The Environmental Forces and Market Potential of Wiggles in Middle East
Introduction
The Wiggles is a group that specializes in children’s music and entertainment, and it combines theories of children development and entertaining music in their videos, live songs, and television programs. The group was founded by Anthony Field, Murray Cook, Bang Shang a Lang, and Greg Page through a joint effort in 1991, in Sydney, Australia. The group has used the concept of social business to further their course, and grow to its current popularity. Until now, the group has been branded by ABC as the most successful and informative pre-school television program. Currently, it is composed of four personalities namely: Anthony Field, Emma Watkins, Lachlan Gillespie, and Simon Pryce (The Wiggles, 2013).
The concept of social business has gained substantial popularity in the corporate world, though many private businesses do not apply it. This concept is different from other business ideologies which perceive any venture as having a sole purpose of profit making. Instead, it is a business designed to achieve other objectives different from profit making, especially those that are beneficial to the community. Though this concept has a more philanthropic mission that the normal business purpose, it has elevated many organizations to great heights of popularity. The Wiggles is an example of a group that has won the public trust through the application of this concept. In 2009, the group earned $45 million, after it was ranked third in BRW’s yearly list. Previously, from 2004 to 2008, the group had been named the richest Australian entertainers, after registering a steady growth reliant on their business theory(The Wiggles, 2013). Social business, also known as “social enterprise”, thus includes projects and activities undertaken to achieve social objectives, and usually these objectives are intertwined with generating direct benefits to the society.
With the coming of globalization, the Wiggles have the capacity to expand to other countries, since rules for entry and exit have been softened. Recently, it is noted that the group has started franchising their concepts to various countries in the world, but this is just a tip of the iceberg. For Wiggles, going global would be a lot beneficial, since it would not only beep up their popularity, but also increase their sales and annual revenues magnificently. Moreover, since the group has a primary purpose of benefiting the society through entertaining and teaching pre-school children, finding root into as many countries as possible would offer the best platform to achieve this objective. The Middle East, particularly, has a rich source of historical tales, and for that matter, the Wiggles would find it a perfect place to develop their edutainment theories, songs, and live performances. Moreover, the region has a booming economy that appreciates entertainment, to an extent that the government of specific countries such the Dubai has signed deals with major entertainment agencies (U.S. Commercial Service, 2012). In effect, the entertainment sector is regarded highly with respect to its contribution to the GDP of the countries in Middle East, with particular attention to the United Arabs Emirates. This paper develops a lucid and in-depth analysis of environmental forces, as well as market potentiality for the Wiggles in the Middle East, especially in Dubai.
Environmental Forces of the Middle East Affecting the Wiggles
The United Arab Emirates is one of the countries in the Middle East with the fastest growing economies. Located in the southern Arabian Peninsula on the Persian Gulf, the country offers a perfect business hub, with a serene environment for settlements. Due to its fast growing economy, the entertainment sector has received a major boost, thus the Wiggles would be right in targeting it as a new market segment in their globalization pan. The following sections analyze the environmental factors in the UAE economy that could significantly affect business operations of Wiggles.
The UAE offers a major market for both U.S. exports and other parts of the United Kingdom and Australia. Due to the rapidly expanding bilateral trade, the country has overtaken most of its competitors by allowing foreign investors to enter the market (Ihsan, 2012). Owing to the country’s role as a regional business hub, it offers the best opportunity for an expanding form like the Wiggles, since its entry strategies are not very sophisticated. It has a modest population of about 8.47 million, and it hosts international trade exhibitions, conferences and monumental hotels which attract tourists from all over the world (UAE Business Forecast Report, 2012).
