Analysis of Emirates Airline

Published by James Taylor

1.0 Introduction

Emirates is an airline situated in Dubai, United Arab Emirates and owned by the government owns it. It was founded in 1985, and research shows that it is the largest renowned airline in the Middle East which operates over 3000 flights weekly. Emirates airline network connects over 140 destinations over 70 states across six continents. Arguably, it is the fourth largest airline across the world in terms of international passengers ferried. The airline enjoyed the longest nonstop commercial flight from Dubai to Auckland from 2016 to 2017. The business model of Emirates is efficient because statistics show that the aircrafts economize on fuel to a tune of 3.1 liters for every 100 passenger kilometer. It also employs modern technology to plan as well as in route optimization. The airline has the best branding technology which appeals to both domestic and international passengers. It has various slogans which have changed right from its foundation up to the present day. The initial slogan was “so be good to yourself, fly Emirates. The airline slogan is currently known as “Hello Tomorrow.”

1.1 The PESTLE Analysis

Political- The airlines support the political activities of the country. Terrorism and civil strikes affect its operation in Dubai. However, political uncertainty across the European, Middle East and African countries have adversely affected the airline.
Economical- Trade protectionist policies of the United States administration has led to the declining of flights into the US (Jeng, 2016). The policies are not either favorable for emirate business thus incurring losses. The low oil prices have positively affected the economy and the entire business of Emirates airlines.
Social- The airlines has improved its recruiting strategy aimed at retaining United Arab Emirates citizens. Ideally, it has initiated a strategy that would ensure that employment opportunities are given the locals or rather United Arab Emirates nationals
Technological- The airlines have invested in efficient customer support system to enable the passenger to get their tickets at their homes comfortably. It has also developed an Omni-channel strategy for seamless passenger experience. The services to customers can be performed through the native language of each passenger.
Legal- The airlines have been banned from ferrying electronic devices to all flights destined to the United States.
Environmental- The airlines are committed to ensuring eco-efficiency through major initiatives and investments. Moreover, it seeks to develop biofuels to reduce environmental impact.

1.2 SWOT Analysis

Strengths- The airlines enjoy strong growth as well as world-class infrastructures which helps it to compete favorably with other international airlines (Belobaba at al., 2015). The government also extends its financial support to the airline, unlike other privately owned airlines. Its branding is exceptional, and it reaches many customers across the world. For instance, its branding is globally known because the airlines have been sponsoring international events like football. Nonetheless, it has global alliance and partnership with three global airlines such as Star Alliance, Sky Team and Oneworld.
Weaknesses- The airlines have costly tickets when compared to other global airlines. The highly priced tickets make its potential customers shift to other global airlines offering reasonable ticket prices. The fall of oil prices makes the airlines to lose income because they are forced to review ticket prices downwards. The operating cost increases with a decrease in oil prices hence adversely affecting emirates airlines.
Opportunities- The airlines have the opportunity to market their business during the Dubai World Expo which will be held in 2020 (Fazli & Farooq, 2018). The airlines would also experience peak season due to the increased number of international travels destined to Dubai since the Dubai World Expo would attract many people across the world. The Al Maktoum International airport has helped the airlines to unlock growth in its business. Dubai has developed to be both tourism and business hub hence increased international travels to and outside the country. It can also increase its market share by exploiting the untapped market in Iran and Cuba.
Threats- The airlines are faced with stiff competition from other global and regional airlines such as Etihad Airways, Turkish airlines, and Qatar Airways. It has also been accused of subsidy benefits by its competitors in the United States. Global and Middle East terror attacks have posed constant threats to the Emirates airlines. The conflicts and political instability in the North Africa region and the Middle East have hampered the emirates airlines operations. , and these will adversely affect tourism and travel consequently reducing the rate of the business of emirate airlines. Syria and Iraq flight paths have been closed and therefore make the airlines to increase their cost of tickets.

1.3 Porters Five Forces

Porter’s five forces help an individual to understand the airline industry as well as the position of Emirates airline in the market.

