395 square km. According to the 2008 consensus, it has a population of approximately 5.5 million people. Its terrain alternates between low hills and plains. In addition, it boasts of a rich cover of natural resources such as petroleum, coal, natural gas, limestone, tin, gypsum, and iron ore among others (Broadberry & O’Rourke, 2010).
Economic-Geographic Features of Sweden
Sweden joined the EU in 1995. It has fared on well after the financial crisis. The economy relies more on exports such as automobiles, construction equipment, telecommunication products, and other development-oriented goods. Its banks are finely capitalized while the general economy is associated with high public spending levels, especially on social programs (Marsh, 2013). The country is characterized by severe employment protection.
Thus, the situation disadvantages the country’s dynamic growth in employment and job mobility. The top corporate tax rate stands at 22 percent while 57 percent is the tax rate income per person. More than 50 percent of its GDP is portioned to government spending. In addition, the country experiences budgetary discrepancies, with public debt amounting to one-third. Geographically, Sweden comes second in landmass, covering approximately 550, 000 square km.
It shares its land border with Finland to the North West while Norway is located to the west. Denmark is situated in the southern part of Sweden. Its coastline is more than 3000 km, mostly along the Baltic Sea while a smaller part of the country is along the Bothnia Gulf. It shares maritime space with Poland, Germany, Lithuania, Estonia, Latvia, and Russia. It has more than 9 million people most of who live in cities.
Social-Cultural Features of England
According to Marsh (2013), England has a great cultural diversity. British Isles migration, including immigrants from overseas and Europe, enhance this culture. The dominant language is estuary English. Symbolism is taken as a localist enforcer and personal commitment form that runs across the strata of socio-economic forces. Support for soccer and rugby is a significant tradition that is taken as a male pride symbolism of self-image.
The dominant personal commitment forms include environmentalism, which is recognized with socio-economic status. Vegetarianism is associated with the middle class and females. The country has many activities, including religious movements that range from cults of radical environmentalists, anarchism, New Age paradigm, antinuclear groups, and ant-capitalists. In addition, the country has South Asian and Far Eastern religious systems of belief such as martial arts cults.
England is under the larger United Kingdom (UK) that comprises Wales, Scotland, and Northern Ireland whose single monarchy is led by the queen. The most localized contemporary localist expressions include support for political parties, monarchy, and soccer teams. Furthermore, ethnic and religious diversity is more pronounced. Racial integration is spatial as indicated by culturalism and assimilation while spatial segregation is indicated by social pluralism. Many non- English immigrants encounter discrimination and marginalization in terms of employment and social class.
Socio-Cultural Features of Sweden
Most inhabitants of Sweden speak Swedish as the first language while English is taken as subsequent language. Immigrants speak more than 200 hundred languages (Heclo, 2010). However, Finnish is more dominant. Symbolically, Sweden is referred to as the people’s home, with a family household being taken seriously. The people’s home or folk hemmet also symbolizes social democracy such as mutual care and equality.
Old-age homes, daycare centers, communal music schools, and labor unions symbolize the new society. Other symbol forms are associated with the agrarian past. Examples of such symbols include Maypole, mid-summer dances, and Christmas feasts among others. National identity is engraved in the society’s historical environments to encourage solidarity. As an autonomous state, Sweden has more than 1000 years of existence. It has well-established national institutions.
The issue of ethnic relations has seen Sweden assimilate skilled labor force from Norway, Finland, and Denmark. It has the largest acceptance of political refugees per capita in the world. The country accommodates many refugees from Vietnam, Hungary, Kurdistan, and Chile. In terms of population, Sweden has the largest industrialization status. Foreigners have favorable access to the welfare system. Besides obtaining citizenship in five years, they can also vote in local elections.
Segregation and discrimination are kept at minimal levels. For example, non-Swedish people are generally named as new Swedes. Concerning food, Sweden has a variety of choices such as kebabs, falafel, pizza, Chinese cuisine, and hamburgers. The main diet comprises potatoes, fish, or meat, and sauce. The world regards the country’s food as not only have the lowest fat content but also one that is ecologically certified (Heclo, 2010). Sweden attaches more importance to vegan, vegetarian, and animal rights. Besides having a diversified economy, it boasts of massive transaction corporations, which have dominated its foreign trade.
A strong public sector and large labor union counterbalance the country’s political and economic might. The total yearly exports give 36 percent of the nation’s GDP. Its economy is more exposed to globalization. It was one of the first countries to allow foreign competition on its key domestic markets and telecommunications. Its currency is the ‘Krona’ since it has not yet joined the EU.
Political-Legal Environment of England
England’s political structure is made up of the parliament and a constitutional monarchy. Queen Elizabeth II who represents the 54 commonwealth nations currently rules it (Useem, 2014). The country is the largest member of the UK. England is ruled directly by the parliament. The British parliament Lower House is called the House of Commons, which is made up of 532 parliamentary representatives from various parties such as Labor, Conservatives, Liberal Democrats, and Independence Party.