Firstly, Dubai is a politically stable country which has undergone major political reforms to offer the best business hub in the region. The government is very committed to empowering the economic aspect of the country, and has put in strategic interventions to ensure that businesses run smoothly. For instance, it has signed an agreement with the United Statesthat establishes formal diplomatic relations, which allows both of them to transact business in a friendlier manner. This agreement has been in existence since 1972, and has so far made the UAE the single largest target market for U.S exports (Toledo, 2013). In the same manner, the country has brokered deals with various other regions such as Australia, and generally there are no real political impediments to new investments. The labor laws are conducive, being among the highest ranked countries by the World Bank according to ease of doing business (Toledo, 2013). Additionally, UAE has been raked by Transparency International as 35th globally in combating corruption and issues of transparency (Bishara, 2011). This means that the country is well-governed, and various forms of business malpractices are curtailed, offering a fair platform for competition. It is also true there are no incentives or restrictions with regard to capital exportation, or foreign direct investment. However, it is a provision that a foreign investor must have a national UAE sponsor, who has exclusive rights for non-food products. This means that Wiggles would have an easy time entering the market.
The economic environment of UAE is far much encouraging than the political situation. The presence of oil and gas reserves has contributed to rapid economic growth, which centers on revamping infrastructure such as ports, roads, telecommunications, airports, desalination projects and electric utilities. Of particular interest is the country’s interest in the telecommunications and entertainment sector. Being a regional business hub, UAE offers a unique environment for rich businessmen who tour the cities, and even build residential homes there (Bishara, 2011). This is an interesting bit for a prospective entertainment investor like Wiggles, which would utilize the booming economy to generate more revenue and build its market brand to international levels. Besides, the exchange and interest rates are quite low, compared to other parts of the Middle East. Since 1980, approximately 3.67 UAE Dirhams exchange for one US dollar. The government has so far adopted more conservative policies on lending that permit charging of low interest rates on corporate loans. The inflation rate has been estimated at 11%, which depicts the economic growth of the country on a broader perspective(Sikdar&Vel, 2011). These economic elements would be of substantial effect to Wiggles, as the group plans to venture into business in the region. For instance, the interest rates will determine the cost of capital of the group, and to what extent it can expand and grow within the region.
The country is composed of more than three quarters of expatriates, who have high disposable incomes, and business-friendly spending habits. The entertainment and media sector is one of the greatest beneficiaries of this habit of spending, as country data shows that the young and growing population is investing heavily in leisure activities (Smith& Woodworth 2012). Market demand for entertainment products is reported to be higher in the Middle East than any other country in the neighboring regions, and despite souring markets for media and related products in most economies; UAE is offering a green light that is encouraging to investors powered by government support, removal of market entry obstacles, and rapid adoption of technology.
The social environment of the UAE is rather strict, since the country is very cautious about the health of the population, thus businesses must adhere to green technology, as was recently passed by the state (Sikdar&Vel, 2011). Needless to say, Dubai is home to a large number of expatriate population, who are learned and information conscious (Ersnt& Young, 2011). This would form a perfect target for Wiggles, since their television shows, live performances, CDs and VCDs on the greatest part focus on the learned and affluent community. It is estimated that 90% of the population own TV sets in their homes, and almost every homestead has electricity connection. This means that the number of viewers, for instance, is alarming. The population of UAE is estimated at 8.47 million, but the figure is steadily increasing at 65%, promising more market for Wiggles’ products. The largest portion of its population is composed of young people, who are open to new and fancy technologies and entertainments.
Technologically, the country’s adoption of new innovations is described as fast-paced. The business has a positive attitude towards technology, as it invests heavily in attracting innovations, foreign expertise, and capital in the move towards developing a free-market economy. Importantly, as earlier stated, one of the infrastructural developments that are zoomed by the economy is modern telecommunication. This is in line with the government’s efforts to create a set of technologies that improve quality and quantity of yield, and at the same time driving costs down. It is in the public domain that UAE is open to any form of sustainable technology, especially the green projects that are sensitive to environmental health (Ersnt& Young, 2011). With this kind of attitude and rate of technological expansion, the UAE is headed for better economic gains, exposing it as the best destination for world-class firms like Wiggles.
