AL NILE Centre

Assessment Activity Front Sheet

Criteria Achieved
P1 P2 P3 P4 P5 P6 M1 M2 D1 D2

(This front sheet must be completed by the STUDENT where appropriate and included with the work submitted for assessment)

Students Name: Reg.#

Assessors Name: IV's Name
Completion Submitted
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Qualification Pearson BTEC level 3 extended Diploma in business
Unit No.: 1 Unit Title: The Business Environment
1. Know the range of different business and their
ownership
2. Understand how businesses are organised to
Learning Outcome (LO) achieve their purposes
1, 2, 3 Outcome Title: 3. Know the impact of the economic environment
No. :
&4 on business
4. Know how political ,legal, and social factors
impact on business

Assignment No. : 1

Part Assessment Title:

1 Of 1
:

In this assessment, you will have opportunities to provide evidence against the following
criteria. Indicate the page numbers where the evidence can be found

To achieve the criteria the evidence must show that the Tick if Page
Criteria student is able to: met numbers
Reference
describe the type of business, purpose and ownership of two
P1 contrasting businesses [RL]

Describe the different stakeholders who influence the purpose

P2 of two contrasting businesses [CT]

P3 Describe how two businesses are organised [IE]

Explain how their style of organisation helps them to fulfil their

P4 purposes
 Describe the influence of two contrasting economic
environments on business activities within a selected
P5
Organisation

Describe how political, legal and social factors are impacting

P6 upon the business activities of the selected organisations and
their stakeholders.

M1 explain the points of view of different stakeholders seeking

M2 Compare the challenges to selected business activities within a

selected organisation, in two different economic environments
[IE]
Analyse how political, legal and social factors have impacted
M3 on the two contrasting organisations.

Evaluate the influence of different stakeholders exert in one

D1 organisation [IE]

Evaluate how future changes in economic political, legal and

social factors, may impact on the strategy of a specified
D2
organisation.

Declaration
“I certify that this assignment is my own work, written in my own words. Any other persons work included
in my assignment is referenced / acknowledged”.

‫أشهد أن العمل المقدم لهذه المهمة هو من عملي وأن أي طرف قد يكون‬

‫شارك في هذا العمل هو إما علي علم أو ذكر كمصدر‬.
Student’s Name: Student’s Signature: Date:
/ /

Internal Verification / Internal Review approval to use with students

IV's/ IR's Name: IV's/ IR's Signature Date:
/ /
Front Sheet
Emaar Business Environment
Introduction
This assignment is prepared to evaluate the external environment of Emaar Properties within two
economic environments of Jabal Omar Development and the UAE. Both companies operate in
entirely two different business sectors and region. Emaar Properties is one of the most valued
and respected property developers in the world. The company has exceptional expertise in the
sectors of real estate development, shopping malls, retail, hospitality and entertainment. (AlEid,
2015). The assignment will discuss the organisation's background and purpose along with its
major stakeholder and their influence. In addition to this, a detailed external environment
evaluation is done in the assignment. This will help in understanding the economic principles
that affect businesses, which is vital for starting a new business in Dubai.

Task 1
D1 Stakeholder’s influence
Shareholders of Emaar Properties can influence the management and their strategic actions in a
significant way (Yeung and Al Mashary, 2019). In addition to this, customer demand affects the
organisation and influence them to be more creative, flexible and adaptive to changing
requirement. Emaar Properties is a customer-oriented organisation and with high customer
orientation, the firm is required to establish a customer relation department in order to resolve
customer queries (Rothaermel, 2013). Moreover, vendors are an integral part of Emaar
Properties supply chain due to which vendors are collaborating with organisation in order to
make the supply chain process more efficient and smooth.
Lastly, companies are establishing a separate legal department, which oversees changing laws
and government requirement so that the firm can avoid any potential penalty or fee (Noe et al.,
2017). The three important stakeholders, which can affect performance of firm in positive terms,
are Suppliers, employees, customers. This can be exemplified from the report of Emaar (2019),
where the author has shown that Emaar Properties records upsurge in Dubai property sales by
25% to AED 18.03 billion in FY 2017; net operating profit increased by 16% to AED 5.70
billion. On the contrary, negative influence on performed can be created by Governments, trade
unions, employers' associations, local and national communities and society. As report of
Alteneiji, Alkass, and Dabous (2019) shows that the real estate market, one of the city’s main
economic drivers, has been hit hard by a slump in regional demand since the oil price collapsed
in 2014.

