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Assignment 2 Analysis of the Establishment of an international branch of Trinity College Dublin in the United Arab Emirates Name: – Maria Kennedy ID No. :- 3838419 Subject: – TBS 920 – International Business Strategy Class: – 1 Day: – Wednesday Date of Submission: – 7th December 2011 Executive Summary Trinity College Dublin is considering the establishing of an international branch campus and have identified the United Arab Emirates as the potential location of their first branch. This report examines this as a possible option for Trinity it looks at the environment Trinity currently operates in its home country Ireland.
A thorough analysis of the identified host country was carried out some of the key findings from this include:- 1. Politically the UAE contrasts the democracy which exists in Ireland, they have system which is a monarchies with rulers/sheikh’s in each emirate. It is a politically stable country however and the rulers are very supportive of foreign direct investment and are especially supportive of international western educational institutions. 2. The legal framework is still evolving which as the country has just existed as the UAE for forty years this is normal.
The legal system is predominantly Islamic law. An important aspect of the law which Trinity College needs to be aware of is the state enforced control of information which has strict guidelines and will impact course delivery, materials and freedom of speech in the classroom. The UAE has free zones which has its own set of rules and regulations which facilitate easier business operations. Dubai International Academic City is one of these free zones established specifically for higher education. 3.
The culture of the UAE like the political system is in stark contrast to the culture in Ireland, the report looks in detail at this aspect as understanding this will be critical to Trinity College’s success. The culture like the legal system is heavily influenced by the Islamic religion which is predominant in the UAE and the region 4. Financial considerations include a currency risk which Trinity College could face as the UAE currency, the dirham is pegged against the US dollar while the currency in Ireland is the Euro.
Recent years has seen the Euro appreciate against the dollar which will help with the initial investment however could negatively impact repatriation of funds when the dirham is converted into euros. If Trinity College decides to establish the campus in the free zone 100% repatriation of funds is allowed also they would not have to see a local partner 5. The World Bank have ranked the UAE as 33rd in the world for ease of doing business which is a positive indicator. Trinity will have to receive accreditation from the Ministry of Higher Education.
The market assessment shows that this market has great potential for Trinity College this and the country analysis will drive the marketing and operational strategies and will also assist in determining the organizational structure. It is the recommendation of the report that Trinity College should proceed with its establishment of a campus in the United Arab Emirates however they will have to carefully plan the process looking at each aspect of this report in much more detail so as to develop a robust road map as failure is not an option.
Table of Contents Executive Summary2 Introduction4 Product & Country of Origin4 Product4 Country of Origin4 Host Country Identification5 Host Country Analysis6 Political6 Macro Political Environment6 Legal System & Attitude to Foreign Direct Investment7 Cultural & Social8 Financial9 Currency9 Repatriation Laws10 Commercial10 Strategy11 Entry Strategy11 Marketing Strategy12 Market Assessment12 Modification of Product/Service13 Price14 Promotion14
Place15 Organization Structure15 Operational Strategy15 Human Resource Strategy16 Management of Political & Financial Risks17 Conclusion17 References19 Introduction This report will assess the possibility of Trinity College Dublin setting up an international branch of their university in United Arab Emirates. It will examine the product which Trinity College offers in it’s home country Ireland where they have been in existence for four centuries.
The report will analyse the host country in detail from the point of view of the risks Trinity would face as they internationalize. Also the entry, marketing and operational strategies which could be employed will be discussed. Finally the navigation of financial and political risks will be considered and a recommendation made as to whether they should proceed with this plan. Product ; Country of Origin Product Trinity College Dublin, the oldest university in Ireland and one of the oldest in Western Europe was founded in 1592.
It is currently ranked 65th in the world by the QS World University Rankings (Top Universities 2011). The current Chancellor of the University is the former President of Ireland and former UN High Commissioner for Human Rights, Mary Robinson which in itself adds to the prestige of the University. The University offers both undergraduate and postgraduate programs including doctorate programs and also boasts an internationally recognised research centre (Trinity College, 2011).
