Executive summary

The purpose of this report is for Atlantis the palm Dubai Jumeirah Islands, to examine the
behaviors of corporate organizations in the Maldivian resort market. The author examined the
market structure of the industry all while giving an external environmental analysis utilizing
PESTEL framework. The author also discussed an in depth explanation on the
ways International trade and WTO effect the tourism and resort industry of the Maldives.

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Table of Contents

1.0 Introduction..........................................................................................................................3

2.0 Types of Market structure and impact on pricing and output decisions..............................4

2.1 Types of Market structures in the Maldives.........................................................................4

2.2 Market structure followed in the Maldives resort industry and key features.......................6

2.3 Impact on pricing and output decision in the resort industry of the Maldives.....................6

2.4 Analysis of business environment of tourism sector in the Maldives..................................7

3.0 Introduction to International Trade and Global Factors Affecting Businesses....................9

3.1 International Trade...............................................................................................................9

3.2 Benefit and Harmful impacts of International Trade for the Maldivian Economy..............9

4.0 Global Factors Affecting Maldives Business Organization...............................................10

4.1 International Trade.............................................................................................................10

4.2 WTO...................................................................................................................................11

5.0 Conclusion.........................................................................................................................12

6.0 Reference list......................................................................................................................13

List of tables
Table 1: PESTEL Analysis of Maldives tourism sector............................................................8

List of figures
Figure 1: PESTEL Analysis.......................................................................................................7

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1.0 Introduction

The word business environment refers to the factors, situations, and organizations that are not
internal to a particular commercial enterprise and outside its control, but nevertheless have a
significant impact on the firm's ability to function and expand. One of the most important
advantages of a corporate environment is that the connection between a firm and its
surroundings usually exposes the business's potential and risks (Kinange and Patil, 2020).
Because the environment is essentially dynamic, it is continuously changing. This maintains
managers encouraged to maintain their knowledge and abilities up to date. This assists them
in preparing for expected and unexpected changes in the corporate world (Bah and Fang,
2015). Furthermore, if a company demonstrates that it is sensitive to the environment in
which it operates, it has the potential to significantly improve the image that consumers have
of that company. Additionally, in order to achieve this goal, the company must have a solid
understanding of the environment in which it operates (Sardak and Movchanenko, 2018).

Tourism is the dominant industry of the Maldives' economy, accounting for more than 28%
of GDP and 60% of foreign currency. As per data from the (The World Bank Group, 2021);
notwithstanding the COVID-19 epidemic, tourism in the Maldives has expanded rapidly.
Travel earnings, which account for 80% of service exports, totalled US$1.5 billion in the first
half of 2021, a mere 9% decrease from the same period in 2019. However, imports of tourist
industry services are likely to have increased as well, stabilizing the balance of trade. Resorts,
hotels, guesthouses, and safari boats are the four types of lodging available to visitors to the
Maldives. All of these lodging options are permitted by the Tourism Act Law No. 2/99 and
require a license from the Ministry of Tourism.

Throughout 2016 and 2020, the number of lodging facilities increased at a significant annual
average rate of 9.2 percent. However, the COVID-19 epidemic in 2020 dramatically reduced
the number of opportunities. A sizeable majority of the bed capacity is held by resorts, which
account for 37,134 beds, or more than 71 percent of the total number of beds in the Maldives.
The resort business has significantly expanded over the past, with 145 seaside resorts and
32,137 beds registered in the Maldives as of the end of 2018 (Ministry of Tourism, Maldives,
2019). The conduct of business entities in the Maldivian resort industry is the subject of this

3
study, which was produced for Atlantis, The Palm Dubai Jumeirah Islands by Jumeirah
Islands.

2.0 Types of Market structure and impact on pricing and output decisions

When it comes to business, market structure refers to the classification and differentiation of
different types of industries based on the level and kind of competition among their goods
and services. It is based on the characteristics that influence the actions and outcomes of
organizations operating in a particular marketplace. A number of factors, such as the number
of buyers and sellers, the ability to negotiate prices, the degree of market centralization, the
quantity of product diversity, and the ease with which one can enter or exit the marketplace,
are all factors that may affect market structure. The four basic types of market configurations
are monopolistic competition, perfect competition, oligopoly markets, and monopoly markets
(CFI Team, 2022).

