Emirates Airlines

Name

Affiliation Company Background

The Emirates Group is a highly profitable business with revenue of approximately US$ 12 billion and more than 40,000 employees. The Group consists of Dnata, the successful Airport Ground Services and Travel Industry division, Emirates Airline. Emirates Airline is considered one of the most highly regarded Airline companies in Asia and also in the world. The company was established in 1985 with two leased aircraft from a rudimentary airport. Emirates airline flies to more than 100 destinations in over 60 countries and has been essential in establishing Dubai as the Middle East’s commercial centre and aviation hub. Its fleet is one of the youngest in the skies, with an average age of less than 70 months, and each month it takes delivery of the 158 aircraft it has on order, worth $52 billion at list price. Emirates is the Airbus A380 super jumbo’s largest airline customer, with several in the air and more than 50 still to be delivered. Currently, 130 airlines fly into Dubai and more than half the 37 million passengers who travelled through the city in 2008 were carried by Emirates, which has a 10,000-strong cabin crew of more than 120 nationalities who speak 55 different languages between them. Emirates are wholly-owned by the Government of Dubai, but the airline is run on a commercial basis and receives no financial support or protection. Competing against established giants of aviation allowed operating under the government’s unconditional open skies policy in Dubai, Emirates has thrived and been profitable in all but its second year of trading.

The shift towards Services

FDI is increasing shifting away from manufacturing and extractive industries and towards services. As service industries were largely national, are becoming transnational recently. The shift to services is being driven by: the general move in many developed countries towards service as the composition of FDI in services have changed, it is mainly concentrated on trade and financial services. In addition, the fact that many services need to be produced where they are consumed. There is also a liberalization of policies governing FDI in services. Lastly, the rise of internet based global telecommunications networks. For instance, Emirates Airlines call answering centres are located in UAE.

The services sector has been the bulwark of the economy, providing stability and contributing significantly to GDP growth. Shows that the services sector accounted for about two-thirds of real GDP growth in the 1990s. Further studies also showed that the global FDI stock in the services sector had more than quadrupled during the period 1990-2002. As a result of more rapid growth in this sector than in the other sectors, services accounted for about 60% of the global stock of inward FDI in 2002, compared to less than 50% a decade earlier.

Services now account for the largest share of the inward FDI stock in many countries, and Foreign-affiliate service providers play an important role in a growing number of services. Most service FDI has been domestic-market seeking, in such traditional services as finance, tourism and trading, or in industries that have only recently opened up to the private sector, such as electricity, water or telecommunications.

Realizing the importance, the government takes measures to ensure world-class standards of service excellence and leadership, such as introducing schemes, activities, programmes and even institutes – aimed at enhancing service levels, capabilities, mindsets and leadership. Examples include the Singapore Service Star, the Excellent Service Award (EXSA), Go The Extra Mile for Service (GEMS), Public Service for the 21st Century movement (PS21), The Institute of Service Excellence at SMU (ISES) and Certified Service Professional programme by WDA.

Gradual development over time has garnered its interdependence involving the manufacturing sector. In the long run, manufacturing and services group will replicate each other and allow firms to share the development of new knowledge-based products. However, many countries have difficulty quantifying FDI flows in services sectors. Determining trade in services is complicated given that services are not traded at a distinct entry or exit points, but rather across four modes of supply. While quantifying investment in services presents further challenges due to the complex nature of FDI definitions.

While FDI in services remains more restricted, both developed and developing countries have taken steps to open up their service industries. In fact, starting from a higher level of restrictiveness, developing countries tended to liberalize their service industries at an even more rapid pace than developed countries over the past decade. The competitive impact of FDI entry on service supply conditions depend considerably on initial conditions in a host country, especially the level of economic and service development, market structure of service and the regulatory framework.

Competitive Advantage

Competitive advantage is a position a firm occupies against its competitors. A business that had the advantage among the competitors can surpass the expected revenue and had a possibility to be the leading firm in the business sector or industry. 

Many forms of competitive advantage cannot be sustained indefinitely because the promise of economic rents invites competitors to duplicate the competitive advantage held by any one firm. Accordingly, a firm possesses a sustainable competitive advantage when its value-creating processes and position have not been able to be duplicated or imitated by other firms.