The Prime Minister runs the parliament. Administrative divisions vary. For instance, districts are regarded as royal boroughs or cities. Metropolitans function similar to boroughs while shire counties divide districts, which are not within the metropolitan. Thus, the county council shares its powers. The civil parish is the most local government wing.
England’s legal business environment recognizes two important alternatives for foreign businesses to take when they seek to do business in England.
First, foreign firms can choose to operate as foreign-owned, but with a branch in England. This plan entails specific particulars and yearly accounts of a foreign firm getting legal registration as a branch with the Registrar of Companies. However, this opportunity can only be on a short-term basis. The disadvantages of this option include insolvency regulations that affect the foreign firm. Clients also prefer dealing with firms directly, instead of interacting with the subsidiary branch.
Tax on income tabulation is difficult because its legal identity becomes takes the same form as that of the parent firm. Secondly, the firm can decide to operate as the UK fully owned company on a subsidiary basis that the foreign company has its interests controlled. All companies are required to file their financial discourse with Companies House (Spence, Jeurissen, & Rutherfoord, 2000). The firm’s constitutional documents such as shareholder resolutions, share ownership, firm directors and secretaries, security copies, and other legal documents are filed as public records. In addition, audited accounts are to be filed regularly. Any failure to file the accounts can lead to fines and prosecutions.
A company or Group Companies formed in England is a legal entity that is separate from its members. Besides, a subsidiary is taken as a separate legal entity that is different from the parent firm. Company management is vested in directors who can be both salaried on non-salaried executives answerable to shareholders. However, directors can be held liable when a company breaks the rules of trade while under insolvency. They may also be held accountable if fiduciary and statutory duties are breached, legislation on the product and environmental safety is contravened, and/or when health and health rules are breached.
Political-Legal Environment of Sweden
Sweden has a democratic form of governance. Its electable posts include parliamentary, municipality, and council positions. Its constitution is made up of four main laws, namely, the Act of Succession, The Instrument of Government, the Fundamental Law on Freedom of Expression, and the Freedom of the Press Act (World Bank Group, 2013). Thus, the government allows its citizens the right to access information, demonstrate, join religious bodies of their choice, and/or form political parties. Legal business in Sweden requires foreign firms and individuals to register limited liability companies, either by having a branch office or as a partnership. However, references and permits are not necessary.
Bilateral Relations between the UAE and England
The link between the UAE and England is mutually stronger. The two countries take the lead in their respective regions financially. Geographically, the two countries are located between the Asian and Western times zones, which allow them to work around the clock. This situation has helped the countries to entice high financial muscles, with highly rated companies that are run by competitively qualified expertise in the insurance, banking, legal, as well as financial sectors (Kelly & Stansfield, 2013).
Thus, the two countries have strong economic ties. Their robust trading connections have a bilateral trade target of more than 12 billion sterling pounds. Many firms such as HSBC, Barclay’s Capital, Clifford Chance, Norton Rose, Thomson Reuters, and Serco among others have more than 4000 employees operating in the UAE. In addition, England and the UAE share cultural and historical links with more than 120, 000 English nationals living and working in the UAE. The UAE also receives more than one million tourists from Britain annually. On the other hand, individuals from the UAE also frequent England for study or for tourism purposes.
Trade and investment in England boost investment opportunities that support Gulf investors. Such investments help the UAE companies to assess and quantify opportunities for its products market. The UAE investor firms also gain in terms of getting the firms registered while at the same time enjoying friendly immigration policies and/or banking and legal services. In addition, England and the UAE have study exchange programs where learners are equipped with the necessary skills to facilitate professional services, industry, and employee equipping.
The countries also have programs for talent development and knowledge exchange. Furthermore, the available business contracts between the UAE and England foster partnerships in areas such as architecture, design, retail, and lasting networks. British companies are always ready to offer Dubai support in building preparation for hosting the Expo 2020.
Bilateral Relations between the UAE and Sweden
The UAE and Sweden have a long trading history. The trade link has been facilitated by the World Trade Organization (WTO) agreement membership, which they both share. Sweden’s entire exports to the UAE amount to more than 3 percent (Devereux & Lane, 2003). On the other hand, exports from the UAE to Sweden amount to less than 0.08 percent of Swedish total imports. In the economic sector, the UAE offers the largest market for its products after Saudi Arabia in the Gulf.
The UAE hosts more than 260 companies from Sweden such as Volvo, AstraZeneca, IKEA, and Sony Ericson. For forty years, Swedish firms have played an important role in shaping the UAE economy since 1971 unification, particularly within the health care, construction, and environmental field. The UAE and Sweden have signed a five-year agreement on technology transfer and cooperation in areas such as climate change combating and sustainable urban development. In the Emirates, Swedish Trade Council assists Swedish companies in establishing themselves while it also helps UAE companies in Sweden.
