BCG matrix
According to Marmol (2015) stars are those whose relative market share is substantial in a fast growing market, requiring significant and continuous investments to sustain its growth. In this way, amenities are considered stars, since this is an essential factor of each tourist destination, and it generates high financial impacts. Since accommodation is a basic amenity required by tourism, and Dubai is one of the most visited cities in the world, it is not surprising that the hospitality industry is a vector of growth. Dubai’s hospitality performance remains resilient, with occupancy levels among the highest in the world (78%) in 2017. (KMPG, 2018)
Question marks have a relatively low market share in a high market growth (Marmol, 2015). Following this, the available packages, along with the activities, are placed in the Question Marks. An example is the activities such as theme parks that require significant investment and ongoing funding and generally have low returns. If it is a market with high growth it can become a star, otherwise, it can become a dog (Marmol, 2015). Dubai Parks & Resorts received about 2.8million visitors in 2018, a 22% increase over 2017, however, the 2.3 million attracted visitors were below 6.7 million expected to the first year. (Niles, 2019). This is an example that it not always exceed the expectations in terms of profit.
Cash Cows represent activities with a very high market share in a slow growth market. (Tribe, 2010) These activities have often established dominance over their competitors in a mature market and require limited investments. The attractions of Dubai are then placed, having low market progress, but a high market share, generating more financial resource than it consumes. Despite the low market growth, Dubai attractions, such as the iconic seven-star hotel, Burj Khalifa or the Dubai Mall are an example of the power these attractions have in attracting visitors, so it shares a high market. “Burj Khalifa is the most popular among tourist attraction in Dubai, recording a number of visitors in of 1.87 million in 2013, which means an average of 156.000people visiting every month”. (Post, 2014)
Ancillary services and Accessibility are placed inside dogs; both services have a relatively low market share in a low growth market, resulting in little revenue. (Marmol, 2015) However, it can be turned into a cash cow, through investments that increase relative market share. Giving accessibility as example, although the public transport system in Dubai has been improving over the last decade, it is an area that does not have a large growing market or a large market share, and that could easily be replaced by other forms, which are environmentally friendly and does not require much investment and time consuming. For instance, electric bicycles are a viable alternative to conventional ways of commuting. The futuristic visions of Dubai for 2030, with an autonomous transportation system, being all the trips driverless, it is an innovative strategy. However, there is always the need for high and continuous investments, with uncertainty as to its growth and future market share. (Anon., 2018)
The BCG matrix is based on the product life cycle theory. This theory establishes the concept that the product usually begins as questions marks (start-ups); then they become stars (growth stage); if business is running successfully, they will turn into cash cows (the mature phase); and finally end their existence as dogs (decline phase) that will withdraw from the market. ( (Alshaali, 2013). Linking Dubai to the Product Life Cycle, it is likely to say that the destination overall is in the growth stage, demonstrating industry visibility and high revenues, modern infrastructure and facilities; great offers in amenities, high levels of popularity and competition. (Butler, 2011). At this stage, it is important to manage strategies and constant investments in terms of advertising to attain the long-term vision and maintain their market leadership. (Appendix 1)
Strategic Audit Overview:
1. TOWS Matrix
TOWS matrix can be an alternative to Porter’s analysis. While Porter’s model provides a framework for analysing the environment, the TOWS Matrix provides a network to develop alternative strategies by analysing a country’s strengths and weaknesses and integrating them with global opportunities and threats. (Weihrich, 1999)
ST Strategy
The proposed plan is to develop new products, promotional initiatives and new events that mix shopping with fun. This is a factor that convinces many tourists in the decision of a destination. (Brochado, et al., 2018) Examples may be the Dubai Shopping Festival and Dubai Summer Festival. According to Gulf News (2018), the famous Dubai Shopping Festival (DSF) had more than 50 million shoppers in 2018 with tourists from all over the Middle East, North Africa and South Asia region, as well as from other countries, participating in the festival. As can be seen with the example above, this helps increase retail spending, stimulating Dubai’s image as a shopping destination. This would be an opportunity for the Dubai market, attracting a large number of tourists and increasing their competitive advantage over other emirates or states. This strategy is considered diversification within the Ansoff Model (Appendix 3) since it will introduce new products and use them to pursue new markets. (Morrison, 2019)
WO Strategy
The suggestion is to target families, as this is a large and growing market of the tourism industry. Family tourism is one of the most important sectors of the tourism industry worldwide and accounts for about 30% of the leisure travel market (cited by Schanzel, 2015). Through family holiday packages, at attractive prices for children or offering group discounts, could encourage the visit and perhaps the return, which would make the weaknesses in opportunities encompassing the W1, W2, W3, W4. According to Appendix 3, this is market development, in which the existing destination product is used, but the strategy is to attract new markets to use the product. (Morrison, 2019). This strategy involves the identification or creation of new market segments for the range of products that the organisation already offers. (Richardson & Evans, 2007).
