Executive Summary
The recommendations for IT systems are in theory based on the key factors that underpin the performance of the Emirates airline against the competitor that has caused intense rivalry in the market. Different information systems were recommended based on their functionalities and the benefits derived by integrating them into the company’s information systems infrastructure. An analysis based on Porter’s five forces in the industry revealed the need for the company to use information systems at the strategic, tactical, and operational levels to collect data for analysis, the basis on which strategic decisions can be made.
The information systems include those that operate at the strategic, tactical, and operational levels and include the Decision-support system coupled with the management information system and the knowledge management systems. The transaction processing system provides data on a day to day transactions at the operational level and serves the purpose of providing data to other levels of management for long term decision making.
The competencies of the company include a new aircraft fleet, well trained and qualified staff, a strong financial base, and strong brand value. The B-Web Analysis, Porter’s five forces, the Blue Ocean Strategy, and the Strategic Map models provide the tools for selecting the information systems. This results in the operational efficiency of the airline that underpins the company’s successful growth path. On the other hand, it is evident that high-quality customer services are the core elements that define the company’s strategy. The justification for the implementation of the information systems at different levels of management is based on the need to provide quality services that are consistent with the mission statement of the company.
Background of the Company
With a turnover of over US$18.4 billion representing an increase of 7.5% over the previous year’s revenue of AED 83 billion and an employee base of 50, 000 highly qualified workers from different countries who live and work in Dubai, Emirates airline has experienced profound growth for a short time (O’Connell, 2011). The company flies over 2000 passengers per week in 55 countries consisting of 157 destinations and still expanding. Besides, the company has been designated as the provider of the longest nonstop commercial flights with a modern fleet of aircraft in the world. It has been demonstrated that the company has grown to its current profitable level and evidence shows that the airline carrier is rapidly growing.
According to Squalli (2014), the Emirates airline constitutes a rapidly expanding and successful group of companies that has been highly rated as an award-winning international carrier. Ranking of the airline was based on different parameters which include the policy of maintaining a young fleet of aircraft, operational and financial performance, and above all, the optimal efficiency of its fleet of aircraft.
Typically, the company uses the Flextracks program for optimal exploitation of profitable routes based on the passenger load factor along with the use of the program known as ‘tailored arrivals’ to effectively link up with other aircraft based on the speed and route profiles of other aircraft within the airline’s systems. The Emirates Group IT provides leading-edge information systems management solutions that are integrated into the airline systems, which has attracted an investment of US$200 million in information systems and employs 2,200 employees on a standardized technical environment (Ali, 2014).
The efficiency of the system is based on function integration, resource optimization, and the use of technically reliable systems on a shared information systems architecture using a network that allows for the sharing of information on a common platform. Here, the leading edge information systems provide the framework for short term and long term strategy formulation and competitive advantage based on Porter’s five forces model. In this case, the Emirates provides products based on ICE that defines the information, communication, and entertainment in its roadmap of service provision besides the use of research and development techniques for problem-solving strategies. Other information system tools that have been integrated into the organization’s information infrastructure include the Wavetec Queue Management for end-to-end solutions for customer needs and expectations.
In its short and long term strategies, the company uses terms such as an increase in market share of 40% to 55% based on tapping the competitive cost to optimize the return on investment. That is beside the use of technology to promote international tourism and to position itself as the premium platform for air travel. At the macro environment level of analysis, the company uses different types of applications in response to prevailing global economic factors such as the global economic crisis and weak economies and social and cultural issues.
In response to the forces from the external environment as defined in the macro characteristics, depictions of its weaknesses, strengths, opportunities, and threats crystalize in the form of various elements such as the advantage of size, a strong corporate culture and brand, and ability to address customer needs and expectations. That leads to the provision of different products and services on the information systems platform.
Porter’s Analysis of the Company
Porter’s five forces model on competitive advantage is based on the threats of new entrants, substitutes, competitive rivalry, buyer power, and supplier power, based on the model, the Emirates airline is reflected in brand equity.
