Organisational Strategy & Decision Making Emirates Airline Case Analysis

centerbottom10500090000centercenter0105000centercenter0105000centertop105000900003BM020 Organisational Strategy & Decision makingEmirates airline case analysisStudent number: Student Name:
Introducing Emirates airline:
Airline industries nowadays became one of the major services around the world that is quite beneficial for other businesses and societies in general because it plays an important role in creating a new global economy. I have chosen Emirates because of the pleasant experience that I personally experienced with flying with emirates. Adding to that, the company position and good reputation as it is considered one of the most highly regarded Airline companies in Asia and also in the world.. “Emirates” is the largest airline in the Middle East and operating nearly 3,400 flights per week. It is the world’s fastest growing international airline and its growth has never fallen below 20% a year (Emirates, 2015). The company also operates three of the ten world’s longest non-stop flights from Dubai to Los Angeles, San Francisco, and Houston. With more than 400 awards for excellence worldwide, Emirate is one of two key unites in the Emirates Group” (Emirates Skywards & Business Rewards) considering this, there must be a reason behind the success of Emirates airlines and in specific their Management strategies that will be analyzed in the following paragraphs.
Porter’s five forces analysis for emirates airlines:
The continuous growth of Emirates airline became a threat for other airline industries. such as Air France, which merged with KLM, and that growth was one of the reasons that lead to merge. Furthermore, the Emirates growth led Air France to discuss with “Etihad” Airline as a step to cooperate with the Emirates competitors. Also, Emirates’ strategic decision had its effect on Air France, Emirates wanted to reposition itself as a global transporter and the strategic location of its hubs in the International Airport of Dubai, which links the east by the west, supported that decision. (Jammoul, A. 2015) Emirates have the ability to serve the passengers who are coming from Asia and Australia to Europe and America, stopping in Dubai, and it is very difficult for European and Australian companies -Air France one of those- to compete with it, due to the low cost and their high cost and that is what makes Emirates a major threat for Air France. (Asia / Middle East, 2000) In the Middle East, Emirates competes with Etihad Airlines and Qatar Airways. The low fare charged by these budget airlines makes Emirates airline operations less competitive
Emirate Airlines internal and external audit analysis:
Strengths:
- A Strategic main location in Dubai.
- Emirates Airline has a global presence serving more than 140 destinations in more than 80 countries around the world (The Emirates story, 2014)
- The Emirates airlines offers passenger transportation through its fleet of more than 200 aircraft, and offers cargo transportation through its freight division, SkyCargo. (The Emirates Group SWOT Analysis)
- Low emissions and environment friendly. The A380’s fuel efficiency is better than most modern small passenger cars in terms of fuel economy per passenger kilometer – this is a key advantage in reducing Emirates missions and maximizing eco-efficiency.  (A380 Environmental Facts | The Environment | About Emirates, 2015)
- Effectively targeting the needs of their customers.
Weaknesses:
-Due to an increase in competition, market share growth is limited and bench-mark standards are becoming more costly.
- Emirates do not cater to budget travellers.
Opportunities:
In January 2012, Emirates and the Mauritius Ministry of Tourism signed an agreement for the development of a list of joint activities to increase the visibility and awareness for around more than 100 destinations to which the airline flies in the country. Furthermore, in 2010, the UAE, Dubai and Emirates Airline have secured over 60 open or highly liberal aviation agreements .( Emirates launches new global brand platform – ‘Hello Tomorrow’ ) These agreements would allow carriers of each partner country to offer open services between each market.
Tim Clark, the president of Emirates, says his airline represents the future of mass air travel. In an era when many international carriers are struggling to sustain themselves, Emirates has filled its planes, raised fares and consistently turned a profit. It earned $925 million in the six months ended last Sept. 30, up from $205 million in the year-earlier period.( MOUAWAD, J. (2011) Emirates Airlines Has Big Ambitions)
Threats:
Due to Increasing Competition in Middle East Market, The demand for low cost carriers has increased due to the economic crisis suffered by many regions. As a result of the economic crisis, travellers have been looking for economical travel options. Adding to that, Volatile fuel prices could affect operating profit margin Jet fuel forms the main raw material used in the airline industry. The cost of jet fuel formed a significant part of the total expenses for the group. The jet fuel bill of Emirates contributed to the highest operating expenses of the group. The group recorded jet fuel expenses of AED27,855 million (approximately $7,582 million) during the year 2013. (Annual Report Facts & Figures, 2014).
