Emirates Airlines Analysis - Case Study Example

Emirates Airlines case analysis Name Institution Date Table of Contents Emirates Airlines case analysis 2 Introduction 2 Background 3 SWOT Analysis 4 PEST analysis 5 The Company’s Strategy 8 Recommendations and Conclusion 10 Reference 11 Emirates Airlines case analysis Introduction All organizations try to apply strategies that may possibly enhance and sustain their competitive advantage within the market. Emirate Airline cannot be an exemption. The airline industry is rapidly growing even though it faces a number of challenges which is regarded as normal in business (O’Connell & Williams, 2011). The case study entails a comprehensive analysis of various factors that develop the Emirates’ general environment, which is among the most reputed global airlines. This company has been running for not less than twenty years. The paper aims at providing strategies used by the company with respect to environmental analysis using SWOT and PEST frameworks, and concluding by giving a number of recommendations. Background Emirates Airline also known as Emirates is one of the airline companies within the United Arab Emirates (UAE). In 1985, May 25, the Dubai’s government founded the Emirates Airlines (Sundaram & Abdulrahman, 2011). The company primarily engages in the provision of commercial services of air transportation within UAE as well as globally. Emirates functions as a branch of the Emirates Group. The company provides services such as cargo, passenger, and postal carriage. Additionally, the company engages in provision of retail and wholesale consumer commodities, hotel operations, institutional and in-flight catering. Emirates Airline operates within seven divisions namely Emirates SkyCargo; Emirates Resorts and Hotels; Management of Leisure and Destination; SkyCargo; EmQuest; Emirates Official Store; Emirates Engineering; and Skywards (Business Week, 2013). Furthermore, the company runs a set of 130 Boeing as well as Airbus jets and around 10 freighters of cargo. Dubai, UAE is the company’s headquarters. SWOT Analysis Analysis of the strategies used by the company will be done through SWOT analysis where S denotes strength, W represents weakness, O denotes opportunity, and T represents threats (Cavusgil, et al, 2012). In terms of strength, Emirates is considered a competitive as well as globally acknowledged airline company hence it managed to have a strategic place within the international market. The strong support from the government of Dubai gives the airline a major strength (Sundaram & Abdulrahman, 2011). With various successive years of profits in multibillion, Emirates has outperformed its key competitor companies to be a model company. A lot of analysts have argued that the company has the capacity to adjust to ever changing market conditions so as to exploit profit. Through consumer interaction, Emirates has been able to develop a business culture that has little similarity with the previous Emirates Airline (Hough, 2010). This thus makes the airline the preferred one by customers. The weakness that the company has is depending greatly on global forward moving traffic. Concentrated competition implies restricted growth of market share in addition to high expense of sustaining target principles. In terms of opportunity, Emirates Airlines is advantageous due to size; hence it is able to accommodate a varied market instead of being limited to narrow amount of destinations (Cavusgil, et al, 2012). Additionally, because of the capacity to penetrate fresh markets due to size of the fleets and unlimited destinations number, the company is very advantageous. Actually the company operates in international destinations that the customers are familiar with. Regardless of the reputable status of the company, there are some threats that the Emirates faces. For instance, other reputable airlines like British airways and Singapore airlines pose a threat that is major to the company. Another threat is the likely rise in operational expenses as a result of the mounting fuel prices, security and insurance costs (Sundaram & Abdulrahman, 2011). With respect to escalating competition in market of Middle East, airlines like air Arabia and air Jazeera are considered low cost therefore preferred by particular clients (Hough, 2010). Changing regulations and policies by the government also pose a threat to the company. PEST analysis Political factors in the macro environment analysis determine the degree to which the state government might influence the industry or the economy (Cavusgil, et al, 2012). For instance, a government might inflict regulations and rules that directly affect the business. With respect to the political environment, the success and growth of Emirates can be greatly accredited to the constant support from the Dubai’s government. The backing of the government has definitely offered the required momentum to the airline to move forward of all of its rivals (Hough, 2010). The fundamental reason following