Company Analysis of Etihaad - Report Example

COMPANY ANALYSIS OF ETIHAAD By Table of Contents Defining Etihaad…………………………………………………………………………3 2. Background………………………………………………………………………………3 3. Growth strategy………………………………………………………………………….4 4. Brands…………………………………………………………………………………...4 5. Main areas of expertise………………………………………………………………….5 6. Current position in the market…………………………………………………………..5 7. Strategy statements (vision, mission, objectives, scope)………………………………..5 8. The Corporate, Business and Operational Strategy…………………………………….6 9. Leadership style…………………………………………………………………………6 10. Organizational Structure………………………………………………………………...7 11. One external analysis (PESTLE, Five forces etc)………………………………………7 12. One internal analysis (SWOT, Value Chain etc)……………………………………….8 13. Based on your analysis of the company critically comment on the future of the company as it is and provide recommendations to take it forward………………………………..8 14. Appendix………………………………………………………………………………..9 15. Reference list....…………………………………………………………………………10 Company Analysis of Etihaad Defining Etihaad Etihaad Airways is the leading airline in the United Arab Emirates. The airline is the flag carrier of UAE, and operates across various destinations in the world. The incorporation of the airline was in 2003 after a royal decree made in July the same year (Alon & McIntyre 2005, p.45). The company began its operations in November 2003 after the royal decree, and based its operations in Abu Dhabi. Etihaad is an Arabic word meaning union. As such, the company represents a union of the Arab league through airline services and operations. For the past decade after the incorporation of the company, the airline grew significantly to become a major player in the Arab league, as well as, in the entire globe in general (Knudsen & Tsoukas 2005, p.211). Background Etihaad Airlines has its hub at the Abu Dhabi International Airport located in United Arab Emirates. As such, the airline has priority rights over the airport, which gives it strategic significance over the airline business. The airline has a fleet size of 91 and covers 96 destinations across the globe, both in the Arab world, as well as, in the other parts of the universe, as evident in Figure 1 of the appendix, and doing 1000 flights per week through these destinations. The figure shows the global route network for Etihaad Airlines including the new destinations that the company is covering since 2014. The frequent flyer program of the airline is the Etihaad Guest, which offers its customers the best and efficient services. The flying passengers wait for their flights at the Etihaad Premium Lounge within the Abu Dhabi International Airport. On the other hand, the airline also has several subsidiaries aligned under the Etihaad Subsidiaries division. The company makes over six billion dollars in revenue per year, guided by its company slogan “From Abu Dhabi to the World”, under the chairmanship of Hamed bin Zayed al Nahyan, and the executive management of James Hogan as the CEO (Altobelli & Sander 2001, p.32). Growth Strategy The company grew steadily over the decade since its inception owing to the successful growth strategy adopted by the company’s management. Analysts place the airline as among the fastest growing airlines in the world owing to its fast speed of growth. The airline began with just a few planes, and a single flight destination to Beirut. However, it made numerous orders for increased passenger and cargo planes and increased its passenger destinations (Bensoussan & Fleisher 2003, p. 65). The company now has over ninety planes and destinations for its operations, with a minimum of 1000 flights per week across various destinations of the world. The company falls under the fast growth stages of businesses (McEwen & Wills 2010, p.67). Brands The company managed to establish a reputable brand image across the world. It developed these strategies through sponsorship and acquisition of various states and companies. For instance, the Etihaad Airline sponsors one of the leading football teams in the United Kingdom, and an active participant of the Barclays premier league. The Manchester City football Club is a company under the Etihaad umbrella, sponsors the teams’ stadium, the Etihaad Stadium, and takes care of players’ payments. The football team boosts the airlines brand image through adorning team uniforms branded with the company’s logo and name. Apart from the Manchester city brand, the company also sponsors other teams and corporate events that help in redefining its brand (Birkinshaw & Hansen 2007, p.89). Issues Facing the Company – Corporate Social Responsibility CSR is very important in the creation of a reputable image for every corporate organization. As such, it is essential for every organization to involve itself in CSR, especially in areas that help in improving the living standards of the community within which it operates. Etihaad Airways follows these footsteps diligently by taking part actively in CSR. For one the company creates numerous job opportunities for locals, as well as, provides them an opportunity to make wealth. This also incorporates a wide range of diversity as more than 125 nationalities appear in its workforce. The workforce of the company also gets the best treatment as the best assets that the company owns, such as a dedicated medical center from the airways, regular wellness days with preventive care checks, as well as, “Fit 2 Fly” leisure facilities to major residential locations. The company also supports sports through major sponsorships, such as the 10-year deal with Manchester United Football Club. Environmental concerns also forms part of its CSR evidenced through water saving campaign plan involving its staff, a 24% improvement of carbon emissions per every passenger kilometer since the year 2006. Main Areas of Expertise The company specializes in passenger flights, as well as, cargo flights across the world. With its hub at Abu Dhabi, the airline takes advantage of its fleet size