The competitive global marketplace today has compelled companies to look for alternative ways of gaining competitive advantage. To gain competitive advantage, many companies are now opting for quality management systems that will help them to reduce production costs and to maintain high-quality services (Sharabi 192).
International quality management has gained more influence due to its ability to improve performance and to reduce costs. For this reason, many companies are opting to implement international quality management practices that will help them to gain a competitive advantage. This report critically analyses the application of international total quality management systems in the United Arab Emirates. Specifically, the report is based on Etihad Airways.
Etihad Airways is the flag carrier of the United Arab Emirates. The airline began its operations in 2003 after an order was issued by Sheikh Khalifa to be the national flag carrier. The company has implemented international quality management in its direct freight to Paris. Since the application of international quality management, the company has reported high profits every year since 2011 (O’Connell 341).
The increased profit is due to the ability of the airline to minimize costs through improved service delivery. For instance, the company has automated business processes through the application of quality management systems that have reduced costs significantly. Total quality management has enabled the airline industry to improve the safety and management control framework to ensure the security of passengers. Moreover, it has allowed the airline to meet compliance requirements and minimize critical risks such as non-compliance and penalties imposed due to inadequate quality and safety control. The security of passengers is essential for Etihad since it plays a critical role in determining the brand image of the company. Through the application of international quality management systems, the company has been able to increase efficiency and profitability.
A snapshot of Etihad Airways
Etihad Airways is one of the best performing airlines in the United Arab Emirates. The company has been reporting high profits since 2011. The UAE government owns the company although an independent board of directors has been put in place the run the airline. Last year, the airline won the best airline of the year at Oscars due to its ability to offer excellent services. The airline had an impressive world best airline cabin crew. As noted by O’Connell, quality at Etihad goes beyond the air (346). The company has been able to combine international quality management systems especially on direct freight to Paris to offer excellent customer care services.
O’Connell noted that in 2012 the company reported $42 million in revenues which was a 200 percent increase from the previous year. CEO James Hogan has noted that due to the implementation of total quality management, the company has been able to improve its brand image over the last three years. Although the airline has faced stiff competition from rival airlines such as Qatar Airlines, it has been able to improve sales due to improved customer service.
The airline operates more than 1000 destinations across the world. It has more than 100 Airbus and Boeing aircraft that have helped the company to achieve phenomenal success. The company has also invested in Serbia airline, Australia, and Germany. The increased customer traffic has resulted from investment in international quality management systems. The company has also been able to increase its destination and capacity on 18 existing routes.
The strategic location of the airline as a crossroad hub enables the company to leverage major pathways from Australia, Indonesia, China, Russia Europe, and America to increase passenger traffic. The airline now claims the largest routes in the Middle East to almost 400 destinations. The company has been able to increase its market opportunities in key worldwide markets by utilizing synergies and cost-saving strategies for quality management systems.
Etihad has a well-articulated mission statement that seeks to reflect the Arabian hospitality industry as a well-enhanced prestigious airline in the United Arab Emirates. The primary goal of the company is to be a global airline that changes the establishment of conventional airlines.
The vision of the company is to be the best airline that delivers and contributes to the economic growth of a customer’s life and environmental sustainability of the UAE.
Strategic objective Etihad
One of the strategic objectives of the Etihad airline is to offer the best services to its esteemed customers locally and globally by meeting their expectations. Moreover, the company was established to be the flag bearer of the United Arab Emirates. The company also intends to offer competitive and modern freight services to its customers in order to remain competitive in the Middle East. The airline has the objective of ensuring that it connects the eastern countries and the western world by providing air services with Abu Dhabi as its business core operation center. Finally, the airline intends to offer luxury air services to its customers by transporting precious cargo, pets and among other products.
SWOT analysis is a strategic analysis tool that shows the opportunities, threats, weakness, and strength of a company. Etihad had has many opportunities as well as threats, weaknesses and strength.
