American International University – Bangladesh (AIUB)
Term Paper on
“Emirates Airlines”
Supervised By:
Faculty of Business Administration (MBA Program)
American International University – Bangladesh (AIUB)
Submitted By:
ProjonmerPoka
Strategic Management _Code: 01164_ Section: C
Sl. No.
|
Name
|
ID
|
Sign
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01.
|
Adnan, Md. Faisal Ahmed
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13-96860-2
|
Adnan
|
02.
|
Baroi, Lorenzo Badhon
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13-96864-2
|
Badhon
|
03.
|
Ahmed, Shanewaz
|
13-96839-2
|
Shanewaz
|
04.
|
Dewan, Adit
|
13-96837-2
|
Adit
|
05.
|
Hassan, Riad
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13-97325-3
|
Daana
|
Letter of Transmittal
20th July, 2014
To
Prof. Dr. Md. Mahmudul Hasan
Faculty of Business Administration (MBA Program)
American International University – Bangladesh (AIUB)
Banani, Dhaka- 1213
Subject: - Submission of term paper on Emirates Airlines
Dear Sir,
Here is the term paper that you have assigned us as the partial fulfillment of the Degree of Masters of Business Administration.
We have prepared our Term paper on “Emirates Airlines” which we are submitting along with this letter. It was an energizing experience throughout semester and preparing this term paper further enhanced our insight about how corporate level activities are being done.
The term paper is aimed to give an overview of how Strategic Management takes place in Eamirats Airlines. We hope that the analysis that we have carried out is up to your expectations. It has been an insightful experience for us and we tried our best to follow the tenets of internship report.
Sincerely yours,
ProjonmerPoka
Strategic Management _Code: 01164_ Section: C
Sl. No.
|
Name
|
ID
|
Sign
|
01.
|
Adnan, Md. Faisal Ahmed
|
13-96860-2
|
Adnan
|
02.
|
Baroi, Lorenzo Badhon
|
13-96864-2
|
Badhon
|
03.
|
Ahmed, Shanewaz
|
13-96839-2
|
Shanewaz
|
04.
|
Dewan, Adit
|
13-96837-2
|
Adit
|
05.
|
Hassan Riad
|
13-96837-2
|
Daana
|
ACKNOWLEDGEMENT
This term paper is made possible through the help and support from everyone, including: parents, teachers, family, friends, and in essence, all sentient beings. Especially, please allow us to dedicate our acknowledgment of gratitude toward the following significant advisor:
First and foremost, we would like to thank Prof. Dr. Md. Mahmodul Hasan for his most support and encouragement. He kindly read our paper and offered invaluable detailed advices on grammar, organization, and the theme of the paper.
Finally, we sincerely thank to our parents, family and friends, who provide the advice and other support. The product of this research paper would not be possible without all of them.
EXECUTIVE SUMMARY
This term paper on strategic analysis of the airline industry with Emirates Airline, to help concerned managers gain a closer review of changing environments in which the company operates. As a result, they are able to position themselves in the marketplace, to make better decisions on strategic management. As in the current global economic recession with falling demand and uncertain economic recovery, the need for business to identify strategic issues becomes vital. This assists managers to review their strategies, to identify their core competence, competitive advantage and any sources of profit available to the business. In this effort, they are able to respond to change and overcome the situational difficulty and possibly achieve superior performance afterwards. The report outlines appropriate strategic options for business sustainability. In the situation of uncertain demand, cost management needs to be effectively executed. Consolidation and concentration within alliances may also be necessary for reducing costs and gaining benefits. Route restructuring is needed to focus on routes of profitability. As to the case of Emirates, the company will continue to sustain and gain competitive advantages forwards, considering that strategic management take full advantages of their core competences, economies of scale, learning and experience curves gained throughout its life. Cost reduction is a long-term necessity for a capital-intensive airline. Thus, cost cutting in the value chain needs to be strictly considered. In view of short-term effect of an economic downturn, strategic objectives for the situation should be emphasis on market penetration by cutting price in existing markets and competition on price basis when customers become price-sensitive nowadays.
Definition of Strategy
Strategy (from Greek, "art of troop leader; office of general, command, generalship") is a high level plan to achieve one or more goals under conditions of uncertainty. Strategy is important because the resources available to achieve these goals are usually limited.
Strategy Matters!
Strategy is often the difference between: success and failure, between mediocrity and excellence a great manager and average managers stumbling through life and moving ahead with purpose
Strategic Management (Theory : 2000 – 2010)
• Strategic Management can be defined as (1) the art and science of formulating, (2) implementing, and (3) evaluating cross-functional decisions that enable an organization to achieve its objectives.
