The aviation industry of the United Arab Emirates plays a significant role in the growth of the region’s economy. Kerkadi attributed this to the fact that the industry provides fast services that have associated huge benefits to the society as well as industries within the region (42). Adler and Mantin pointed out that the fact that the airline industry is in support of the globalization and internationalization objectives makes it one of the important industries not only in UAE but in the whole world as well (2).
Despite this, the aviation industry receives a lot of pressure to increase investment as well as drive innovation and invention to create competitive advantages. For this reason, the approaches adopted by various airlines to gain a competitive advantage as well as ensure that they stay relevant in the industry are a subject worth investigating. This report focuses on the case of Emirates Airlines in UAE. The choice to investigate the strategic management of Emirates Airline was informed by the fact that Emirate is a major player in the airline industry of the UAE and the globe as well.
Emirates Airlines was started in 1985 by the government of the United Arab Emirates. The company’s primary operations are in ensuring the availability of commercial air services. The airline started with two aircraft but nowadays, the company has grown to more than 80 aircraft flying to more than 75 destinations in over 50 countries in the world. Its cabin crew is considered to be the largest and hails from over 90 different countries.
Such a strong background of Emirates Airlines has enabled it to venture deep into the future. For example, the airline recently ordered more than 40 A380 Airbus. With such trends, Emirates Airlines is going to be among the most successful airlines globally. According to Adler and Mantin, the airline links UAE with other parts of the world through transportation services. Nowadays, Emirates Airlines ranks among the top largest airlines in the Middle East region with more than 34,000 flights in a week (4).
Besides, Kerkadi Emirates Airlines is considered to be one of the fastest-growing internal airlines, with a percentage growth of above 20 percent annually (42). The company has experienced increased demand in various parts of the world. For example, in 2012, Emirates registered an 18.4% increase in the number of passengers in comparison to the case in 2011.
Analysis Emirates Airline’s mission
The mission statement is founded around the need to ensure that the services the airline company offers are the best in the world. As such, Emirates Airlines works towards ensuring the provision of quality in-flight services in support of business within the transportation industry. Also, the airline ensures that customers are highly satisfied by adopting the latest technology by invention and innovation as well as refining the level of services offered to customers in many parts of the world.
The airline focuses its activities into ventures that are likely to make the company excel in various undertakings by ensuring that the needs and demands of its customers are met. As well, such a mission can be fulfilled through a successful contribution to Dubai incorporated alongside ensuring that the city grows into an aviation center drawing clients from all parts of the world. The implication of this is that the airline focusses entirely on achieving quality as opposed to quantity; an approach that has led to overwhelming achievement in the travel as well as the global tourism industry by offering services of high standards.
For example, the purchase of the Super-Jumbo Airbus by Emirates Airline was a strategy towards achieving its mission within the aviation industry. Also, the airline installed personal entertainment systems in the company’s classes ensuring that there were more than 20 and 15 TV channels and audio channels respectively. Besides, the airline introduced online booking of flights which give sits customers the privilege of choosing their preferred seating arena.
Emirates Airline’s vision
All activities of Emirates Airlines are aimed at ensuring safety in civil aviation, sustainability as well as achieving the leadership role within the global aviation industry. As such, the airline works towards ensuring civil aviation safe, leading and sustainable sector by implementing innovative strategies that ensure the satisfaction of its customers and reduction of operational costs, while at the same time attracting new clients from various parts of the world.
Goals and objectives of Emirates Airline
The goal of Emirates Airline is to excel in all its ventures for a chance to be at the top in the aviation industry. For this reason, the airline works effortlessly to ensure that it positions itself strategically as a global carrier most preferred by customers within the Middle East region, Gulf countries as well as globally. To achieve its objectives, the airline focusses on effective customer feedback analysis, which is important for gaining a prompt response to customers’ queries at all times.
In the light of O’Connel, the customer relations team carries an out thorough analysis of customer complaints as well as compliments provided by customers for a chance to establish any areas where the organization’s staff and general management requires changing or upgrading (339). Such an approach ensures that the services and products offered to the customers are tailored specifically to the needs and demands of the customers. Additionally, the airline achieves its objectives by focusing on the needs and demands of its customers, improving quality, enhancing efficiency, reducing the cost of operation, as well as increasing levels of productivity.
Organizational and Environmental Audit
The success of an organization ought to factor the internal and external factors that influence the organizations’ activities. As such, organizations need to factor in organizational ad environmental audits in their strategic planning process. Adler Mantin noted that Organizational and environmental auditing techniques are considered to be effective strategies that focus on the internal and external factor evaluation in an organization (3).
Often, organizational audit refers to the evaluation of internal factors in an organization, while the environmental auditing takes consideration of the external factors that might have a significant influence on the operations of any given organization.
In the case of Emirates Airlines, conducting an organizational audit and an environmental audit would be a suitable approach towards understating the performance as well as the efficiency of the airline concerning several internal and external factors. This is attributable to the fact that organizational and environmental audit gives an organization a platform to establish areas that require changes as well as a proposition on how the particular organization can respond to such requirements.
Organizational audit refers to a strategic planning tool that involves objective assurance as well as consulting activities aimed at adding value as well as improving the operations of any given organization. In general, organizational audit plays a significant role in the success of an organization specifically by helping any given organization to achieve its set goals and objectives. This is attributable to the fact that organizational audit brings into the picture a systematic as well as a disciplined approach to an organization that can be effective in ensuring improved organization’s operations.