The threat of new entrants
This is the case with the renowned brand players in the airline industry that has high-quality old band values in addition to being defined by other factors such as low switching costs. Here, empirical evidence suggests that the sunk costs for the airline industry players are low besides having a high supplier base.
Intensity of rivalry
It is imperative to note that the intensity of rivalry in the airline industry is strong because of the introduction of short-haul and long haul carriers that provide low-cost services. Statistical data points out that at present there are 37 new carriers and the number has been increasing and each entry makes the competition much stiffer.
Bargaining power of customers
The concept of customer bargaining power is evident in the airline industry as exemplified in buyer volumes for different classes, the ease with which buyers can switch to other service providers, backward integration, buyer price sensitivity.
Bargaining power of suppliers
Employee solidarity is empirically presented in the context of supplier power to bargain. In theory, this is accounted for in terms of suppliers of products and the level of concentration to consumer levels and the presence of substitute inputs besides additional factors such as buyer information, buyer volume, and pulls through factors.
The threat of substitute products
The Emirates airline’s competitive advantage is defined based on the existence of budget and luxury classes which consequently leads to huge price differences. The perceived value of the Emirates airline is rated as good.
B-Web Analysis of the Company
Emirates Airlines is a success story because of the integration of various factors that are modeled in the Blue Ocean Strategy that companies use to search for new and existing markets for optimal competitive advantage (Al-Jenaibi, 2014). Emirates Airlines uses web data to optimize the data in decision making in the context of the development and strategies that the company should adopt and integrate into its operations for competitive advantage.
The key areas that web analytic data has been applied include the revenue forecasting, geographic revenue, expenditure, nature of different markets, currency and interest rates, and fleet acquisition and financing among other details. In theory, innovation, value addition, value innovation, and the strategic approaches that can be optimized to differentiate the company and optimize the existing market for growth and profit generation. According to Caiazza and Nueno (2014), the key driving components that merge include buyer’s value, innovation, and costs.
Customer service is in the heart of the company’s services in the context of the provision of various products in response to the changing market trends. Besides, the company has instituted measure such as innovation into its products and services such as the provision of services either in collaboration with other airlines such as Royal Air Maroc, South African Airlines, Air Malta, and Japan airlines among others to optimize value and profits besides creating a strong brand name in the form of alliances (Arjomandi & Seufert, 2014).
Also, the company’s strategy reflects a low-cost carrier that operates in optimal market segments to avoid loss and increase profits and market share. This is evident in the increase and sustainability of the operations of the company that has been experienced. The demand for the services of the company has grown by 14.3 per cent which has led to the generation of US$ 964 million as profit (Caiazza & Nueno, 2014). That is beside the US$ 11.8 billion revenue that was generated in the financial year 2014/2015 reflecting an efficient response to the new design strategies that the company has integrated into its business operations.
Emirates airline employs well trained and experienced financial experts in different areas that have advised the company increase its operational excellence, which was reflected in an array of airbuses such as the 50 Airbus A380s, 21 Boeing 777s, A350 XWBs, 152 aircraft, and an order of 194 aircraft among others. Further evidence is adduced in the fleet acquisition and financing strategies that enabled the company to raise US$ 413 million to finance three Boeing 777-300ERs (Barros & Wanke, 2015).
The approach is consistent with value innovation and buyer innovation and value. Besides, the company has invested in strategies that have enabled the optimization of operational strategies, new markets and payment strategies, integration of new customer objectives that have led to a significant increase of 12.4% to 123,055 every year (Caiazza & Nueno, 2014).
The core tools that underpin the changes as defined in the four action framework and that is reflected in the continued operations of the company include reducing those factors that adversely affect industry operations, eliminate those elements that do not add value, create value, and raise those factors that support optimal performance. According to Caiazza and Nueno (2014), this is evident in the 56.4% of net profit increase in the closing financial year.
