Answer & Explanation:edit the attached paper on the following·Format the title page to APA,·On the introduction part add what will the paper be talking about by summarizing the contents add 1 page·write the company’s objectives (1 page)·ad in text citations 5 of them and which should also be the reference list·avoid plagiarism
strategic_management_on_emirates_airlines_revisison.doc
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Strategic Management in Emirates Airlines1
Abstract
This report investigates the management of Emirates Airlines in comparison to other airlines. The
first part provides a brief outlook of the Emirates Airlines and there is a look at where the company came
from. The various development stages are discussed showing the changes the company had to make to
accommodate its growth.
There is a look at the goals of the company which the management strives to achieve. These
objectives necessitate the formulation of strategies including a diversification strategy, an intensive
strategy and a generic strategy to ensure the airline remains one of the top airlines in the world. Emirates
Airline has been innovative in the use of technology to enhance its service and has set the trend in the
industry. This report also discusses the strategic alliances that the airline has made to increase its reach
and therefore access more customers.
It also delves into the stages a company goes through facing different challenges and
competition. There is a look at some competitors in the industry and other similar type of organizations.
British Airways and Singapore Airlines offer the best examples of the diverse competition that Emirates
Airlines faces. There is a look at the similarities and contrasts in challenges and strategies taken by these
airlines in comparison to Emirates Airline.
A swot analysis then goes through the strengths, weaknesses, opportunities and competition that
the company may have. Recommendations on how the airline can ensure it remains competitive and
profitable are then stated in conclusion.
Strategic Management in Emirates Airlines2
Introduction
After a gap was left by the closure of Gulf Air, Emirates Airlines was established in the 25th of
October 1985 by the Dubai government with only two aircrafts at the time. It has now over 142 aircraft
and flies to 78 destinations that are spread over 102 countries throughout the world. The cabin crew is so
diverse that it accommodates 95 nationalities. Recently it made aircraft orders of at least 27 billion dollars
for 45 Airbus A380 making it the largest buyer of Airbus super jumbo in the world. Emirates Airlines is
also the fifth most profitable airline worldwide. According to a BBC report, it has been growing by at
least 20% each year for the last 17 accumulating a profit of 637 million dollars in 2004-2005.
Offering consistent and high quality for money service and being the best airline on all routes is
the Emirates Airline’s mission which it is committed to achieve. Towards this goal it has been known to
be innovative and customer oriented in the provision of services including personal entertainment system
offers in all classes, 22 audio channels, 18 TV channels and an online booking service enabling customers
to search for flights, book and choose seats. It remains one of the fastest growing airlines.
Strategic Management in Emirates Airlines3
Existing Management Strategy
When Emirates Airlines was created, the management was small and able to take quick decisions.
It was efficient and did not follow the orthodox model of hierarchies and board of directors. The
employees are said to have been treated as family and normal workers. These building blocks were
important in helping them maintain a low cost structure. They also offered a good quality of service and
had a young fleet in comparison with other airlines that existed at the time (mbaassignments, 2009).
The high performance of the airline depends on strategies that are being formulated and
implemented. There is a mixture of a variety of operational strategies including a diversification strategy,
an intensive strategy and a generic strategy. The most important operational strategy of Emirates Airlines
is the high quality provider strategy. Being an airline that is concerned with passenger safety, it plans to
have 120 Airbus A380 once a new airport space is available. It is also working with Boeing as the plane
manufacturer works on the 777 jets next generation.
Emirates Airline is also known for pioneering market trends which is another operational
strategy. It has managed to differentiate itself from others through offering of modern services such as
advanced aircraft, comfortable seats with personal entertainment systems, use of mobile phones on board,
an e-ticketing system, private first class suites, SmartLanding and SmartRunway safety solutions. The
company has also implemented several intensive strategies including market development, product
development and market penetration.
There is also a reduction of operations costs when there is sharing of resources with different
companies through alliances. The companies benefit from a wide range of customers too. Also, long term
agreements with suppliers create strong relations with suppliers and discourage any sudden changes in
pricing. There is still a need for airlines to cut prices and improve services for a strong and winning
aviation market.
Strategic Management in Emirates Airlines4
Emirates Airline is also known for customer service operational strategy. It provides the best
ground services through easy and early check-in, chauffer driven airport transfers in some cities and
waiting lounges. It was the first airline to introduce digital windscreen systems.
The airline industry has been affected by political and other economic factors especially after the
11th September disaster which resulted in a great change in the travelling abroad for business, studies or
even visits. Also, the rapidly rising of oil prices all over the world has increased costs and consequently
reduced profits with reports estimating the losses to be 6 billion in 2009. There has been a global
recession which had an enormous impact on business. Such an economic downturn affects market
demand, changes customer behavior and preferences and cause financial deficits.