Often, such an approach focuses on improving the efficiency of an organization through the evaluation of government control as well as risk management processes. An organizational audit is significant in an organization in that it highlights the weakness and strengths of an organization. The following are some of the factors put into consideration in the organizational audit of Emirates.
Customers, in the case of emirates airline, refers to the individuals who use the transportation services of the airline. Such people have a lot of influence on the performance of the company since they determine the amount of revenue that the company gets. As such, Adler and Mantin asserted that Emirates Airlines works hard towards the maintenance of a strong relationship between the company and its customers for a chance to earn their trust and loyalty (1).
For example, Emirates Airline has a customer relations team that is dedicated to ensuring that the customers at Emirates receive high-quality service based on their needs and demands. Such an objective is achieved through effective customer feedback analysis, which focuses on a prompt response to customers’ queries at all times.
O’Connell noted that the customer relations team carries an out thorough analysis of the complaints as well as compliments provided by customers for a chance to establish any areas where the organization’s staff and general management requires changing or upgrading (339). Such an approach ensures that the services and products offered to the customers are tailored specifically to the needs and demands of the customers.
Also, while putting a lot of emphasis on the needs and demands of its customers, Emirates Airlines adopts strategies aimed at improved quality, enhanced efficiency, reduced cost of operation, as well as increased levels of productivity. The combination of these aspects ensures that customer satisfaction is achieved and hence, the company is in a position to make more sales and increase its revenue. However, the airline is affected by the increased bargaining power of the customers.
For example, the airline suffers from the demand for low prices as well as high-quality services, which to some extent affects the productivity of Emirates airline in terms of profit margin. According to O’Connell, some competitors of Emirates have low-cost carriers; a move that has threatened the customer base of the airline (339). However, to counter such challenges, Emirates Airlines decided to introduce low-cost subsidiary branches. Besides, the airline introduced the business, economy, and first classes to cater to the needs and demands of various customers.
Emirates Airline is a strong airline considered among the largest airlines in the world. Despite this, the airline faces stiff competition from other large airlines. The primary competitors of Emirates Airlines include Air France, British Airways, and Lufthansa. These airlines have a lot in common in terms of superior services as well as flight experience. British Airways is the strongest competitor of Emirates.
Even though the company suffered significant losses in the past years, it has maintained a high market share, with an operating profit increase of more than 8%. Also, the sales volume of British Airways in the past years increased by about 1.2%. Overall, this airline has a market share of about 45%, given that it dominates flights between the United States and Heathrow. On the other hand, British Airways’ target market comprises of pleasure, business, and international upscale travelers within the age group of 30 and 50.
In comparison to British Airways, Emirates Airlines experienced an increase of 415.7% in terms of net profit in 2010. Such growth in the company’s profits and sales was registered at a time when the world was experiencing an economic recession. Nevertheless, Emirates Airlines accounts for 40% of the total aviation market share. However, the airline has been working towards a market share of about 70%. With improved technology and emphasis on quality services, Emirates Airline can significantly increase its market share.
Emirates Airlines focuses entirely on its country, division, model, brand, as well as its product. The product portfolio of Emirates Airline comprises of a mixture of fleet ranging from Airbuses to Boing wide-body aircraft. To remain competitive in the market, the airline ordered an additional fleet of some of the largest airplanes. Besides, the airline takes consideration of excellent, as well as consistent services.
Putting a lot of emphasis on such a mode of operation has ensured customer satisfaction and rapid growth and development of the airline in terms of revenues and market share. On the other hand, the airline has been able to remain relative in terms of quality services by focusing on the needs and demands of its customers. This has also been enhanced by the availability of personal and professional approach towards customers and their needs and demands.
For example, Emirates Airline was the first to have customized videos installed in its aircraft, as well as the first to ensure that its aircrafts had showers and personal suites. The availability of three types of classes; first, business and economic, gives its customers a wide range of options to choose from based on their tastes and preferences.
The pricing strategy of Emirates is based on the class that any given customer is traveling in. However, the airline is located at a strategic place to serve customers from both the West and the East. For this reason, Emirates has been successful in serving customers from the East and the West at relatively low costs compared to the case in other airlines. Also, Okura noted that Emirates Airlines provides direct routes to numerous destinations at remarkable costs (21).
For this reason, the airline has not only been in a position to be relevant in the industry but also maintained an efficient pricing strategy. The airline has capitalized on hiring low-cost laborers and hence benefiting from low operational costs, which gives Emirates a competitive advantage in comparison to other airlines in the industry. Moreover, Emirates Airline has introduced a dynamic pricing strategy, which focuses on the management of aircrafts’ seat capacity. Such a strategy is significant in that it ensures flexibility in the seats’ prices. The company has invested a lot in its pricing strategy for diversification and meeting the diverse needs of its customers.
Promotional strategies are robust at Emirates Arline. This is aimed at ensuring that the airline has a large customer base. One of the recent promotional campaigns that have been greatly effective is the “Fly Emirates. Keep Discovering”. With such promotional strategies, the airline has a high potential to achieve its objectives as well as position itself as a global leader within the world’s aviation industry.
An environmental audit of an organization refers to the process of developing as well as identifying variables in an organization that has a high potential of benefiting any given organization as well as the threats that the given organization should avoid. The implication is that environmental audit involves much more than the exhaustive identification of factors that influence any business but instead, focuses on significant factors, which provide actionable responses. Based on this statement, the environmental audit can be considered to be any process that identifies an organization’s threats and opportunities as well as develops strategies aimed at benefiting the given organization. Often, this is achieved through capitalizing on the identified opportunities while avoiding the threats.
