PESTLE Analysis Of Skycart’s Expansion In Dubai Market

Skycart and its drone delivery service

Discuss about the Role of Place Branding and Image.

The aim of the report is to demonstrate the understanding of the key elements of the PESTLE analysis. Along with this, the aim is to make the CEO of the company convenience for the expansion of business in the selected country. Skycart is well known company who provide Drone solutions to their clients or customers. This company has been selected for the report. The report is prepared by the management consultant who can provide a help to the company for their strategic move in the market. It has been founded that the market of Dubai has the opportunities for the Drones due to which this market is selected by the company for setting business. The report includes the external analysis considering the case study “Drones”.

Skycart is revolutionizing the way physical goods are distributed from one place to another. The company offers service for the self –flying distribution drones. Skycart acknowledge a US$120B global market for last mile logistics, the ending leg of the supply chain of the drone is usually the most exclusive and least resourceful (Skycart, 2018). Moreover, considering the state of the art transportation system the company associations the drone with different software, hardware, cloud technology and a mobile application so that they can provide the faster, reliable, and cost-efficient delivery to their customers (Skycart, 2018). Autonomous from pickup to delivery, Skycart is created to measure from a single drone to thousands of drones for network operations. In addition, the company is a fast drone shipping service delivering the packages or goods in 30 minutes or less. The company has formed a UAV network for the unified peer-to-peer transfer by air (Skycart, 2018).

A PESTEL analysis is a tool that is used by the marketers to evaluate or monitor the macro-environmental factor that can create an impact on the working of the business. The letter in PESTEL stands for the Political, Economic, Social, Technological, Environment and Legal factors (PESTLE Analysis, 2018).The PESTEL analysis has been conducted for Drones in Dubai market as this is the effective way to evaluate the factors that can affect the Skycart expansion in Dubai.

The political factors determine the factors that affect the working of the company due to changes in the rules by the government for a certain industry (Hill,Jones, and Schilling, 2014). Skycart needs to consider the external factors before they get involved in the setting of the business in Dubai considering the case study on drones.

• Approval from Government: – Drone is one of the leading technologies across the world and the government of the UAE will provide the approval for the drone soon because this product reflect the use of advance technology. If Skycart will take a step to set up the business in Dubai then they need to take approval from government same as like Eniverse Technologies who is willing to offer drone.
• Traffic control centre: – UAE’s General Civil Aviation Authority is working effectively to launch a drone traffic control centre as of November 2016 after considering the fact that there is a rise in the delivery of goods with the help of drones (Rahman, 2016). This is taken into the consideration after knowing the fact that due to increase in the number of drones there might be some possibility of the sudden accidents. Therefore, it is effective to create drone traffic control centre.
• Trails for delivery: – Government entities in Dubai like Dubai’s Roads and transportation authority (RTA) and the Dubai Future Accelerator are conducting the trails for the deliveries with the use of drones in the upcoming months which help them in assessing the challenges that they are going to face in the market. Moreover, RTA has tested an autonomous air taxi in the year 2017. Along with this, in the month of June 2017, it was expected to start trial operations in the 4^th quarter of 2017. These trials reflect that there are vast opportunities for the Skycart if they expand the business in the market of Dubai.
• License for Drone: – Dubai civil aviation authority is making it compulsory for the drone users to apply for a license. These regulations will come into existence on May 1^st and according to this the retailer of the drone will not be able to buy it until and unless they accomplish the formalities related to Drone (Puthuparampil, 2017). Along with this, the buyer requires a basic training in which they learn the effective way to operate the Drone. These regulations are one of the major threat for the company.

PESTLE Analysis of Drone market in Dubai

This analysis reflects that there is a vast opportunity for Skycart as a drone service provider in the Dubai market. The government of UAE found that many other countries are making use of drone services for various purposes which helps them in delivery goods easily. The expansion of business in the Dubai market will be beneficial for the company as the demand for the drone services is going to rise in the coming years. This will ultimately increase the revenue of the company and they will also get the opportunity to trade with other developed countries. Though there are some regulations related to use of drone and these regulation will get settle down with the change in time.

The economic factor determines the economy’s performance that might affect the working of the company. The major economic factors that are considered while evaluation is inflation, GDP, purchasing power, interest rates, foreign exchange rates and many others (Kotler, 2015). Economic factors of the country matter a lot for the growth of the business.

• GDP of Dubai: – Dubai is the second wealthiest emirate in the UAE after Abu Dubai which is the capital state. This reflects that the GDP (Gross Domestic Product) in United Arab Emirates which was worth of 384.7 billion US dollars in the year 2016. The GDP value of UAE reflects 0.56% of the world economy (Trading Economics, 2018). Dubai has become one of the fastest growing economies in the world with the growth rate of 6.1%. This has helped the country to form the trade relationships with other countries across the world. Apart from this, there are many companies who like to set up their business in Dubai considering the GDP of the country (Government of Dubai, 2018).
• Low operational and logistical cost: – This is the fact that Dubai is addressed by its low cost of operations and logistics. Considering the analysis the drone deliveries would be 30 to 40 percent cheaper while comparing it to the traditional delivery avenues. Along with this anything weighing, more than 5 kg will not be delivered. This low cost of the drone is possible because of the economy of the country. Along with this considering the strategy& report drone market is expected to grow and reach till DH 5.5 billion ($1.5 billion) by the year 2022.