Etihad has a substantial competitive advantage over its main competitors. The company has been able to concentrate on its business model which resembles that of fly Emirates that is the most profitable and business in the Middle East. Moreover, the company has been able to Emirate most of the pattern that makes up fly Emirates. It has been able to use forge business acquisition with fly Emirates to gain a competitive advantage in the region.
Moreover, as the company is the flag bear, it enjoys a huge customer preference due to its strategic location. The location of the company enables the airline to connect different parts of the world. It is located at a crossroad between Europe, Asia, America, and Russia (Robert 181). The strategic location of the company has enabled both fly Emirates and Etihad to enjoy more passenger flight across the global. It is a key travel line for those coming from India, China, and South Asia. Its location has become the selling point of the crossroad between different parts of the world. Further, the company has collaborated with other airlines from Australian, which has enabled the company to enjoy more destinations across South Asia. Australia is one of the fast growing markets from airlines and Etihad had taken advantage of its strategic location to excel.
The United Fly Emirates is one of the biggest business hubs in the Middle East that attract many visitors across the globe. Due to its robust infrastructure, the company has been able to take advantage of being a flag bearer to increase market share. Many customers identify Etihad with the national flag of the country which is one of the well know business center in the Middle East. Moreover, United Arab Emirates has become a tourist destination due to its ample business resources coupled with its strategic location as a crossroad has positioned the company for long-term profitability. The strategic location of the airport in the southern part of Abu Dhabi will directly allow the same complementary dynamics of future expansion.
The company has a strong management who run the company and develops policies with professionalism. Etihad had employed western professional managers who have developed strategies that enable the company to enjoy success across the Middle East. Management policies are imperative because they allow a company to develop competitive strategies that will benefit the company in the long run (Robert and Chacko 181). Etihad is one of the best airlines in the world.
The company has won the price of the best airline regarding service delivery at Oscars. This shows the excellent business model employed by the management and board of directors in ensuring the company has to succeed and increased it long-term sustainability. The company has also established key competitive advantage which are hard for others to surpass due to its ability to develop new innovative business ideas. Moreover, the Gulf team together with Etihad has been recognized due to their reputation to of success and good customer care in the hospitality industry. The United Arab Emirates has developed to be a leader in progressive digital revolution with many cultures and social activities which are driven by new technology.
Etihad has enjoyed good customer perception due to its approach to a greener environment. The board of directors has taken strong measures to conserve the environment by cutting down on pollutant and fuel conservation (Unnikrishnan 28). The globe today is moving to greener sources of energy and world leaders have strongly supported environmental conservation by cutting down on the pollutant. This goal is the cornerstone of the company which has enjoyed strong customer reputation as the best environmental conversation airline. This brand perception is likely to propel the company to achieve its goals not only today but also in future.
Although the company has a strong customer’s reputation and strategic location, it suffers from a looming terrorist threat. The Middle East has a bad reputation due to its association with terrorism and violence. Moreover, this is supported by the unstable political climate that continues to disrupt business operation on the Middle East. However, the company has developed it business model by diversifying its market to counter the impact of terrorism. For instance, the company has concentrated on its customer service which has given it good reputation instead of associating it with terrorism. Etihad is also accused of not preparing adequate books of account to allow investors to analyze it business model and long-term sustainability (Flottau and Unnikrishnan 6).
This has resulted in criticism from a different player in the industry because they cannot be able to understand why a big airline does not disclose it a business model in the books of account. Disclosure is imperative especially to allow investors to evaluate the long-term sustainability of a company. Although the government owns the company, it should make adequate disclosures to stakeholders to allow them to make a sound decision regarding investment and equity in the company. Moreover, the company has very little information know on the Google search concerning the payment of directors and board of director. The failure of disclosure goes against international accounting standards which require companies to give proper disclosure to its stakeholders. Therefore, management should allow more disclosure on the company’s books of accounts as it gain global leadership.
The company has excellent opportunities to increase its business operations by adding more tourist destination. Since Etihad is a crossroad between many countries and continent, the company can open new destinations especially in Australia and southern Asia. For instance, the company can add it cargo flight destination to India and Indonesia. India and Indonesia are a huge of raw material from the United Arab Emirates.