However, due to the trend of tourism, development of globalization and international trade, the
airline industry has restored its passenger numbers. It is thus still growing and is actually a top level profit
industry. Passenger numbers exceeded 2.3 billion by the end of 2009 according to IATA.
Emirates Airlines has a good and an effective business model which ensures achievement of
company objectives and that it becomes a leader in the industry. It also includes the following:
Quality control
The standard and quality of the brand is a fundamental prerequisite in the achievement of any
goals of an organization and a strong brand name is important in attracting customers.
Aviation training
This not only opens new opportunities for outsiders but helps in the retaining of old employees
ensuring the company gets maximum benefits from them.
Information technology development
Strategic Management in Emirates Airlines5
For an airline to be able to attract big contracts, it needs to develop its information technology
system, adapt e-business and use a self check services system. Information technology can also provide
tactical tools for an organization whose proper application and use is able to bring great advantages in
strengthening and promoting their competitiveness.
The internet’s proliferation as a mainstream form of communication has resulted in a wide range
of strategic business implications in general and for the travel and airline business in particular.
Information technologies are usually implemented once and are not interfered with unless there is utmost
need or breakdown of the existing system.
Tourism and hotels
Through development of restaurants, hotels and buildings an airline can increase the number of
tourists travelling with them. The company may also build new bases and expand existing ones which
encourages travelers to use their services which will be more convenient or less costly.
Market surveillance
This requires resources such as office equipment, employees and finances and competences
including online booking, point to point routing, on time delivery, route policy strategy and frill strategy.
Research may also be necessary so as to be able to determine the trend of the market and industry.
Strategic Management in Emirates Airlines6
Competitors
Competition is more hostile in the maturity stage due to increased advertisement and promotion.
Companies increase their research and development budgets and want to differentiate themselves from
their competitors through the increasing of their customers brand loyalty. They start cutting their
operating costs. They have even been known to use offensive strategies rather than defensive strategies
through change of market strategy, development of products and marketing to stay alive and compete
during this stage.
New entrants in any particular industry are not the most liked by existing companies due to the
fact that new companies provide attractive low cost products. They also face challenges such as:
Capital requirements
A huge requirement is required in this industry for the purchase of new aircraft, the starting of
new projects and attracting of customers.
Brand name and customer loyalty
Airlines that have great goodwill and a strong image in the market easily outdo new market
entrants.
Some competitors to the Emirates Airlines include:
1. British Airways
It is the United Kingdom leader and one of the biggest airlines in the world and has also adapted
latest services such as e-ticketing and extra comfortable seats. Just like Emirates Airline, it is also facing
increased competition and has to contend with an increasing amount of market share being grabbed by
more firms.
Strategic Management in Emirates Airlines7
In addition to scheduled flights, services, British Airways also operates domestic and
international carriage of mail and freight and ancillary services. It flies to at least 300 destinations and
employs over 42377 people in the United Kingdom. It has been labeled as one of the pioneering airlines
in the adoption of green technology and environmentally friendly decisions. It was actually the first
airline to be part of a group of European countries reducing the emission of greenhouse gases.
Moreover, passengers’ printing their boarding passes was started by British Airways. Just like
Emirates Airline, it is also developing bases like Heathrow airport which is the United Kingdom’s and
one of the world’s busiest airports.
2. Singapore Airlines
Having been established in 1947, it is regarded as one of the most reputable travel brands in the
market. It is a premium carrier with high innovation levels as well as excellent service levels and has
strategically given priority to profitability as compared to size. The Singapore Airlines Group has
subsidiaries that cover every segment of the market and they include Singapore Airport Terminal
Services, Singapore Engineering Company, Singapore Airlines Cargo and Tiger Airways. It is therefore
well placed to be able to compete with any new entrants that offer low prices.
In its international strategy, it joined the Star Alliance which is one of the three major alliances,
the other ones being Skyteam and Oneworld. Also, various divisions have been investing in India and
China through alliances with various organizations. Singapore Airlines is also using information
technology to enhance customer service as well as increase efficiency. Its website is both advanced and
user friendly enabling customers to check schedules, purchase tickets, check into flights, find out
promotions and choose their meal for the next flight.
Strategic Management in Emirates Airlines8
Swot Analysis
Threats
Emirates Airlines is located in a region with political instability and increased terrorism activities.
This results in an increase in operation costs due to an increase in aviation security. The inability of
Airline companies in the Middle East to join other top airlines affected business during a past economic
and political instability in the Pacific Asia region.
Fuel prices have increased resulting in high costs of operation as a result of which the airline
industry suffered a loss of 3 billion according to IATA (studymoose). The modern online ticketing
platform is also susceptible to hackers and viruses which can destroy the company’s database and result in
huge losses. There have also been natural disasters such as floods, earthquakes and hurricanes. Pakistan as
an example has been hit by an earthquake as well as floods. These eventually have an impact on the sales
of airline companies.