The threat of new entrants- There are entrant barriers in the airline industry which might be brought by the huge capital involved during the time of entry into the business. It also requires approval by the government for an individual or group to enter into the airline business. It needs huge capital for new entrants to penetrate the highly competitive market. There are also difficult standards that must be met by new entrants such as airplanes quality. Huge capital investment is needed by new entrants into the market to establish a good position in the market share (Taneja, 2016). The airlines found in the current internal aviation industry have a good command in the market which makes it nearly impossible for new entrants to have a significant share in the market. The above discussion shows that Emirates airlines have a low threat to new entrants. Therefore, famous companies such as Emirates airlines which have been operating for over three decades can handle the pressure from new entrants into the airline industry.
Bargaining power of buyers- Ideally, the buyers in the airline industry have insignificant control over the price of air tickets. They have only effect on the costs whereby they shift for other airlines that charge lower rates. Most customers want the best quality of services which is adequately offered by Emirates airlines. Lack of bargaining power of buyers makes the Emirates airlines to increase its airfares without losing its customers. Customers are willing to pay high prices charged by the emirates airlines due to the high-quality services offered. The analysis shows that Emirates airlines buyers have low bargaining power.
Bargaining power of suppliers- The bargaining power of suppliers in the airline industry depends on the number of suppliers of planes and the need of the airlines for these carriers. Boeing and Airbus are the best companies known for manufacturing airplanes used for civil transport. The aviation industry has a low number of suppliers thus providing adequate opportunity for the suppliers to show limited flexibility in their pricing structure while keeping high power of bargaining. Therefore, they have high bargaining power when selling their products to well-established airlines like Emirates. The suppliers enjoy the benefit of gaining a contract with Emirates, the leading airline across the world. The position of Emirates airlines in the market has enabled its management to develop a good relationship with the suppliers. Also, the management can collaborate with the manufacturers to design the emirates airlines planes that enhance the experience of customers.
Competitive rivalry- The airline industry in the contemporary world has a high level of competitive rivalry. The feature puts the Emirates company to the task of developing a strategy aimed at increasing its financial supremacy even if there is stiff competition in the airline industry. The management of emirates asserts that high-quality services and aircrafts and infrastructure update assists the company in maintaining a competitive advantage in the airline industry. The emirates airlines have the advantage of being a national airline in Dubai, but its competitors have a market share in the global market, and therefore it must invest heavily to maintain the loyalty of customers by developing brand loyalty programs (Gustavo, 2013). British Airways, Air France and Qatar Airways are some of the potential competitors of Emirates in the airline industry.
The threat of substitute products- The Emirates airline, is faced with the challenge of substitute of products in the industry. Apart from Emirates, other airlines could provide the same services as those it provides. The services provided by other airlines can be termed as substitute products of Emirates airlines. Emirates airlines are focused on offering high-quality services to address the problem of substitute products.

1.4 Internal environment analysis of Emirates: 7S Mckinsey Analysis

The strategy of the emirates airlines- The Company utilizes a good business strategy that helps it gain prominence to its stakeholders such as the customers. It has invested in diversification approach as a business strategy to ensure that customers from different social and cultural background get the best service from Emirates airlines (Min & Joo, 2016). The success of the emirates is realized through the adoption of a general strategy of the company which forces it to use focus-leadership approach.
Style- The success of the airlines is contributed by proper leadership style practiced by the top management team. It uses a family-style of leadership which positively influences the activities of the company. Notably, it utilizes a democratic style of leadership whereby the employees are involved in decision making of the Emirates airlines.
Structure- The management adequately coordinates the activities of the Emirates airlines. The hierarchical type of management structure provides smoothing running all businesses in the entire company. The hierarchical management structure is suitable for large companies like Emirates airlines.
Shared value- Ideally, the success of a business organization like Emirates airlines depends on the level of ethics practiced by employees, management and other stakeholders. A company builds on strong ethical values is set to prosper both national and international spheres. Emirates airlines have initiated strategies aimed at boosting sustainable development as well as the growth of the company. The shared values exercised by the company may include taking care of staff, stakeholders, environment and the community.
Staff- The airline staff receives proper remuneration as enshrined in the labor laws of the United Arab Emirates. It also gives shares of its profits to the eligible staff members depending on their actual performance. The airline staff and family members are offered a subsidized ticket.
Skills- Emirates airline employees are subjected to regular training to ensure improved service delivery to its customers. For instance, the airline has developed its training center dumbed “Emirates Aviation University” for training employees. The strategy helps the staff to acquire the required skills and knowledge that would promote the growth of the company.
System- The Emirates Company has invested in information technology to maintain a competitive advantage in the airline industry. The firm is developing e-business systems to address the growing digital market in the airline industry.

1.5 Challenges facing Emirates

The company does not have an autonomous fleet for the operation of airports
It does not have an innovative way of teaching its crew
It cannot accommodate the personal needs of all customers.
Competition from other global airlines is stiff thus reducing its annual profits (Hammoud et al., 2017)
Currency fluctuation in its primary market is a significant challenge since it reduces its benefits.
Shortages of pilots have forced Emirates airlines to cut its frequencies.
The airline is faced with staffing challenges because it is understaffed thus compromising the quality of services provided to potential customers.

2.1 development of objectives

The main objectives of Emirates airlines are:

To provide a safe, secure and luxurious flying experience to and from the United Arab Emirates.
To Promote tourism activities of Dubai as well as introducing Dubai to the world
To Increase market share
To top low-cost carriers market to gain the return on investment of the emirates airlines
To retain and promote market share of frequent business travels.

