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Dubailand Final Case Study

Over the years, Dubai has been able to take advantage of its
prime location in order to grow at an excessive rate and create a
hub that attracts business from Europe, Africa, and Asia. The oil
and natural gas industry in the UAE has allowed Dubai to pull in
investors from neighboring countries in the region, as well as
significant human and social capital, giving the city even more
fuel for excessive growth. Dubai is now a global leader in trade,
travel, and business, and it is using its competitive advantages
in order to diversify its strengths into a variety of businesses
and industries. Through its convenient location, its oil and gas
assets, and its diverse human capital, Dubai has positioned
itself as the center of world trade not only in the Middle
East, but worldwide.
It is no surprise that Dubai has been able to use its
central location in order become a major player in both the
shipping and aviation industries. The UAE was able construct the
largest port on the Persian Gulf which made the region a great
cargo hub in the Middle East and stimulated trade with China.
Dubai has also established one of the largest airports in the
world and accommodates over 60 million flying passengers per
year. Because of Dubais prime location and ease of access, it is
now a hot spot for luxury, leisure, and tourism. The vast growth
in business and tourism in Dubai make the city an excellent place
for investors in the retail, entertainment, and real estate
industries to spend their money. Dubai is now filled with lavish
stores, restaurants, and nightclubs. The citys magnificent
skyscrapers and extraordinary hotels and real estate are now as

impressive as any in the world, and Dubai will continue to use

what it has built in order to keep expanding and drawing in
tourism money from all over the world.
While Dubailand was in some ways inspired by Disneyland, there
were numerous differences between the two, most of which were
driven by the different conditions and environments. While Disney
was an already successful private enterprise in the largest free
market economy and its Florida project, Disneyland was led by it.
Disney chose the site in Florida for its year round temperate
weather, access infrastructure and existing tourism industry. No
doubt, state government hospitability to the project would have
been a factor in the decision as well and perhaps the State
government in Florida encouraged the project and acted as a
supportive partner. Disneyland Orlando also had an advantage in
having a proven model in its California Disneyland in a fairly
similar market both destinations would aim mainly at American
Family holidaymakers from the region, making demand prediction
and consumer behavior a little more predictable than if the
project were based elsewhere in the world.
Dubailand on the other hand, was a project being led and driven
by the oil rich Emirate of Dubais political leadership. This was
one of many enormous development projects in the region that were
aimed at building a non oil economy on which the UAE could depend
in the post fossil fuel future. It had succeeded in establishing
itself and Dubai in particular as a tourism, business and trading
hub and was determined to scale those aspects of its economy up,
massively. The Emirs controlled the United Emirates with
unopposed authority and with immense oil capital which they were
able to use to aggressively develop their infrastructure. The
Arab leadership represented the Arab population that was now only
5% of the people in Dubai, for example which was filled with

expatriate workers taking advantage of the low tax and fast

growth environment and contributing to the burgeoning economy of
the Emirate. The Emirs protected the local interests and took
every advantage possible of talent, capital and expertise from
around the world while expertly strategized and managed their
economy. While they bult a cosmopolitan culture to attract and
retain this talent as well as tourism, the deeper sensibilities
were steeped in Islamic and Arab tradition and formality.
The site for the project would by definition be in an area with
oppressive heat through the year and an unremarkable landscape
apart from pristine sand dunes. Sheikh Maktoum, the Crown Prince
of Dubai would develop this area while also developing the access
infrastructure around it including road and air travel and
hotels. It would also face the task of building massive water
desalinization capabilities for the area and ensure a global
marketing operation beyond comparison. Its long term success
would be dependent on attracting enough visitors (15 million per
year was the target) most of whom would be international
While the government would focus on these aspects the Dubailand
business model aimed at building private partnerships and
attracting developers who would build portions of the project or
through leases where private companies would operate particular
attractions or facilities and stores. This Public-Private
partnership model enabled the project to be enormously scalable
and created opportunities for investment but would lack some of
the control that Disney would have on its own, owned projects
like the one in Orlando.
Tourism itself was the center of Dubais plans to move away from
its dependency on oil. Its lack of cultural, historic or natural
attractions meant tourism would revolve around amusement,

