Strategic Analysis of Emirates Airlines Company †MyAssignmenthelp.com

Question: Discuss about the Strategic Analysis of Emirates Airlines Company. Answer: Introduction Emirates Airlines is an airline company which has its headquarters in Dubai, in the United Arab Emirates. The Airlines came into existence in the year 1985 with just two aircraft comprising its fleet, an Airbus 300 B4 and a Boeing 737 (The Emirates Air Line, n.d.). The present operations of the company extend to more than 102 countries across the world and the fleet consists of more than 142 aircraft. It is considered to be the largest airlines in the Middle East and the fourth largest airlines in the world today and operates more than 3600 flights every week from its base in Dubai (The Emirates Air Line, n.d.). Airline Industry Profile The global airline industry has always been characterized by an intense level of competition among the key players along with an intense price pressure that necessitates the continuous need for the airline companies to improve efficiency (S, n.d.). This is an industry which has reflected a parallel growth with the increasing number of passengers using the air mode of travel. However, with the global economic recession, the business sustainability of the airline industry has been affected in key aspects like financial resources, changing consumer preferences, internal resources, market forces, and much more (S, n.d.). Another key element which affects the state of the airline industry is the rise in the prices of oil across the world which affects the cost of travel and the overall profitability of the industry (S, n.d.). Life cycle of the Airline industry The classic definition of product life-cycle attributes four life stages to every product; the introduction stage, the growth phase, the maturity stage, and the final phase is the decline stage. According to this definition of Product Life Cycle, the airline industry is in its maturity stage which can be attributed to the presence of perfect competition in the industry and the market (Hill, Jones, Schilling, 2014). The maturity stage in the product life cycle is characterised by an increasing level of hostile competition among the different players and a surge in the promotional and advertising activities to beat the competition (Hill, Jones, Schilling, 2014). The companies in a mature industry shift from using defensive strategies to using offensive strategies in their marketing mix, product development strategies, etc. to stay ahead of the competition in this aggressive life cycle stage (Lambert, Davidson, 2013). This stage also results in the exit of the less efficient companies from the industry as the companies employ strategies to reduce the overall operating costs which leads to the decline in the mean profit levels of the firms. Many companies in a mature life-cycle stage increase the budgets for RD to improve their efficiency (Lambert, Davidson, 2013). Emirates leadership style and team The Emirates airlines success is largely attributed to the management team of the company and some of its members who have been a part of the companys management since its inception in 1985. The leadership style that the top managers and leaders of the company practice is largely a democratic and an influential style of leadership (Zander, Butler, 2010). The top leaders of the company use the skills and aptitude to inspire confidence in their employees and influence the thinking process of the employees at all levels. The leadership uses the social influence parameters to provide assistance and support to the employees of the company to steer them towards the common goal of the organisation (Zander, Butler, 2010). Core competency analysis A concept developed by Gary Hamel and C.K. Prahalad, the core competency can be described as an ability of the company to differentiate its products from the competitors in such a way so as to get ahead of the competition. For example, Emirates continues to implement its differentiation strategy in various aspects of the business such as ticketing, technological features of the aircraft and the flying experience to stay ahead of the competition (Daft, Albers, 2013). External Environment Analysis of Emirates Competitive environment The competitive environment of a company refers to the dynamic external system where that specific business functions and competes. For example, in the international airline industry, Emirates competes with all other international airlines in the market. Happily, the company is considered as one of the premier organization in this area (Daft, Albers, 2013). PESTEL Analysis Political factors: Air travel across international borders is governed by political agreements between nations. The governments of many nations have strict rules and regulations that apply to foreign airline companies to protect the profits of their own domestic airlines. However, Dubai is an open unprotected market with an open skies policy which has helped Emirates in growing its capacity and developing capability through an open market competition to become one of the prominent airlines in the world (Daft, Albers, 2013). The deregulation of aviation in many countries has prompted many airlines to develop their capacity for open routes, increasingly competitive fares, exit of air carriers, service frequency, and much more. As liberalization in the aviation policies and the industry continues to grow, the competition among the key players is becoming equally fierce (Daft, Albers, 2013). Economic factors: Jet fuel in an airline company accounts for approximately 40 percent of the operational costs and therefore it is highly sensitive to any fluctuations in the oil and fuel prices in the international market (Babatunde, Adebisi, 2012). However, Dubai, the home country of Emirates is an oil-rich company, remains an important factor in the growth of the country. However, it is also prone to economic recession that continues to plague the country (Babatunde, Adebisi, 2012). Social and Cultural factors: There has been a massive increase in travel for recreational, educational and employment purposes and it has boosted the prospects of the airline