2.2 Strategic option and supporting the rationale for the strategic choice

For the Emirates airlines to maintain its competitive advantage in the airline industry, it must utilize TOWS or SWOT matrix strategy. It is a strategic tool of planning that can be used by managers in emirates airlines to conduct a situational analysis. It is an essential tool for evaluating strengths, weaknesses, opportunities, and threats faced by Emirates airlines in the modern business environment (Nhuta, 2012). A critical SWOT analysis of the firm helps it to maintain its market share in the industry’s market. The tool is very interactive since it coordinates various activities in different departments in the company. These departments are finance, operations, strategic planning, marketing, and management information systems.

Moreover, the SWOT as a strategic tool assist the emirates airlines managers in pinpointing the internal factors like strengths and weaknesses and external factors such as opportunities and threats. The managers can build SWOT analysis into four strategies, and they include, SO (strengths-opportunities), WO (weaknesses-opportunities), ST (strengths-threats) WT (weaknesses-threats) Strategies.

Strengths – Opportunities (S-O) strategy

With the proper use of Strengths and opportunities strategy, the company can quickly identify its strengths and opportunities. The emirates airlines have a good market share which should be fully exploited to realize maximum profits. Arguably, the company has commands the large size of the market in the airline industry because it has operated for many decades. On the issue of the workforce, the airline has highly qualified personnel for discharging quality services to its customers. It ensures that its staff is trained on the contemporary skills and knowledge for the smooth running of company activities. Moreover, the Emirates airlines have a superior reputation in both the national and international market. It also can provide high-quality services to passengers. Despite the above strengths identified by the S-O strategy, the Emirates airlines have got various opportunities to exploit (Holloway, 2017). For instance, it can venture in new markets. The S-O approach is imperative to Emirates airlines because it would identify the situation of the economy. Through the strategic opportunities such as weak market of the potential competitor of the company will be recognized and necessary measures are taken to maintain its competitive advantage in the industry. Moreover, the strategy will ensure opportunities such as the improvement of technology and the growth of the existing market are realized. The strengths and opportunities strategy will effectively analyze both internal assessment organization and external assessment of the environment.

Strengths – Threats (S-T) strategy

The strategy will ensure that all the strengths and threats of Emirates airlines are identified. The strategy is essential to the company because it would help it to utilize the strengths to build its global reputation. Moreover, the strategy will enable the firm to identify the areas that need improvement to reduce the threats posed by new entrants into the airline industry. For example, the strategy of ST would ensure that the company uses its strengths to eradicate the possible threats facing it (Nataraja & Al-Aali, 2011). Threats such as new competitors, new policies and regulations, change of market tastes, availability of substitute products and a shortage of company resources would be addressed by proper utilization of company strengths. Therefore, the Strengths- Threats strategy is inevitable to Emirates airline because it will adequately solve the problem brought by company threats.

Weaknesses-Opportunities (WO) strategy

Weakness- opportunity strategy in emirates airlines is essential because it helps in the identification of areas that can be improved in the future. On the other hand, the opportunity is a situation whereby the company has a chance to utilize untapped potential to increase its profits as well as service delivery. Through WO strategy the company can open up new markets, decreasing transportation cost, tapping new customers through the development of online booking and ensuring low inflation thus stabilizing the market. The opportunity strategy analysis can make the government since it wholly owns the Emirates airlines to review policies to ensure low inflation. Weaknesses of the firm can easily be identified through WO strategy and necessary measures taken to address the problem. The weaknesses may force the firm to invest more on technologies; more funds to be channeled into the company; diversification of services and increased in research and development to solve the snags involved in service delivery of customers.

Weakness- Threat (WT) strategy

The strategy helps managers to identify the threats faced or about to be faced by the Emirates airlines in advance and relevant measures put in place to ensure the competitive advantage of firms is maintained. For example, the strategy can identify threats like the development of new technologies by other firms; changing behavior of consumers and lack of innovation of new products and services (Picazo, 2013). The strategy is crucial because it identifies the weaknesses and threats on time and gives the managers ample time to adjust in developing possible solutions thus maintaining a good position in the market. Imitation of low quality and counterfeit goods is also identified when SWOT analysis is conducted under the WT strategy.

2.3 Implementation of a SWOT analysis

The issues raised in the SWOT analysis can be adequately implemented by the Emirates airlines to ensure competitive advantage in the airline industry. The firm can implement SWOT analysis strategies in various ways:

Physical Resources- The physical resources of Emirates airlines are airplanes, hangers, and computers. The implementation of the ideas discussed in SWOT analysis will be implemented by ensuring the proper use of a large number of aircraft owned by the firm. For instance, the global presence of many planes would increase the market share of Emirates Company hence increasing profits. The airplanes are manufactured with high technology which will adequately serve the needs of customers. The planes are designed in a manner that would improve the passenger experience. More planes will be purchased to ensure availability of flights in all the routes across the world. Ideally, the aircraft is acquired from renowned manufacturers such as Boeing and Airbus companies and therefore their safety is highly guaranteed (Redpath et al., 2017). Another resource which will help the company implement the SWOT analysis is the computers.