Opportunities
The growth in per capita income in UAE is creating a market for airline tickets and so is the
growth in the world and UAE population. The UAE is planning huge investments in the development of
Abu Dhabi and Dubai airports which will enhance the economy, increase tourists and reduce the
dependency of oil through alternative business opportunities.
Aviation events like the Dubai Air show promote Middle East airlines to the world and a forecast
by the World Travel and Tourism Council indicates that locality, beautiful buildings and luxury hotels
and restaurants will lead to an increase in tourists in the UAE. Also, a lot of firms are shifting to Dubai as
a result of a better situation political situation and safety which gives an opportunity to increase passenger
numbers.
Strategic Management in Emirates Airlines9
Strengths
The Emirates Airline is a member of the Arab Alliance, Arab Air Carriers Organization and it
being a state owned organization benefits from trade pacts being signed. it also sponsors a variety of
festivals and sports.
It was the first Arab company to introduce an e-booking system. It also offers a self check-in
system at the airport. It is the world’s biggest buyer of super jumbos and provides quality training and
impressive salary packages and benefits to employees. In spite of high prices of oil, the airline is growing
and recently launched flights to San Francisco.
An increase in the world population is increasing the number of tourists and educated people.
According to the National Human Resources Development and Employment Authority of the UAE, the
population in the country had grown to 7 million as of 2010. There are also emigrants travelling from
different countries and they all contribute to additional passenger numbers. The airline is also strategically
located to be able to take advantage of resources being gathered between east and west in Asia.
Weaknesses
There is a heavy reliance on international onward moving traffic. The increase in world oil prices
is bound to affect the company’s profit margin. Cut throat competition also means limited growth of
market share and a high cost of bench-mark standards maintenance.
Competition
Emirates Airline faces competition from Qatar Airways, Etihad Airways, Jet Airways and Air
India Express just to mention a few.
Strategic Management in Emirates Airlines10
Recommendations and Conclusion
Emirates Airline is the seventh largest airline in the world considering international passengers
and fourth largest if you consider international kilometers flown. It has been able to double its size every
3 and a half years in its first decade of operation. At a particular time, it had to respond to claims by a
competitor that it doesn’t pay taxes and that it receives a huge financial help from the Dubai government.
It has been feared that the airline would get caught up in the Dubai debt crisis which would have forced
the carrier to reduce its expansion hurting aircraft manufacturers like Boeing and Airbus having placed
huge orders with them.
Despite the company doing well, one should not disregard the huge support and goodwill it gets
from the government and its heavy reliance on expatriates to manage and run operations. As competition
increases and resources decrease it remains to be seen how the airline will survive especially without
expatriate employees. Senior executives are obviously thinking about this and rethinking strategic
approaches and pondering economic challenges.
With a detailed view of its internal and external environment and all other factors that might
affect the position of the company, it may use an offensive approach during a time of strong competition.
Due to investments in aircraft, technology and the best quality of services, operation costs at Emirates are
high. Therefore, the company should control its costs through improvement and development of
operations activities. The maintenance process may be improved and an effective and efficient flight
schedule as well as better utilization of company resources such as aircrafts adopted. Investment in
technology cuts the cost of labor and thus reduces operation costs. Installation of a new self check service
system in all airports is a good example.
In response to new low cost airlines in the UAE, Emirates Airlines should offer advanced level
services and control costs and thus mot needing to reduce prices. It may also introduce a subsidiary brand
Strategic Management in Emirates Airlines11
based on low costs. An extension of routes in tourism areas is strongly recommended and so is joining
global alliances which will increase its destinations worldwide enabling it better compete with low cost
airlines.
For improvement of its services and increasing of customer satisfaction, Emirates Airline should
sign contracts with an E-Business company. It should also comprehensively analyze and review its
internal and external factors as well as competitors and develop new strategies to keep it in a good
position in the industry.
It is of the essence that the management of the airline is well aware of an economic downturn’s
short term, potential medium term and long-term effects on the business. This would enable it to take care
of its competences and competitive advantages so as to be able to withstand and overcome such a
situation in addition to mapping out strategic objectives to enable it to remain one of the leading airlines
in the future.
Strategic Management in Emirates Airlines12
References
Ivan Ninov’s Strategic Management
Retrieved from
www.emiratesacademy.edu
Emirates Airlines
Retrieved from
www.studymoose.com
Student at
www.ukessays.com
MBA Assignments
www.mbaassignments.blogspot.com
Ahmad Jammoul’s The Strategic Diagnosis of Emirates Airline
Cited from
www.academia.edu
…
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