An Analysis of Emirates Airline Using Organizational Behavior Theory - Essay Example

Emirates Airline Introduction Emirates Airline is a well known UAE based Airline Company which has experienced rapid growth since its inception. The company is well known all over the world for its exclusive customer services and unique flying experience. Emirates Airline has operations in many countries across the globe. The airline flies between 72 cities all over the world (Emirates Website, 1). Emirates Airline is also the largest airline operating in the Middle East (Gulf News, 1). The company is based in Dubai and has its headquarters in the city. The company started in 1985 and since then has grown tremendously which reflects the financial robustness of the airline. In this paper, an analysis of Emirates Airline will be presented using organizational behavior theory. A brief commentary will be made on profitability of the company. A detailed SWOT analysis of the airline will also be included in the analysis. A brief profile of the Emirates Group will also be presented in the paper. In the end recommendations will be made for Emirates Airline. Profitability of the Organization The airline has seen its profits decrease in 2012 because of the increasing prices of fuel. The company was able to make a profit in the year ending March 2012 which is a very good sign because airlines in general are going through a bad time (Schreck, 1). The company has shown profitability for many years in a tough and uncertain industry which reflects the superior performance of the company. Emirates Airline reported a decrease of 61 percent in its annual profits on accounts of increasing fuel prices (Walid, 1). The company’s revenues increased which shows that this loss is not because of decrease in business but because of rising fuel prices. Analysis Emirates Airline is based in Middle East and this region is very different from Western countries, therefore, organizational behavior and culture of the company is also different from conventional western organizations. The analysis preset here will be based on organization behavior of Emirates Airline. SWOT Analysis Strengths The main strength of the company is its well established brand name and financial robustness. The company is a part of the Emirates Group that is owned by the government of Dubai which is very oil rich, and therefore the company is never short of investment. This is also a reason why the airline has grown to great heights in such a short period of time. The company has also successfully developed a positive image in the industry and is well known for its luxurious services. The airline also enjoys cost advantages over other airlines (Horth & Alwyn, 2). The organizational behavior in Emirates Airline is aimed at improving the skill level of employees. The human resource management of the company is extremely popular as Emirates is known to use innovative recruitment system. The airline also offers training to employees of superior quality which is another important strength of the company. This reflects how the company invests in employees. This also throws light on the organization behavior of the company. The organizational culture of the company is also very flexible. The airline has a flat organizational structure (Knorr & Eisenkopf, 2) and there are no strict rules and regulations. The organization is run as a family and decision making process is very informal (Sull, Ghoshal, & Monteiro, 37). This allows the airline to make decisions relatively quickly than western organizations. Also an open door policy is practiced in the company and a friendly environment is maintained in the organization. Employees are encouraged to think big and growth plans are approved in no time. The President of the company, Sheikh Ahmed, serves as a head of the family (Sull, Ghoshal, & Monteiro, 36). The company is that it does not follow a particular management style rather it works like a family organization where decisions are taken on a case by case basis. This is how Emirates Airline is able to gain competitive advantage over other airlines as it is not bound by conventional wisdom. Employee/Profile Employees are the main strength of the company. Emirates Airline is known to provide training to employees that show that the company invests in its employees. This is particularly true for the higher level employees because company employs a very sophisticated e-recruitment system. This allows the company to attract the best pool of applicants from all over the world which benefits the company. The top level management of the company comes with great reputation and is vastly experienced. This is where the financial resources of the company come in handy as the airline is able to retain top people of the industry. The top management of Emirates Airline is regarded as the best in the business and is considered as major reason for the success of the company. This is how employees benefit the company. The flexible culture of the company also complements employee performance. Employees are free to come up with new ideas and they are not bound by conventional wisdom. The decision making process is also quicker which means that employee ideas are translated into reality rather quickly. Weaknesses The airline also has some weaknesses. Emirates Airline is not known to pay good salaries to employees, especially to lower level employees. This is because of the abundance of labor in the country. Emirates Airline is also not known to follow the western standards of organizational practices, for example age discrimination and other similar illegal practices are allowed under the country’s law (Destination Travel, 1). Issues like these are not considered a problem and this is an area where the organization is lagging behind from its western counterparts. The company also has banned unionism in order to avoid any wide scale employee outburst. Although flexible organizational culture of the company has some benefits, it allows room for inefficiencies. When companies do not have standard operating procedures it results in serious problems. Flexibility comes at a cost of efficiency and this is one of the weaknesses of the company. Family organizations have inefficiency issues because decision making is fluid and there is no set way to go ahead. This is a weakness of Emirates Airline. Opportunities There are many opportunities open to Emirates Airline. The company has presence in Middle East and this can help the company grow in regions close to Middle East. For example the company can grow into Asia which has a huge population. The culture of Asian countries is also closer to Middle East than western countries. This presents a great opportunity for the company to grow into an ever growing market. Another opportunity for the company is to partner with other firms to give the company strategic advantage. Currently the company has not partnered with any other airline but in future Emirates Airline has an opportunity to use its position to develop strategic partnership with other companies. The