The faculties are broken down into three main fields – Arts, Humanities ; Social Sciences; Engineering, Mathematics ; Science; Health Sciences, it has 24 schools including a reputable medical school. It also has 30 research centres, four research institutes and eight major research programs including Globalization. It boasts amongst its alumni two Nobel Prize winners, Ernst Walton for physics and Samuel Beckett for literature, as well as famous authors such as Jonathan Swift and Oliver Goldsmith (Top Universities 2011).
Trinity College has the generation of knowledge and transfer of knowledge as one of the core objectives of their 2009-2014 Strategic Plan through combined teaching and research they believe they successfully contribute to the creation of a knowledge society (Trinity College, 2011). The importance of this knowledge society will be illustrated later in the report. Country of Origin Trinity College is based in Dublin which is the capital city of Ireland, an independent country since 1921 which joined the European Union in 1973 (CIA, 2011).
Ireland’s political system is described by the CIA (2011) as a “parliamentary democracy”; this political system allows freedom of speech for all of the 4. 67 million population. Ireland has historically suffered from high levels of immigration this trend slowed down during the time of its boom in1990’s when the phrase Celtic Tiger was coined to describe the double digit economic growth rate. However Ireland has now seen since its highly publicised economic downturn a return to increased rates of immigration, as of 2011 according to the CIA 0. 6 people out of every 1000 in the population migrate. Placing them in 56th place compared to other countries in the world. While the native language of Ireland is Gaelic Irish the spoken and used language throughout the country is English. Education has for many years been one of the corner stone’s of Ireland’s success. In fact Harris in 2005 lists the level of education as one of the main reasons for Ireland’s economic success in the late 1980s. He described Ireland’s education system as excellent with 48% of the Irish population having received tertiary education by 2005.
This was aided by a decision taken by the Irish Government in the mid-1990s to abolish tuition fees for Irish nationals in third level undergraduate education. By 2009 Ireland recorded the highest participation rates in tertiary education (Walsh, 2009). However with the current economic climate this level of funding is no longer sustainable. This is why in November 2010 the five year national recovery plan has as one of the key elements the reintroduction of student contribution for third level education (Department of Finance, 2010).
Host Country Identification According to the 2009-2014 Strategic Plan set by Trinity College they are having to look at new ways of funding to support their programs as “exchequer funding is declining year on year and is expected to do so for the foreseeable future” (Trinity College, 2011) this is due to the world wide economic downturn which as illustrated above has heavily impacted Ireland. This downturn may also impact overseas students financially as the cost of living in Ireland so far from home could influence their choice of University.
Currently 16% of the student body at Trinity are from outside of Ireland, of this 40% are from outside the European Union (Top Universities, 2011). So as to serve this group of international students and also to help its internationalization strategy Trinity College is considering establishing an outpost in Dubai located in United Arab Emirates. According to Labi (2009) European Universities are developing an interest in internationalization and like their American counterparts want to build closer ties with the Middle East.
Many anticipate that this will enable them to draw more students from a greater number of countries than just the “feeder countries” close to home. By air Dubai is located less than 12 hours from 80% of the world’s population and just four hours from one third of the world’s population (Emirates, 2011) this location provides enormous opportunities for a University such as Trinity College as it explores the possibility of internationalization. The following section will analyse the United Arab Emirates (UAE) as a potential host country. Host Country Analysis
Before any international company considers investing in a new foreign market it will carry out a country risk assessment. This section of the report will analyse the UAE as a potential host country for Trinity College who have existed in their home country for almost 420 years. When any multinational enterprise (MNE) considers internationalization they face risks which are different to that of their home country, four main areas they need to examine are – political, cultural, financial and commercial so as to assess how the host country differs from the home country.
The UAE has a population of 8. 9 million of this 10% of the population are Emirati the rest are expatriates of various nationalities (U. S. State Department, 2011). The UAE is host to more than 200 nationalities who live and work there (Thekkepat 2011, p21). Political According to Ball and McCulloch (1999) country risks are increasingly political in nature, while these include wars more common is the impact of government and its attitude to non-national business, risks can also be the legal system of the country and how this impacts business operations.