P4 Organisational style supports in business purposes

Due to the functional approach, Emaar Properties is able to define the roles of responsibilities of
every managers and employee. In this way, managers can work according to organisational
objectives and strategies. In addition to this, the department can focus on their work in a proper
manner due to which Emaar Properties is able to provide best customer service and ability to
deliver goods on time and with standard quality. In addition to this, responsibility and
accountability can be established through the functional structure (Rothaermel, 2013). In this
way, Emaar Properties can fulfil its purpose and objectives in a meaningful way.
The important functional areas are marketing, human resource management, finance and others.
Each of these functional areas has its own strategies and these strategies are devoted to the
achievement of the business objective. In Emaar Properties, the business objective is focused on
delivering great customer value throughout the globe. Thus, ensures recruitment of highly valued
employees, who can deliver unmatchable services to customers. Whereas, financing function is
focused on the efficient utilisation of funds and maximisation of profitability so that investments
can be done in new markets.
M2 Challenges in two different economic environments of UAE and Jabal Omar
Development
Personal Income is one of the factors, which affects Emaar Properties’ revenue. Personal income
in the economy largely depends on economic growth and it is uncontrollable. Moreover, the
unemployment rate can decrease the revenue of Emaar Properties, as there will be fewer people
to purchase from the firm (Rothaermel, 2013). Low level of average income can affect the
purchasing pattern; hence, revenue will be impacted due to it. High interest will make the
borrowing expensive due to which expansion strategy would need to be launched through careful
consideration (Das, 2012). Monetary and Fiscal policy affects the firms greatly and considered to
be the major economic challenge which uncontrollable in nature.
If the government adopts Expansionary monetary policy, it means that the supply of money will
increase in the market; therefore, the demand for goods will increase (Craig and Campbell,
2012). However, if contractionary monetary policy is adopted, the money will be limited in the
market, hence, less business activity and less personal income. In UAE Emaar Properties has the
advantage of strong economic environment and high personal income and per capita income. In
addition to this, the economic policies also favour the Emaar Properties in UAE. As economic
comparison of Saudi Arabia and UAE provided in appendix 1 showed positive situation of UAE
in contrast with Saudi Arabia. Economic attributes are showing a more attractive position of
UAE. For instance, deficit of UAE is lower in contrast with Saudi Arabia; the country has lower
debt and higher GDP per capita income of 43,005$, which is lower in Saudi Arabia amounting to
$23,339 (Country Economy, 2019). Therefore, in UAE individuals have more affordability level
and economic challenges for Emaar Properties can be lower in contrast with Jabal Omar
Development. However, it is expected that this Jabal Omar Development will show more
improved position.

Figure 1 Economic Impact on Real Estate Sector (Khumpaisal, 2011)