Economic forces determine the success of any organization since they dictate the availability of capital, demand as well as the cost of production. For a case whereby the economic condition factor low cost of capital and a buyout demand, investments become highly attractive and are more likely to be profitable. On the other hand, is the cost of capital is high, investors experience a difficult situation in their investments with a high probability of losses. As such, economic factors have a lot of influence on the success and timing of any given strategies adopted by an organization. Better economic conditions increase the demand for various services and products, while economic depression would lead to a decrease in demand.
Emirates Airlines has been ranked among the top and largest airlines in the world. Besides, it is considered highly competitive based on the strategies that it employs to remain relevant in the aviation industry. The airline boasts of success as well as a stable economy. Emirates Airline operates in risky areas that are full of dangers, but the management has ensured that there are effective strategies to ensure a stable economic condition by effectively responding to such challenges.
Over recent years, there have been economic downturns and aviation challenges within the aviation industry. Despite this, Emirates Airlines hardly felt such conditions as its sales volume and profit margins increased. According to Mehta, Jain, and Jawale, such a situation was attributable to the airline’s strategy of ensuring the growth and development of Dubai City into a tourist destination as well as an attractive regional shopping center free of tax (530).
Also, Emirates Airlines engages in strong promotional campaigns aimed at growing its hub within Dubai to be the best in terms of geographical position as it connects Asia and Europe. Furthermore, Mehta, Jain, and Jawale noted that Dubai has grown as a trading center attracting business people from various parts of the world (530). This is beneficial to Emirates in terms of cargo business. Emirates Airlines has aircraft that have widebodies.
Such large aircraft are significant for the accommodation of increased demand in the cargo market both regionally and internationally. A review of the financial performance of Emirates Airlines shows that there has been a significant increase in its sales volume and profit. For example, during the 2003/2004 financial year, the airline recorded a net profit of over $420 million, which accounted for over 70% increase in comparison to the previous year.
The socio-cultural environment in any market comprises of tastes and demand for a given service or product. However, such factors are likely to change concerning general changes and disposable income. At times, given products get saturated in the market thereby, affecting the prices of such products as well as the associated promotional strategies. In the case of Emirates Airlines, the company ought to be aware of any changes in demography that might have a significant influence on the operations of the company.
Horovitz attributed this to the fact that changes in regions, affluence, ages as well as number in the working population can have a significant impact on the general operations of the organization (163). Culture has a significant influence on the operations of airlines because people who travel by air are from diverse cultural backgrounds. For this reason, airlines are required to put into consideration how particular changes in culture impact a given group of people.
For example, people from Saudi are unlikely to take liquor, and thus, the airline’s crew is required to be aware of the various cultural beliefs of different people. Similarly, the crew needs to avoid offending Muslim passengers by offering them drinks and snacks during Ramadan.
There is an increasing threat of existing products within the aviation industry brought about by a change in social factors. Along with such changes are emerging opportunities associated with market and differentiation segmentation. For the case of Emirates Airline, the societal situation where the airline operates tends to have adverse impacts on its operations. Despite this, the airline has been working hard to ensure the airline’s operations are dedicated to the needs and demands of each society. Such an objective is achieved by focusing on the maintenance of good relations as well as reputation within the areas of operation.
The introduction of technology in operations of businesses has led to great impacts as far as the success of businesses over the world is concerned. The use of the internet has become common nowadays, with its impacts being felt in business operations and their subsequent success. For example, it has become a common practice among customers to look for products and services online and make comparisons before settling for their preferred ones.
Such a trend is also common within the aviation industry; travelers can look for reviews of airlines online before choosing which to use. Besides, some airlines are nowadays offering online booking of flights. In the case of Emirates Airlines, technology plays a significant role in its success as it has been used over a long time to create a competitive advantage. For example, Emirates Airline makes use of several IS/IT systems as well as uses the internet to aid in engaging its customers in various parts of the world. Such platforms are used to create awareness of the latest trends. Besides, the airline makes use of technology to improve its operations and productions.
Dubai city is considered the internet city since it provides the necessary internet infrastructure to people around (Horovitz 163). For example, the government’s project, Dubai Internet City has recorded growth in revenue over the past years.
According to Horovitz, over the years, technological advancement has been carried out within the aviation industry to improve service delivery to customers (165). For example, improved technology has been instrumental for the development of Boeing and Airbus aircraft that features modern technology and comes with great features such as entertainment facilities.
While putting a lot of emphasis on the needs and demands of its customers, Emirates Airlines adopts technological strategies aimed at improved quality, enhanced efficiency, reduced cost of operation, as well as increased levels of productivity. For example, Emirates Airline planned to include Airbus and Boeing in its fleet of aircraft as a means to remain relevant in the market through the provision of facilities. Also, the airline has embraced technology in all its aircraft as well as flight services.
Nowadays, it is possible to book Emirates flights online along with choosing the preferred seat. Such advancement in technology has positively improved the operations and profitability of Emirates Airlines by ensuring that the airline offers efficient services to its customers thereby, ensuring customer satisfaction.
There are a lot of concerns concerning global warming threats. Such concerns are based on the need to protect the environment. As such, it is the responsibility of all organizations to ensure that their operations have the least negative impact on the environment. In the case of Emirates Airlines, El-Saboni noted a lot of concern is on the pollution that the airline’s fleet has to the environment (130).