Although most of the raw materials are transported via the sea, some peoples prefer to use Etihad airline because it is fast and safe (Wattanacharoensil and Yoopetch 295). The huge resource enjoyed by Etihad can enable the company to open new destination and acquire new planes quickly. The unlimited business opportunity arising from India and Australia is more likely to sustain the company in the long run. Therefore, Etihad has an extraordinary opportunity to increase profitability.
The primary threat facing Etihad is the geopolitical unrest and terrorism which is likely to disrupt smooth business operations. The likelihood of terrorist attack on the airline prevents some customer especially those from India from using Etihad. If a terrorist attack occurs in the carrier, it is likely to disrupt normal business operations across the world. For instance, this would compel Indian customers to use their airlines to and from the United Arab Emirates strictly. This would be a major setback since Indians represent a huge market share of business people and tourist.
Rational of quality management systems
The rationale of quality management system was to ensure quality control (verification). The concept of quality management was developed to minimize errors and dysfunction in production processes. After the introduction of total quality management, the focus shifted from detection of product defects to help an organization to evaluate all phases of production. Quality in the airline industry is built systematically to achieve excellent customer service. International quality management systems ensure the review of products and services of a business to identify areas that require improvement (Ebrahimi, and Sadeghi 5633).
Etihad ha implemented total quality management to ensure all areas of a business irrespective of their sizes are successful. Total quality management systems have helped Etihad to achieve reduced wastage, increased market share and meet customer’s expectation. This is in line with the core competence and the strategic objectives of Etihad airline to offer the best services to its esteemed customers locally and globally by meeting their expectation. Moreover, the company was established to be the flag bearer of United Arab Emirates. By implementing quality management practices, the company ensures that it leverages its core strength to achieve organizational goals (Ferrari and Reggiani 32).
International quality management also helps the company low the cost of service delivery. Etihad is well known for its ability to implement quality management systems in the direct flight to Paris. For instance, Etihad has been accredited a certificate of ISO 9000 QMS, which has enabled to company to keep up with the stiff competition in the industry. Etihad is committed toward improving it quality services to ensure it has achieved competitive advantage in the long run.
The rationale for implementing total quality management is to improve the quality of services especially on their direct route to Paris. Quality management systems have helped the company to improve departures and arrival on their direct route to Paris. The company reported a high profit during 2012 because it was able to leverage QMS to improve efficiency that has led to an efficient way of doing things. They have also helped the company to develop new strategies in both the short term and long term to help the business run smoothly. Quality management has enabled Etihad to maximize efficiency and quality of their processes.
Etihad has implemented ISO 9000 framework to enable the company to improve management systems for design customer service and supply of virtually any services. The implementation and success of ISO 9000 is based on the industrial best practice that helps organizations to demonstrate their commitment to quality (Kern 623).
It offers Etihad the assurance of improving customer service, customer relationship and improve time and cost saving. Etihad has enjoyed a good reputation due to the ability to develop repeatable processes that have improved business efficiency through improved monitoring in the company. It also offers other stakeholders a tool to satisfy the customer and other stakeholders. The modern quality management ensures quality control in the airline which is a fundamental practice that ensures a company has achieved long-term sustainability. International quality management systems lead to a new way of managing organizations that underpin the rationale for quality management. Application of ISO 9000ensures Etihad gets things done right the first time. ISO 9000 ensures total quality customer priority to achieve strategic competitive advantage (Fabricio 172).
The central focus of this system is the customer because without the customers Etihad cannot be able to survive. This is in line the service industry where the key focus of airlines is to offer the best qualities to their esteemed customers (Zaslansky 1092). For instance, the direct flight to Paris offers the best customers service in compared to other destination. This is highly driven by the implementation of ISO 9000 that have improved customer service. The international ISO 9000 ensure compliance with formal means to ensure that companies carry out their activities as planned to ensure the quality of products and services. Etihad relies on ISO 9000 to ensure continued improvement using the required standard which is based on international airline set standards to achieve sharing best practice.