industry and Emirates has been a natural beneficiary of this increase due to its well-connected and strategic network in all societies across the globe (Issa, Chang, Issa, 2010). Technological factors: With saturated competition in the market, it is necessary for a company to keep pace with technological changes in the market (Ho, 2014). As part of these changes, Emirates continues to invest in new and advanced technology and implements the differentiation strategy by purchasing latest models of aircrafts for its fleet. In addition, the company continues to update technology such as online ticket booking facility (Ho, 2014). Environmental factors: The services of Emirates continue to be environment-friendly as it incorporates various technologies designed to reduce carbon imprint (Shabanova, Ismagilova, Salimov, Akhmadeev, 2015). For example, the new Airbus 380 inducted by Emirates consumes less fuel and it emission levels are much lower. However, the airline business is susceptible to a natural disaster like hurricanes and other weather and climatic disturbances can have a major impact on the business of the company (Shabanova, Ismagilova, Salimov, Akhmadeev, 2015). Legal factors: The airline industry is susceptible to not just the rules and regulations of their home country but also have to abide by the laws of the countries they are operating in. Any change in the laws and policies of a nation can affect the business, profitability, and the revenues of the company (Gupta, 2013). Porters Five Forces Analysis of Emirates Threat of new entrants: The threat of new players entering the industry is relatively low in this industry as the entry barriers are very high. The high amount of capital requirements to purchase the aircraft and to enter this industry makes it relatively difficult for the new players from entering the market (Wensveen, 2016). Further, this is a service industry and the brand name and goodwill command a lot of customer loyalty which the new entrants will find difficult to compete with (Wensveen, 2016). Bargaining power of Suppliers: The main product for this industry is the aircraft, and there are two prominent aircraft suppliers that dominate the world market today, Airbus and Boeing (Baker, 2014). Therefore, the two major suppliers have a high bargaining power and any kind of hike in the price of the new aircraft or a delay in delivery of the aircraft can cause major loss of business and revenue for the company (Baker, 2014). Bargaining power of buyers: The consumers of today have a lot of airlines companies to choose from as many airlines are offering services on the national and international routes and the competition in the global airline industry is very high (E. Dobbs, 2014). Therefore, the buyers have a high bargaining power as they can easily switch over to the other service providers if the quality of service offered and the price standards do not meet their requirements (E. Dobbs, 2014). Threat of substitute products or services: The airline industry offers two kinds of services in the travel category; luxury travel and economy travel (Porter, Heppelmann, 2014). There is a very big price difference in the two categories which prompts many passengers to opt for economy flights while travelling over short distances. Many of the people also prefer other cheaper modes of travel like cars, railways for travelling over a short distance in many developing countries (Porter, Heppelmann, 2014). Rivalry among existing competitors: There is an intense competition among the airline companies at the global level with the presence of a number of flights from different airlines on the same routes at competitive prices, best of the services, and different kind of promotional offers to boost sales (Dlken, 2014). There are approximately thirty-seven airlines flying from Dubai on the same routes. Besides, there is an increasing competition among the airline companies through the continuous innovative offerings like reclining seats, on-board spas, and other such facilities (Dlken, 2014). Internal Environment Analysis: 7s Mckinsey Analysis Strategy of the company: Emirates Airlines has maintained its supremacy in the airline industry over the period of the years. Emirates have flights to most of the important destination cities in the world and the business strategy at Emirates gives prominence to the diversity of the companys stakeholders primarily the customers of the airlines (Ravanfar, 2015). The company has adopted a diversification approach to its management which ensures that the different communities and the customers of the company from varied socio-cultural backgrounds receive one of the best services in the industry provided by a team of dedicated and committed employees and staff members (Ravanfar, 2015). The generic strategy of the Emirates airlines which includes their strategy of focus-leadership is also one of the main contributors to their success (Ravanfar, 2015). Style: The leadership style of the top managers of the company is one of the very important factors that are responsible for the success of Emirates (Singh, 2013). The company has family-style leadership pattern and the leaders of the company are democratic and influential leaders. The top managers and the leaders of the company utilise their leadership skills to inspire confidence among the subordinates and influence their pattern of thinking (Singh, 2013). The leaders act with the consensus of the stakeholders but are able to coordinate the activities and the thought process of the employees towards the unified goal of the organisation (Singh, 2013). Structure: The Government of Dubais Investment Corporation of Dubai is the official owner of the Emirates Airlines. The Airlines has a hierarchical management structure to coordinate the smooth functioning of the vast size of the business of the airline (Mi Dahlgaard-Park, 2009). The Chairman and the CEO of Emirates Airlines is Sheikh Ahmed Bin Saeed Al Maktoum, who has led the company to success with the changes in the strategy and the new initiatives which have resulted in increasing the market share of the company (Mi Dahlgaard-Park, 2009). Shared value: The Emirates