• Strategic Management focuses on integrating management, marketing, finance/accounting, production/operation, research and development (R&D) and computer information systems to achieve organizational success.
Strategic Management (Theory : 2011 – 2015 ± )
• Strategic management involves strategy development, which is comprised of five stages:
1. discovery,
2. strategic thinking,
3. strategic planning,
4. strategy roll-out,
5. strategy tune-up/adjustment.
1. Discovery, “Emirates Airlines” requires all members of the team to individually gather information on an agreed upon set of attributes affecting the organization.
2. Strategic thinking, “Emirates Airlines” can be defined as ‘the generation and application of business insights on a continual basis to achieve competitive advantage’.
3. Strategic planning stage, “Emirates Airlines” utilizes the insights form the strategic thinking phase to assemble a mission statement, set goals and objectives, audit the organization for internal strengths and weaknesses, assess the external environment for opportunities and threats, evaluate strategic options, and then select and operationalized an organizational strategy
4. The strategy roll-out phase, “Emirates Airlines” turns the strategy into activities and offerings and ensures that the strategy is communicated well throughout the organization.
5. The strategy tune-up phase, “Emirates Airlines” is a meeting held several times per year to keep track of the progress of the implemented strategy and adjust for changes in the internal and external climate of the organization.
According to the definition of strategic management our project “Emirates Airlines”fit into (theory 2011-2015+) as they also do strategic planning, and thinking and strategic adjustment at the end.
Strategy (from Greek, "art of troop leader; office of general, command, generalship") is a high level plan to achieve one or more goals under conditions of uncertainty. Strategy is important because the resources available to achieve these goals are usually limited.
Strategy Matters!
Strategy is often the difference between: success and failure, between mediocrity and excellence a great manager and average managers stumbling through life and moving ahead with purpose
Strategic Management (Theory : 2000 – 2010)
• Strategic Management can be defined as (1) the art and science of formulating, (2) implementing, and (3) evaluating cross-functional decisions that enable an organization to achieve its objectives.
• Strategic Management focuses on integrating management, marketing, finance/accounting, production/operation, research and development (R&D) and computer information systems to achieve organizational success.
Strategic Management (Theory : 2011 – 2015 ± )
• Strategic management involves strategy development, which is comprised of five stages:
1. discovery,
2. strategic thinking,
3. strategic planning,
4. strategy roll-out,
5. strategy tune-up/adjustment.
1. Discovery, “Emirates Airlines” requires all members of the team to individually gather information on an agreed upon set of attributes affecting the organization.
2. Strategic thinking, “Emirates Airlines” can be defined as ‘the generation and application of business insights on a continual basis to achieve competitive advantage’.
3. Strategic planning stage, “Emirates Airlines” utilizes the insights form the strategic thinking phase to assemble a mission statement, set goals and objectives, audit the organization for internal strengths and weaknesses, assess the external environment for opportunities and threats, evaluate strategic options, and then select and operationalized an organizational strategy
4. The strategy roll-out phase, “Emirates Airlines” turns the strategy into activities and offerings and ensures that the strategy is communicated well throughout the organization.
5. The strategy tune-up phase, “Emirates Airlines” is a meeting held several times per year to keep track of the progress of the implemented strategy and adjust for changes in the internal and external climate of the organization.
According to the definition of strategic management our project “Emirates Airlines”fit into (theory 2011-2015+) as they also do strategic planning, and thinking and strategic adjustment at the end.
Most Strategic Management Model
1. PEST analysis
2. STEER Analysis
3. Five Forces Model
4. Strategic Group Map
5. SWOT analysis
6. Blue Ocean Strategies
7. Open innovation
8. seven S model
1) 1) PEST Analysis: PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management.
2. STEER Analysis: STEER analysis systematically considers Socio-cultural, Technological, Economic, Ecological, and Regulatory factors.
3. Five Forces Model:
· Supplier Power
· Buyer Power
· Threat of Substitute
· Threat of new entrants
· Rivalry
4) Strategic Group Map:
Emirates Airlines has implemented many strategies:
A. Eliminate
1. Over the counter booking system
2. Free food/beverage on the plane
3. Seating Class booking system
B. Reduce
1. ‘Luxury’ facilities provided by airport lounge
2. Number of attendance service on the plane
3. Seat quality is very good.
C. Raise
1. Focus on several key destinations
2. Increase frequency of flight
D. Create
1. Online booking system
2. Point-to-point travel system
3. With these strategic moves, Emirates Airlines was able to focus on factors that really bring value to the customers such as point-to-point travel system, easy booking system, etc. This helped Emirates Airlines to reduce cost and at the same time increase the value to the customers – ‘Value Innovation’.