of ninety-one to fly across various destinations in the world delivering cargo and taking people across ninety-six established destinations. For instance, in 2013 alone, the airline managed to transport over ten million passengers across various destinations in their 1000 weekly flights of cargo and passengers (Bollingtoft et al. 2009, p.120). The active participation of the airline in cargo and passenger transportation enabled it to maximize its profits, and grow its revenues over the years to rival major airlines in the Arab league, such as the Emirates Airline (McShane & Glinow 2010, p.24). Current Position in the Market The airline currently holds a competitive position in the market with its wide range of services, class and taste for its passengers. The efficiency and systemization of the company’s services enables it to create market efficiencies that bring about both cost efficiencies, as well as, quality service delivery systems. The airline is currently the flag carrier of the United Arabs Emirates, which gives it a lucrative position in the airline industry as the market leader. However, it still has rivaled competition from other established airlines operating in the country such as the Emirates Airlines or the fly Emirates, as well as, other international airlines such as the Delta Airlines. The company that provides it with the stiffest competition is the Fly Emirates Airlines, which also has its hub in the United Arab Airlines, at the Dubai International Airport (Bruton & White 2007, p.3). Strategy Statements (Vision, Mission, Objectives, Scope) The company began as a flag carrier of the UAE with the sole goal of expanding across the world and become a leading airline. The company’s mission statement, ‘From Abu Dhabi to the World’ says it all by expounding on the airlines chief objective to go global through mergers and acquisitions (Burton, DeSanctis & Obel 2011, p.55). So far, the company acquired various controlling stakes in a number of leading airlines across the world to enhance and expand its global operations. These regional and global expansions of the airline, termed Etihaad Equity Alliance incorporates other leading airline providers such as Ai Serbia at 49% stakes, Air Seychelles at 40% stakes, Air Berlin at 29.2 stakes, jet airways at 24% stakes, Virgin Australia at 19.9% stakes, Aer Lingus at 2.987% stake, and Darwin airline at 33.3% stake (Miner 2011, p.90). The Corporate, Business and Operational Strategy The corporate strategy of the airline is to establish a global presence through expansion activities. On its own, the company makes over 1000 flights per week, through ninety-six destinations in the world. However, this is just a tip of the iceberg, as many destinations remain unexplored by the airline. As such, the move to take on the Etihaad Equity Alliance program was a strategic move that enabled the company to have presence in numerous different parts of the world without necessarily setting shop in these places. The business strategy of the company is to increase its flight presence in many parts of the world by expanding its flight destinations, as well as, the number of flights in a given operational period, such as weekly, monthly or annually (Cooke, Jenkins, Moreton & Williamson 2013, p.63). Leadership Style The airline has robust leadership, which operates under the Islam law. The management of the company uses a direct approach leadership, which entails free interaction of all members of the organization. As such, there are no limits or restrictions on employees in expressing their opinions to the management. In addition, there are no bureaucracies that an employee or member of staff need to follow in order to get attention from the management team (Frisendal 2012, p.4). Such an open leadership style provides room for cooperation and team building within the company, which is essential in the growth and development of the airline (Thomassen 2006, p.71). Organizational Structure The organization structure of the airline comprises of a board of directors, followed by the executive team of management, then the employees or workers of the organization. The board is the chief governing structure of the airline, under the leadership of a chairperson, with his vice, and two sub committees. It consists of seven members who are not part of the management, and are independent from the operations of the airline, and two sub committees, which are the audit committee and the executive committee. The executive team implements the policies set up by the board in drawing up the goals and objectives of the company (Gully & Philips 2011, p.30). One External Analysis (PESTLE, Five Forces Etc) The company engages in the latest technologies in order to provide its passengers with the best services while on board their flights (Haig 2011, p.89). For instance, its in-flight entertainment system provides passengers with both ambience and relaxation during flights, especially considering its adoption of Thales TopSeries i5000 and PanasonicX2 entertainment systems, which come along with an audio/video-on-demand system. This system is present in its long-range aircrafts (Tywoniak & Waldersee 2007, p.41). One Internal Analysis (SWOT, Value Chain etc) The major strength of the airline is that it is a national carrier of the United Arab Emirates. As such, it enjoys all the rights that come with being a flag carrier, such as government support and protection, as well as, tax levies and other incentives. This enables the company to expand its operations expeditiously especially when the government has its back. This could be in relation to funding required for expansion and growth, or increasing of its number of aircrafts (Hitt, Hoskisson & Ireland 2011, p.125). Based on your analysis of the company critically comment on the future of the company as it is and provide recommendations to take it forward. The Etihaad airline has potential room for growth and improvement as evident in Table 1 in the appendix, which shows the half-year