UAE is prone to frequent dust and sand storms, which severely reduce visibility. Besides, the islands in the Persian Gulf, especially the smaller ones, are difficult to navigate and can offer a real challenge to travellers. In addition, some of the environments factors include occasional windstorms and strong tides that bring a real menace at the shores. Besides due to the large reserves of oils and gas, pollution caused by oil spills is a major problem (Ersnt& Young, 2011). In respect to these detriments, the country is overly concerned with further aggravations on the health of the environment, and industries are governed by strict rules regarding wastes disposals, adoption of green technology, and production of goods that are fit for human consumption. For Wiggles, which would not produce any consumables, and whose activities would not interfere much with the environment, such regulations will be least effectual. However, its operations would be affected by shifts in weather conditions, dust and sand storms, as well as movement on the shores by ship of boat.
Lastly, the legal environment of UAE is not as strict as many other countries; indeed, it has been rated number two among the countries in the Middle East as far as business legal framework is concerned. It must, however, be admitted that the current legal framework favors the investors over their foreign counterparts. Generally, national treatment of investors does not exist in the UAE, and ownership of stocks and land is restricted(Tarbuck& Lester, 2009). On the positive note, the UAE does not hold any tariff barriers against investments that are made in form of sponsorship, restrictive agency, and distributorship requirements(Kearney, 2007). Therefore, for an organization such as Wiggles, it has the option of searching for UAE sponsor, through which it would satisfactorily set up its business. Through its legal body UAEG, the government of UAE monitors and facilitates legal affairs, customer service and economic studies for the foreign investors. Four laws are currently affecting the operations of foreign investors in the country: Commercial Agencies Law, Federal Companies Law, Government Tenders Law, and the Federal Industry Law(Tarbuck& Lester, 2009). These offer the biggest barriers to UAE foreign direct investments.
The Federal Companies Law requires that all organizations or companies established within the territorial boundaries of UAE must have at least 51%of their shares owned by country nationals. All interests of general partnership must be fully owned by nationals, and foreign shareholders are allowed to hold up to 49% interest in limited liability companies(Tarbuck& Lester, 2009). The country, just like many other economies, stipulates specific contents of television shows and CDs that can be viewed by a specific group of people. Everyrecorded content must be verified by a government agency and the correct designation which specifies the allowable group of viewers is stamped (Tarbuck& Lester, 2009). This would be very relevant to Wiggles, as it would have to take its productions for verification before distribution. Generally, the legal system of UAE is more relaxed than most of the economies, for example, U.S. it would be imperative for Wiggles to acquaint itself with all the entertainment industry regulations, since they would be paramount to the way it operates and affect the demand for its products(Gabrielsson, Gabrielsson&Seppäl, 2012).
Market Potentiality for Wiggles in the Middle East: UAE
As earlier stated, the UAE offers a unique environment for robust business growth, and is currently the regional hub of international business in the Middle East. Generally, the Middle East is the most politically unstable part of the world, with wars raging frequently among themselves, or with the United States (Library of Congress, 2007). As a matter of fact, this region needs a program such as that offered by the Wiggles, to tech children the value of peace-keeping, brotherhood, and respect for life. The social business concept on which the group was founded would best be served in this region, as it would serve to benefit the society a great deal, apart from making profit as well. As earlier identified, the UAE is one of the most politically and economically stable countries in the Middle East, but other countries such as Egypt, Yemen, Qatar, and Kuwait are also viable targets for thriving business for foreign investors(Kearney, 2007).