5) Open innovation: Emirates can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.
6) McKinsey – Seven S-Model:
- Business Environment/Strategy: Emirates strategy is to be the world’s leader in the airline industry. Our mission is to be the leaders in the air transportation industry. They intent to provide the eminent quality service to the clients.
- Shared Values: Emirates offer safety and comfort along with creativity and inspiration to reach the ideality. They also offer economic flight and other value added services to their customers so that one day they become the world’s leading Airline Company.
- Structure: Emirates has a very structured Organizational Chart. They organized their organization to different departments and different management layers so that total organizational operations run smoothly and ensure customer satisfaction.
Organogram
Here is the organizational Structure of Emirates
- Staff: Emirates staffs are highly qualified and experienced. Top management employees are very experienced in the airline industry. They are very experience in setting company business plan and strategy so that they can do profit. Others staffs are also very skilled in their respective area and they are always working hard to improve themselves.
- System/Infrastructure: Emirates is using latest aircrafts in their pool to ensure safety and luxurious flight. They have the reward system for both of the frequent flyer customer and employees. They are very much concern about their customer feedback and they respect their customers and always try to act according to their customer feedback.
- Skills: Emirates always choose best human resources to run the business. They are very much skilled and their know how on airline business is excellent.
- Style: Emirates always emphasize on quality. They have the best on flight crews to take care of the passenger during flight. As we know journey by air is very monotonous, so they provide excellent entertainment system and food for the passengers so that they do not feel bored. Their pilots and crews are also very helpful. Their employees are also very energetic and dedicated to their works to bring success for the company in every aspect.
Company Profile of Emirates Airlines
Emirates (Arabic: طَيَرانالإمارات DMG: Ṭayarān Al-Imārāt) is an airline based in Dubai, United Arab Emirates. The airline is a subsidiary of The Emirates Group, which is wholly owned by the government of Dubai's Investment Corporation of Dubai. It is the largest airline in the Middle East, operating nearly 3,400 flights per week from its hub at Dubai International Airport, to more than 133 cities in 74 countries across six continents. Cargo activities are undertaken by the Emirates Group's Emirates SkyCargo division.
During the mid-1980s, Gulf Air began to cut back its services to Dubai. As a result Emirates was conceived in March 1985 with backing from Dubai's royal family, with Pakistan International Airlines providing two of the airline's first aircraft on wet-lease. It was required to operate independent of government subsidies, apart from $10 million in start-up capital. The airline became headed by Ahmed bin Saeed Al Maktoum, the airline's present chairman. In the years following its founding, the airline expanded both its fleet and its destinations. In October 2008, Emirates moved all operations at Dubai International Airport to Terminal 3 to sustain its rapid expansion and growth plans. Till then Emirates has built up a strong brand name as a leader in the aviation industry, particularly in terms of service excellence, and it’s very rapid growth, coupled with consistent profitability.
Mission
"Our mission is to be the leaders in the air transportation industry. We intent to provide the eminent quality service. Our desire is to offer safety and comfort along with creativity and inspiration to reach the ideality, and provide an unending growth to our shareholders. Our ambition is to attain our employees’ satisfaction by gathering the best conditions"
"Our vision is to be the world’s leaders in Airline Industry."
SWOT ANALYSIS OF Emirates Airlines
PESTEL ANALYSIS OF Emirates Airlines
EMIRATES - PORTER’S FIVE FORCE
SWAN Analysis & TOWS Matrix
SWAN ANALYSIS OF Emirates Airlines
## Strengths
1. They have a service that provide customer with an early and simple check-in.
2. They have good strategies in decision-making
3. They strictly maintain a strategic location
4. They provide self-entertainment system in all seats, and Emirates Airlines considers the first airline in the world that provides this system on a commercial aircraft.
## Weaknesses
1. Focusing too much on their high-end achievements and diversification in spite of the risky effects of such decisions.
2. High prices comparing to other airline companies
3. They don’t have an available hub in Abu Dhabi.
4. Does not cater to middle class & budget traveler
## Achievements
Achievements of Emirates Airlines within its entire existence and until today, we can tell with certainty that this company has a very high level of risk management. More than 500 international awards are testament to the hard work and determination of every member of the Emirates.