The two countries also collaborate in health care provision where many UAE patients have gained access to Swedish medical care through Symbiocare, Sahlgrenska International, and Stockholm International Care AB. In terms of education, Sweden has a program of helping UAE medical doctors who study at the University of Gothenburg. In addition, nurses from the UAE access education in Malmo where they learn the usage of new clinical technologies and equipment. Thus, they apply the same knowledge in their home clinics. An exchange program exists between universities in the UAE and the Royal Technology Institute in Sweden.
Comparison and Evaluation
England and Sweden have favorable social, cultural, political, and legal environments for any UAE company to operate its business. Furthermore, bilateral relationships between the UAE and these countries have a long history of close cooperation and collaboration. This partnership is as experienced in matters of economic relations, trade, legal agreements, healthcare, and bilateral investments. However, demographically, England is well placed than Sweden.
When food diversity is emphasized, England may have a larger market for foreign food and food products compared to Sweden. Legalities for new company entry into England are favorable. The two options provided of either using a subsidiary firm or entering as a limited liability company are more flexible. England, being a member of the EU and the UK, has a department of Foreign and Direct Investment (FDI) that helps foreign countries to invest in England and its EU and UK members.
England’s favorable environment through FDI provides a competitive system of the tax rate. Besides having the right people who possess excellent right talents and skills, its regulatory systems are transparent and relatively easier to operate a business.
England has a heightened speed when it comes to executing its mandates. One can take less than two weeks to set up a company. The investment environment is made favorable by low taxation and the fact that it has one of the most grown finance capitals. However, some of England’s weak points include foreign firms getting the same treatment in terms of taxation and legal proceedings, just like English firms, the GDP is highly influenced by the financial sector, infrastructure is relatively poor, and competition from foreign companies for market space and industrial sector is very stiff.
On the other hand, Sweden has a relatively low demographic density as compared to England. Its economic and political situation is favorable. Its business environment is of high quality. The World Bank has rated among the top-ten world economies that have business undertaking facilities in terms of own-company formation, employee hiring and dismissing, loan availability, contract execution, inventory security, and capital registration.
In addition, the county has a direct tax system. It has the lowest corporate tax. Rules that guide total tax deduction on interests, exemptions on contributions, and capitalization are relatively less strict. It also has a balanced legal system that facilitates reliable and transparent hearings. Furthermore, the quality of consultancy and management services is high. Hence, commercial procedures and formalities are easily undertaken. However, the country has high labor costs, high tax rates on individuals, inflexible labor legislation, and high costs overall.
Modes of Entry
International market modes of entry are channels employed by organizations to gain access to new international markets (Burgel & Murray, 2000). The UAE Pearl Company may consider franchising. This mode will require the company to provide concepts, branding, and expertise to operate its business in the chosen country. The option is viable in Sweden but not in England due to the requirement to register a limited liability company or a subsidiary. Turnkey contracts will involve the company building its plant in the target country that will involve training foreign expertise. However, this move may be unviable because the company has its plant situated in the UAE.
The company may also consider joint ventures. This equity-based model is advantageous since the company will enjoy technology access and management skills. It will help in sourcing the local workforce and partners. It allows ease of access to manufacturing, channels of distribution, and research and development. Considering the modes of entry, the most viable conclusion can be reached through the verification of internalization stages (Morschett, Schramm-Klein, & Swoboda, 2010). Hence, based on the company’s strategy of facilitating exclusive export of dates and dates products, a joint venture may be the most viable entry strategy (Burgel & Murray, 2000).
The UAE Pearl Company should start by forming a Limited Liability Partnership (LLP) incorporation. This company is registered under the LLC partnership Act of 2000. It is recognized through the initials LLP after its name, UAE Pearl LLP. The company should be registered at the Companies House, either directly or using a formation agent. After a branch has been opened after one month, the company should provide a signed and certified form to Companies House (Lee & Lings, 2008).
The form contains details of the parent company and of the opened branch. The details include its name, physical address, and business type. Details of directors, resident persons permitted by the company to operate on its behalf, and its secretary will be given. Other documents include the parent company’s constitution, objectives and aims, internal regulations, external operation laws, audit accounts disclosure, and a copy of the company’s published accounts.
The company should also choose a mode of taxation. After full registration, the company should send an expatriate from the UAE Pearl to the subsidiary company. The expatriate will assist not only in establishing a sales strategy of the parent company but also directing local employees brought on board (Dabic, González-Loureiro, & Harvey, 2015). When a preliminary market has been identified and employees trained, dates and dates products will be exported to the subsidiary company for actual sales.
Conclusion
This discussion has explicitly exploited the UAE Pearl Company’s preliminary survey for entry into the EU market to export its dates and dates-related products. Through a two-phase screening method, England and Sweden were arrived at. These countries have strong economic ties with the UAE. From the above discussion, it is realizable that England is more viable to consider the first entry compared to Sweden.
England has diverse demographic features, bigger import capacity, and is among the largest capitalist economies in the world. In addition, its foreign business entry policy is favorable. Considering the modes of entry, the most favorable means of admission is a joint venture due to its advantages of accessing new sales and marketing technologies, entry into the foreign market niche, access to channels of distribution, R&D, utilizing local expertise, workforce, and partnership in the target entry country.
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