The effect of the environmental analysis on the strategic position and strategy of Emirates airlines:
The requirement for effective strategic management is increasing due to the highly complex and turbulent environments in which most private and public sector organizations currently exist. Why emirates is a superior performer: it has to have a competitive advantage: more commonly can improve faster that your competitive can do ``
Differentiation: Unique benefit – customer is willing to pay at a premium price
Competitive advantage through a narrow competitive scope focusing on a particular type of customers
Emirates Airline PESTLE ANALYSIS
Like any other business, Emirates Airlines is affected by external factors that includes four major factors, namely Political, economic, social and technological factors.
Political Factors
The airline industry is highly sensitive as it can easily be affected by the changing of political situations globally. Adverse political conditions are often triggered by global wars, countries’ civil wars in different countries (Capon, 2008). For example, the constant political crisis in the Middle East and pacific Asia regions have posed huge disturbance to the Airlines companies. Specifically, the Middle East regions such as Qatar, Lebanon and Syria have affected the business efficiency for Emirates Airlines Emirates Airlines has been a victim a victim of this crisis because it has not managed to seal International Alliance with top Airline companies such as American Airlines (Dr Kai Hüschelrath, et al., 2013).
Economic Factors
Economic factors concerns the aspects of global financial matters that affects the company’s customer based and mode of operations and maintenance. For every airline to be successful, they ought to have great facilities and supported with latest technology to match and satisfy the customer’s requirements (Cento, 2011). For example, Emirates Airlines have investment projects, whereby they plan in establishing its postmodern airports in Dubai and Abu Dhabi. The forecasted total investment on airport constructions is likely to go beyond 70 billion Dirham. The project appears lucrative as it will boost the investors with additional revenues from the airlines and tourism industry thus reducing high dependency of oil revenue (Eaton, 2013). In additional, Emirate Airline has chosen to enter into alliances, which are considered as the main factor of many airlines companies success as it reduces the operation costs (Vasigh, et al., 2014).
Social Factors
Social factors include population demographic, global relationships, education matters and the art of travelling. Today, the world’s population is increasing rapidly and this has consequently increased the number of traveller around the world, also, education growth has increased number of educated people who tour the world for many reasons and this has boosted Emirates Airlines (Delfmann, 2012). Specifically, according to report presented by National Human Resources Development and Employment Authority Tanmia, UAE population is constantly growing from 5.63 million to 7.557 million within a span of 10 years. This big population creates a huge customer base for Emirates Airlines. Recently, UAE has seen an increasing number of emigrants. The company’s tend to earn more profits from the constant travelling of those emigrants to their home countries and back (De Wit & Mayer, 2010). Another social factors is the global health concern. Cases of ailments epidemics such as zika virus and bird flu tend to interrupts flights to popular destinations such as Rio de Janeiro and Beijing china (Lynch, 2015).
Technological Factors
With the dynamism of technology in world today, the company is faced with technological pressure which affects it both both ways positively and negatively (Lynch, 2016). The negative aspect is that the invention of teleconferencing media has reduced need of conduction the traditional face-to-face meeting among international business partners (Grundy, 2012). This tend to reduce the company’s customer base as many would prefer to conduct meetings online to save on the flight costs. On the contrary, technology has provided positive impacts to the Airline industry as well. For example, now passengers to book or cancel their flight through smartphones. The e-booking platform has helped to boost the company sales as on the system makes reservation system very easy and accessible to anyone (Mayer, 2011).
Discussion
From the SWOT, PORTERS Five Forces and PESTLE Analysis, Emirate airline appear to have a wide strategic options that can boost its operation in the long run at both business-level and corporate level. Focusing on business level strategy, the company can adopt the differentiation strategy (Truxal, 2013). Like any other business, Emirates Airlines can differentiate its services by offering latest and postmodern services such as comfortable seats, reliable e-booking, e-ticketing systems as well as advanced aircrafts (Johnson, et al., 2011). This approach will enable the company to not only match the big players such as British Airways but also differentiate its products from these competitors to attract new customers and maintain the existing ones (Grundy, 2012). In addition, the company can employ a quality control strategy. This department will ensure the airline is providing quality services. Apart from gaining more passengers, this approach will boost the company’s brand both regionally and globally (Morrison & Winston, 2010). Another available business-level strategy is the cost leadership strategy, Since Emirates Airline is enjoying the advantages of its large economies scale, it can implement a cost leadership strategy to subsidize both the air ticket prices and freight charges as way of wooing many customer an suppressing the competitors (Grundy, 2012).
Under corporate level strategy, the can capitalize in the global population growth to expand its operation. The ex...