this is because the local government owns Emirates. A couple of regulations and policies have been put in place by the state government favorable for both growth and development of airline industry. For instance, the policy of open sky that the government adopted fosters airlines expansion (Hough, 2010). The policy of open sky allows other nations to set up routes to UAE, like Dubai. This definite policy facilitates Emirates to create a powerful connection with nations worldwide and hence uphold its position as a highly regarded global airline (Sundaram & Abdulrahman, 2011). Emirates Airlines presently are linked to nearly hundred various destinations within 60 nations, globally. This policy has facilitated the airlines to expand its secondary market services like Newcastle and Manchester in Britain, Dusseldorf and Hamburg in Germany or Kolkata and Kochi in India. Additionally, this policy reduces the scopes of interferences from the government in the operation of the company (Hough, 2010). Consequently, the authorities of the airline have the freedom to apply effective strategies of business, devoid of facing obstacles such as strict government regulations and rules. All in all, the airlines and the government share interests and goals that are common. Hence, regarding whichever significant decision, in general there should be full backing on the government part. Economic factors of the company’s macro environment are the determinants of the performance of the economy that directly affect an organization and have booming effects that are long term (Cavusgil, et al, 2012). For instance, inflation rates rise would impact the way organizations’ price their services and goods. Additionally, it may affect the power of purchasing by consumers and alter models of demand and supply for the economy. This is the case in the Middle East competition where most customers prefer using affordable airlines like air Arabia contrary to Emirates Airlines which is quite costly. Among others, Emirates Airlines being positioned as the world’s competitive and largest company, it is therefore economically established. Despite of the number challenges and dangers that Emirates faces in different regions of the globe, Emirates’ management makes sure that the company is able to conquer every hurdle hence obtaining an economic condition that is better (Hough, 2010). Social factors in the macro environment include and not limited to demographics, cultural trends, and population analytics (Cavusgil, et al, 2012). Emirates Airline is affected through the situation existing within the society they operate in. The rise in the expatriates’ number in Dubai results in an increase within the margin of profit since they use Emirates travelling back to their homes. The company also attempts to make sure that everyone in the society is provided with the same opportunity of benefiting from the services offered by the company. Technology has a great role within the airline business (Daniels & Radebaugh, 2001). The developments of information technology (IT) have impacted Emirates Airline in a great way. For example, the company applies various systems of IT/IS and also utilizes the Internet in the communication among staff and customers. Moreover, Emirates uses online facilities such as check in for passengers in order to enhance their operations and services. Electronic ticketing is advantageous to both the airline and customer by providing grand convenience, decreased time of processing, operations that are simplified and check-ins that are faster (Scoop Business, 2008). Technology and innovation have constantly been a significant value for Emirates. For example, the company pioneered in providing seatback entertainment for every passenger without considering class (Sundaram & Abdulrahman, 2011). Investment by the company in technology that is highly developed is among the global strategy to guarantee long-term expansion. One of the advanced technology solutions used by the airline is Danware’s NetOp remote control which facilitates the international company decrease the cost and time of offering outstanding IT support (Hill, 2001). As a result of Emirates’ rising global presence, the airline needed to build up extra 30 multilingual locations including Japanese and Arabic to facilitate operations. The company needed its local offices globally to be able to bring up to date their own data while at the same time maintaining a degree of central management over the data and the process of publishing (O’Connell & Williams, 2011). Environmental issues are very important to Emirates. One specific environmental hazard is air pollution and any airline ought to put into consideration (Hill, 2001). Emirates has considered a number of steps in an effort to decrease air pollution; the major one being the company’s aircraft fleets that are advanced in addition to being fuel efficient (Sundaram & Abdulrahman, 2011). The aircrafts burn not more than four liters for each 100 traveler kilometers. Due to their