Apart from analytical data estimates, it is a fact that the UAE is composed mostly of expatriates who come and live in the country as hey work. This population has children who are hungry for education, entertainment, and other leisure activities, thus forming a perfect target for Wiggles. Given its rapidly growing population, currently standing at 8.47 million according to official estimates from the national statistics, the country is composed of young people, who basically form the desired market for Wiggles. Kearney (2007)says in his report that while the global entertainment and media industry is struggling with growth, the UAE is thriving with fast-paced improvement and market growthof about 19% per annum (Middle East Monitor, 2013). This value is expected to go higher as the population od Middle East, especially in the UAE, are spending more disposable income on entertainment and media; the government continues to invest in the sector; and restrictive regulations are eased to allow for more investments. In 2007, the sector was estimated to be working with a capital of $10 billion, and the value is expected to increase with reduction in trade barriers. For instance, Saudi Arabia has lifted a ban on cinemas, which had lasted for over 30 years (Kearney, 2007).
The most attractive feature of the Middle East market is its potential for growth across media and entertainment segments, foreshadowed in its current economic growth rate. It is also safe from cannibalization from online channels, which is very prevalent in western countries. In addition, the region is within close proximity with large consumer bases in North and East Africa, Southeastern Europe, and South Asia(Kearney, 2007). Although substantial challenges exist in these markets, the fact still remains that market demand for entertainment products are on the rise, and the opportunity for easy entry and greater penetration still stands. With increasing internet connectivity, the Middle East is opening up to a business world driven by technology and rapid increase in GDP. The UAE, for instance, has already acquired a GDP that is higher than any of the average countries in the European Union(Kearney, 2007).
These data leave one asking: what does the future really hold for the Middle East. With a young, wealthy and growing population with a lot of disposable income, backed up with a craving for new technology, the Middle East media and entertainment sector is headed for a big boost. The prospective opening of the large market in Saudi Arabia will open the region to a vast resource of opportunities, which investors would better move fast to utilize (UAE Country Profile, 2012). Wiggles, for instance, would need to understand the consumer market and establish a localized presence, blending in with the region’s cultural and social values (Gabrielsson, Gabrielsson&Seppäl, 2012). Since it is estimated that by 2025, 70% of the world population will be composed of Muslims (Middle East Monitor, 2013), a prospective company that has long-term goals would better acquaint itself with the community, to ensure market dominance in the coming years.
In terms of competition, the Middle East has a number of successful entertainment firms, but none of them has adopted the business approach reminiscent of Wiggles’. The LouLuo Al Dogung’s is one of the children leisure centers that have been set up in Dubai. It was put up by the White Hutcchinson Leisure & Learning Group of Kansas City (Zahra, 2011). The center offers traditional storylines, events and themes for kids which teach about environmental values, but unlike Wiggles, it incorporates women as well. This means that there is group that is exclusive for children entertainment, and Wiggles’ entrance into that market would be prudent and well-targeted. Additionally, the Little Explorers Group offers various entertainment and education activities for children between ages two and seven, where they acquire skills about the environment and other areas of their surroundings (Zahra, 2011). In spite of their existence, the two groups do not offer mobile and versatile children entertainment activities like Wiggles, and they have little connection with major televisions and other media firms. This provides a window of opportunity which Wiggles can utilize to enter the market, posing as a unique service giver, coupled with its social business concept. In the United Arab Emirates alone, it is estimated that more than half the population is under 18, with even a greater proportion of this being small children. It therefore follows that the market is too large for the available players, and more parties are needed in the mix to bring value and taste to the Middle East children entertainment sector.
Conclusion
In lieu of the analysis of the external environment of one of the Middle East countries, UAE, it suffices to conclude that it would be prudent for Wiggles to venture into business in this region, since it has vast resources that promise an active economic growth, powered with rapid improvement of technology. All the elements of the external business environment of UAE point to it as a potential business hub not only for the U.S., but also for other countries which are members of World Bank. The liberalization of markets brought about by globalization has largely contributed to the opening up of the Middle East to other parts of the world, and it now stands out as an untamed economy that still holds numerous economic potential. With a population growing steadily at 65%, the Wiggles would find this region rich for investment and longing for information. The expansion of the group to the other parts of the global economy, especially the Middle East, would not only provide it with a huge potential for economic growth and stability, but also contribute to the fulfillment of its primary objective of serving the community.
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