Reflecting this analysis this section of the report will examine the UAE’s the macro political environment and its stability as well as their legal system and their attitude to foreign direct investment (FDI). Macro Political Environment Davidson (2009) describes the UAE as a “federation of sheikhdoms in the lower Persian Gulf comprising of oil rich Abu Dhabi, and the international entrepot of Dubai”. He goes on to describe how the political system in the UAE comprises of hereditary monarchies which are assembled under a central federal government control of which is dominated by the emirates of Abu Dhabi and Dubai.
This system of hereditary monarchies is important as the environment could change dramatically with a change in ruler if that ruler has a different vision for the future of the country. Davidson believes that given the mix of traditional and formal powers the UAE is an excellent example of a “hybrid, neo-patrimonial political system”. The UAE shows little sign of moving towards a democracy as defined in the Western world.
However despite this both Dubai and Abu Dhabi have continued to attract foreign investment and the country’s 2021 Vision Document ( UAE Interact, 2010 ) lists among its four key objectives both the building of a knowledge based economy, which will encourage entrepreneurs from public and private sectors, and the provision of a first rate educations system. The plan also clearly states that legal frameworks and regulations will be designed to support these initiatives and that intellectual property rights will be protected.
According to Wilkins (2010) the UAE government has an objective of making this a regional hub for higher education to support this each year Counselling Point Education and Social Services host a seminar regarding higher education and part of this is the promotion of the UAE as a study destination (Menon 2011, p9). Both the goal of a knowledge based economy and the provision of first class education would be of great interest to Trinity College it illustrates that the UAE provides an opportunity should they proceed with internationalization. Legal System ; Attitude to Foreign Direct Investment
The legal system is a mix of civil and Islamic law and one only has to read the news papers daily to realize the legal frameworks of this country are still evolving as there are frequent additions and amendments. Nonetheless the UAE and particularly Dubai is very supportive of FDI. In an effort to attract foreign companies they have established free-zone investment parks including one for education in the form of Dubai International Academic City. Their joining in 1996 of the World Trade Organization and later the International Labor Organization further illustrates their commitment to FDI.
The latter is a major move as prior to joining the ILO federal law banned any form of collective bargaining (Davidson, 2009). Despite these changes there is still a state enforced control of information although this has relaxed somewhat since the disbanding of the Ministry of Information in 2006 control still exists for example internet proxy servers restrict access to certain sites (Davidson, 2009). Some free zones and Universities are operating outside the system nonetheless it remains an important consideration for Universities setting up outposts overseas as it impacts even the most fundamental university tasks such as ordering books.
George Mason University who established a campus in Ras Al Khaymah experienced this first hand when government censorship delayed delivery of books by months (Lewin, 2008). For Trinity College who has its origins in a country which proactively promotes free speech this will be something they will have to examine carefully. Cultural ; Social Culture is a very important consideration for any company considering setting up overseas and it is very often the factor that is overlooked when carrying out the country assessment.
Business success internationally requires cross cultural literacy differences in culture heavily impact how business is practiced. In the age of globalization it is easy to assume that cultures are converging however beneath this image of modernization deep cultural differences remain (Hill 2005 p90). Hill (2005, p91) combines the definitions of Hofstede, Namenwirth and Weber to define culture as “a system of values and norms that are shared among a group of people and that when taken together constitute a design for living”.
This term design for living is very important as it correctly shows that culture is the main influence of how people live and behave both socially and in the work place. As Trinity College explores the option of a new campus in the U. A. E. it is important that they examine the culture of the country carefully. This report already noted that the UAE has over 200 nationalities living here which means it is already a cultural melting pot the religion of 96% of the population is Muslim (CIA, 2011) and this heavily influences the value systems and how people live.
The following points illustrate how religion impacts how the country works. No matter the home country the weekend days in the UAE are classed as Friday and Saturday, Friday is a holy day and a very important day for the Muslim community. Public holidays throughout the year are largely based on the Hijri and not the Gregorian calendar; also Ramadan takes place once a year for a month when employees are entitled by law to reduced working hours. These factors are very important for Trinity as it considers an outpost here they impact days and hours of operation hich in turn impacts the semester days and how they link to the operations in the home country. Experts such as Hall and Hofstede have carried out extensive studies in this region as well as in the west. Trinity College management team should look carefully at Hall’s communication theory which looks at how culture impacts whether communication is high or low context. Many could assume that the biggest challenge will be the language barrier between English and Arabic the native tongue in the region however the actual spoken or written language is far less significant in high context cultures it is perhaps the least important.