## Next step
Emirates Airline’s next step is flying to more destinations on more aircraft every day.
TOWS Matrix OF Emirates Airlines
Value Chain Analysis
Emirates is renowned for a huge range of properties, diversified business, contributing to its full operations. Most operations are owned and run by Emirates. Dubai International Airport has exclusive Emirates Terminal 3 (Emirates, n d.). Emirates adopt vertical integration into its core business structure, incorporating diversified properties. This resembles itself through manufacturing, marketing and technology. Emirates directly operates check-in, service desks, boarding and lounge services, baggage and handling and airport push-backs (Emirates, n d.). In addition, Emirates hotels & resorts; Emirates skycargo; Emirates aviation college for pilot and staff training; Emirates engineering centre for repair, maintenance and training; Emirates catering, incorporate business support(Emirates, n d.). These activities make up smooth operations for the airline’s success. Obviously, Emirates has a great potential to create added value through vertical integration in the value chain, defined by Hill et al (2007). As stated, there are many Emirates-branded subsidiaries and partner companies that operate in conjunction with the business. On the basis of this assessment, Emirates outweighs competitive advantages over competitors, in terms of productivity, cost efficiency and entrepreneurial management.
Emirates is renowned for a huge range of properties, diversified business, contributing to its full operations. Most operations are owned and run by Emirates. Dubai International Airport has exclusive Emirates Terminal 3 (Emirates, n d.). Emirates adopt vertical integration into its core business structure, incorporating diversified properties. This resembles itself through manufacturing, marketing and technology. Emirates directly operates check-in, service desks, boarding and lounge services, baggage and handling and airport push-backs (Emirates, n d.). In addition, Emirates hotels & resorts; Emirates skycargo; Emirates aviation college for pilot and staff training; Emirates engineering centre for repair, maintenance and training; Emirates catering, incorporate business support(Emirates, n d.). These activities make up smooth operations for the airline’s success. Obviously, Emirates has a great potential to create added value through vertical integration in the value chain, defined by Hill et al (2007). As stated, there are many Emirates-branded subsidiaries and partner companies that operate in conjunction with the business. On the basis of this assessment, Emirates outweighs competitive advantages over competitors, in terms of productivity, cost efficiency and entrepreneurial management.
Firms Infrastructure
· Vertical Integration
· Government Partnership
· Free tax by Dubai International Airport
· Standardized Aircraft
· Legal issues
HR Management
· Emirates Aviation College
· Reward Employee Program
· Accommodation and Transport Allowance
Technology Development
· In House Research Centre
· Engineering Centre
· Sky Cargo
· Computer Reservation System
· In-flight System
· Flight Scheduling System
Procurement
· Emirates Catering Service
· Stock Control, Food & Drinks
· Fuel Handling
Inbound Logistic
· Exclusive Emirates Terminal 3
· Yield Management
· Less Dependence on Supplies
· Dubai International Airport
Operation
· Self-operation on;
· Check-in
· Service Desk
· Boarding & Lounge Services
· Baggage & Handling
· Airport Pushback
Outbound Logistics
· Emirates Sky Cargo
Marketing & Sales
· Official Sponsorship
· Slogan "Fly Emirates"
· Safety Issues
· Awards Achievement
· Effectiveness of Pricing Strategy
Services
· Sky Wards
· Emirates Lounges
· Emirates Hotel & Resorts
· 24 Hours Prior Check-in Service
· ICE (In-flight Entertainment System)
ViSA Model
• Vi = Vision; “To make civil aviation safe, leading and sustainable.”
The principles which propel us forward
A strong and stable leadership team, ambitious yet calculated decision-making and ground-breaking ideas all contribute to the creation of great companies. Of course, these have played a major part in our development, but we believe our business ethics are the foundation on which our success has been built. Caring for our employees and stakeholders, as well as the environment and the communities we serve, have played a huge part in our past and will continue to shape our future.
• S = Strategy;
Emirates Airlines has a good and effective business model which is very helpful to gain company objectives and help to company become leader in the airline Industry .following are strategies of the emirates airlines strategies.
• A = Action Plan;
“Emirates is working on a action plan to ensure that they get flights and passengers moving as quickly as possible as airspace reopens. This will include extra flights. However, like every carrier, they cannot fully activate contingency plans until they receive clearance from European Air Traffic Control authorities. until this happens, they are unable to give firm timescales.”
GREAT Model
By using GREAT Model, Emirates Airlines will create the short term proposal.