The ISO 9000 standards are based on compliance principles which ensure the quality of services for customer satisfaction. These standards are a guideline and a mark to the outside world as a mark of conformity aimed at customer satisfaction. In the direct route to Paris, the ISO 9000 satisfy the implicit needs of the customers as well as explicit ones (Kuei 4474). While the application of these systems can enable a company to achieve impressive customer service, it is imperative to develop integrated approaches that will ensure the company takes into consideration all aspects of customer service. The ISO 9000 help the company to achieve its objectives by building a platform.
Requirement for improving quality
They are many factors that must be in place to ensure customer service delivery. For instance, strategic management plays an essential role in improving the quality of services in the airline industry. Management decisions determine whether Etihad will be able to achieve set goals. The relationship between strategic management and quality improve is highly dynamic. It involves decision-making process which encourages effective strategies to improve performance. Nigsch and Schenker-Wicki noted that managers develop strategies that can be integrated with totality in the organization to improve customer service delivery as they motivate the workforce (673).
Although there is a relationship between strategic management and total quality management, the approaches used in their implementation and operational perspective is unclear. Strategic management plays a vital role in ensuring improved performance of the company. For instance, Etihad management has utilized the ISO 9000 to improve critical safety checks (Metaxas and Koulouriotis 503). The airline industry has become complex and controversial.
Etihad has adopted mechanism and philosophy of quality and safety of customers as their priority. Etihad has adopted a philosophy that being safe is the right thing to do and is the law. The company has developed safety checks that will ensure that all customers are safe. It includes the development of a most efficient aerospace system to improve flight safety. The aviation safety has remained the highest priority for the company; managers have supported actions that ensure integrated, and safety system in all planes (White 47). Before any plane takes off, Etihad Airways must make sure that all safety checks have been thoroughly conducted to ensure the safety of customers. This ensures no fundamental breakdown might affect a plane.
The company has adopted leadership team structure that has enabled the company to achieve improved services. Team leadership has allowed Etihad to communicate effectively with all workers across the organization. A collaborative organizational culture supports this leadership style.
The company has adopted a collaborative organizational culture that has helped to the company to achieve customer service delivery. Employees are encouraged to develop new ideas through collaborative discussion which has enabled the company to improve quality. This organizational culture is effective because it allow total quality management systems to be implemented easily (Nigsch and Schenker-Wicki 674).
Critical safety check has become an integral part of business success at Etihad Airways. This has ensured that the company’s flight schedules are not disrupted by federal inspection which can impose fines when safety checks are not done appropriately. Security plays a vital role in the success of aviation industry. Strategic management comes into play by improving security and efficiency of aerospace systems in the world. Managers are expected to develop and ensure proper implementation of international quality management.
Etihad ensures it has a high reputation for emphasizing on ethical business practices. These values are important because they underpin Etihad’s business code of conduct. The company also ensures continued compliance with international aviation code of conduct to improve business performance.
The company has adopted new strategies to motivate its workforce. For instance, employees are recognized for impressive performance. Moreover, the company ensures a healthy and safe working condition. Managers also maintain open communication with workers that has been an important motivating factor since employees feel their opinion matters to the organization.
The company has a well-established evaluation committee who detects changes in customer needs and updates the board of director to implement new strategies to help the company excel.
The company achieves strategic partnerships through the acquisition of equity in other airlines. Moreover, Etihad also collaborates with other airlines such as Air France, Air Germany, and air Siberia to improve service delivery. The airline employs strategic alliance to gain competitive advantage and to make equity investment. For instance, the company has acquired 24 percent stake in Jet Airways an airline in India. Although the Indian jet airway has not been performing efficiently, the company has been gaining market share due to the massive investment made by Etihad airline. The strategic acquisition in jet airlines in India has enabled Etihad to penetrate the market without many challenges that face new entrant.