This has been instigated by the fact that Emirates Airlines has a large fleet of aircraft implying that the level of pollution expected from such fleet is likely to be high. As such, the airline has adopted safe strategies aimed at the reduction of the level of pollution its activities have on the environment. For example, headphones used during any given flight are recycled as opposed to being disposed to avoid polluting the environment. On the other hand, the airline has an environmental protection policy that is followed to ensure that there minimal or no pollution to the environment. As well, Emirates Airlines has partnered with various environmental bodies to advocate for global environmental protection.
However, there is a concern about the consumers’, media’s as well as the government’s attitude towards the environment. Changes have been noted in environmental legislation in the past, as well as present (El-Sabonis 130). For this reason, Emirates Airlines need to develop approaches that are aimed at ensuring a better corporate image. One such approach is the current initiative whereby the company engages in the promotion of environmental sustainability through various projects like planting trees and regulating the amount of waste available for landfills. On the other hand, the company has focused its efforts to ensure reduced environmental pollution by ensuring that the cutlery used by customers is recyclable.
Some governments in the region of the Asian Pacific were based on the paternal policy of governance in the past. For this reason, it was the responsibility of the government to ensure that there were effective policies in place to protect airlines against any form of external forces. Nevertheless, such policies are not available anymore. As such, airlines are nowadays free to engage in competition. While the traditional protective policies were effective, the availability of open ground for competition has given all airline level ground to grow and develop for available resources and strategies.
For example, the Emirates Airline has significantly grown over the recent years due to its competitive advantage over other airlines, as well as robust strategies such as low operational costs. Also, the availability of open competition has given each airline an equal chance to focus on the economic rule to gain a competitive advantage. The benefit of such a condition is that airlines experience limited cases of legal hitches.
Therefore, the availability of regulations and policies that are availed by international and local governments ensure that the airline is extremely cautious whenever carrying out any activity. For this reason, El-Saboni observed that Emirates Airlines remains focused on the available rules and regulations to ensure that it does not enter into any legal problems (130). Despite this, there is a need for the company to put a lot of emphasis on legislations governing health and safety, competition, as well as employment.
Strategic Planning Techniques
Strategic planning refers to the process through which an organization defines various strategies, as well as sets out the direction to be followed in decision making as well as the allocation of its resources to achieve various set objectives. Strategic planning can also take not consideration control measures that can be adopted in an organization to guide the implementation of various strategies. As such, it is evident that strategic planning is a very important aspect of organizational success, growth, and development.
In the case of Emirates Airlines, the company is faced with a lot of challenges and competition from other big global airlines. For this reason, El-Saboni pointed out that there is a need for Emirates to have effective strategies that are aimed at the achievement of its goals and objectives as well as the realization of the airline’s mission and vision (130).
Two strategic planning techniques can be applied in the case of Emirates Airlines to aid in decision making as well as ensure that all activities of the organization are focused on the realization of the set goals and objectives. Such techniques include the Boston Consulting Group (BCG) growth matrix and the ANSOFF matrix.
The Ansoff Matrix refers to a type of strategic planning tool which is used in the provision of a suitable framework that an organization can rely on to plan the future growth of the concerned organization. The focus of this strategic planning tool is on the analysis of the decisions of an organization’s future for four elements; market penetration, market development, product development, as well as diversification.
The market penetration element allows organizations to push existing products and services within the present market segments. The market development aspect focuses on the development of new markets for any existing products and services for a given company. On the other hand, the product development aspect is necessary as a guide on the development of new products as a result of existing markets, while diversification aspect takes into consideration the development of new products due to the availability of new markets.
In the case of Emirates Airline, the use of Ansoff Matrix can significantly highlight the growth potential of the airline, as well as establish new strategies towards market penetration, market development, product development, as well as diversification. The table below summarizes the Ansoff Matrix of Emirates Airlines.
|EXISTING||Market Penetration ||Product Development strategy |
|NEW||Market development strategy ||Diversification strategy |
There is an increase in competition within the aviation industry of the world. This has seen many airlines experience large amounts of losses. Such an increase in competition has also forced numerous airlines to adopt strategies that can help them gain competitive advantage such as forming alliances. Therefore, Emirates Airlines needs to adopt robust strategies that can ensure that the airline not only achieves a considerable market share but also remains relevant in the industry.
As such, one way that Emirates Airline can enhance its market penetration is through the improvement of its in-flight services. Such an approach is attributed to the fact that businesses put a lot of focus on approaches that enhance the sale of existing products of any given organization to existing markets to drive growth strategy of any given organization for market penetration. For example, the airline can adopt a successful criterion that ensures that passengers on board can make use of their cell phones for communication.
Such an approach is aimed at market penetration and is measurable in aspects of the usage of data and voice as well as the size of market penetration. However, it is important to note that a significant corrective action plan is not available should this approach fail.
Secondly, the use of a loyalty program can be a suitable approach to market penetration. Emirates Airlines has adopted a loyalty program, which is commonly used by several other airlines nowadays; miles. In this case, the airline has established different membership; the Business Rewards and Emirates Skywards. The objective of this loyalty program was to reward loyal customers by ensuring that they save a considerable amount of money.
Also, it was aimed at gathering personal information about the airline’s clients. The miles loyalty program focuses on coverage of specified miles for clients to benefit from the program. As such, the airline benefits from the program in that any client willing to enjoy the loyalty program has to use the services of Emirates for a long time to exhaust the provide miles limit.