2.1 Types of Market structures in the Maldives

 Oligopoly market

Oligopoly refers to a state of the marketplace in which there is only a small quantity of
rivalry for customers to take into consideration. When an economy has this system in place,
only a select few manufacturers, distributors, and sellers engage with the customer population
to distribute things. There are a few products for which there are just two separate vendors or
suppliers available. An oligopoly could choose to be inefficient and lack creativity, or it can
move toward competitive results. When corporations employ this edge to their advantage, the
financial effect is consistent with competitive market systems. In this case, consumers can get
better pricing and products. The market won't be competitive, but company conduct can be.
However, higher degrees of societal concentration can limit the range of options available to
customers when there are just a small number of businesses operating in a certain sector
(Chief, 2019).

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  Monopolistic competition

In a market structure known as monopolistic competition, numerous small enterprises are

pitted against each other. But on the other side, businesses engaged in monopolistic rivalry
market products that are similar yet distinctly different. Such characteristics enable
companies to increase prices within a specific range in a marketplace with monopolistic
competition. In monopolistic competition, consumers have many items due to distinct
products; in perfect competition, people sell identical items, and in monopoly, sellers don't
try to introduce innovative features because there is no competition. However, because of
differentiated products, corporations might charge consumers more than a reasonable price
for added features. In perfect competition, businesses cannot charge higher prices because
they provide homogenous items (Hunt, 2011).

 Perfect competition

A market structure known as perfect competition occurs when there are several vendors and
buyers in the market offering a single, identical good. As a result, an equilibrium between
both the supply and demand of the good by sellers and buyers determines the product's price.
It has almost no advertising costs since the items are homogeneous and provided the firm
preserves the pricing as determined by market forces, purchases will happen spontaneously.
However, In a market where there are few barriers to entry, any company can come into the
market and begin selling products, hence established firms cannot manage to remain careless
(Parikh, 2015).

 Monopoly market

A monopoly occurs when one corporation controls the entire market. The phrases company
and sector are synonymous. This corporation is the sole maker of a product with no
competitors. Because there are no options, the company has the most market power.
Monopolies frequently limit output, increase costs, and enhance profits as a result. A
monopolist will boost production efficiency more than the existence of another supplier,
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preventing manufacturing from achieving economies of scale. Profit, on the other hand, is
centered on manufacturers since customers have no other option. After all, the product is
required to meet their requirements (Dunda, 2022).

2.2 Market structure followed in the Maldives resort industry and key features

It is evident that the Maldivian resort sector has a monopolistic competitive market structure.
This suggests that a large number of businesses are fighting for a share of the market by
offering services that are comparable but not equivalent. The market structure of the resort
business is demonstrated by the almost 50 new resorts that will operate between 2018 and
2021. The key features of this type of market structure are a large number of competitors,
businesses that provide services that are similar but unique from one another, and a limited
degree of differentiation between the various types of amenities and recreational pursuits.
Additionally, there are many more branding and marketing efforts, non-price rivalry, and no
significant entry hurdles (Kachroo-Levine, 2021).

2.3 Impact on pricing and output decision in the resort industry of the Maldives

Resorts fight on both variables and pricing in the Price-non-pricing competition. The non-
price competition includes aspects like marketing, promotion, and service enhancement, in
addition to pricing. Furthermore, due to substantial expenditure on advertising and
promotion, this market structure causes resorts to have big seller expenses. The primary goal
of output decisions in this sector is to improve profits and market share. Clients determine the
price, and companies set outcomes based on sales for various services, in a competitive
industry such as a monopolistic competition market structure, since every resort seeks to
distinguish itself by providing reduced prices and higher efficiency to its customers in order
to develop their market share (Kachroo-Levine, 2021).

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2.4 Analysis of business environment of tourism sector in the Maldives

A PESTLE analysis looks at an organization through the lens of the key external forces it
faces, which include political, economic, social, technical, legal, and environmental factors. It
has a wide range of potential applications and can be of assistance to senior executives and
human resource professionals in the process of making strategic decisions (Kolios and Read,
2013 and Yuksel, 2012).

Figure 1: PESTEL Analysis

(Yuksel, 2012).

When considering political factors, it is unmistakable that the Maldives' diplomatic relations
with a number of different countries constitute an essential political component that
contributes to the growth of the tourism business. This has a direct bearing on the ways in
which it interacts with other countries like China, India, and Sri Lanka. The consistency of
the administration is another factor that facilitates travel to the region and makes it more
appealing to tourists. Another factor to take into account is the permissiveness of the
unlimited immigration regulations for the construction of resorts by a variety of hotel chains
(Kara, 2018). In the economic aspects, discretionary income has emerged as a key element
that has enabled visitors to enjoy Maldivian tourism. A successful economy with inflation has

7
promoted tourism and the construction of additional hotels (Gregoric, 2014 and Yuksel,
2012).