The relationship between quality management and ISO 9000 is dynamic. ISO 9000 refers to a set of international standards that specify how management operation should be carried out. Total quality management identifies how companies can improve profits by complying with international standards. Therefore, the relationship between total quality management and ISO 9000 is that both are implemented to improve the quality of product and services within an organization.
In order to achieve improved efficiency through the application of total quality management, Etihad airline had to change its operations from engineering based company to customer-oriented airline. Managers had considered the implementation phase the key to the success of the company. Several factors enabled the company to implement international quality management, namely:
- Maximizing return on each flight to Paris by introducing computerized reservation.
- Growing the market share through strategic alliance with other airlines.
- Providing impressive customers services at a premium price.
- Etihad introduced cost saving systems.
In 2003 when the airline entered the market, managers believe the only way they could achieve strategic success within a short duration was to leverage employee support. This included creating strategies that would align the organization with the vision and mission thereby inspiring workers to give the best (Jiménez 332).
The only way the company could achieve that goal was to implement total quality management programs. This system was implemented in the Etihad airway’s technical workshop. This workshop was responsible for overhaul repair and maintenance of the aircraft and service delivery. In order to be the best airline in the Middle East, the technical team decided to use quality management to increase customer satisfaction, reputation, and profitability. The top management team established the following steps:
- Conducting a feasibility study on the current position of the workshop;
- The company had to obtain management support and commitment to the implementation of total quality management systems.
- Training and educating workers were essential in order to facilitate necessary changes from top management to junior employees. Moreover, it included the introduction of new management styles that would support the implementation and sustainability of total quality management.
- Managers had to change policies and procedures that would fit and facilitate the implementation of total quality management. Moreover, the managers had to introduce a new organization culture that would fit the new system.
- Implementation of TQM program
- Managers would review the progress made in order to foster sustainable commitment of all levels of the organization.
In order to enable managers to examine the implementation progress of the system, they conducted a survey from the technical workshop which targeted clients and supplying areas. Managers decided to analysis the cost of quality to ensure it would be profitable in the long run. Employee quality cost data was used to calculate the cost required to improve customer service delivery specifically on the direct route to Paris. These costs were broken down depending on the relationship with quality namely:
- Anticipation – this refers to activities that improve performance
- Assessment – this refers to the check required to ensure a concept is implemented “right the first time”;
- System failure- this refers to activities that have failed during the implementation of the system “right first time.”
Top and middle managers were tasked with the responsibility assessing how subordinate employees implemented the activities related to quality. The fact that employees were properly informed and involved in the process; it has been a success throughout the organization. Employees were education the concept of TQM before it was implemented which helped them to understand the role of improved quality in the organization. The need to improve quality helped to justify the training required to implement total quality management. This also prompted considerable debate on the issue of quality to ensure all workers understood what they were required to do and when. The data collected was used as a diagnostic report to improve quality in seven steps identified below:
- Management style;
- System and procedures;
- Employee perception of management decisions;
- Attitude of workers toward the new system;
- Facilities and conditions;
This approach was the best to ensure that the data collected is used to give management a general overview of what they should expect when implementing the TQM. Moreover, it enabled managers to learn new ways that can be implemented to employee morale and overall organizational quality management practices. The data collected enabled the airline to explain the rationale and philosophy behind the implementation of total quality management.
All workers were encouraged to suggest new strategies that could be implemented to improve quality (Zaslansky 1093). Employees suggested that the existing management style was not consistent with the new quality management to be implemented. Different players in the industry were also tasked with the responsibility of developing new and innovative business ideas that would help the company to improve quality. Each group involved up to 12 people who were required to deliberate and come up with new ideas of conducting projects to improve quality. For instance, some of the groups were required to develop new ideas for improving the quality of the sorting aircraft test equipment in order to enhance certification control. Etihad Airways workshop is recognized as the best in the aviation industry by different players and even Etihad Airways itself.
The benefit of total quality management which was implemented in 2009 has improved quality and performance since the company has reported high profits from 2012 to 2015. The company has been able to achieve high-quality performance and positive changes using the data that was collected in the survey. It is worth noting that after the implementation of TQM, Etihad Airways has been able to offer excellent customer service in its direct route to Paris. This is evident in 2012; the company had a reported profit of $42 million which was a 200 percent increase from the previous year (Walsh 53).