Thirdly, the airline has established the AMEX/VISA cards, which give the clients a chance to earn miles while at the same time spending (Graham and Vowles 105). However, the advantage that clients with the AMEX or VISA Cards have is they do not have to spend the money specifically on Emirates. Such an approach motivates individuals to become users of Emirates services, thereby, enhancing the company’s market penetration.
The other strategy is through technologies used. The airline has advanced in terms of technology. Nowadays, Emirates Airlines makes use of various media to ensure that it remains relevant in the aviation industry. For example, the company uses various apps, online ads as well as social media to engage its existing and prospective clients.
Lastly, Emirates penetrates various markets through customer relationship management whereby a lot of focus is given on knowledge-driven in-flight services. The company makes use of a particular customer relationship management database that runs during flights to maintain the relationship between the airline and its customers through the enhancement of customer satisfaction. For example, the CRM project offered HP tablets to 1,000 pursers in 2004. This approach is beneficial to the company in that the company can keep customers’ data for effective segmentation and targeting.
The market development approach of Emirates Airlines is focused on the extension of new routes. According to Squalli, this strategy is based on the fact that the availability of new markets requires new products and services to meet the demand in such areas (1138). In the case of the transportation industry, the growth of new markets creates an opportunity for companies to launch their services and products. Graham and Vowles noted that Emirates Airlines focuses on developing Dubai city into an aviation center for the global long haul (105).
Presently, Dubai acts as an alternative airline hub to major hubs such as Schiphol, Charles De Gaulle as well as Heathrow Airport. As such, Emirates Airlines has been working towards the promotion of Dubai city as an international destination by ensuring the availability of low-cost hotels and insights into events such as the Dubai Shopping Festival which is aimed at attracting numerous travelers to Dubai.
Therefore, the airline considers the addition of new routes as well as a destination as an approach to ensure that tourists have a wide selection of alternative routes and destinations to choose from.
Also, the airline has roadshows which it manages. Such a strategy ensures positive publicity about the airline, which ensures that visitors to Dubai get credible information about the airline. The airline has been instrumental in the growth and development of Dubai city to be an intercontinental hub. As such, the fact that many people attribute the success of Dubai city to Emirates Airlines is enough positive publicity.
Product development revolves around the strategies adopted by a given organization to introduce new products and services to an existing market. This strategy requires significant approaches in skill development to expand customized services for the condition in the market. The growth of Dubai into an international destination provides an opportunity for Emirates airline to develop its products to match international standards.
Redpath and Warnock-Smith noted that unlike the Lufthansa, Emirates Airlines has embraced this strategy by considering the introduction of high quality first-class private lounges that are aimed at the attraction of business travelers (44). This strategy has led to the restructuring of the airline’s arrangements to feature stylish lifestyles such as the availability of long seat reclines, TV widescreen and horizontal couches, as well as outfitting comprising of personal mini bar, desk, coat cabinet, and personal storage. These features act as value additions, and they are necessary for meeting the demand for first-class services following the growth and development of Dubai into an international business hub.
Even though the above strategies are aimed at successful retention of a large market share, it can be impossible for the airline to achieve its objectives without taking into consideration the diversity of its customers, both existing and potential ones. Diversification is considered to be a suitable strategy used by businesses to make their services and products available in new market segments. However, it is important to note that a diversification strategy is a risky approach due to the limitation associated with this approach in terms of experience and knowledge of the new market areas.
The introduction of low-cost carriers in the European market was successful, and it triggered the need for such a strategy in the case of the Middle East. This approach is becoming a common strategy among airlines as they seek to gain a competitive advantage over one another. It is an approach that focuses on the provision of lower prices to customers in comparison to the traditional airline. It is effective in the hat it allows flexibility of costs thereby attracting many customers.
For example, Air Arabia has dominated the UAE’s low-cost carrier. For this reason, Emirates Airlines need to come up with a competitive low-cost approach to effectively counter the threats within the market. One of the suitable approaches is the introduction of Emirates Airline’s subsidiary that operates fully at a low cost. However, for Emirates Airlines to achieve a considerable share of the low-cost airline market, it will be required to expand its current marketing objectives.
Such an approach is aimed at retaining its current customer base in the UAE. As such, the proposed new low-cost subsidiary carrier ought to be focused on routes that are highly demanded as well as have a high population of expatriates such as Pakistanis, Indians, and Egyptians. Presently, the low-cost carrier initiative has led to the establishment of Al-Makthourn International Airport in Jebel Ail. This airport was strategically developed to provide residents of the Northern part of emirates and Dubai with suitable travel options.
Boston Consulting Group (BCG) Matrix
The Boston Consulting Group Matrix refers to a planning tool that makes the use of graphical representation of the services and products of any given organization to help the concerned organization to make decisions on what it can sell, keep, or even invest more in. The graphical representation takes into consideration the market growth rate on the y-axis while the market share is represented on the x-axis. The figure below shows a summary of the BCG matrix of Emirates Airlines.
|HIGH||‘STAR’ ||? |
|LOW||‘Cash Cow’ ||‘DOG’|
Emirates Airlines is considered to be a significant player in the aviation industry of the Middle East. According to recent reports of the airline’s performance, Emirates has tripled the capacity as well as passenger revenues within the last 5-10 years. Even though the company experienced a drop in its cash margins, (from 28% to 23%) its performance remains to be exceptional. The availability of strong financial backgrounds gives the airline a chance to enhance its flexibility towards expanding its capacity, as well as boosting its market share. According to the Boston Consulting Group, it was estimated that Emirates Airlines had a growth potential of between 9-12% in 2015. Nevertheless, such a growth rate is subject to the retirement of the airline’s older aircraft.
