Management Strategy and Policy of Emirates Airlines - Case Study Example

Management Strategy and Policy “Emirates Airlines” Table of Contents …………………………………………………………………………… 3 Background and History of the company………………………………………….. 4 Industry Analysis……………………………………………………………………. 4 Market Analysis……………………………………………………………………… 5 Mission of the company……………………………………………………………… 5 External analysis of the company…………………………………………………… 6 Porter’s five forces model…………………………………………………………… 6 External threats to the company……………………………………………………. 6 External opportunities for the company…………………………………………… 7 Internal Analysis of the company………………………………………………….. 8 Non pricing Competitive Strategies…………………………………………………. 8 Global Strategy………………………………………………………………………. 9 Entry Strategy and recommendations……………………………………………… 9 Conclusions………………………………………………………………………….. 10 References …………………………………………………………………………… 11 Abstract This paper provides an analysis of Emirates airlines. It discusses a strategic analysis about the global airline industry with the primary focus on Emirates Airlines. The report is presented in numerous sub-sections while it is comprised of two major sections. The first section discusses the Emirates Airline Company’s external and internal environment in detail while the last section provides a comprehensive analysis of the current situation of the company. Background and History of the company Emirates Airline Company was established in October 25, 1985 with sponsorship from Dubai royal family (Shahzadi et. al., 2014). The airline is among the top carriers in the world in relation to passenger kilometers. It is the leading airline company in the Middle East in relation to passengers, fleet size, and revenue (Shahzadi et. al., 2014). It has become the fourth largest air carrier in the world with regard to passenger kilometers flown and on international passengers carried. Currently, Emirates Airlines has one hundred and forty two fleets aircrafts and destinations in over one hundred countries worldwide. It is fast growing and has recorded more than $3,500 in the last seventeen years (Shahzadi et. al., 2014). Industry Analysis Airline industry is fast growing and has emerged as one of the top-level profitability industries. However, some economic and political factors have affected the industry after the experienced change in the abroad journey trend for study and business purposes. High prices for oil, especially in the Middle East, have increased the cost of airline services, thus contributing to a decrease in profit and some loss. Consequently, the number of passengers has recently been increased and is resuming to the original level of demand for the service. Great improvements on the industry have constituted the rebuilding of the aviation market whereby by airlines have cut off their prices and improved their services (Pujc, 2013). The airline industry, in relation to the industry life cycle, has moved from its growth stage, which constitutes its establishment to its maturity stage. The final stage is its decline. The industry is on its maturity because of the stiff competition in the market. In this stage, competition has become more hostile thus pushing companies, in the industry, to establish strong advertisement and promotion programs (kostjan4ik, 2008). Market Analysis Airline industry is currently in a strong market position. Its viable strategies and position in the market has helped the company win the customers’ loyalty and become more attractive compared to other new arrivals. Entry in the market is very unattractive for the reason of low demand and strong competition. Emirates Airlines has several opportunities that assist in handling all uncertainties since it is a member of the Emirates group, which reduce its expenses (Pujc, 2013). The company is enjoying a large market share with high profitability rate. This is perceived as one of the company’s competitive advantage. In this situation, Emirates Airlines is among the strongest companies in the airlines industry and is in its move to acquire a bigger market share (Pujc, 2013). Mission of the company Emirate airlines’ mission is to provide the best and first class services to their customers. Mission statement We exist to provide the world’s leading in-flight experience (Shahzadi et. al., 2014). Vision To make civil aviation safe, sustainable and leading Values of the Group Emirates airlines has various initiatives aimed at helping the disadvantaged members of the societies they serve. They also focus on improving the lives of individuals trapped in extreme poverty. They are in the frontline position to deliver humanitarian assistance during tragedies like the natural disasters and wars. At the emirates group, they place a great value on corporate citizenship as well as on the social responsibility and believe that their business ethics are integral to their continued success (Pujc, 2013). Goals Emirates Airlines’ goal is to become the leading airline transport provider in the airlines industry. They also target to promote Dubai’s tourism activities and introduce the country to the world. They are struggling to improve and retain frequent business class travelers market position. Emirates Airlines Company has a good business strategy, which has been helpful in gaining their objectives and has helped the company become a leader in the airline industry. However, in order for the company to sustain and retain its success, it should implement the IT development strategy. This strategy would be useful in their e-business programs. It would also help in the improvement of their profits through the advancement in their technological systems. This would enable them make bigger contracts with big international companies. The company could also introduce an online service where passengers can make online bookings. This would enable many customers access their service at a more convenient system. External Analysis of the Company: Porter’s Five Forces Model Risk of Entry by Potential Competitors Entry of potential competitors in any industry faces many threats from the existing companies in the industry. This is because new companies may offer attractive commodities with very low costs. In the airline industry, there are very low threats while the comparative barriers are high. Such challenges faced by the new entrants include capital requirements where they require huge capital to purchase aircrafts and launch projects that attract customers. Airline companies that have strong goodwill and good market images like the Emirate Airlines can easily compete with new entrants (UKEssays, 2013). Bargaining Power of Suppliers Suppliers in this market can easily change their market trend through high demand and control on quality and prices of their products and services (UKEssays, 2013). Airbus and Boeing are the leading global suppliers of the aircrafts in the airlines industry. Bargaining Power of Buyers Buyers in the airlines industry also influence the