WT Strategy
The plan is to increase demand in off-season months (Summer, Ramadan) by developing more cultural, sports, convention and leisure events. (Anon., n.d.) This strategy would be good for the environment, as it would stimulate dispersion, with more people all year round, not just at ‘peak seasons’ (T3). Also, it would showcase more Dubai and would encourage repeat visits (W2). At this time, prices also decrease (W4, W1) so these events can encourage people to stay longer and get to know what Dubai has to offer. According to Ansoff Model (Appendix 3), this strategy is market penetration in which the destination adjusts a product to attract a larger volume of the existing markets. (Morrison, 2019).
2. Future Strategy for Dubai
The most viable strategy to achieve Dubai’s goal is the WT Strategy, which encourages the promotion and development of new events (sports, cultural, conventional, leisure) as well as sustainability, which encompasses the DTCM objectives. This strategy involves an active search for an increase in the market share controlled by the company with existing products (Richardson & Evans, 2007). Events such as the Expo and the Olympics are a great source of revenue for the destinations, attracting visitors and investors from all over the world. “The 2012 London Olympics boosted the UK economy by 9.9billion” (Flanders, 2013)
After the rapid urbanisation and enormous growth of Dubai as a tourism destination, the environment felt many negative consequences. (Alderman, 2010). After that, sustainability has become a key target for planners in recent years and has been mandatory for all new projects since 2014. (Visit Dubai, n.d.) Supporting the tourism vision 2020, the Dubai Sustainable Tourism Initiative has been developed to make sustainability in a fundamental component of the hospitality and tourism industry in the emirate”. (Dubai, 2017) Oasis Eco Resort included sustainable practices such as “recycling waste water on site for irrigate; onsite waste management; the application of a zero emission zone and 157.000 square feet of solar panels”. (Bagherian, 2014)
Thus, this strategy would be sustainable, promoting the dispersion of people; balancing the capacity levels; and reducing the impacts on natural resources and environmental footprint. This can be achieved by enhancing or optimising marketing operations such as advertising, customer relationship management, or more competitive pricing (Richardson & Evans, 2007).
In order to support and successfully implement this strategy, it is important to consider strategic models relevant to this field. A great challenge for tourism managers, is to deal with change in the external environment, however, in today’s competitive marketplace, each destination or product needs to adapt to changes in the environment. (Dwyer & Edwards, 2009). And so, the Strategic Drift Model (Appendix 4) happens when the business plan is no longer relevant to the external environment facing it. According to Dwyer & Edwards (2009), strategic drift is due to changes in technology such as, different situations and unexpected challenges in which the organisation fails to result the expected strategic outcome. In this case, the purposed strategy would lead to the phase of incremental change, since there are not many variations in the external environment.
Conclusion and Recommendations
The report has shown that Dubai has a significant competitive edge, and this is proven in the market in which it operates. However, due to the shortcomings identified earlier that need to be rectified, the fundamental task of Dubai is to understand how the competitiveness of a destination can be further improved and sustained.
After conducting Dubai strategic audit, accessing its internal and external factors, it is possible to conclude that is a desirable destination with high-quality infrastructure and luxury tourist facilities. Despite the fact that it has short stays and low return rate of visitors, Dubai gains a lot of recognition due to its strategic location and high-quality infrastructure and luxury tourist facilities. Despite, the fact of having political instability in the Middle East, Dubai is considered a safe place with a stable government. As mentioned earlier, being also recognised as a shopping destination, it encourages many people to visit it and differentiate it in competitive terms.
Dubai success may depend on the implementation of effective strategies such as the introductory cultural or sports events, may provide a way to help achieve its vision of becoming the worlds’ most popular destination by 2020. It is expected that DTCM along with all interested parties continue to invest in the industry, which can lead to further growth, and later achieve the vision of 2025, which include attracting 21-23 million tourists in 2022, and 23-25 million in 2025. (Bridge, 2018)
With the continuous increase in competition, and destinations trying to copy what Dubai offers, the challenge will be to continue attract tourists from traditional markets and attract new visitors from high potential markets. With policies and strategies such as the implemented in stopover, including no tourist transit cost for up to 48 hours and optional visas for extended stay of up to 96 hours are great to increase tourist from new markets. (Dubai, n.d.)
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