Dubai: a Cluster for Medical Tourism Industry Clusters and Firm Competitiveness (6106)
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Dubai: A Cluster For Medical Tourism Industry Clusters and Firm Competitiveness (6106) Marcus Borg, Moa Karlsson, Andrea Pariani, Federica Sordello, Ziyue Zhou Executive Summary 2 This report provides an analysis of the healthcare and medical tourism cluster in the Emirate of Dubai (UAE). With a focus on Porter’s Diamond Model, different models about strategy and competitiveness are applied to guide the analysis, which is divided in four parts. In the last decades, globalization, new technologies and lower information cost made it possible for patients seeking medical treatments to move across the globe to find the best provider in terms of quality of care or cost, changing dramatically the healthcare industry The government of Dubai, starting in 2002, implemented plans, policies and legislations to transform the city into a global hub for medical tourism by encouraging foreign investments and creating a constructed cluster In our project, we analysed the macro and micro factors that had an effect on the formation and development of the Dubai Healthcare Cluster Following the Funnel Model, we made an environmental analysis of the United Arab Emirates with a focus on Dubai to understand the economic, political and cultural elements that had an impact on the cluster Later on, we used the Five Forces Analysis to understand the distribution of power among the players in medical tourism and we collected data to understand the trends related to cost-effectiveness, value chain and regulations that are shaping the healthcare industry The next step was to define the healthcare cluster in Dubai by mapping it and using models such as the Four Lenses Model, the Hollywood Model and the Inverted-S Model Through the Diamond Model, we defined the microeconomic environment that surrounds the cluster and we highlighted the elements that might have a negative impact over the cluster’s performance Furthermore, we considered the interactions among the players with the 7 Gaps Model in order to assess the cluster dynamism We provided an overview of the competing clusters around the globe to identify the competitiveness issues that the cluster is facing Going down in the Funnel, we presented Thumbay Group, a firm playing in the Dubai healthcare cluster, defining its role and the motivations behind its entrance in the cluster with the Radio Model We found out that the cluster is not attracting the expected number of customers and is facing issues in creating a profitable business model and in competing with other clusters around the globe. To tackle the problems highlighted, we suggested a shift in track using the Railway Model and some specific policy recommendations to strengthen the four sides of the Diamond Model and guarantee the survival of the Healthcare cluster in Dubai. Agenda 3 Down the funnel, investigating how competitiveness and innovativeness are shaped by both macro and micro factors. A complete analysis of the Dubai healthcare cluster for medical tourism. Economy Demographics Culture Geopolitical Environmental Analysis (pp. 4 - 7) PESTEL Analysis History Railway Model Cluster Overview Value Chain Five Forces Analysis Four Lenses Model Hollywood Model Cluster Analysis (pp. 9 - 23) Evolution Diamond Model 7 Gaps Model Competing Clusters Competitiveness Issues Overview History Railway Model Firm Analysis (pp. 25 - 27) Radio Model Performance Policy Recommendations (pp. 29 - 32) Environmental Analysis – UAE Key Facts and Figures 4 UAE is an exceedingly rich and open country that historically faced many challenges, mainly connected to the efforts at economic diversification to reduce the portion of GDP from oil and gas. 1960 1970 1980 1990 2000 2010 2017 Oil boom, UAE GDP per capita Pearl Economy twice as high as Switzerland Fall of oil prices 9/11 Independence from GB Start of economic diversification policy First oil export Oil price fluctuation Country founded and real estate collapse Economy Snapshot Demographics Geopolitical Culture ▪ Population: 9.9M ▪ Urbanisation: 85.5 % ▪ Territorial disputes with Iran ▪ Hospitality - take care of your ▪ GDP: USD 371.4 (30th) ▪ Immigration: 88% ▪ 2nd largest Arab Economy guests ▪ GDP per capita: 6th ▪ Men: 68% ▪ Small land mass and no water ▪ Relationships – do business ▪ Oil and gas share of GDP: ▪ % under age of 65: 99% with friends 30% Environment Cluster Firm Policy Recommendation Environmental Analysis – PESTEL Analysis 5 UAE is a structurally unique country in terms of its government and resources. Highlights Political Economic Social UAE is a federation of 7 While rank 1 in competitiveness Despite almost 90% of It is important to be aware of the differences in emirates, where the royal of inflation and having a very inhabitants being immigrants, governmental structure and culture between UAE families elect national stable debt, the government citizenship in UAE is only and Western Countries. Despite being a unified representatives. Political parties budget balance indicator in WEF achieved by decent. The country nation, each emirate is often acting as a