airline industry is facing many problems and therefore in future such partnerships will be vital. The company has opportunity to make strategic partnerships with other companies. Threats The main threat to the company is regarding soaring oil prices. Increase in oil prices hurt airline companies to no end and this is what has happened to the company in the 2011-12. Another oil price hike can hurt the company even more and therefore it is a big threat for the company. Another major threat for the company comes in the form of employee dissatisfaction. Employees, and specially the lower level employees, are not allowed to form unions of any kind. The attitude of the management towards them is also not very good. This can turn into a big threat for the company. Today people are becoming aware of their rights and employees might rebel against the company. This will give the company a bad name all over the world which might tarnish the reputation of the company and damage its brand image. Discrimination with employees is not considered as big a crime as in western countries in the company and this is a huge threat for the company. Emirates Group Emirates Group is fully owned by Dubai Government. It is a large conglomerate of travel and tourism companies. Emirates Group includes aviation services, air cargo, and passenger flights. The group employs more than 50000 personnel all over the world which shows the extent of operations of the group. Emirates Group is also a very large employer of the region (Emirates Group Website, 1). The turnover of the company is also in billions of dollars which again is representative of the vastness of the company’s operations. Emirates Group has also grown significantly since its startup. The group has also diversified into many industries and sectors. The group currently has more than 50 subsidiaries which help Emirates Group diversify greatly. Emirates Group also allows full freedom to subsidiary companies and does not interfere too much in their management. This again is shows the approach of the company and its flexible and family like structure. Diversification into many industries and sectors has allowed the company to enjoy profitability even in difficult economic times (Gale, 1). Another important characteristic of the Emirates Group is the governmental support it enjoys. The company enjoys monopoly in the aviation services industries as the Dubai government controls all the airports in the city. This allows the company an advantage over other firms. Also the financial position of the group allows it to reap extraordinary benefits. We discussed earlier how Emirates Airline grew tremendously over a few decades. This is again because of the strong financial position of the company. The backing of an oil rich government, that earns significant revenue from tourism, is a major source of financial success for the Emirates Group. Recommendations It is advisable for the company to change its organizational culture a little bit because flexibility comes at the price of inefficiency. The company should not become rigid and it should not lose its unique way to look at problems. But it is important for Emirates Airline to bring more professionalism in the decision making. The company should make its decision making process more formalized to counter the negative effects of family organizations. This will help the company increase its efficiency and will also allow the airline to grow in a sustainable manner in future. The company should also start investing in lower level employees because these are the employees who can bring a major difference for the company. Emirates Airlines should learn from other successful airlines like Southwest Airline how to treat lower level employees. Also rules regarding discrimination and compensation should be developed so that the company does not compromise on employee satisfaction any more. Abundance of labor should not dictate the employee policy of the company as it is vital to invest in all employees, not just the top management. It is also essential to solve issues of discrimination because it may attract bad publicity. The airline will have to do something regarding increase oil prices. It is advisable for the company to use oil futures and other hedging strategies to secure itself from higher oil prices. A couple of years like the 2011-12 can hurt the company significantly and therefore something should be done regarding increasing oil prices. Conclusion Emirates Airline is the largest airliner of Middle East and is a well known company all over the world. The company has remained profitable for many years and this is representative of the superior performance of the company. Emirates Airlines has a power brand name and it enjoys a strong financial position. The organizational culture of the company is also flexible which allows the company to manage problems in a nonconventional manner. Flatter organizational structure is another added advantage for the company. A major weakness of the company is the inefficiency that stems from its flexible culture and decision making process. The company is also not paying employees well which is a weakness. Opportunities like huge available market in Asian countries are present for the company. The company is facing major threat in the form of soaring oil prices. Works Cited Page Destination Travel. Airline Review - Emirates Airlines, 2012. Web. August 10, 2012 http://www.destinationtravel.info/reviews/emirates.html Emirates Airline. Our Destination, 2012. Web. August 10, 2012 http://www.emirates.com/ae/english/destinations_offers/destinations/index.aspx Gale, I. Diversity is key to the success of Emirates. The National, 2009. Web. August 10, 2012 http://www.thenational.ae/business/travel-tourism/diversity-is-key-to-the-success-of-emirates Gulf News. Emirates to hire 700 pilots over next 18 months, 2010. Web. August 10, 2012 http://gulfnews.com/business/aviation/emirates-to-hire-700-pilots-over-next-18-months-1.636488 Horth, D., &T. Alwyn. The next low-cost threat. What does Emirates mean for Europe? UBS Investment Research, 2005. Web. August 10, 2012 http://www.airneth.nl/serve_file.php?dType=dDocument&id=157 Knorr A. &Eisenkopf, A. How Sustainable is Emirates’ Business Model? Aerlines Magazine e-zine edition, Issue 38, 2007. Web. August 10, 2012 http://www.aerlines.nl/issue_38/38_Knorr_Eisenkopf_Emirates_Business_Model.pdf Schreck, A. Emirates airline profits hit by higher fuel bill. Salon, 2012. Web. August 10, 2012 http://www.salon.com/2012/05/10/emirates_airline_profits_hit_by_higher_fuel_bill/ Sull, D., Ghoshal, S. & Monteiro, F. The Hub of the World. Business Strategy Review, 2005. Web. August 10, 2012 http://www.donsull.com/downloads/hub_of_the_world.pdf The Emirates Group. Our Company, 2012. Web. August 10, 2012 http://www.theemiratesgroup.com/english/our-company/our-company.aspx Walid, T. Emirates Annual Profit Falls 61% On Fuel Costs, Europe. Bloomberg, 2012. Web. August 10, 2012 http://www.bloomberg.com/news/2012-05-10/emirates-annual-profit-falls-61-on-fuel-costs-europe.html Read More