According to the BCG Matrix, it is evident that Emirates Airlines is a cash cow. The airline has gained the top position in the aviation industry of the Middle East, which has enabled Emirates to experience high revenues on invested assets. The rate does return on assets exceeds the rate of market growth, implying that the airline is in a position of generating more revenue than its capacity to consume. Also, research and development have played a significant role in the growth of Emirates Airline.
One of the advantages of the company has is that it has the capacity of funding its research and development projects. Such an approach ensures that the airline can service its debts as well as ensure that its shareholders are paid dividends in time. Given that Emirates Airlines can generate stable cash flow, it is possible to evaluate the cash flows of the airline in the future with reasonable accuracy.
Emirates first class
The airline has introduced the Emirates First Class, which takes consideration of the fact that Dubai city has grown and developed into an international hub for business. For this reason, the Emirates approach of the first-class targets high-end customers traveling in and out of Dubai. This strategy has significantly helped the airline to grow its cash flow margins as well as increased the percentage of its market share significantly.
Emirates Business class
The introduction of the A380 hub in Dubai changed the way Emirates Airlines conducts business; it has led to improved efficiency and increased customer service by taking into consideration features such as the inclusion of numerous TV channels audio and many more personalized services. The business class strategy has attracted numerous travelers since it matches the international standards; a move that has largely contributed to the airline’s growth in terms of revenue and market share.
As pointed out earlier, diversification is an important factor in market segmentation and targeting. Amidst the business class and the first-class features of Emirates Airlines, the company has factored in the economy class.
Generally, a review of the case of Emirates’ position in the global market shows that the airline has the potential to grow and expand because the airline enjoys considerable advantages in comparison to other categories of airlines in the market (Graham and Vowles 106). One of the significant contributors to such growth is the fact that Emirates Airlines pays no corporate tax as well as relies on implicit sovereign backing. Such an approach ensures that its operational costs are at minimum possible levels.
Blake pointed out that the consolidation of the airline’s fleet to Airbus A350s, Airbus A380s, and Boeing 777s ensure the efficiency of the airline’s operations in terms of scale and fuel consumption (36). As such, Emirates can ensure simplified maintenance as well as crewing operations, reduction in the costs of fuel, alongside benefits of low-operating costs in comparison to other carriers in the industry that makes use of complex and older fleets. For this reason, the company is expected to grow significantly relative to the available market.
The Attack and Defense Strategies
The success of companies is largely dependent on the strategies that the company adopts to ensure that it survives the internal and external factors within the market. Competition is one of the factors that determine the direction any company ought to take in terms of ensuring its sustainability and efficiency in the market. For this reason, many companies engage in defensive and offensive strategies to remain relevant in their industry (Blake 37). In most of the cases, attack and defensive strategies are used whenever companies are pressured or in cases where there are opportunities for market entry to ensure the improved position of the concerned company in their specific industry. Often, competition becomes stiff whenever firms retaliate to the approaches adopted by their competitors.
The aviation industry is one of the major industries where attack and defensive strategies are commonly used nowadays. Graham and Vowles attributed this to the fact that there is an increased demand for better and high-quality transportation services (105). As such for an airline to remain relevant to its customer, it must adopt strategies that are effective and will guarantee improved market share and competitive advantage. In the case of Emirates Airlines, the company focuses on the attack and defensive strategies due to the increased level of rivalry in the industry.
Blake noted that the airline engages in both pre-entry and post-entry defensive strategies (37). The pre-entry defensive strategies include capacity expansion, continuous improvement, covering all bases, fortifying, signaling, as well as defending. On the other hand, organizations can engage in post-entry strategies.
Signaling refers to a strategy whereby firms make their announcement regarding an action they wish to take shortly. Often, such an announcement is done through print and press media. Lee noted that the signaling strategy is used in the aviation industry to threaten competitors (4). For example, in the case of Emirates Airlines, Blake asserted that the company announced its intention to include Airbus 380 in its fleet; a strategy that scared off its existing and potential competitors given the efficiency of the Airbus 380 aircraft (36).
Fortify and defend
Fortify and defend strategy is adopted by companies to put up barriers especially for firms wishing to enter a given market. As such, O’Connell asserted that this strategy is used by Emirates Airlines to lower the possibility of an attack (339). Firms are more likely to start operations in a given industry if they see potential in terms of high revenue evident in the case of the existing firms. The aviation industry attracts a lot of potential firms and thus, the existing ones must lower the inducement of a potential attack by engaging in defensive strategies.
The majority of the large airlines within the aviation industry have engaged in various strategies aimed at fending off any competitors. For this reason, Emirates Airlines ensures that no attractiveness would guarantee a possible attack and thus, discourages potential attackers and competitors. One of the approaches adopted by Emirates Airlines in line with this objective is to grow its economies of scale, engage in product differentiation, switching costs, as well as the adoption of the latest technology to enhance the quality of products and services provided to its customers. Such entry barriers make it difficult for other airlines to operate in regions that are dominated by Emirates Airlines.