Current Strategic Map of the Company
The Emirates airline’s strategy map defines a host of key elements which the company has integrated into its operations on the premise that they provide the framework to be successful (Demil & Lecocq, 2010). This is evident in the product strategy, alliances, operational excellence requirements, new market technology, marketing principles, and the integration and use of technology to achieve optimum operations in providing the desired customer experience as detailed in the company’s mission statement.
In theory, the long term shareholder value is integrated into the company’s strategy that happens in terms of the company’s services and collaborations that have established with other service providers in the industry such as the Japan airlines. According to Squalli (2014), the company has established good customer relationships as detailed in the principle of value creation through internal business processes in the delivery of differentiated value proposition to the customers.
For instance, the company provides various services on its information systems infrastructure to enable customers to select flights using the AeroMobile technology based on GSM systems, OnAir wifi, inflight communication services, and internet services among others. The value proposition is achieved through market segmentation based on information about customer destination, their country of culture and origin, and the length of the journey (Grančay, 2014). The basis of the services is a low cost, product leadership, and complete customer solutions. Other differentiation strategies include buyer patterns, motivation for traveling, the value gained from traveling, and the type of travel.
The other key elements that define the value map include the provision of services that make inflight fun experiences, high employee ownership, high employee compensation rates, targeting good destinations, fast ground turnaround, low price tickets, and integration of standard flights in service delivery (Demil & Lecocq, 2010). That is reflected in the internal operations, service and product innovation, management processes, and compliance with social and regulatory processes. Besides, the strategy is defined in the context of well-trained human, information, and human capital that is embraced by the company.
Low and Lee (2014) provide evidence, which shows that the company has developed a strategy that balances contradictory forces such as the currency risk exposures and interest rates, hedging was currency risk exposures, and taking advantage of a balanced portfolio approach. Demil and Lecocq (2010) present a typical instance that comprises an 83% fixed interest rate on aircraft operating leases with interest floated at 17% on variable interest.
Through an enhanced shareholder value, the company provides sustained profits based on efficient services and optimal profits. This is evident in the 17.2 % return on shareholder funds in the financial year 2014/2015 (Low & Lee, 2014). The figure represents a significant increase from 13.6% of the previous financial year. Besides, it is reflective that the strategy map underpins a steady increase in revenue that has grown steadily at 7% per annum despite the recent weakening of currencies and other challenges such as the 80-day closure.
The strategy is the key driver to success because it enables the company to accommodate diverse portfolio financing besides the ability to secure funds from international financial institutions to invest in new aircraft that underpin the growth of the business (Squalli, 2014). Also, Emirates Airlines maintains the contribution of the diversified revenue base from different sources in terms of geographically distributed income from destinations such as Europe and the Americas.
Emirates airline’s Current Blue Ocean Strategy Canvas
Research studies show that the Emirate airlines have developed a Blue Ocean Strategy Canvas for competitive advantage by creating uncontested markets. The company offers products and services that are unique to each market segment besides focusing its activities that reflect a new value curve (de Wit, 2014). The rationale is that Emirate’s leadership is action-based activities. That is evident in the strategic approaches of removing or eliminating waste by reducing the number of aircraft that are consistent with the current needs of the market is one of the examples that provide the answers to the use of the blue ocean strategy.
Examples include the entry into new markets and the use of the new payment schemes technology to make payments in ever-expanding markets that are deemed as profitable. Dubai is one of the target destinations that the company made entry because of its attractiveness and growth.
According to de Wit (2014), the four action framework is reflected in the activities that resulted in the signing of new agreements with companies such as the Royal Caribbean International and Costa Cruises companies with a lot of packages that resulted from the agreements. Resulting incentives include the provision of online services to the customers in conducting business operations. This led to the creation of a large market share among 59 countries with 13 languages and drastic growth in revenue of 43% a year in high earning markets and 20% in those markets that are low earners of profits (de Wit, 2014).