operation that is based on efficient focus; fewer flight numbers are required to transport cargo and passengers. The Company’s Strategy The marketing strategy that Emirates uses is actually a success. For instance, the market of the company is segmented into two principal groups on the ground of the trips’ frequency, the trip’s average length, as well as the brand faithful customers (Sundaram & Abdulrahman, 2011). The profitable passengers to Emirates are the business class and they readily pay for the service that is luxurious since to them the price is moderately inelastic. The company provides great services of Wifi to these customers and extra working room and therefore they choose direct trips. In the economy category, Emirates loses because customers prefer the carriers that are low cost. Brand loyal travellers are customers who fly with Emirates despite their prices and depend on the reputation and quality of the company (O’Connell & Williams, 2011). Emirates targets businessmen and executives who are high ranking within 30-60 age group looking for comfort and luxury while travelling. On the other hand, it gives services to every customer in spite of nationality. The positioning strategy of Emirates is universal, modern, and for the money paid, a customer gets good value (Hill, 2001). Where first and business class customers are concerned, the airline’s position has great quality, comfort and luxury on board. With respect to families, Emirates becomes premiere by offering an inclusive and pleasing inflight experience. In terms of differentiation, Emirates is ranked first. The company pioneered in implementation of contemporary technology like using mobile phone on board (CIO, 2006), the concept of sun and moon, and internet browsing. Services such as showering while on board for passengers in first class and services of complimentary chauffer are also offered. From the start, Emirates has assumed an aggressive strategy of growth. The profit figures display a yearly rise without fail excluding the operations of the next year. The company has been repeatedly expanding its capacity of passenger in addition to destinations’ number. The strategy adopted by Emirates depends on the purchase of luxurious aircrafts that are fuel efficient; and experienced staff (Sundaram & Abdulrahman, 2011). The lean structure of management and the ability to quickly make decisions play a significant role in the company’s growth strategy. Creating value in addition to accomplishing goals are essential strategic standards in globalization (Namaki, 2008). This is why Emirates constantly work to better their services internationally. Recently, Emirates obtained a fresh milestone when it landed at Cape Town, making it the 100th international destination within South Africa (Sundaram & Abdulrahman, 2011). Recommendations and Conclusion Presently, international business is regarded as the leading trend of economic and business globally. Emirates Airline is yielding the advantages in a great way. The profits and sales of the airline increase on a yearly basis. This is very encouraging for the company and proves that Emirates Airline established the correct balance between local responsiveness and global integration as well as the proper international ingredients to change a distinctive strategy into a value that is superior. In conclusion, the growth of Emirates in the last twenty five years has been exceptional and the company targets to maintain the present rate of growth of 20 percent yearly. The airline has a particularly powerful brand name that attracts the loyalty of customers. Reference Business Week. (2013). Company Overview of The Emirates Group. Retrieved on 22 March, 2013, from: http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=% 2024963869 Cavusgil, S. T., Knight, G. A., & Riesenberger, J. R. (2012). International business: The new realities. Upper Saddle River, N.J: Prentice Hall/Pearson. CIO. (2006). Emirates Airlines to Offer In-Flight Mobile Phone Service. Retrieved on 22 march, 2013, from: http://www.cio.com/article/26561/Emirates_Airlines_to_Offer_In_Flight_Mobile_Ph one_Service Daniels, J. & Radebaugh, L. (2001). International Business: Environments and Operations- 9th Edition, Prentice Hall. Hill, L. (2001). Emirates' success is no mirage. Air Transport World, 39, 1, 46-48. Hough, B. (2010). Emirates Airline: The pride of Dubai. Airliners (miami, Fla.), Vol. 23, Issue 3. Namaki, M. S. S. (2008). Strategy and entrepreneurship in Arab countries. Basingstoke England: Palgrave Macmillan. O'Connell, J. F., & Williams, G. (2011). Air transport in the 21st century: Key strategic developments. Farnham, Surrey, England: Ashgate. Scoop Business. (2008). Emirates Airline 100% E-Ticket Enabled. Retrieved on 22 March, 2013, from: http://www.scoop.co.nz/stories/BU0805/S00489.htm Sundaram, N., & Abdulrahman, A. A. (2011). The exceptional performance strategies of Emirate Airlines. Competitiveness Review: an International Business Journal, 21, 5, 471-486. Read More