The airline industry is fast growing digital, and computers of the company will be used to improve service delivery such as online booking of tickets, printing of passenger manifest, and enhancing communication among the significant number of employees. The computer resource will be used in the planning of flights, accounting crew scheduling. Weather tracking will be done using computers to enhance customer safety and comfort. The service delivery to customers is set to improve after the implementation of SWOT analysis ideas. The implementation would see seating arrangement in the airplane done using computer technology

Nonetheless, physical resources like hangers will be availed for safekeeping of planes. Hangers will serve as designated areas for maintenance of airplanes as well as storing aircraft. They are built in a manner that will ensure airplanes of all sizes are accommodated. The move is to ensure the safety of passengers because poor keeping might result in unnecessary breakdown thus jeopardizing their lives. The strengths of Emirates airlines show that it is capable of erecting many hangers to accommodate the vast number of airplanes.

Financial resources- The financial resources of the firm can effectively implement the SWOT analysis strategies because it has enough capital granted by the government and the accrued profits. The financial strengths will ensure that research and development are conducted to help the firm provide a wide range of services to choose from. The financial capability will also be used to enter into new markets. However, the strengths realized through adequate funds will enable the firm to improve its market share by reducing its ticket prices. The financial strength is essential in that it will invest in the intensive advertisement of its services hence increasing the size of the market in the world, unlike other unexperienced airlines with limited funds.
Human resources- Mostly, companies fail because of understaffing and employment of semi-skilled workers. The availability of funds in Emirates airlines Company will enable the management to employ highly qualified personnel to deliver high-quality services to customers. New and existing workers will undergo new training to ensure the airline provides the desired services while achieving customer satisfaction (Tugores-Garcia, 2012). The company will also increase the number of training centers from one university to three to accommodate the swelling number of employees. All the employees will be trained to handle customer grievances at all times ethically.
Intangible resources- Branding should be given the priority because it globally markets the emirates airlines company. Design of the airplanes also matters to the customers. The design means that customers might be comfortable or not. Therefore to enhance customer satisfaction, management and procurement department should purchase the most comfortable airplanes.
Leadership style- The style of leadership will shift from authoritarian to democratic since it provides freedom to all stakeholders to participate in decision making.
IT systems- the company, will ensure modern technology is used in information storage and database. Online booking will also be availed in the portal of the Emirates airlines.
Scheduling plan- The scheduling plan of flights will be effectively done by the use of modern technology to curb unnecessary errors. There will be strict time observation to eradicate the common delays which have led the company to lose customers to its competitors.
Organization structure- The Company will employ an effective organization structure aimed at streamlining and coordinating the vast activities undertaken in the company. The hierarchical organization will be implemented to ensure the smooth running of the Emirates airlines hence delivering the best services ever.

2.4 Monitoring the strategic plan

The use of a balanced scorecard will monitor the strategic plan of Emirates airlines. The scorecard is the best monitoring tool because it ensures regular discussion of what is happening in the firm. In the scored card, meetings are held after a certain period to gauge extend at which the strategic plan is implemented. Top management may agree when and where to meet to ensure the strategic plan is monitored to improve the results is aimed at delivering. Scored cared monitoring tools looks into various aspects such as financial performance, customer performance, growth performance, human resources performance and quality and effectiveness of performance (Nhuta, 2012). Organization excellence is realized when the above aspects show positive results during monitoring. When the customers of Emirates airlines register high levels of satisfaction of the services delivered, then the implementation of the strategic plan would have worked as expected. Human resources performance would depict that the strategic plan is appropriately implemented. For instance, when the output of employees in the Emirates airlines is proportional to the working time, it means that SWOT analysis ideas have been implemented to the latter. Increase in finance of the company clearly shows that it has achieved the strategic plan as required.

2.5 Conclusion

The airline industry has experienced essential dynamics in the last two decades after the invention of modern technology. The airline business is very competitive and therefore needs good strategies for individuals to survive the changing business environment. Thorough situational analysis of the business organization is essential since it gives a clear insight into what is on the ground. The situational study can be conducted using, STEEPLE analysis, SWOT analysis, Porter’s five forces, and McKinsey 7S framework. The situational analysis tools help a business organization to maintain competitive advantage or identify its gaps which it needs to improve to have a better position in the market. The best situation analysis of Emirates Airlines Company is SWOT analysis because it could identify strengths, weaknesses, opportunities, and threats. The features of SWOT analysis helps a company to know the areas that need improvement and the existence of unexploited opportunities in the market economy. Finally, the scorecard monitoring tool can appropriately be used in evaluating any strategic plan.

References

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