As Rosch & Segler (1987, pp 58) state “communication is particularly difficult when the communicating sides belong to different cultural environments; above all if the two environments involved are as radically alien as the Orient and Occident”. It is likely that the set up team from Trinity would be mostly from a low context background so navigating this communication challenge will be critical. High context communication is very common in high power distance countries which is an area studied by Hofstede.
Power distance is also an important component of this culture if the management team of Trinity College are to succeed they need to be very aware of this point as it impacts expected levels of Protocol. Ireland has a low power distance ranking below 40 in contrast the high power distance ranking of the Arab world is 80 this can be compared to the world average of 56. 5 (Hofstede, 2011). Hofstede defines Power Distance as “the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally” (2009).
Attributes of this theory include the fact that authority is to be respected and subordinates expect to be told what to do and not asked to be part of the decision. This will be an important consideration and a would result in a steep learning curve if not planned for in advance. This report can only touch on the main points of culture it is highly recommended that should Trinity College decide to proceed with internationalization into the UAE they should carry out an extensive study of culture as given the difference between home and host this will be critical to their success.
Financial Currency The currency of the U. A. E is the dirham which was introduced in 1971 upon the formation of the country. Later in 1978 the decision was taken to peg the dirham to the dollar, since 1997 the rate has been set at $1 = 3. 6725 dirham (ExchangeRate. com, 2011). As Trinity College is based in Ireland where the currency is the Euro they will face a foreign exchange risk if they choose to operate here. In recent years the Euro has appreciated against the US dollar a trend which seems set to continue so from that point of view now would be a good time to invest in the U.
A. E. as although there were some indications of a move towards a single currency for the GCC countries the U. A. E has recently indicated that they are unwilling to partake in this. While the depreciation of the dollar against the euro is a positive factor when it comes to the initial investment the downside of this may be felt when it comes to setting of prices for courses and subsequent repatriation of funds from the UAE to the home country which would be the ultimate goal of setting up the operation. Repatriation Laws
As previously mentioned in 2007 Dubai established a Free Zone specifically dedicated for higher education, Dubai International Academic City (DIAC) this and Dubai Knowledge Village form part of the Education Cluster. There are many benefits to this for institutions such as Trinity who wish to establish in the U. A. E. the main ones being – 100% foreign ownership is permitted; full repatriation of profits and capital is allowed; there is exemption from customs duty and a guaranteed 100% tax exemption for the first 50 years (DIAC, 2012).
This is different to Abu Dhabi where Universities such as New York University had to seek local partners in order to establish a campus (Lewin, 2008). If Trinity College want to maintain independent control both financially and operationally then it is recommended that they explore the option of DIAC as a host to the campus. Commercial The World Bank (2011) Ranked the UAE as 33rd in the world in their “Doing Business 2011 Report” when evaluating the business environment and the ease of doing business. This has been made even easier with the establishing of the free zones as discussed in the previous sections.
In addition to the rules and regulations which apply to companies operating in the free zone Trinity College needs to be fully versed on the rules of the two main bodies regulating tertiary education in the U. A. E. The first is the Ministry of Higher Education whose division Commission for Academic Accreditation (CAA) is responsible for ensuring educational excellence through licensure of institutions and accreditation of programs. This body strives to ensure standards which are comparable to international standards.
The second body is the Knowledge and Human Development Authority which is the regulatory body for all academic institutions in Dubai. This body is responsible for the licensing of all educational institutions in Dubai whether they are located within or outside the free zones (DIAC, 2011). Strategy Entry Strategy Should Trinity College decide to ahead it needs to determine an entry strategy the decision on which strategy to use is heavily influenced what is the amount of control they wish to maintain and also their attitude to risk.
They will need to consider carefully the strategic importance of this UAE market, this is especially important as this would be Trinity College’s first outpost overseas so success is vital. This report has already looked at the option of the educational free zone DIAC, so should Trinity decide to go ahead with a strategy where they maintain high control by setting up their own independent campus which would be a wholly owned subsidiary then this would be the best strategy.