industry’s trend. This is due to their demand for their high quality and demand for low prices. Buyers also have skills in influencing the reduction of costs. They are powerful because of the huge amount of passengers in the market who yield to approximately 1.8 billion every year (Ahmed, 2013). Substitute products There is still a big threat of substitute products in the industry for any products. People may choose to use their cars, trains or buses within the same country. Rivalry among Established Companies The rivalry trend in the airline industry is significantly high. This is due to the availability of many airlines in the market, which offers best costs and services. In this case, many companies struggle to increase their share price, their image and best goodwill among the passengers because of the offer of best costs and services. They also offer the best and most attractive promotions to attain and attract customers. External Threats to the Company The company is at times e affected by some political conditions. These include wars and economic instability in many countries. For example, there has been a serious political and economic instability in different countries, which interfered with the airlines’ business in the Middle East since the airlines companies are unable to join the top airlines companies with the international alliances. Other economic threats experienced are the increased fuel prices and the arrival of new airlines companies with low costs. External Opportunities for the Company In the political environment, many international companies are planning to shift their headquarters in Dubai for the purpose of safety and sound political situation. This creates valid chances for the Emirates Airlines to raise the number of its passengers (Mahasagar publications, 2013). Other social aspects like education give an opportunity for the expansion of the company. This is because, with the increased demand for education, many people travel internationally in search for education. The demand for education, therefore, increases the chance of the growth on the airlines company. Internal Analysis of the Company Resources and Capabilities of the Company Emirate airlines has many threshold resources like flights, employees, office equipments and a head quarter. It has other resources inform of the management team including a well-trained staff. Competences of the Company Its competences include its route policy and the frill strategies, as well as the IT development. It has other threshold competences such as online booking, point-to-point routing and operations on time delivery (Ahmed, 2013). Competitive Advantage of the Company Emirates airlines has implemented a generic strategy through offering high quality services. This has helped the company achieve a number of benefits over their competitors and acquire a larger market share. The company is the first airline company to offer TV screen in its airline and introduce the e-ticketing system, which won many customers. Emirates airline was also the only company, which provided training using the modern technology known as the plane simulator (The Tourism Society, 2010). Strengths of the Company Emirates Airlines is the first airline company to introduce the e-booking system. They also offer a self-check-in system service at the airport. The company provides qualitative training, awards and good salaries and benefits to the employees and cuts labor costs to increase the employee’s loyalty (Mahasagar Publications, 2013). In 2006, the company sponsored Fifa World cup, which increased its brand awareness and made its goodwill in the market. Weaknesses of the Company It is a young airline, established in 1985. It has high operational cost due to its application of new technology and the purchase of aircrafts. It has no membership of the international alliances. Non-pricing Competitive Strategies The hotel and tourism strategy for the company is made for the increased number of tourists. In this way, many customers prefer using their services due to the hospitality provided within the hotels. Global Strategy The company has developed a global strategy that has helped it go beyond the limits of the regional market. It has established carriers many non-Arab countries like in Europe and Australia hence increasing its market size. Entry Strategy and Recommendations At the time of competition to its maturity stage, the company must approach entry strategy after its review of its internal and external environment as well as any related factors that may affect its market position. Recommendations for the company may include extending routes worldwide to the most attractive areas like Canada would be a good recommendation. This would be made possible by joining the global alliance in order to increase their destinations (kostjan4ik, 2008). Additionally, the company should consider the highest advancement in technology for its progress that may include making contracts through the e-business company as this would improve its services (kostjan4ik, 2008). Emirates airlines should reduce its operation cost by improving and developing some operation activities. It should improve the maintenance and better use of the available aircrafts. Conclusion The airline industry is volatile to cyclical fluctuations in the Middle East just like in any other place. Emirates airlines have risen within this type of environment and have withstood the air turbulence in many attempts to grow in recognition. Through these efforts, it has become a global airline based in the Middle East. It numerous developed strategies have significantly had many effects on its growth. Despite many threats in the industry, the company has progressed and achieved a strong position in the market. References Ahmed bin Saeed. (2013). How Dubai’s Aviation Industry has really taken off Flights of Fancy. Strategic Growth Markets: Retrieved from: http://www.ey.com/GL/en/Services/Strategic-Growth-Markets/Exceptional-July-2013-Emirates-Airlines kostjan4ik. ( 2008). Emirates Strategic Analysis. Retrieved from: http://www.studymode.com/essays/Emirates-Strategic-Analysis- 143984.html Mahasagar Publications. (2013). SWOT Analysis of Emirates Group Airlines Industry. Retrieved 4/6/2014 fromhttp://mbaprojectreportindia.blogspot.com/2013/10/emirates- group-airlines-swot-analysis.html Pujc. (2013). Fly Emirates. Retrived from: http://www.slideshare.net/pujc/emirates-ppt Shahzadi et. al. (2014). Emrate Airlines. Retrieved from:  http://www.scribd.com/doc/32216217/Emirates-Airlines The Tourism Society.(2010). Aviation and tourism: Implications for leisure travel. Retrieved 4/6/2014 from: http://www.tourismsociety.org/book-review/50/aviation-and-tourism-implications-for-leisure-travel.htm UKEssays. (2013). A Strategic Study Of Emirates Airlines Marketing Essay. Retrieved 4/6/2014 from: http://www.ukessays.com/essays/marketing/a-strategic-study- of-emirates-airlines-marketing-essay.php#ixzz33cPHcNGy Read More