Besides, the implementations of new business strategies in the context of shaping the price policy in addition to the provision of services and products that swing customer behavior. The use of new software products has added to the force that enables the organization to track the pricing of other rival service providers to inform the company of price changes to respond with competitive price offerings (Meijer, Benschop, Donker, & van der Avoort, 2014). The other activities that are functions of the blue ocean strategy include sustained investment in the brand, customer loyalty programs that inspire confidence in the customers. Confidence is inspired by providing reliable air travel services and eliminating those non-profitable routes.
It is imperative in the discourse of the theory on the Blue Ocean Strategy Canvas that for competitive advantage, the company should create value based on factors that the company has not embraced before. In the context of the current strategy, the company has continuously invested in innovation. Different software tools provide different capabilities for the organization.
Typical examples include the development of software tools that connects the leadership with the market realities of customer needs and expectations and the ability to analyze the current trends in business. This is possible in the context of the distribution of leadership across different management levels in decision making apart from the provision of software tools that enables the management and the customers to make real-time decisions.
On the other hand, the company must open new lucrative routes that have been the trend for the company (Caiazza & Nueno, 2014). The other issues that need attention include the deployment of the most efficient aircraft besides the ability to protect and secure cargo the market share, right-sizing of its fleets, and integration of new technologies.
Proposal for three Key IT Systems
Then why the statement is based on the need for justification on the use of the right information system to enable the Emirates airline in its expansion strategy of creating new routes, creating strategies long term strategies for growth and development, creating a large customer base, identifying unique markets that respond to the Blue Ocean Strategy Canvas, establishing more destination locations, and aiming to improve the excellence of its operations (Caiazza & Nueno, 2014).
However, the problem arises that underpins the need to achieve the strategic growth of more than 14.3%, sustain its profit based on more than US$ 964 million in an environment with intense rivalry as detailed in Porter’s five forces model from other low-cost service providers.
That is in addition to the need to address customer needs and expectation at the lowest price in the minimum time with the shortest turnaround time and be able to catch up with new ideas to incorporate new and better practices in the provision of services in the airline industry (Arjomandi & Seufert, 2014). This is in the context of the profit generation, better service delivery, the use of better technology to ensure better customer services and be able to provide low-cost services in an environment of fierce competition and poor global financial performance.
In this case, the problem that has been identified crystallizes into the vulnerability of the company to intense rivalry, the ability to respond to changing customer needs and expectations, and the need to ensure operational efficiency to sustain and increase profits. The problem is defined in the context of the ability or inability of the organization to make decisions at the different levels of management besides, the provision of services at the operations level that are way ahead of customer needs and expectations.
The magnitude of the problem is reflected in the fleet acquisition and financing, design and development of the right operational strategies, and the integration of market-based information systems to serve at different management levels (Squalli, 2014). For instance, according to “Emirates annual report, “during 2009-2010 the global industry declined by 10%, registering a 23% fall in one month alone” (Arjomandi & Seufert, 2014, p. 3). This underpins the need for achieving double-digit growth to address the problem of regulated departure, new investment in new routes, and in the acquisition of knowledge excellent, which provides information to drive success.
A synopsis of the company and its operations show the need for integrating information systems to streamline its operations for competitive advantage. The company has a different level of operation, which includes strategic, tactical, and operational levels. Besides, the seamless integration of different information systems modules into a single program provides a better framework to conduct the services on a single platform (Caiazza & Nueno, 2014).
Researchers argue that due to the customer needs and expectations and the need to align the company’s services to its mission statement, it is imperative to implement an information system that enables vertical and lateral communication to happen, enable employees from different departments to communicate and freely share information, increase performance and turnaround time, facilitate collaboration, monitor the activities of the organization, standardize workflow, and enable the management to redesign business process.
The three key IT systems that can be adopted and integrated into the organization include those that provide functionalities at the strategic, tactical, and knowledge levels (Arjomandi & Seufert, 2014). In response to the company’s strategy and mission statement, it is imperative to use the strategic decision support system (Executive Support System) to support decision making and the strategic level. A typical example is Wavetec application.