Covering all bases
This defensive approach is also referred to as product proliferation, as it focuses on the introduction of new products that are aimed at filling any gap within the market. This is attributable to the fact that by flooding the market, it becomes difficult for the concerned firm to be outflanked by other competing firms. In the case of the aviation industry, Graham and Vowles observed that Emirates Airlines seeks to make an impact in most parts of the world by introducing direct flights, well as short-distance flights to numerous destinations (105).
The airline can engage in such operations in comparison to its competitors because it enjoys economies of scale, low costs of operations, as well as have an efficient fleet in terms of fuel consumption.
The availability of such strategies ensures that the expectations of the other airlines are shaped for the profitability levels in the industry by a display of a possible low return on invested capital. For example, the operational costs of Emirates Airlines are significantly low. This is significantly done to ensure that the airline can charge considerably low prices on its services in comparison to other airlines in the industry. For this reason, it becomes hard for other airlines to charge low prices due to their high operational costs. As such, competing firms are forced to merge with other airlines or even stop operations in certain regions.
According to Rich, the strategy of continuous improvement is focused on relentlessness in terms of improving distribution channels, development of the product, quality of the products, as well as operational costs (24). In most cases, the areas to improve on are determined by the organizational value proposition. In the case of the aviation industry, Graham and Vowles noted that product differentiation and reduction in costs of operations are the major areas of concern for improvement (106).
For this reason, airlines are continuously working to ensure reduced costs of operations, provision of quality products, as well as the development of efficient flights. The Emirates Airline has engaged in continuous improvement by focusing on its products and costs. The adoption of the Airbus 380 model of the fleet has significantly created a competitive advantage for the airline by ensuring low costs of fuel consumption and operations. Such a strategy ensures that the airline can operate at low costs in comparison to its competitors and still make profits.
Also, the airline has ensured improvement in its operations by adopting new technology to ensure that the services and products provided to its clients are of high quality and that it meets the demand and needs of its clients. Technology has been very effective in the improvement of services and products in Emirates Airlines. Such approaches ensure that the airline has a competitive advantage over its competitors.
There are post-entry strategies that the airline engages in that are aimed at ensuring successful operations, as well as a competitive advantage. Some of such strategies include defending position before the establishment of an entrant, introducing fighting brands, as well as engaging in cross-parry.
First, the strategy to defend the entry of new airlines in the industry has been effective in Emirates Airlines because it gives the company the chance to enjoy various advantages. This is attributable to the fact that the entry of new airlines in a given region increases the level of competition in the industry. As such, Graham and Vowles asserted that the airline prevents new entry by focusing on the expansion of economies of scale, reduction of cost of operations, advanced positioning, better services, and products (105).
For example, the introduction of the Airbus 380 has prevented new entrants in regions where the airline operates as such aircraft are efficient in terms of fuel consumption. Besides, Adler and Mantin asserted that the airline has established short flights to numerous destinations, which has scared away other airlines from operating in such areas due to the high cost of operations and inefficiency of their aircraft (2).
On the other hand, Emirates Airline has capitalized on technology to ensure that its products are of high quality such that other airlines can’t enter their areas of operations. For example, the airline ensures that its customers can book flights online; a feature that is not common in many other airlines.
The introduction of fighting brands is an effective approach that emirates airlines engage in to ensure the protection of territories where the company operates. Such an approach is adopted where there is a need to compete with another airline’s brand. For example, the low-cost careers in the Middle East have given Emirates Airlines a lot of pressure, until it focused on the introduction of subsidiary low-cost carriers in various parts of the world to counter such competition. The introduction of the low-cost carriers was aimed at ensuring that the airline’s core brand is not jeopardized by the increased demand for low-cost carriers.
Offensive strategies are common within the global airline industry. Emirates Airlines uses a frontal attack by focusing on customers targeted by its competitors. The airline achieves this by engaging in effective product promotion in areas dominated by its competitors. Also, the airline puts a lot of emphasis on its rival’s core areas of operations. For example, Emirates Airline focuses on introduces its low-cost carriers in areas dominated by its competitors to gain a considerable market share given that the majority of the airlines have a considerable high cost of operations.
On the other hand, Emirates Airlines engages in predatory strategy, strategic encirclement, as well as guerrilla attacks whenever necessary for gaining a competitive advantage over its competitors.
The competitiveness, as well as the relevance of any organization, is influenced by the level of competition. For this reason, organizations are compelled to implement approaches to counter such competition. In the case of Emirates Airline, it is evident that the company adopts attack and defense strategies in line with its goals and objectives. however, for the changing needs and demands within the aviation industry, the airline needs to redefine its strategies to ensure that they are aligned with the increased demand to remain relevant. For example, the airline should focus on the advantages associated with advancement in technology to align its strategies with such changes in the technology.
Ethical and Corporate Social Responsibility
Corporate social responsibility refers to approaches or activities undertaken by the organization to help society responsibly. Also, such activities are aimed at relieving any economic and ecological challenges that the concerned organization might have concerning its location or area of operation. In some cases, corporate social responsibility activities are carried out to solve a local crisis or even seek to improve certain conditions in the community such as education, environment, health, or even labor.
Emirates Airlines has strong ethical and corporate social responsibility. Its responsibility is focused on some segments including its customers, employees, the government, as well as the society.