However with high control comes high risk due to the level of resource commitment. If Trinity College decides to proceed with this entry strategy they will have to very carefully analyse the host country as was discussed earlier in this report of particular importance will be the social and cultural factors as the UAE and its nearby feeder markets are very different in nature to their home country Ireland. Alternatively Trinity College could look to partner with an existing educational institution here in the UAE.
This would still allow a moderate to high level of control while reducing the resource commitment. University of Waterloo for example have partnered with Higher Colleges of Technology (HCT) in Dubai where they provide courses from the HCT campus, while the courses are the same as what would be taught in Canada and the faculty delivering the courses are also employees of University of Waterloo the agreement includes use of HCT’s infrastructure, laboratories and technology. (University of Waterloo, 2011). A partnership of this nature would be a ossibility for Trinity College however there would have to be careful selection of partners. Cavusgil, Ghauri and Agarwal (2002, p126) note that it is not just capital and technology which is important for success in emerging markets but of equal if not more importance is the ability to build and sustain successful relationships with foreign partners. They believe that Western businesses tend to focus on technology over relationships which would not work in an emerging market with a culture like that of the UAE where relationships are most important.
In addition to partner selection Trinity College an important consideration would have to be its long standing brand of excellence which is internationally recognized great care would need to be taken not to dilute their brand. Trinity College offers a very wide range of courses as well as a large number of research centres, the entry strategy will be heavily influenced by the courses they decide to offer in this region as that will determine the resource investment required.
However considering their brand it is be recommended that they consider FDI rather than partnership as their entry strategy. Marketing Strategy Market Assessment The first task any MNE must undertake is a careful assessment of the market they are entering. Factors to be considered are the market need, market size, purchasing power of the residents and those feeder markets and the potential growth of this market. There are positive signs that the UAE holds a positive opportunity for growth for a high quality tertiary educational institute such as Trinity College.
An important statistic for any University considering opening up in the UAE is that currently 38% of the national population is below 15 years old and a further 46. 8% is aged between 15 and 40 (UAE national Bureau of Statistics, 2010) this and the number of expatriate families with children who may not wish to return back to their home country to continue with their University education provide an immense opportunity for Trinity College which has an international rather than just local brand.
Daniel Kirk (2009, pp 2-3) says that education can now in the wake of globalization be described at a commodity, “something which can be sold, purchased and valued or devalued”. He goes on to discuss the importance of education when it comes to the social and economic success of a nation as natural resources become scarce more and more nations are become aware that economic success relies on a knowledge economy which facilitates the creation of ideas, systems and people who are educated this can then be traded in a globalized economic system.
This idea of education as a commodity and how critical it is to it is to the creation of a knowledge economy is important as this has played a major role in the trend towards the favouring of Western Education models and as a result a rise in the number of University with Overseas Branch Campuses as universities see an opportunity to reach previously untapped markets, this is especially the case in the UAE given its proximity to the rest of Asia and the Middle East (Kirk 2009, p5).
This trend needs to be looked at by Trinity College from two perspectives on one hand there could be a follow the leader strategy where as a recognized institution they would not want to be left behind however from another perspective as Wilkins (2010) points out they could find it difficult to differentiate themselves in crowded market place. Lewin (2008) described the speed at which foreign institutions were opening up in the Middle East especially in the UAE as the “educational gold rush”.
Wilkins (2010) believes that over the next 5-10 years the best Universities will prosper and grow while the weaker ones will withdraw. Given Trinity Colleges record and world ranking with careful attention to their product, pricing and promotion they have an opportunity to be one of the institutions who grow and prosper. Trinity College needs to be keenly aware that in the UAE there exists three federal Universities which were established for the education of Emirati staff all of whom offer free education to national.
They will have to access the impact this would have on their enrolment numbers. Trinity College will have to look carefully at how any strategy will impact their marketing the next section will look briefly at the four “P’s” of marketing. Modification of Product/Service The cultural factors discussed in the host country analysis will mean the Trinity College will need to modify they product offering to take into account the local laws and culture. While as mentioned earlier the U. A.
