Expanding Hybrid Car Business in the
United Arab Emirates
Athens State University
March 5, 2013
This paper examines the subject of expanding the business of Toyota Motor Company’s hybrid vehicle, the Prius. The company is looking to expand the sales area of the Prius into what has become a highly developed and strengthening country that is open to the world of hybrid cars. The country that Toyota is targeting is the United Arab Emirates. With its quick pace and solid economic system, Toyota Motor Company believes this to be a perfect candidate for expansion. This paper will go into why this expansion will be a success.
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The emirates are Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain. Arabic is the official language of the UAE, and English is used as a second language.
The UAE’s government is an elected, but not democratic government system. It is set up in the following manner. The President of the Federation is elected by the Supreme Council of Rulers. This is the body of leaders that is in charge of policy making. The President and Vice President are elected from its members, and have five year terms that are renewable.
The Supreme Council is in charge of both the legislative and executive pieces of the government. It is in charge of planning and ratifying federal laws. When the President nominates someone for Prime Minister, it is the Supreme Council that must approve the nominee. If the Prime Minister were able to resign, it is the Supreme Council that must accept the resignation. The Prime Minister, once in office, must appoint a Council of Ministers, which is similar to the United States Cabinet. Their duty is to develop and execute federal policy.
The UAE has a dynamic economy, and has proven to be extremely resilient in a difficult global economic climate. One reason for the strong economy is the advantages that the UAE offers to businesses that choose to do business there. One major advantage is the fact that there are no corporate or income taxes. Obviously, this is something that businesses will find quite intriguing. Also in the UAE, there are no trade barriers and competitive labor costs. There are more than 750 US firms in the country, and over 30,000 Americans live there.
Starting New Business in UAE
In the UAE, there are two options that one must choose from in order to conduct business. This is through joint partnerships, or through what is called a Free Trade Zone (FTZ). With the joint partnership option, at least 51 percent of the business must be owned by someone that is a natural citizen of the UAE. A Free Trade Zone, on the other hand, would be the option that Toyota would have to work under. The benefits of the business being able to conduct their business in the free zone are numerous. First off, there is no regulation stating that the ownership of the company must be made up of UAE nationals. 100 percent of the company must be under foreign ownership. There are huge tax benefits that come with the free zones. Businesses are exempt from corporate, personal income, import, and export taxes.
UAE Business Etiquette
In any business venture, one must ensure that they are aware of how business is done and what etiquette is expected. In international business, this is even more important. For Toyota, knowledge of the etiquette that is expected is mandatory. If they move into a new territory and are unaware of customs, it is a possibility that they will offend co-workers or associates that may be trying to help them establish their foothold. Loss of business...