Responsibility to employees
Emirates Airlines gives much focus on the development and protection of its employees. This is in line with the airline’s value on social responsibility and corporate citizenship, as well as the belief that the business ethics of Emirates Airlines have contributed immensely to its continuous success. For this reason, the company ensures that its staff is committed to the growth and development of the airline to maintain a competitive advantage over other airlines in the industry. As such, the company takes care of its employees through several excellent benefits such as profit-sharing programs and schemes which are tailored to offer the necessary help to help the employees grow in their careers. Such an approach ensures that the organization employs qualified candidates to help it in its growth and development strategies.
Responsibility to shareholders
Emirates Airlines ensures that it pays its shareholders in time, unlike most other airlines. The airline has been able to make high profits over the recent past due to the adoption of effective strategies aimed and minimizing the costs of operations and capitalization of short and direct flights. Such approaches have been effective and hence, ensure that the airline rewards its shareholders on time.
Responsibility to customers
Mueller and Hüschelrath noted that Emirates Airlines puts a lot of emphasis on ensuring that the interests of its customers are catered for (71). Such an objective is achieved by taking into consideration the necessary initiative to offer excellent and consistent services to its customers. Often, such an approach ensures customer satisfaction, rapid growth as well as the development of the airline in terms of revenues and market share.
On the other hand, the airline has been able to remain relevant in terms of quality services by focusing on the needs and demands of its customers. This has also been enhanced by the availability of personal and professional approach towards customers and their needs and demands. For example, Hvidt noted that Emirates Airlines was the first to have customized videos installed in its aircraft, as well as the first to ensure that its aircrafts had showers and personal suites (397). Also, the airline ensures a wide variety of classes such as first, business, and economic, which are very important in giving its customers a wide range of options to choose from based on their tastes and preferences.
Responsibility to the environment
Environmental protection has become an issue of concern that requires the contribution of everybody. For this reason, Muelle and Hüschelrath Emirates Airline has taken the initiative to ensure that its operations have the least impact in terms of pollution to the environment (74). For example, one of the significant changes implemented by Emirates Airlines concerning environmental pollution is the change of the airline’s fleet.
This came following concerns that the airline had a large fleet that had a high probability of polluting the environment. As such, the airline changed its model of the fleet, as well as its operation to take care of the environment. Nowadays, Emirates Airlines boasts of the most efficient aircraft fleet as far as the emission of harmful gasses to the environment and fuel consumption are concerned. No other airline has ever developed a fleet like Emirates’ that is highly efficient in terms of environmental protection. This is attributed to the fact that the fleet of Emirates Airlines features an average consumption of fuel. The normal consumption rate of fuel per hundred passengers is about 4 liters for every single mile covered by the airline’s fleet.
Besides, Emirates Airlines introduced the “Airbus A 380” model, which has a high potential for efficient consumption of fuel and has low emissions. The adoption of the Airbus A 380 has indicated the seriousness that the airline has as far as environmental stewardship is concerned.
Emirates Airlines has worked to comply with eth EU ETS, which is a global scheme aimed at the reduction of the level of emissions to the atmosphere. Although the majority of the airlines have opposing views to the model of EU ETS based on the preferences of the industry for a sectoral scheme that matches the global standards, Emirates has more than 20 percent operations to and away from the EU. This is based on the fact that the airline has complied with the emissions requirement.
Responsibility to society
Besides environmental protection, Emirates Airline is also focused on ensuring that the society where it carries out its operations benefits from some of its activities that are focused on enhancing societal responsibility. For example, Hvidt asserted that the airline created the Dubai desert conservation reserve in conjunction with the government of Dubai (397). Also, Al Maha is symbolic of the work of the Emirates group aimed at ensuring environmental and societal responsibility, sustainability, and patience about the environment.
On the other hand, the airline introduced the Addicting Global Policy to ensure that there is a significant behavioral change to ensure the best social corporate citizenship. The airline is also focused on ensuring that nothing goes to waste and thus, started a companywide recycling program allowing daily recycling of products.
Emirates Airlines has introduced and run significant projects in various parts of the world that are aimed at giving back to society in different aspects (Blake 36). For example, ‘A Greener Tomorrow’ is an environmental initiative that was developed in 2013 by Emirates airline aimed at supporting not-for-profit conservation. The airline raised the required money for this project through recycling programs initiated by the airline.
Additionally, the airline has been towards conservation as evident in the cases of One & Only Wolgan Valley in Australia, a conservation resort pioneered by Emirates Airlines. The resort takes a lot of consideration on environmental conservation with the building having been designed to take consideration of environmental impact. As such, the green technology used in these buildings ensures minimal water and energy consumption. The One & Only Wolgan Valley was certified as the first hotel to have zero carbon emission in the world.
In Africa, the Emirates Airlines introduced the Changu Changu Moto project which focuses on the availability of fuel-efficient cooking stoves. Ripple Africa focuses on ensuring that the local communities in Malawi have better healthcare, education, and environmental protection services. Changu Changu Moto project develops a cooking stove that is simple, highly sustainable, low in terms of cost, and makes use of 100 percent local materials. The project has a strong focus on the reduction of deforestation within the local’s area alongside the reduction of the amount of smoke directly inhaled in the process of cooking.
From the above, it is evident that Emirates Airlines has done a lot to give back to society, its employees, the environment, shareholders, as well as its customers. For this reason, the corporate social responsibility of Emirates can be considered to be strong and effective since it focuses on a wide range of activities aimed at improving the social responsibility of the airline to various parties. Therefore, the airline ought to ensure continued focus on the interests, needs, and demands of its shareholders, customers, as well as the environment. This is attributable to the fact that such strategies are significant in ensuring the relevance of the company within the areas that it operates.
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