Executive Support System
The why statement for the executive support system is based on the problem that management has on several occasions encountered challenges on the correct and optimal routes to follow for profit-making. Here, the company has opened over 170 destinations and the appetite to enter new markets has not abated as indicated in the mission statement. The core drivers are to provide the best services to the customers at the lowest cost that are tailored to meet specific customer needs and expectations (Arjomandi & Seufert, 2014).
However, because of the number of destinations, the rivalry in the business environment, and threats from other entrants, it is impeccable for the management to be able to make effective and accurate decisions on the market to enter and those markets to avoid as per the concept of the Blue Ocean Strategy Canvas. The solution is to implement an executive support system. This supports the ideas that define the business model that is based on Porter’s five forces analysis.
The application has been integrated into the company’s information systems infrastructure for data collection and analysis for the long term and short term decision making. However, the application’s prevalent features are designed for the management of activities at the operations level. In this case, the application has been applied to 71 different stations in the world and has proved to be effective central processing software.
The strategic component of the information system is evident in the reporting capabilities of the software on different business activities in different centers in the world. At the strategic level, the organization could be supported in making long terms decisions such as the purchase of new aircraft carriers, pricing strategies, customer relationships management because the Emirates airline uses a specific CRM database to learn about customer needs and expectations, loyalty programs, and to make long terms strategic decisions.
The executive support system provides the management with the ability to make decisions on new routes to open up and the type of airplanes to buy that fit into the needs of the target market. Examples include the decision to buy a fleet of 15 airbuses in 2010 besides the11 Boeing 777s and the 4 Airbus A380s that were delivered to the company. Also, the information system enabled the management to make the right decisions to buy a fleet of “50 Airbus A380s, 21 Boeing 777s, 5 Boeing 747s, 70 Airbus, and A350 XWBs plus 50 other options”. The decision to buy a new aircraft every month was based on the data that was collected using the management information and the decision support systems.
Management information system
The other recommended information system is one that provides functionalities at the tactical level. Examples include the management information system and the decision-support system that provide functionalities in the provision of internal services that are consistent with the company’s Blue Ocean Strategy Canvas model for competitive advantage.
At the strategic level, the application provides the functionality that supports decision making and provides management with information on profits, dividends, shareholder relationships, and other decisions that have moderate effects on the performance of the organization. Also, the application provides a summary of the day to day transactions based on the strategic decisions that are necessary for success.
That is in addition to the ability to collects data for decision making on pricing strategies which are based on the cost-containment strategy that enables the implementation of the Control Self-Assessment concept into the cost management paradigm. An example is an application used in the new payment schemes where new agreements have been signed between the Emirates airline and the Royal Caribbean International with the provision of many different packages such as Dubai Rugby 7s.
Here, innovative payment schemes were developed based on technology which allowed for online booking that generated 20% of total revenue for the company. Many cardholders were offered free services on the application platform and some services were offered on zero percent interest with three months installment.
Knowledge management and operational level information systems
The why for implementing the knowledge management and the operational level management information systems span the need to collect data for analysis that have the analytic components for long term decision making. The key drivers must be acknowledged and the correct information harvested using the management information system to enrich the knowledge management information system for strategic decisions. The appropriateness of the information system is based on its key features that justify the use of the B-Web Analysis of the Company model to collect data from different sources.
In the context of the application and the problems to solve and the need for competitive advantage, operational efficiency, day to day data collections on the number of passengers and the need for data for analytical purposes for short term and long term planning, the operational level management information system is an indispensable candidate.
That is beside the ability to collect environmental data and the need to access the services offered by the company via the internet, it is imperative to conclude that there is a need for an information system that supports the services. The rationale is that Emirates Airlines is an immense company that spans 50 brands and employs over 51, 000 people. That underpins the need to implement greater efficiency using information systems. Among the areas that need operational efficiency are organizing the flow of customers besides the effective allocation of employees within the organization to work in their designated places.
Also, the information system is required to provide efficiencies in benchmarking service qualities besides providing the necessary means to define the key performance measures for establishing the quality standards for employees working for the Emirates airline.