Emirates Airlines adopts differentiation generic strategy to gain a competitive advantage amongst its competitors by offering the highest quality services in order to be the best company in the market and differentiates from its competitors. For example, Emirates airlines was the first airline that offered TV screen for all aircraft’s classes. Also it was the first company in the Middle East to serve the e-ticketing.

In addition, it gained a competitive advantage by focusing in new segments in the market. For instance, it provides another airline companies such as Qatar Airways with training courses by using the most modern machines, called plane simulator to be the only company in the Middle East that offers such service. The aim of such changes is to be the leader in industry by increasing the brand name awareness regionally and internationally which will increase the demand and the profit as well.

As the Airline industry is in the maturity stage, there is a strong competition between airline firms. Each firm should use offensive strategies besides doing analysis for internal and external factors that may affect its position. The research and analysis for Emirates airlines address following recommendations:

The operational cost is increasing due to huge investments of Emirates on aircrafts and services and increase in fuel prices. Emirates should reduce the costs by making operational improvements, namely improving maintenance processes, maintaining high aircraft utilization and making effective flight scheduling. It could also be reduced by investing technology in distribution channels to reduce labor costs. For instance , it is recommended to install more self-service kiosks in airports of the destinations of Emirates airline since it has already install ones in Dubai airport.

In response to the threat of low cost airlines, Emirates shouldn’t lower its fares after years of offering advanced services, instead it has to offer new low cost brand as a subsidiary of Emirates group serving economic travelers who are now customers of new low cost airlines, thus expanding the market share. Extending routes is recommended especially there is a growth in tourism UAE. There are main regions in the world that Emirates do not have routes in, namely Canada, It has to extend destinations worldwide (especially attractive areas). Joining a global alliance enables increasing its destinations, offering more fare options for customers helping to solve problems of new low cost airline.

Investigating technology is recommended for improving customer service and Emirates has to sign contract with an e-business company that offers airlines technology solutions. E-CRM strategy is a new technology that Emirates should implement since internet users’ number is increasing. It allows managing long term relationships with customers (Jiang, 2003). Generally, Emirates should do analysis for internal and external factors and its competitors and develop new strategies to stay competitive in the maturity stage.

External Environment Analysis

It is important to understand the external environment of the organization in order to plan the future of the organization. The threats and opportunities of the organization need to be analyzed in a proper manner. The external analysis of an organization can be done by understanding the political, social and economic issues related with the organization. The changes or the influential factors related to politics, economy, social factors and technology (David L. Loudon, 2004)

Demographic, Cultural & Social

The emirates airlines are functioning in the Dubai city. The culture and the society of the city provided the organization with some unique features. Most importantly the city provides the organization with a large number of people intending to travel by using passenger services and cargo services (Saxena, 2009). Hence putting to use the resources of the company. The ideal points which the airlines connect are Asia, Europe and Africa. The culture of Dubai is an open culture where the people of different nationalities, culture live together in a developed environment (M. C. Cant, 2009).

Political

Negotiated agreements are made when air travel has to be carried out between different countries. There are certain rules and regulation between the governments concerning the aviation facilities and the operation of the airlines. The market of Dubai is unprotected. The open skies policy of Dubai has helped Emirates to change into a carrier. The Emirates Airlines has the potential to compete with the largest airline of the world. The reason behind the growth of the Emirates Airlines is the tough competition which the company has to face. The Emirates airlines have taken full advantage of functioning in the international market by connecting some of the destinations such as America, New Zealand etc. In the case of the aviation industry liberalization is increasing to a great extent. This has resulted in an increased competition in the market (Saxena, 2009).

Economic

In the case of the airline industry the current scenario of the economic conditions has a great deal of impact on the functioning of the organization. The growth of the Emirates Airlines has taken place in the UAE which has always been known for its strong economy. The market which has been chosen by the company to function is also powerful and stable. The stable economic growth of a region is an important factor contributing to the success of the organization (J. Paul Peter, 2010). There has been economic downturn recently which has influenced the industry on a great scale. The demand of air travel has decreased. There are many airlines which have to decrease their capacity both domestic and internationally. The challenge which stands in front of the Emirates Airlines is to function well even during the time of crisis.

