Strategy for International Business Operations - Case Study Example

INTRODUCTION

The report discusses how the airline has taken off from being a small startup to an international brand that is collaborating with international brands and airlines to strengthen the company further. The airlines have been providing their services to all social classes and they have uniform, unbiased service provision across the cabins and this has helped in gaining further market value and customer preference. The report discusses the marketing mix that has been adopted by the airlines and the strategy that they have utilized to enter newer markets. Considering the current company scenario and the through the help of SWOT analysis a proper report will be developed and this will also help in analyzing the possible new markets and opportunities that can be utilized by the airlines to grow their brand further.

COMPANY OVERVIEW

Eithad Airways is the national airlines of United Arab Emirates and they have been in business since 2003. They were formed due to the royal decree and since they have been doing very good business and have also been awarded with the best airlines award in 2012. It is amongst the fastest growing airlines in the history of aviation industry. The top most management of the Airlines consist of the members of the Royal family of Abu Dhabi. Thus it is not a private airline but government backed airline. The CEO of the airlines is the former CEO of Gulf Air and with he has brought extreme experience and senior expertise which has helped in the development of the company in the most positive way possible. The airline has been winning the Leading airline award for five consecutive years. This means that they have a pool of satisfied clients who have had amazing experience with the airlines. Similarly their marketing strategy have usually been out of the box and have helped in establishing a proper brand name.

The fleet of the Etihad airways contains 88 airplanes and operates around 1400 flights per weeks internationally and they serve 84 international networks for passenger and cargo destinations in Europe, Asia, Australia, Middle East and North America. Additional to their own assets they also have 30 percent shares in the Air Berlin, which is considered as the fourth largest air carrier in the whole of Europe. They also own 40% share in Air Seychelles. The airline offers Arabian hospitality combined with the best possible customer service that treats people well making their flying experience a great one and regardless of the cabins they sit in.

COUNTRY AND MARKET ANALYSIS:

Etihad Airways within itself is a very established air carrier and hence is now looking for opportunities that are based beyond their own borders. The aviation industry with growing time is becoming far more competitive and decreasing the buying power that the consumers have, the airlines amongst themselves are competing with each other on the basis of low cost and preferential services. With the growing concern regarding the terrorism situations worldwide, the profit margins of airlines is decreasing day by day, as they have to compete with each other on pricing basis and at the same time invest much more than they were previously doing in the security of their airlines. The most promising market that they can explore is the European countries and the country of Australia and Newzealand. The main reason being that these countries have now open citizenship opportunities to foreigners and are welcoming people in their own country, this means a lot expatriates arriving into the country and a promising market for air carriers.

The external factors that can be discussed with regards to the probable expansion are:

Political stability:

The region is politically very stable and this is the reason people for other countries are also seeking employment opportunities in these regions. With the increase in foreigners in the country the airlines has the opportunity to do great business as they can offer cheaper flights to the probable homelands (which is in most cases the Asian countries). Etihad is already offering services in the Asian region and hence it will not be much cost consuming. They are also flying on the Australian route and the European routes so obtaining flying and operating licenses would also not be much of an issue.

Free Market system:

The country is now opening up its borders for international markets and as opposed to closed borders it is offering much better opportunities to newer business so that they can strengthen their own economies. This offers a great opportunity for the already established Etihad airways as they are themselves seeking newer possible expansion possibilities.

Corruption Levels:

The levels of corruption are quite low and this offers a fair and transparent opportunity for the new businesses as they can enter newer markets without the fear of facing any kind of bribing or other useless discrimination.

Level of existing competition:

Since the Australian economy has just recently opened up and there are very few newer entrants, Etihad airways has the power of entering and making it into the economy. The backing of airways is quite strong and UAE itself is a growing market and this offers a boosted growth possibility for the airways into a new market with few competitors. This can also help in establishing a better and much stronger base for the company.

Meeting the consumer needs:

The air carrier has been very successful in providing to its customers in the most suitable way and hence have rave reviews from their customers this makes them a established brand from a customer perspective. They offer great customer service and look into the customer complaints without much fuss. This helps in development of a highly satisfied customer base.

Level of existing Competition:

Etihad airways has been able to rise above the existing competition in their local region as well as among the most used air routes in which they started their business. They are now in a strong position to actually establish themselves in a newer country. They have proved themselves time and again by obtaining service awards at various levels. They have been able to surface above other air carriers and this gives the stronger position to continue promoting their own business.

Trade Barriers:

There are no existing trade barriers as the Australian economy has been opened up for international businesses. It is a part of their policy to invite international businesses as this will help in strengthening their own economies. UAE is itself looking for countries that will welcome them to much better trade opportunities and help in expanding their existing international flight destinations. Collaborating with the Australian government can help in boosting their presence as the progressive air carriers and establishing them as a much bigger brand.

All of these factors are very relevant to the situation of Etihad Airways and can help them boost their presence. The current situation of the air industry is all based on how has the most cost effective strategy. In the wake of recent terrorist attacks companies are competing with each other on the basis of cost effectiveness and customer satisfaction and loyal returning customers.

MARKETING MIX & STAFFING POLICY

The marketing mix includes Pricing of the product, placement of the product , promotion of the product and the product itself.

The pricing of the airline's fares are very reasonable considering the facilities that they offer in air during flight. It has been observed that there have quite many successful campaigns that have actually increased awareness of the product offering internationally as well as locally. The promotions are done through on the vehicle boards, bill boards in malls and airports. In the recent years there have also been a number of sponsoring activities for events like award functions, football events, cricket events. These sponsorships have helped in the development of the presence of the airlines internationally as well.

The hiring procedure of the airlines is not biased, they welcome international application and hire purely based on talent and skill sets regardless of any kind of prejudice. There are no limitations to the amount of female employees as well. The employees share the common vision with the senior management and hence there is little and to some extent hardly any conflicts between the company interest and the organizations.

MARKET ENTRY STRATEGY

The six entry modes that are open to any company are:

Exporting Directly:

Direct exporting means that the company is itself entering into the new country as an entity.

Licensing:

This option is a much safe option as the company transfers its right of service provision usually to a much established brand or a local brand. The company enjoys its share in the share from the sale of the service.

Franchising:

In franchising the company has to have a very strong brand recognition as this helps in customers recognizing the product. This strategy is usually used when the company is looking for rapid expansion.

Partnering:

It is a requirement in many countries. The company is able to open up its business in the new country only when they work in collaboration with some other local.

Buying a company:

Buying a company means that the company that is seeking entry into a new country buys a local brand and then enters the market. This helps them in gaining a status that is equivalent of a local company and thus they can enjoy local based benefits as well.

Piggybacking:

In this entry strategy the company basically uses the support of a local well established brand which helps them in establishing their presence. It is a very safe as the investments are minimum and the company can always back out whenever they feel that their business is not doing well.

In case if Etihad airlines, the most suitable option would be Licensing, once they establish their presence in the country they can always opt for direct exportation as this will help them in getting all the revenues into their own accounts.

STRATEGY FOR INTERNATIONAL BUSINESS OPERATIONS

The company can use the Globalization strategy as it can help in pursuing a low cost strategy worldwide. It is also highly advisable as this will help in gaining benefits through economies of scale. The services can be customized as per the needs and requirements. The global office can remain updated through constant collaboration with the regional offices.