The CEO James Hogan has noted that due to the implementation of total quality management, the company has been able to improve it brand image over the last three years. However, Etihad Airways can improve quality by forming strategic alliance with other airlines such as Air Berlin, Air Seychelles, Darwin Airline, Air France, and Air Serbia. This alliance could benefit Etihad Airways to eliminate the complexity that exists in the global alliances by ensuring they improve the quality of service (Mutter 34). Moreover, this will encourage Etihad Airways to deliver consistency experience to its customers both locally and globally.
It will enable customers to enjoy consistency framework that will allow the airline to maximize flight connectivity for passengers as they offer superior quality services. The Etihad airline can also enjoy standardized mileage and tier benefit, especially from Air France. Furthermore, the company will enjoy economic of scale and operational synergies which are likely to increase the quality of services to customers who travel to France. Strategic alliance with Air France will enable Etihad to share sales teams, procurement and shared pilots in their direct route to Paris.
Etihad Airways can also improve quality by signing agreements with Krono Corporation in order to enjoy management software that will improve quality. Krono crew planning software can enable the company to optimize planning and scheduling of cabins and crewmembers to improve efficiency. The software will allow Etihad to increase effectiveness in altitude pairing, altitude insight, and Roistering that is essential for planning and improving the quality and stability of crew rosters. The system is made by the state-of-art technology that will enable Etihad Airways and its crewmembers to improve the quality of crew schedules and service delivery.
Etihad can be able to improve quality by taking advantage of ISO 9000 QMS to improve organizational performance. Etihad can be able to improve it customer services in their direct route to Paris by leveraging its contact center to create an opportunity to serve their customers better. The call center can be used to direct customer call in precision queuing routes to improve service delivery (Yadav 22).
When Etihad employs these services, it can be able to create a high level of services in their customer care desk. Moreover, this system can be used to improve day-to-day work by speeding call response by more than two times. For instance, Etihad has been able to improve guest numbers which reached its highest level of 15 million in 2015. By taking advantage of the digital guest experience, the company can be able to improve customer service.
Etihad should consider a strategic alliance with other airlines such as Air France in order to eliminate complexity in service delivery. Moreover, a strategic alliance with Air France will enable the company to share costs such as improve flight connectivity. Etihad airline can also enjoy standardized mileage and tier benefit, especially from Air France. The company will also be able to enjoy economic of scale and operational synergies that are likely to increase the quality of services to customers traveling to France. Forming alliances with other airlines will enable Etihad to share sales teams, procurement, and shared pilots in their direct route to Paris.
International quality Management systems have been gaining more influence across the globe due to the due to the mutual influence of its particular influence. Total quality management has gained more influence due to the ability to improve performance and its cost-reducing capability. The increased customer traffic has resulted from investment in international quality management systems.
The company has also been able to increase its destination and capacity on existing routes. The strategic location of the airline as a crossroad hub enables the company to leverage major pathways from Australia, Indonesia, China, Russia Europe, and America to increase passenger traffic. The strategic location of the company has enabled both fly Emirates and Etihad to enjoy more passenger flight across the global. It is a strategic travel line for those coming from India, China, and South Asia.
Its location has become the selling point of the crossroad between different parts of the world. The modern quality management ensures quality control in the airline which is a fundamental practice that ensures a company has achieved long-term sustainability. International quality management systems lead to a new way of managing organizations that underpin the rationale for quality management. Application of ISO 9000ensures Etihad gets things done right the first time. ISO 9000 ensures total quality customer priority to achieve a strategic competitive advantage. The airline can be able to gain competitive advantage by forming alliances with another airline. This will encourage Etihad Airways to deliver consistency experience to its customers both locally and globally. It will enable customers to enjoy consistency framework that will allow the airline to maximize flight connectivity for passengers as they offer superior quality services.
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