It has been established that the transaction processing system measures the desired level of quality and provides the data necessary for analyzing day to day transactions and the trend in the company’s short term operations. That is in addition to enabling the management at the operational level to collect information on event updates, source concentration, and event derivation. However, there is a need to incorporate Customer Relationship Management (CRM) for the effective sharing of information and to establish close relationships with the customers. A typical application that provides the capabilities is the skyward customer relationship management information system.
IT Investment Analysis
The justification to invest in information technology should be presented with compelling reasons that leave no doubt in the minds of the management on the need for information systems. Different information systems have been proposed for different purposes (Al-Jenaibi, 2014). The strategic process of selecting an information system depends on the expected benefits. Ali (2014) present empirical evidence that is derived from data on the operational efficiency of the information systems that have been implemented at the three levels of management compel for the need to conduct an investment analysis to justify the need for the information systems.
Executive support system
The executive support system is a strategic level information system that was adopted by the organization for strategic level decision making abilities. Emirates Airlines is a company that was constituted with the long term goal of profit-making in the provision of services that address customer needs and expectations based on 50 and more products available for the customers (Ali, 2014). The approach consists of the six principles which define the Blue Ocean Strategy of operating beyond the existing demand, developing market strategies that are geographically distributed in different market segments, overcoming different organizational challenges, building the correct execution strategy, and implementing the strategy right.
To ensure that the profits are achieved, it is important to use an information system that provides top-level management with the ability to make long term decisions that drives the organization towards its strategic goals as reflected I the mission statement. Here, the company can emerge with profits because technology provides an end to end solution that links the organization to the company’s long term goals. This is possible because of the implementation of the Emirates Skywards information system solution at the strategic level (Arjomandi & Seufert, 2014).
The justification for the use of the information system is based on detailed strategic planning where customers are provided with services that optimize the return value on their money by enabling them to spend their money using the same card on different destinations, enables quick calculation of the money that has been spent, and the provision of business rewards to the customers. The overall goal is to increase the number of customers that constitute the profit function. In turn, that has led to better service delivery and a broader customer base which has necessitated the management to buy more aircraft.
The Decision-support system (DSS) and management information system (MIS)
The rationale for investing in the DSS and the MIS in theory constitute the functionalities of the applications, which includes the ability to generate data on a day to day transactions (Arjomandi & Seufert, 2014). The data is important in enabling the company to identify those profitable routes to continue the business operations on and make projections on the future trend in the profitability of other routes and discard those routes that do not promise any profits. The information system depends on internal sources of information that are emended in the transactions that occur on the organization’s information systems infrastructure. Information from different areas of the organization is summarized and presented in the form of management reports.
On the other hand, the Knowledge Management systems are critical for the management to generate reports that reflect the performance of the organization for a specific period to be able to make strategic decisions that are based on data mining techniques. Knowledge Management systems provide the data to make decisions that reflect the long term performance of the organization on different routes and enables the management to make predictions on the routes that are profitable and those that should be discarded (Barros & Wanke, 2015).
This is in line with the strategic goal of the company that aims to make enough profits and generate revenue that can sustain the operations of the organization in different geographic locations. Investing in such a system has enabled the company to drop unprofitable routes, determine the customer needs and expectations, and tailor the services and products to meet the changing customer behavior. Evidence of the use of the information system to address the mentioned needs underpins the reasons that have led the company to develop more than unique 50 product offerings for different market segments.
The tool also provides the technical analysis capabilities in addition to the effective analysis of financial markets that provides data that is used to support decision making in portfolio investment among other investments (Barros & Wanke, 2015). Besides, the organization has invested in the operational information system for the generation of day to day reports on the transactions that happen on the information technology infrastructure of the organization. Here, the information provided by the International Air Transport Association (IATA) is the basis for new markets that are made available on the operational information system. However, the transaction processing system supports the provision of analytical data and the ability to initiate different views of the states of operations in the company.
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