P5 Influence of two contrasting economic environments
The economic environment of Emaar Properties can influence significantly. However, Emaar
Properties operates in real estate and most of the real estate services and packages introduced by
the firm address groups of diverse income level (Yog, Cekin, and Homsy, 2016). That is why in
crunch economic situation, Emaar Properties is able to sell above par lever. In the UAE, Emaar
Properties is able to increase its revenues because of the favourable economic environment.
Moreover, the UAE is the financial hub and many business activities take place here due to
which economy of the country is gaining momentum, which is favourable for Emaar Properties.
However, if Emaar Properties wants to invest in US, the firm will have to rely on different
economic factors and one of the factor is the demand of the product. Although the Emaar
Properties is high in demand there are other competitors offering real estate services for many
years (Yog, Cekin, and Homsy, 2016). Therefore, it can be said that Emaar Properties would
need to invest significantly in order to capture a few percentages of market share. Moreover, the
Jabal Omar Development market is considered to be extensive and in order to operate in an
efficient way, the firm would need to adopt aggressive expansion strategy that would cost
billions of dollars which high chances of failure (Craig and Campbell, 2012).
As appendix 1 shows a higher deficit of Saudi Arabia in contrast with UAE, it can be predicted
that cost in operations in this country can be higher. The justification is that economies facing
higher deficits usually implements higher taxes on individuals so that these can be recovered
appropriately. When it comes to investing operations, Saudi Arabia shows higher feasibility for
firms as the country is coming up with new Artificial Intelligence (AI) systems. Thus, in case of
Emaar Properties, the investment operations in Jabal Omar Development will be highly
beneficial and heavy returns can be obtained.
D2 Economic, political, legal and social factors affecting strategy
Future changes can affect Emaar Properties greatly. Technological advancement will transform
the social factors as Emaar Properties can operate in the global market through a single location.
In addition to this, countries making their political matters more favourable for the business and
in this, they are collaborating with the companies (Deloitte, 2019). Developing countries
providing incentives to companies like Emaar Properties to invest so that the country can move
towards development stage (Rothaermel, 2013).
 Legal Factors
Fair competition and consumer protection rights should be implicated in organisational
operations. For instance, price-fixing and strict property laws can cause lead to the creation of
penalties from legal bodies of the country.

 Social Factors
The changes in social factors can be in terms of demographic changes and restrictions for
expatriates to buy real estate properties have possibilities to affect sales of Emaar Properties as
UAE is witnessing massive layoff.

 Political Factors

The political environment of the UAE is significantly dependent on governmental policies,

which comes under a stable platform. Political parties in the UAE are suffering from many issues
in the management of the political environment, resulting in creating pressure in terms of
investments.

Task 2
P1 Type of business, purpose and ownership
The firm selected for the task is "Emaar Properties" from the UAE region and "Jabal Omar
Development" from Saudi Arabia.
Emaar Properties
Emaar Properties is regarded as the leading "real estate development" firm which primarily
located in UAR region but also has an operation in a different part of the world. Emaar is a joint-
stock company, which is listed in the Dubai stock exchange. The firm currently has a valuation
of USD 9.7 billion at the end of FY2018. The firm operates international along with it its six
different business segments and around sixty active firms. In addition to this, their international
presence is quite broad and it is present in around 36 different markets across, North Africa,
Middle East, Pan Asia, North America, and Europe. The firm is popular for its large-scale
projects in which Burj Khalifa is the benchmark of it (Emaar Properties, 2019).
Jabal Omar Development
Jabal Omar Development Company, apparently one of the largest real estate company in the area
and one of the largest registered organisations in the Saudi Tadawul Stock Exchange. The
leading company, Jabal Omar, is a multi-faceted country-wide enterprise within a mobile
separation from the Great Mosque of Makkah. While the Kingdom of Saudi Arabia continues to
expand its capacity to respect a growing number of pioneers, JODC is a happy proponent of the
improvement of the Grand Mosque region and seeks to provide guests and residents of Mecca
with a new spiritual and physical experience (Jabal Omar Development, 2019).
P2 Different stakeholders influencing the organisational purpose

Figure 3 Key Stakeholders (Lumen Learning, 2019)