Airlines business ethics are very strong and are the basic foundations on which the success of the company has been built (Singh, 2013). The strategies of the company are aimed at seeking a sustainable development and growth for the company which includes caring for their staff, internal and external stakeholders, environment, and the communities they serve along with increase the revenues for the company (Singh, 2013). Staff: The remuneration offered by the Emirates Airlines to its staff members employed in different nations is always decided keeping in mind the labour laws of the concerned nation and are at competitive rates to the prevailing industry norms (Mi Dahlgaard-Park, 2009). The company also offers a profit share to all the eligible members of its staff based on the performance of the company. The profit share offered is between the two to fourteen weeks of the basic pay of the concerned employee. The airline also offers the air tickets at reduced rates for the staff and also the family members of the staff (Mi Dahlgaard-Park, 2009). System: The Companys strategy of development in the Information Technology to achieve a competitive edge in the fast-growing digital market is one of the very important strategies of the company. The company is making investments in the development of the self-check services and the e-business systems (Ravanfar, 2015). The development of the Information Technology systems is the key requirement of the airline to help in the smooth running and the coordination of the activities of the vast operations of the branches of the company which are spread across the different geographical locations around the world (Ravanfar, 2015). Skills: The Emirates Airlines follows a strategy of the extensive aviation training of all its employees. The Emirates has its own training centre which is known as the Emirates Aviation University, which trains the employees and the prospective candidates for the company and helps them acquire the knowledge and skills which are necessary for the strategic growth of the company (The Emirates Air Line., n.d.). The company also has in-house or internal training centre which offers more development and training programs for the employees to help them polish their skills for advancement in the company (Taran, Boer, Lindgren, 2015). The BCG Matrix of Emirates Airlines Cash Cow: The Economy flights can be considered the cash cow of the company which is also considered the foundation of Emirates Airlines. Prior to the Emirates introducing the economy flights in the company the economy class market was dominated by other players like the Qatar airlines. However, after the launch of economy class by Emirates, many people have switched their preference to Emirates economy flights (Jarzabkowski, Kaplan, 2015). The company has been performing steadily in the economy segment in the western countries and the Middle East, but the Asian market has not been fully tapped by the Emirates economy flights. The sales from the Asian region are not constant and have proved to be a setback in the revenues of the company (Jarzabkowski, Kaplan, 2015). The company has focused its strategy to improve the experience of the economy class customers and has refurbished the economy aircraft cabins. The experience of the economy class passengers in the Boeing 777 have been p ositive in the last few years proving that the strategy of the company is gaining success in the market (Jarzabkowski, Kaplan, 2015). Stars: The first-class and the business segments of the Emirates Airlines are the business leaders and the stars of Emirates operations. These two are counted among the flagship services offered by the company and enjoy a substantially high market share in the rapidly growing aviation industry (Jurevicius, 2013). Emirates has utilised the full potential of these two services and made good investments in them which has helped in growing their market share even more. With an upsurge in the economy and the income of the travellers the desire to enjoy the services of the first class and the business class will increase further providing further growth opportunities to the Emirates Airlines (Jurevicius, 2013). The airlines should concentrate on maintaining the star services on a global level and ensure that the quality of the services being offered remains uniform across the Middle Eastern markets and the South Asian economies (Jurevicius, 2013). Question Marks: The Emirates Airlines has recently launched its new service, the Emirates Holidays which although has a very high potential but has a very low market share presently. The investment in the venture is much higher as compared to the revenues generated from the same (Emirates Holidays. n.d.). The service could become a very high source of income and revenue for the airlines but is facing a tough competition from its main rival the US Aviation industry. But there are no monopolists in the growing tourism market although there is a lot of competition and Emirates Holidays has to undergo some challenges to be able to dominate the tourism market (Cadle, Paul, Turner, 2010). At present, the sales of the Emirates Holidays have been on the lower side and they have not been able to carve a niche for themselves in the tourism service provider market (Cadle, Paul, Turner, 2010). Conclusion Two important factors that distinguish Emirates from its competitors are the differentiation strategy of the company and the strong financial position of the company. Ever since the company came into existence it has built a strong customer base and built a good brand name and brand image for itself. This has helped the company to maintain its profitability even during the times of economic recession. The company has set the standards for the industry level competition in the quality of the services offered to the travellers. The airline was the pioneer in installing the video systems for all classes in the year 1992 introducing the in-flight personal entertainment systems. The airline also offers a large number of non-stop flights from its base in Dubai to important destination cities across the world. 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