Technological

The recent trends which have taken place in the technology have triggered success in the airline industry. There has been a great need of advancement in technology for a long period of time. In order to create a lucrative business it is important that the advancements in the technology are adopted by the company efficiently and in an effective manner. The Emirates Airlines have complete knowledge about the principle of investing in the technological developments in order to function properly in the market of airline industry. In commercial aviation the Emirates airlines is the youngest and in future it promises to the most technologically advanced company (M. C. Cant, 2009). The Emirates Airlines has signed agreements with the Aero Mobile in order to incorporate the technological advances and provide the best technology to the passengers. In order to appreciate the technological advances of the Emirates Airlines the company has been awarded best inflight entertainment, Best It Developer awards etc.

Market

The changes in the market which have been witnessed are the increase in the prices of the fuel and the increase in the availability of the natural resources. Due to the changing scenario the manufacturers are facing problems in the production of the vehicles. They have to form vehicles which are small and friendly to the environment. A lot of investment has been made by the airline companies in order to develop a fuel which would contribute to the development of the environment. It has become important that the market is driven by the environment friendly resources. Hence the change in the market leads to the change in the production strategies (Saxena, 2009).

Competition

Due to various changes such as technology, economy and other globalization scenarios there are a number of airline companies emerging. Due to the increasing competition it becomes important for the airline to function in accordance so that the competition could be faced. The Emirates airlines have become a brand and due to the change in its name as a brand the competition does not pose much threat to the airline. However, the company keeps changing its strategies in order to keep up to the competition in the market.

Recommendations

The implementation in the case of Emirates Airlines need to done in order to cover up the weakness of the organization. The weakness which lies in the organization is that it focuses on some of the events which may harm the business. In order to analyze the risks which are associated with a certain event the company should form up a risk analysis team and the team would analyze the future venture and predict if the company should go ahead with it or not. A risk can be understood as a threat which has the potential of harming the development of an organization. If the risk becomes real the development of the organization may get damaged and the organization may have to undergo a tremendous loss. The risk analysis team would adopt any of the proactive or reactive strategies in order to assess a particular venture. A risk estimate can be presented to the employees working on the situation. An advantage of such an implementation would be that the company is aware of the risk to be followed in a certain situation. A program can be developed in order to get back from the risk (M. C. Cant, 2009).

The control of the implementation of the risk analysis can be done by the leaders and managers of the organization. It is their responsibility to assess the situation. A framework can be developed by the skilled leaders and managers of the company in order to assess the situation of the risk.The implementation and control should focus on the weakness of the company. IF there is other weakness which the organization encounters with the passage of time it is important that the company plans and implements the program in order to control the weakness of the company and perform in a better manner (M. C. Cant, 2009).

Conclusion

In order to function successfully it is important that an organization selects the domain in which it possesses the distinct quality. Using the distinct quality the organization can gain competitive advantage over other organizations. Besides the domain the strategies and the other management strategies adopted by the company further contributes to the development of the company. The strategies which have been incorporated by the Emirates Airlines have helped the company to stand in the competitive market and maintain its position in the market. It is due to the leadership style and due to the strategies which have been adopted by the company it has been able to maintain its position in the market despite of all the fluctuations. The corporate strategy which has been adopted by the Emirates Airlines has proved to be guidance for the company in the time of challenges and opportunities. In the market environment there are various challenges and opportunities which need to be handled at the right time and dealt in a proper manner. The strategy adopted by the Emirates airlines proved to be the biggest milestone for the company. In order to survive in the competitive market it is important that the Emirate Airlines should consider the fact that the different strategies need to be updated and innovation need to be incorporated in the various strategies. The Emirate airlines should function in such a manner that the new strategy which the company plans to incorporate should be developed in such a manner that the company is able to face the different challenges in an efficient manner.

References

Cantwell, J., Dunning, J. H., & Lundan, S. M. (2010). An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment. Journal of International Business Studies, 41(4), 567-586.

Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long range planning, 43(2), 195-215.

Kolk, A., & Van Tulder, R. (2010). International business, corporate social responsibility and sustainable development. International Business Review,19(2), 119-125.

Levy, D. L., & Newell, P. J. (2002). Business strategy and international environmental governance: Toward a neo-Gramscian synthesis. Global Environmental Politics, 2(4), 84-101.

Verbeke, A. (2013). International business strategy. Cambridge University Press.