Emaar Properties
Shareholders: Shareholder's main interest is in the share price and they need higher profits, value
maximisation, and want a good reputation for business. Therefore, shareholders want their board
of directors to seek long term and sustainable value maximisation instead of short period growth
(Rothaermel, 2013). The positive influence from their aspect is that they can invest more into
business, whereas, the negative influence is that they can take their investment out of the firm
and invest in another firm (David and David, 2013).
Customer: Customer is those who purchase real estate products. For example, customer demand
and market demand significantly influence their strategic actions, as they are real estate
developers. With different customer demand, the firm is required to change its project
management technique (David and David, 2013).
Government: Government regulate all the business-related industry through laws and
regulations. Changes in the laws can alter strategic measures taken by the firm (Noe et al., 2017).
Vendors/ Suppliers: These are the person for a firm that provides raw material to the company
used for the construction work. For example, the firm relies extensively on these suppliers during
a project and their role is critically important. That is why, firm properly do vendor management
(David and David, 2013).
Employees: Employees at Emaar want remuneration, which should be competitive according to
market, safe work environment and better career development opportunities (Noe et al., 2017).
Jabal Omar Development
Shareholder: Shareholders as owners of the company want higher profits and value maximisation
in a sustainable way. Want business to have established a strong force in the industry
(Rothaermel, 2013).
Customer: Jabal Omar Development relies ultimately on its customer who is the final purchaser
of the property product. In this regard, the organisation makes every possible strategy in order to
give the customer a high-value product along with affordability and convenience (Noe et al.,
2017).
Vendors/ Suppliers: Jabal Omar Development is a property business and various companies
provide them with their products to sell. Therefore, the firm is required to maintain a large list of
vendors and suppliers. Moreover, Jabal Omar Development is operating on a large scale due to
which it has high power when it comes to managing vendors (Rothaermel, 2013).
Employees: Employees at Jabal Omar Development want market-based rewards and
compensation, safe and healthy working environment, competitive and career-focused job role
and want to be part of the multinational business (Rothaermel, 2013).
M1 Views of different stakeholders
 At Jabal Omar Development and Emaar shareholders want high and constant profits,
along with increasing share price and higher dividend. They want management to
maintain low debt level in order to avoid high financial risk (Nel and Abdullah, 2015).
 The customer wants affordable products and services with supreme quality and according
to market standards. Emaar wants to deal with different innovation as customer want
unique designs and concept (Rothaermel, 2013).
 Supplier and vendor need a good price and frequent repayment of the delivered goods.
 The government want companies to work according to established standards and criteria
(Rothaermel, 2013).
P3 Describe how two businesses are organised
Jabal Omar Development
Jabal Omar Development is based on hierarchical structure and has a tall organisation structure
with short managerial span. In addition to this, Jabal Omar Development has an approach that is
more functional when it comes to organisation structure where every manager has a functional
responsibility. The major advantage of adopting tall hierarchical structure is that it gives Jabal
Omar Development's management more control as they are dealing a large number of stores
(physical and brick and mortar) and a significantly large number of real estate inventories
(Rothaermel, 2013). Jabal Omar Development is based on the functional approach as compared
to a geographic-based approach. Dividing the organisation into different functions enables the
firm to control the employees and different department of Jabal Omar Development (Craig and
Campbell, 2012).
Emaar Properties
Since Emaar Properties is regarded as the real estate development f due to which it deals in
projects. Emaar has both a functional structure and as well as projectile organisational structure.
In the normal course, the firm is functional in nature and follow a formal hierarchy. Job roles are
properly defined according to function and each manager knows its responsibility and task.
Secondly, the projectile organisational structure helps the firm to manage a particular project
(Ramanathan et al., 2017).
Corporate
Executives

Project 1 Project 2 Project 3

Project Project Project

Team 1 Team 1 Team 1

Project Project Project

Team 2 Team 2 Team 2

Project Project Project

Team 3 Team 3 Team 3

Figure 5 Projectile Organisational Structure (Rothaermel, 2013)