The GDP of the country is one of the important factors that are considered while evaluating the economic factors. The GDP of the country is rising which reflect that the purchasing power of the people is increasing. Considering the analysis of Case study, it has been analyzed that economy of the country is improving year by years which is a positive signal for the company. The logistics cost of the operation is less due to which most of the people like to prefer drone service due to which it is expected that market of the drone will rise. If the Skycart Company will expand their business in Dubai they will definitely be able to make a profit.

The technological factors include the innovation in the technology that can create an impact on the operation or working of the company. This also includes automation, research and development and the awareness of the company or country for the technology (Barney and Hesterly, 2010).The case study includes different technological aspects that reflect the opportunity for the company.

• Technology advancement: – UAE is one of the leading regions in the terms of technology innovation and advancement. Dubai country is one of the most populated and developed countries of UAE as they have vast opportunities for the development of the technology in the nations (Chernev, 2018). Dubai is an international IT hub that serves service industries like IT and finance. The vast innovation and technology have contributed to makes the government attracted towards the use of the drones. The innovation in technology has brought different ways of using drones. These drones can be used by the firefighters and deploy equipment to their desired destinations.
• Research and development: – The country has different research and development centres where they can perform the activities related to the use of drone services in Dubai. Moreover, the government is also putting efforts and considering the research on drone services the government conducted trials for the deliveries with the use of drones in the coming month (Hafeez, et.al, 2016). RTA conducted a test in their research centre related to the autonomous air taxi in June 2017. Apart from it, there are numerous companies who declared the use of drones in their business in the coming future. Ride-hailing app Uber broadcast in April that it has strategies to roll out a network of flying care in Dubai by 2020.

Technological factors play a vital role in deciding the drone service business expansion in the market for Skycart Company. The company has found that the technology advancement in Dubai is increasing which is providing an advantage to the companies who are making use of the technology. Moreover, in Dubai, they make use of technology with innovation which helps them in using drones in different ways. Along with this, for this purpose, the government of the country has contributed to the development of trials of the deliveries with the use of the drone. This reflects that they know the effective ways to make use services which will enhance the demand for the drones in the near future.

Political factors affecting Skycart’s expansion

The above components of the PESTEL analysis reflect the opportunities along with the threats for the business in the market (Iacobucci, 2014). Dubai market is very attractive for the drone services as the country has good scope for the technology. In addition, the government of the country has found that many other states are making use of the drone services in their different operations which made them think on the approval of the drones. Initially, the government will allow the facility of drone in major cities and then the retailers or suppliers can supply this to other small cities of the country.

The major issue that has been found after the analysis of the external factor is government intervention in the industry which creates an impact on the working.

• It is suggested to the company to implement the legislations brought by the government in the market of Dubai.
• It is recommended to the company to appoint a consultant for their services in the Dubai market so that if any change in the policy takes place they can help you in guiding a proper way to overcome the same. Though, finding an appropriate advisor in the market of Dubai who is aware about the rules and regulations related to the drone is very difficult.
• It is recommended to the company to perform the tie-ups with the technology company in Dubai with the help of which they can get the ideas and innovations to make the service successful in the market of Dubai.
• The company should analysis their competitors moves because there are many companies who are willing to expand their business in Dubai. This is the way through which the company can analysis the upcoming threats.

Conclusion

In the end, it can be concluded that the strategic move of the consultant is to expand the business of drone service in the market of Dubai. It is essential for the company to analyze the external factors that can affect the business of drone in the market of Dubai. The analysis includes the evaluation of the 3 major components of PESTLE that can create an impact on the working of the Skycart Company. These components are taken after considering the case study of the drone which talks about the role of the technology, government, and economy of the country. Considering the case study, the justification is provided to the CEO of the company after the analysis of the factors. All these factors are in favor of the expansion of the business in the nations of UAE.

References

Barney, J.B., and Hesterly, W.S. (2010) Strategic management and competitive advantage: Concepts. Prentice hall.

Chernev, A. (2018) Strategic marketing management. Chicago: Cerebellum Press.

Government of Dubai (2018) Dubai Economy [Online]. Available from: https://www.dubai.ae/en/aboutdubai/Pages/DubaiEconomy.aspx [Accessed 15^th April 2018]

Hafeez, K., Foroudi, P., Dinnie, K., Nguyen, B. and Parahoo, S.K. (2016) The role of place branding and image in the development of sectoral clusters: The case of Dubai. Journal of Brand Management, 23(4), pp.383-402.

Hill, C.W., Jones, G.R. and Schilling, M.A. (2014) Strategic management: theory: an integrated approach. UK: Cengage Learning.

Iacobucci, D. (2014) Marketing management. UK: Cengage Learning.

Kotler, P. (2015) Framework for marketing management. India: Pearson Education.

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Puthuparampil, J. (2017) You Will Now Need A License And Training Before You Buy A Drone In Dubai [Online]. Available from:https://www.incarabia.com/wire/you-will-now-need-a-license-and-training-before-you-buy-a-drone-in-dubai/ [Accessed 15^th April 2018]

Rahman, F. (2016) New law on sale of drones coming soon, civil aviation authority says [Online]. Available from: https://gulfnews.com/business/aviation/new-law-on-sale-of-drones-coming-soon-civil-aviation-authority-says-1.1902299 [Accessed 15^th April 2018]

Skycart (2018)Company [Online]. Available from: https://www.skycart.net/company/ [Accessed 15^th April 2018]

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Trading Economics (2018) United Arab Emirates GDP [Online]. Available from: https://tradingeconomics.com/united-arab-emirates/gdp [Accessed 15^th April 2018]