The Maldivian people appear to have embraced and encouraged the tourist industry as the
primary source of wealth for the nation. This creates a favourable environment that promotes
tourism. Another element that has impacted the sector is the perception of the Maldives as a
tourist destination among foreign visitors (Rauf, 2014). The tourism business in the Maldives
has been affected by the progression of technology in recent years. With improved
infrastructure and transportation options, visitors to the Maldives can now have a more
pleasant experience overall. The risk that the country faces owing to global warming, the
Maldives' sustainable attitude to tourism, and the hotel sector are just a few examples of how
environmental considerations affect the Maldivian tourism industry (Gregoric, 2014). The
regulatory environment that the government of the Maldives has created for visitors is one of
the factors that contribute to this phenomenon. The Maldives has a number of regulations in
place to protect the health and safety of visitors, both of which are factors that contribute to
the success of the tourism business in the country (Kara, 2018 and Rauf, 2014).

By utilizing PESTEL analysis, it is feasible to examine how these issues may affect the
Maldives' resort industry's potential to grow and be profitable. The table below shows the
PESTEL analysis of the Maldives tourism sector.

Table 1: PESTEL Analysis of Maldives tourism sector

PESTEL Description
Analysis

Political - Political stability draws tourists to the nation, strengthening the business.
- By luring tourists and boosting business, diplomatic ties
- Government laws that permit several resort companies to open locations
in the Maldives increase rivalry (Kara, 2018).

Economical - State financial assistance to the tourism industry to spur the economy
- Economic stability makes it simpler for businesses to turn a profit
- The availability of disposable income that enables the natives to utilize

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 resort facilities (Gregoric, 2014).

Social - International visitors who believe The Maldives is a tourism paradise that
is experiencing quality and greater customer traffic.
- Maldivians are optimistic about tourism because it is the nation's main
source of revenue (Rauf, 2014).

Technologic - New means of communication help resorts attract a new market.

al - Modern tech to increase the profitability and efficiency of operations like
maintenance in resorts
- Modern forms of leisure are being made possible by latest tech
- Technological advancements in the food industry enable resorts to reduce
food expenses and boost efficiency (Gregoric, 2014).

Environment - The idea of ecotourism is gaining popularity

al - Becoming sustainable enables cost savings through recycling and reuse.
- Changing with new, increasingly efficient techniques lowering the
carbon footprint (Kara, 2018).

Legal - New laws on visitor protection encourage travelers to visit and stay at
resorts (Kara, 2018).

Author developed (2022).

3.0 Introduction to International Trade and Global Factors Affecting Businesses

3.1 International Trade

International trade is a necessity or desire for commodities or services that lead to the transfer
of money, commodities, and services worldwide or territories. This trade accounts for a
sizable portion of the gross domestic product in most nations. Considerable benefits and
drawbacks of global trade in all of its manifestations exist. Businesses that export can see
levels of development that might not be feasible for businesses that simply concentrate on
home industries (Sachitra, Sajeevi, Withanawasam, and Jayathilake, n.d). Instead of having a
small client base in their primary market, this gives brands and enterprises the chance to
generate consistent income from a diverse portfolio of customers across numerous markets.

9
However, Diverse cultures' beliefs, norms, and demands can harm a business brand. Ignoring
to discover a different culture's expectations might result in costly brand-damaging mistakes
(Berezval, 2020).

Nevertheless, whenever a brand and business operations in multiple markets, they should be
competitive to succeed. By studying a wider spectrum of global developments, companies
and businesses can improve quality, style, and product development to constantly improve
and broaden. Nonetheless, companies focus on emerging markets to increase their lifespans.
This implies developing market currency rates may swing widely, creating budgeting
challenging. Foreign currency assets and liabilities can make a brand and firm less attractive
overnight, causing severe revenue losses (Berezval, 2020).

3.2 Benefit and Harmful impacts of International Trade for the Maldivian Economy

States that have a definite advantage in producing a certain item can specialize in producing
that item and exchange it with one from a different country that is more appropriate.
Producing is costlier than importing. In the situation of the Maldives, this is also valid,
enabling it to focus on both tourism and commercial fishing. Nonetheless, the Maldives is
rich in natural resources, but because they are constantly exported as a consequence of trade
with other countries, these resources could be depleted, which would be bad for the country's
economy (Samue, 2019 and Atkin and Khandelwal, 2020). The establishment of centers by
businesses from industrialized nations in the Maldives enables the nation to access the
technological and institutional know-how of these businesses. this can then be used by local
businesses to boost their growth. However, international trade may result in the public's
access to dangerous substances including narcotics, counterfeit, stolen, and culturally
incorrect goods (Berezval, 2020). The development of the indigenous sector in the Maldives
is negatively impacted by international trade. It imperils the continued existence of domestic
small businesses. Nevertheless, international trade can provide Maldivians with access to
foreign goods that were previously unavailable to the general public for assessment.
Additionally, it gives us access to cheaper and higher-quality international items (Atkin and
Khandelwal, 2020 and Berezval, 2020).