shopping and a wide variety of activities. Therefore Dubailand

was a part of the initiative to build the area as the worlds
leading tourism hub. Disneyland on the other hand aimed to
capitalize on existing tourism traffic and further build on it.
The brand that was being sold to potential visitors also had its
subtle differences. The Disneyland brand is centered on the magic
of Disney itself and its rich portfolio of stories, characters
and inescapable multi-media content that American consumers were
constantly exposed to. The sense of anticipation about Disneyland
would therefore be significant and while it created expectations
it created the possibility for monetization. Dubailand on the
other hand would have to build an entirely new brand for itself
and this would be based on the sheer scale and unparalleled
variety on offer. It would attractive to Asian and European
tourists for its accessibility and short flying distance, lower
cost than the options in those geographies and for having options
for every possible type of person and therefore family member. It
would position itself as a self contained destination with every
leisure facility imaginable.
Perhaps relatedly, Disney kept the project secret until launch to
prevent real estate escalation in the area while they were still
acquiring land for the project. They would be able to attract
tourists after the project had been fully built. Dubailand on the
other hand depended on actively promoting the project around the
world while it was even in its nascent stages, to be able to
attract investors and to build, phase by phase, visibility to
attract tourists.
The Sheikh of Dubai has played a major role in development of
Dubai. He had vision and tact to maneuver his extravagant plan
for Dubai towards success while at the same time keeping in mind

the conservative fabric of his society. His development model was

based on the end goal of reducing Dubais dependence oil
revenues. Due to factor conditions, Middle Eastern countries have
abundant oil reserves and oil trade contributes a majority
percentage to their total revenue. Due to this advantage, middleeastern countries are reaping tremendous monetary benefits and
will continue to do so till their oil reserves are not depleted.
These benefits have siloed them into focusing all their attention
to the oil and gas sector. However, in the long run, their core
competency will transform into core rigidity. And thats exactly
what The Sheikh of Dubai plans to not let happen. He has used
different factor conditions available in his region to diversify
economic activities. Development of ports and transforming Dubai
into an aviation hub are some of his initiatives. At the same
time, with tough citizenship and ownership laws, he has made sure
to not neglect the original inhabitants on the region.

And it is these tough laws that foreign individuals and firms

should evaluate prior to investing in Dubai. Foreign nationals
have been known to be imprisoned for breaking UAEs very
stringent laws. Financial default is punishable by imprisonment.
Pathetic labor conditions may result in negative publicity for
investors. The war on terrorism has created a political turmoil
in the region. Dubai, till now, has not been directly affected by

this turmoil but its proximity makes it vulnerable.

The Dubai government should look at other similar cases of

Disneys venture into Paris and Hong Kong and how those didnt
live up to expectations. The non success of similar endeavors in
regions other than USA points to a cultural difference. It may be
possible that amusement parks are not an attractive option for
Asians and Europeans. And since US citizens constitute only 5% of
total tourists flowing into Dubai, Dubailand may end up facing
similar struggles.

Also, their projected figure on visitors at

73Mil annually is way higher than the expected 60Mil capacity of

Dubai airport. The infrastructure will also have to be upgraded
to meet the expected demand. Due to the ongoing turmoil in the
middle-east, it will be a difficult in attracting American
tourists into Dubai. Dubai can also amend its visa laws with
programs such as visa on arrival for certain regions to boost
tourism. The negative publicity received due to poor labor
working conditions will have an influence on the inflow of
foreign investment. Power generation may become an issue and
Dubai may fall short of meeting future demand. Dubai should
invest in solar energy and utilize the ample sunlight its surface

Porters Diamond


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