E is opening up there is still censorship this will impact course content. Rugman and Collinson (2009, pp328-330) list education products as one of which often require extensive modification to accommodate cultural sensitivities and local laws. Most branch campuses which set up overseas offer a narrower range of courses to meet the needs of the market while also matching the University resource capability. Naturally Universities favour courses which will easily attract high numbers of students (Wilkins 2010).
Trinity College will have to examine its broad range of courses and decide which ones can be internationalized as well as establishing which courses meet the needs of this market While differentiation might be challenging it is imperative that should they decide to proceed the University must immediately ensure that they receive full accreditation from both the Ministry of Higher Education here and internationally from the home country. This will mean that any qualifications achieved by students would be recognized both in the UAE and by an international standards body. Price
Pricing of their product is an important consideration for any company and Trinity College is no different. For them as they consider embarking on an internationalization strategy they will need to find a balance between course fees being charged at home and that of the pricing structure of their competitors in the UAE. They will want to remain exclusive attracting top level students just as they do at home so their pricing strategy must reflect this. The price will be affected by the weak dollar against the euro; this affects the purchasing power of residents both of the UAE and the feeder markets.
Costs are an important factor in setting pricing for example the expected package the university will have to pay so as to attract internationally qualified faculty who meet the standards of the courses taught at home will heavily impact pricing. Some costs could be managed for example setting up in DIAC would give Trinity a non traditional campus as many of the support services would be already provided, these include food services which can be costly if managed internally and almost always have a high initial fit out investment cost. Promotion
Promotion defined as “the process of stimulating demand for a company’s goods and services” (Rugman & Collinson 2009, p333) will be critical to Trinity College’s success as it enters this new market. Although it will require some modification ultimately Trinity’s core product which is knowledge sharing will not change the promotional message will however have to be modified to be more inclusive. A glance at their website shows that the message is very western in orientation, although many of their students are international the website and their promotional material does not reflect this.
The promotional message for this region would have to be more inclusive with a more international feel to the message. A good example of this is the University of Wollongong in Dubai where the message is tailored to suit many nationalities. This is a region which places great emphasis on relationship building so Trinity College will need to run road shows in the region to generate awareness by personal delivery of the message.
The UAE runs two major education road shows annually one in Dubai, GETEX (Gulf Education & Training Exhibition) and one Abu Dhabi, Najah Education and Training Exhibition and Career Fair Abu Dhabi, Trinity College would need to have a strong presence at both of these fairs both pre and post opening. Place This place or distribution network is perhaps not as important to Trinity College as it would be to a company with a tangible product such as a car manufacturer, what is important however is the location and the design in that location this is referred to in services marketing as the physical evidence.
This physical evidence is important as the customers of Trinity, the students and the external community, will form judgements on what they see. What they see should match their expectations as this will be associated with price as well as the prestige of the brand. Organization Structure The three strategic goals of any MNE will centre around efficiency, flexibility and learning. The emphasis may change but to be successful Trinity College will have to examine these as they will drive the organizational structure of the UAE Campus should they decide to proceed.
The locus of decision making control will also impact the structure of the subsidiary campus. The ideal structure for any organization is geocentric in nature so that the strategic plan is developed from a global perspective which will lead to a transnational network structure that is balanced in its responsiveness to the local market while still having the right level of integration to take advantage of economies of scale. This is the recommended tructure for Trinity College as they must adapt their product to meet the needs of the local market of the UAE as was discussed at length the unique culture of this region impacts product, promotion and operations however a strong link to the home country campus in Ireland is essential as there is an opportunity for sharing of faculty and via technology even combined course delivery through video conferencing. The UAE Campus will need strong experienced leadership who report back to the board of directors in Ireland.
Operational Strategy This section will look mainly as the Human Resource Strategy as hours and days of operations was discussed under the impact of culture and partner selection was looked at in the entry strategy. Should Trinity College decide to go ahead in the UAE this operational strategy will need to become their road map from decision through to opening of the campus and then the guide for day to day operations. Human Resource Strategy
Education is no different to any other service industry in that the entire product is delivered by people so this is the key element and will ultimately define the success or failure of the courses offered. Wilkins (2010) discussed that the main reason both Yale University and University of Pennsylvania decided not to open international campuses was that there would be a real challenge to recruit faculty who would be willing to relocate and this would therefore impact their ability to deliver courses which met their academic standards at home.