P6 Impact of political, legal and social factors on activities of the business
Jabal Omar Development
From Jabal Omar Development's aspect, the business has significantly under the influence of
political and social factors more. Jabal Omar Development operates in a different region due to
which firm has to make compliance with the local or domestic laws and as well to the
international laws. Moreover, if there is a political disability in any country, Jabal Omar
Development might incur heavy losses. A political decision such as putting a tariff on imported
products can lead to higher prices, which mean that Jabal Omar Development would require to
operate with domestic products. Moreover, if the political environment is favourable Jabal Omar
Development (Adeoye and Elegunde, 2012). It can take an aggressive expansion decision.
Moreover, if a market has a high population growth rate, Jabal Omar Development can take
expansion decision on the particular social factor. Moreover, laws related to the real estate
industry can limit the company to operate freely in the market (David and David, 2013). Jabal
Omar Development Plc’s revenue has a direct relation with social factors such as population.
The more population, the more will be the sales for Jabal Omar Development.
Emaar Properties
Real estate is heavily regulated due to which the Emaar properties are required to make full
compliance with the prevailing laws and regulations (Rothaermel, 2013). In addition to this, the
firm operates in a different part of the world and political stability and decision significant effect
on the real estate industry. In addition to this, social factors such as increasing population is
another factor, which affects the business activities of the firm (Neneh, 2016). In addition to this,
Laws related to purchasing the property are quite relaxed as compared to previous laws. There
less restriction on property purchasing by foreigners, which gives Emaar an opportunity to
expand more in the region (Better Homes, 2019). Therefore, if some want to invest in real estate
business it can profit as well because of ease of restrictions. According to the table, Asia, Latin
America and Africa have the highest growth rate, which means Jabal Omar Development has the
opportunity to expand business in various part of the world.

Figure 6 10 year Population Growth Rate Source: (World Bank, 2019)

M3 Impact of political, legal and social factors on contrasting organisations
Jabal Omar Development
Saudi development company Jabal Omar, which is behind the transformation of Central Mecca,
is also profitable in the third quarter after a series of losses last year. Listed in Tadawul stock
exchange, it is well received by the development of luxury hotels, residences and businesses to
meet the expected increase in demand from visitors and pilgrims to the holy city. Net income
after deduction of zakat and taxes reached SR 469.62 ($125.13 million) on a Saudi exchange.
This compares to a loss of $593.97 million in the year-ago quarter. According to Jabal Omar, the
profit improvement was due to higher sales due to the sale of residential units (Spong, 2018).
In the third quarter, sales amounted to SAR 1.32 billion compared with SR45.52 million in the
same period of the previous year. The developer also mentioned a "positive performance" in his
commercial sector as well as a reduction in some of the company's financial burdens. The results
will be published in the same month. Market commentators predict that demand for luxury hotels
and other residential properties in Mecca will remain "high" next year, which Jabal Omar
Development Co. wants to see (Spong, 2018).
Emaar Properties
Emaar operates in a different part of the world due to which political, social and legal factors
affect the organisation significantly. Firstly, legal factors can be devastating such as new
construction-related laws or contract laws, Emaar would need to work according to it. Constant
changes in the laws can affect its operation and project management (Craig and Campbell, 2012).
Moreover, the increased population is always attractive for Real estate developers because more
population means more housing and construction project requirement. Increased population and
social development in India has allowed the firm to launch various projects across India. Political
factor plays an important role in developing the organisational structure (Adeoye and Elegunde,
2012). For example, political support UAE region has enabled Emaar to develop huge
construction projects along with innovation.

Conclusion
For Emaar Properties, the Middle East market considered their biggest market and any changes
in that market can affect their revenues and opportunities. According to the research, it can be
concluded that the hospitality sector saw an increase in supply by six per cent. In addition to this,
demand for offices is also increasing. However, due to reduced income and purchasing power,
residential property sales price has declined as well as rental income has been declined. In
addition to this, industrial and logistics also experienced growth. All these factors, affect the
Emaar Properties in the proper way.
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Appendices
Appendix 1