are banned. From an analitycal has fallen drastically to rank 89. also falls poor on female individual country within. This leads to perspective, this has not Giving UAE rank 28 overall. participation in the workforce, internal competition of resources and the prevented the country to be Despite oil revenues having at rank 121. Because of the decisions are made by families, clans, tribes etc. ranked 1 in competiveness of decreased, spending plans for country´s harsh climate, most government spending and 2 in 2018 are higher than ever. people live in the cities. An event that highlight this is the opening of the public trust in politicians. world tallest building, Burj Khalifa. The building was originally named Burj Dubai. However, following the 2008 recession Dubai as an emirate was on verge of financial collapse. The Abu Dhabi emirate agreed to lend money to Dubai emirate on the condition that the tower was renamed to Technological Environmental Legal Burj Khalifa, after the emir of Abu Dhabi, Khalifa Rank 24th in Technological UAE holds a central There is a mixed system of bin Zayed Al Nahyan – son of the founder of UAE. readiness. New technologies geographical position between Islamic and civil law. WEF ranks From an outside point of view, it is singular and and FDI are steadily available East and West. The country has all factors of juridical, policy illustrative to not only build the worlds tallest sky and both are absorbed by firms an abundance of oil resources and auditing and reporting scraper, but also to have Royal Family feuds over in the country. Specifically, but is lacking agricultural standards relatively high, its name. Dubai is taking the lead in this products and clean water, which between rank 10-22. The one field and it is aiming at are partly imported. exception to this is is the legal becoming one of the smartest Furthermore, desertification is rights index, ranked 106th. cities globally by 2020. gradually eating up the country. Environment Cluster Firm Policy Recommendation Environmental Analysis – Dubai Analysis 6 Among the Emirates, Dubai enjoys a strategic location and political stability; government polices and investments made it an attractive pole for international business thanks to high-quality infrastructures, advantageous cost structure and financial stability. Dubai is in a strategic location being a bridge between Eastern and Western Countries and the CIS and Location Africa; it is very accessible thanks to the over 120 shipping lines and 85 airlines that connect it to 130 global destinations Politics Dubai is a low crime and politically-stable country and enjoys financial and monetary stability; the government favours business through liberal economic policies, ownership rules and free zones The Emirate is characterized by high quality of life which has been reached thanks to excellent Quality of Life infrastructures, low crime, clean environment, tolerance of diversity, cosmopolitan life style, modern public administration and availability of premium consumer goods and services The government invested heavily to develop transport, telecommunications, energy and industrial Infrastructures infrastructures which are now considered to be among the best infrastructural facilities in the world; these features make the country extremely attractive for international business The economic system is open and free; there is deregulation of the private sector, no direct on corporate Economy profits, except for oil companies, and 100% repatriation of capital and profits. Furthermore, local entrepreneurs established many partnerships with international businesses Dubai has an extensive foreign trade network which includes 179 states; therefore, it offers to investors Foreign Trade a wide choice of potential global marketing outlets for a diverse portfolio of goods and services. Moreover, being part of the UAE, it is part of the third-largest export and re-export centre International companies can benefit from extensive cost advantages; there are no foreign barriers or FDI quotas and the country is really competitive in terms of import duties, labour cost, energy cost, real estate cost and financing cost Environment Cluster Firm Policy Recommendation Environmental Analysis – National Railway Model 7 UAE diversifies its economy through a cluster development strategy in order to decrease its dependency on oil. The Railway Model can be used to describe this national situation. Both local and central UAE is a global leader in cluster development. Clusters are governments has continuously placed bets into new paths, or clusters, and then aggressively generally built thanks to government interventions. Combined invested into these. The main goal of this is to decrease oil dependency and achieve with the global leadership in efficiency of government spending, economic diversification. The current goal is to reduce oil´s share of GDP from 30% to 20% by this means that arising clusters are met not only with a business 2021. While it is not a key cluster at the moment, UAE is investing heavily into tourism overall, friendly climate, but also financial support. including healthcare tourism. Prominent cluster: Tourism.