results of the airline in 2012? some of the key indicators used in this analysis show exemplary performance of the airline both now, and in the future, such as a 20% positive variance in the growth from passenger revenue between 2011 and 2012 of the same period. Its strategic growth towards equity alliance is a bold move that will enable it to have presence across various destination of the world (Vibert 2004, p.112). The best way forward for the airline is to increase its fleet capacity to facilitate a significant increase in the number of its flight destinations, as well as, the frequency of flights in a given period. Corporate branding, mergers and acquisition, and quality customer service delivery is another way to ensure the airlines growth and development (Johri 2010, p.72). Appendix SWOT Analysis Strengths Strong Backing of Abu Dhabi Govt Advantage of Being Present in Oil Rich Emirate The airlines has over 5,000 flights per week Over 55 countries are covered extensively across the world Good branding and visibility, and it has actively sponsored many events Weakness Relying Heavily on International Onward Moving Traffic Market share growth is restricted due to intense competition level Opportunity Brand New Fleet. Leverage this and also improve the customer confidence in the airline More global destinations Tie-ups with airports to give premium facilities to passengers Threats Increasing Competition in Middle East market Changing Govt policies and international aviation rules and regulations Hence, A PESTEL variable constitutes “the factors that are relevant to influence decision making. It can take the form of - Political, Economic, Social, Technological, Environmental and finally Legal factors which defines the environment of a company.” (OxfordUniversityPress, 2007) Laying emphasis to this notion, we can drive home the facts that “Etihad Airways is in line with respecting all the environmental regulation while conducting business. The partnership with Masdar signed in 2009 is one crucial factor on the environmental front and decision reached in that regard.” (EtihadAirways1, 2010) On the political factors, Etihad is known be compliant with local and foreign policy makers, be it in US, UK and in UAE. Moreover, on the legal factors, its influences are paramount concerning Etihad management. Moreover, technological and social aspects also take centre stage in influencing decision at Etihad, and the following SWOT analysis bears testimonial. Political: Etihad Airways, like other aviation firms, has to follow strict government regulations. Economical: The Company also has some social responsibilities to follow. The reason is as Aviation co-exists with country’s hospitality industry, it has to make sure that hospitality industry does not get suffered. Social: As the company’s staff and passengers both come from the society, there is a social obligation in the company to work for the welfare of the public. Technological: As the technology changes, the employees who can deal with new technology are needed in every aspects of work. Ethical: There are some Ethical constraints like cannot limit on work hour etc. Legal: Aviation laws, labor laws, governments rules form the legal periphery for Etihad Airways. Competition Competitors 1.Emirates 2.Air India 3.Jet Airways 4.Qatar Airways also can you put the reference from the analysis as well thank you regards Dear, the writer Please do the analysis of PESTEL as well thank you Regards Reference List Alon, I. & McIntyre, J., 2005, Business and Management Education in Transitioning and Developing Countries: A Handbook, M.E. Sharpe, New York Altobelli, C. & Sander, M., 2001, Internet Branding: Marketing und Markenführung im Internet, Lucius & Lucius De, Stuttgart. Bensoussan, B. & Fleisher, C., 2003, Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition, Pearson Prentice Hall, Upper Saddle River, New Jersey. Birkinshaw, J. & Hansen, M. T., 2007, The Innovation Value Chain. Harvard Business Review, 85(6), retrieved September 10, 2007, from Business Source Premier Database. Bollingtoft, A., et al., 2009 New Approaches to Organizational Design: Theory and Practice of Adaptive Enterprises, Springer Publishers, New York. Bruton, G. & White, M, 2007, The Management of Technology and Innovation: A Strategic Approach, Thompson South-Western, Mason, OH. Burton, R., DeSanctis, G. & Obel, B., 2011, Organizational Design: A Step-By-Step Approach, Cambridge University Press, New York. Cooke, P., Jenkins, W., Moreton, K. & Williamson, D., 2013, Strategic Management and Business Analysis, Routledge Publishers, London. Frisendal, T., 2012, Design Thinking Business Analysis Business Concept Mapping Applied, Springer, Berlin. Gully, S. & Philips, J., 2011, Organizational Behavior: Tools for Success, Cengage Learning Stamford, Connecticut. Haig, M., 2011, Brand Failures: The Truth about the 100 Biggest Branding Mistakes of All Time, Kogan Page Publishers, London. Hitt, M., Hoskisson, R. & Ireland, D, 2011, Strategic Management: Concepts and Cases: Competitiveness and Globalization, 10th Ed, Cengage Learning, Stamford, Connecticut. Johri, A., 2010, Business Analysis, Himalaya Pub. House, Mumbai, India. Knudsen, C. & Tsoukas, H., 2005, The Oxford Handbook of Organization Theory, Oxford Handbooks Online, Oxford. McEwen, M. & Wills, E., 2010, Theoretical Foundations Theoretical Basis for Nursing, Third Edition, Lippincott Williams & Wilkins, Philadelphia. McShane & Glinow, V., 2010, Organizational Behavior, 6th Edition, McGraw-Hill/Irwin, New York. Miner, J., 2011, Organizational Behavior 6: Integrated Theory Development and the Role of the Unconscious, M.E. Sharpe, New York. Thomassen, L., 2006, Retailization: Brand Survival in the Age of Retailer Power, Kogan Page Publishers, London. Tywoniak, S. & Waldersee, R., 2007, Strategic Analysis: A Guide to Practice, McGraw-Hill Australia, Sydney. Vibert, C., 2004, Theories of Macro Organizational Behavior: A Handbook of Ideas and Explanations, M.E. Sharpe, New York. Read More