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4.0 Global Factors Affecting Maldives Business Organization

4.1 International Trade

By engaging in commerce, states have the opportunity to expand their respective markets and
gain access to goods and services that may not be readily available in their immediate
vicinity. As a direct result of international trade, competition in the market has become much
more intense. As a consequence of this, the cost of the completed product to the consumer is
decreasing, which is a positive development (Berezval, 2020). Consumers benefit from global
trade because it makes it possible for them to purchase goods and services that are either
inaccessible in their native country or are more expensive there. This in turn benefits nations.
It is possible for a country to purchase goods that it is unable to produce or generate if all
types of commodities are readily available. This not only enables the country to purchase
these goods, but it also encourages the production of a wide variety of goods in many
countries, which in turn promotes specialization. Moreover, the stability of prices is another
benefit that may be attributed to international trade. It has the effect of bringing down prices
of commodities all around the world (Atkin and Khandelwal, 2020).

International trade advantages and disadvantages for resorts in the Maldives

Advantages

- All kinds of goods are accessible, allowing resorts to buy international products at a
discount. Lacking internationalization, the resort cannot access the merchandise. These
products improve customer experience.
- It permits courtiers to concentrate on industries, which helps Maldives focus on tourism and
resorts. This can enhance sales and market share.
- International commerce prices of goods all around the world are likely to fall as a direct
result of this factor (Manda, 2021 and Berezval, 2020).

Disadvantages

- International trade can decrease Maldives' natural resources, leading to economic decline.
This damage resorts.

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- Can make hazardous substances like drugs, fakes, pirated items, and culturally insensitive
goods accessible. Such items may deter travelers.
- Rich countries often help poor countries thrive economically. Dependence often leads to
exploitation. This economy will hurt resorts (Al-Sakran, 2022).

4.2 WTO

World Trade Organization (WTO) serves as an alternate dispute resolution or mediation body
for the global trading community. International trade disputes can be discussed and resolved
at the organization. The fundamental goal of the WTO is to maintain open communication
channels among its members when it comes to trade. International trade is regulated by
WTO, which relies on agreements signed by most countries (Ismail, 2005). Trade promotes
economic growth, which can lead to increased jobs, something the WTO can aid with through
wise policymaking and broader trade authority. Protectionism is expensive and raises prices,
but the WTO negotiates trade restrictions and upholds the principle of non-discrimination,
which results in lower living costs. Costs associated with production are thereby reduced. In
Addition, a tool for the development of peace between nations Two of the core tenets of the
trading system facilitating trade and giving nations a fair and productive forum to settle trade
disputes leading to peace. International cooperation and confidence are fostered and
reinforced by the WTO in times of peace (Acharya, 2021).

WTO trade advantages and disadvantages for resorts in the Maldives

Advantages

- It can help boost economic growth and jobs with smart policies and enhanced trade
authorities. When the economy is solid and thriving, resorts may expand their markets and
attract new clients.
- Peace results from two of the commercial system's main principles: promoting commerce
and offering a fair venue for settling trade disputes. WTO promotes peace, collaborative
partnerships, and confidence. This promotes travel
- WTO removes trade prohibitions via agreement and non-discrimination. This reduces
production costs. These will reduce resort costs, increasing earnings (Acharya, 2021).

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Disadvantages

- The WTO has been criticized for unfair trade policies for developing economies. This can
hinder Maldives' resort sector
- This could damage developing countries like Maldives' economy. Instability hurts resorts.
- Resorts may not enjoy the same benefits as MNCs, forcing the industry to underperform
(Alemi, Melo, and Haas, 2016).

5.0 Conclusion

In conclusion, it should come as no surprise that market structures are vital to the success of a
firm. How decisions are made within the organization is altered according to which of the
four distinct market structures is in play. It is possible to get the conclusion that the business
climate plays a significant impact on every business. It is essential to do an environmental
assessment and adapt one's business practices accordingly in order to maintain a presence in
the market. PESTEL is one such model that may be used to conduct an analysis of the
external environment. After conducting research on the tourism and resort sector in the
Maldives, it is abundantly obvious how the country's environment affects the company.

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