This will be of real concern for Trinity College as compromising of standards is not an option as it would negatively impact their brand reputation. Recruitment As Kirk (2009, p22) correctly points out there is a shortage of national employees available which means that Trinity College will have to rely on expatriate workers especially in the recruitment of faculty. This in turn impacts costs as expatriate packages for faculty would have to be attractive to lure them away from their home countries.
Most packages include housing provision, private healthcare, air tickets, school fees and a gratuity at the end of service. In the UAE the compensation packages make up a high percentage of the company’s costs. As discussed above recruitment of faculty could be a real challenge for Trinity according to Wilkins (2010) research active senior faculty are reluctant to leave their home campus and young faculty fear that they might miss the chance of promotion if they move overseas.
Trinity could perhaps handle this challenge in a way similar to what New York University in Abu Dhabi have done which is offer secondment opportunities to faculty who are based on their Dublin campus whereby they come to the UAE to teach for a certain length of time. Another way to reduce costs would be to hire part time or adjunct faculty, however this is not ideal as it limits commitment and will not ensure quality course delivery or research (Wilkins, 2010).
Another challenge which international companies face is the increasing trend towards nationalization of staff (non academic) positions with Emirati staff which due to the wide range of benefits and high minimum salary levels is costly for companies. These will both be important considerations for Trinity College as with reduced funding from government at home would mean that any overseas campus branch should not operate at the cost of home resources rather it should in the long term be a source of funding if needed. Human Resource Policies Human resource policies will have to be responsive to the legal system of the host country.
While much of the rest of Trinity College’s product, promotion and even pricing structure can be integrated globally it would be challenging for any MNE to fully integrate their HR policies when operating overseas and Trinity is no exception. Management of Political & Financial Risks A major financial risk for Trinity College will be the exchange risk, as discussed in this report the UAE dirham is pegged to the US dollar and as Trinity’s home country’s currency is Euros they will have to manage inter-location transfers of funds carefully.
They can look at hedging and forward contracts to minimize exposure. Financial risk can also be in the form of country risk and the laws regarding repatriation of funds, by establishing their campus in DIAC this risk is mitigated as 100% of funds can be repatriated and also there is no cap on investment. Trinity College in their geocentric approach will also have to consider the UAE banking system and the effective use of the financial institutions in both Ireland and the UAE. As discussed in the host country analysis careful assessment of the political risks is imperative.
In the case of the UAE it this needs to be looked at in conjunction with the cultural risks as they are very much interlinked. Rugman and Collinson (2009, pp 408-409) suggest using integrative techniques to reduce these risks. These techniques are designed to facilitate making the MNE part of the host country’s infrastructure. They include the establishment and nurturing of relationships with the host government and other influential groups in the community. A university should be integrated into the community which is why so many have community outreach programs.
As discussed nationalization of certain staff positions is becoming mandatory and Trinity College should embrace this by hiring local personnel. Rugman and Collinson believe that this strategy would endear the company to the host government. Trinity College does have a competitive advantage in that they have a high world ranking and their business – provision of tertiary education – is something which is highly valued by the UAE government, these must ensure that if they proceed they immediately build strong links and work towards accreditation both national and international. Conclusion
There is a quote which is often used in higher education which is “there is no great city without a great university” there is no doubt that Trinity College has contributed to making Dublin city a great one in the 420 years since its inception it is part of the history not only of Dublin but of Ireland. This report has examined the possibility of Trinity College opening an overseas branch in the UAE and in doing so taking their first step in internationalization. There are many risks to this undertaking which would need to be analysed thoroughly before they make a final decision whether or not to proceed.
Many believe that the rewards of establishing in a new education hub such as the UAE do not outweigh the risks and potential costs (Wilkins, 2010). However given the opportunities the UAE offers there is also a great chance that this market will offer Trinity a positive international profile as well as resulting in additional revenues. Both of these will only be possible however if both the financial and political risks which includes cultural risks are carefully managed.
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