Goals:
Then as now, Emirates goals is quality, not quantity, and in the years since taking those first small steps onto the regional travel scene, Emirates has evolved into a globally influential travel and tourism conglomerate known the world over for our commitment to the highest standards of quality in every aspect of our business. Emirates goals to develop Dubai into a comprehensive, global, long-haul aviation hub.
Other goals include staff education, waste reduction and recycling, lower energy use and greater communication – internally and externally.
Roles:
The main role is aviation service make sustainability and eco-efficiency the cornerstones of all group operations, in the air and on the ground.
Expectations:
“The passenger experience begins the moment a flight is booked and from that point our goal is to deliver an exceed customer expectations,” said Patrick Brannelly, Emirates’ Vice President Corporate Communications Product, Publishing, Digital & Events.
Emirates was also the first airline to allow its passengers to use their personal mobiles while flying, and continues to lead competitors with its on-board offerings. Its award-winning in-flight entertainment system, ice, offers passengers up to 1,500 channels of entertainment and recently the airline introduced capacitive touchscreen technology and even larger screens to its in-seat televisions.
Abilities:
The ability to adapt a new environment and strong cultural awareness and people.
Timing:
In 2013-14, emirates tonnage transported increased by 8% to 2.3 million tons. In addition to belly hold cargo capacity to Emirates’ new passenger destinations, in 2013-14 emirates launched new freighter operations to Kano, Nigeria; Guangzhou, China and Quito, Ecuador.
SMARTER Model
Specific: Emirates goal to develop Dubai into a comprehensive, global, long-haul aviation hub.
Measurable: Emirates order-book stands at more than 300 aircraft, with a total value of approximately USD 138 billion as of June 2014.
Achievable: On 25th October 1985, Emirates flew its first routes out of Dubai with just two aircraft. Then Emirates goal was quality, not quantity, and in the years since taking those first small steps onto the regional travel scene. Now they have more than 300 aircraft, with a total value of approximately USD 138 billion as of June 2014.
Realistic: The financial year 2013/2014, Emirates carried 44.5 million passengers and 2.25 million tons of cargo. Emirates are looking forward to a bright future in which they carry many millions more across a growing network of international destinations.
Time: In 2013-14, emirates tonnage transported increased by 8% to 2.3 million tonnes. In addition to belly hold cargo capacity to Emirates’ new passenger destinations, in 2013-14 emirates launched new freighter operations to Kano, Nigeria; Guangzhou, China and Quito, Ecuador.
Encompassing: The United Arab Emirates was ranked 19th overall in the World Economic Forum’s 2013 Global Competitiveness Index (GCI), and 1st globally in six sectors of the GCI index. the UAE and Dubai have embraced and built on the advantages of their geographic location.
Reviewed: Various award given to Emirates in 2013-
The BCG Matrix
PURE Objective and GREAT Model
PURE Objective:
Positive:
- Increase market share 40% to more 55%
- Retain and improve frequent to business class travelers market share
- Tap competitive cost carriers market achieve company’s return on investment
- Promote Dubai Tourism International gate to across continent
Understood: Emirates employee diversity of over 160 nationalities is their unique strength as a global organization. Talent is not nationality exclusive, and their diversity of nationalities, cultures, religious and ethnic backgrounds enriches their workforce by bringing new ideas, innovations and thinking styles that lead to business success. Their employee diversity also complements Dubai’s cosmopolitan multicultural population where over 85% of residents are expatriates.
Recorded: The key to the Emirates success has been the CONTINUITY of its management team. At the helm of the company there is a group of talented executives with proven track records in their fields of expertise. Now this philosophy drills down across Emirates DNA to RETAIN the best talent.
Ethical: A strong and stable leadership team, ambitious yet calculated decision-making and ground-breaking ideas all contribute to the creation of great companies. Of course, these have played a major part in their development, but they believe their business ethics are the foundation on which their success has been built. Caring for their employees and stakeholders.
Market Analysis Including Market Segmentation
Integration of Marketing Mix:
1. Price:
•Emirates Airline is using the premium pricing strategy, which is to offer a higher price than what other airlines in the market offer
2. Place:
• Emirates Airline has about eleven travel shop branches in the UAE and about 122 branches outside the UAE all around the world that provides superior services
•Emirates Airline has also an online website presented in about nine languages in order to reach all its target segments from different nationalities.
3. Promotion:
For advertising, it has to advertise in newspapers that mostly attract this segment like Gulf news and in cheap magazines such as Ahlan.
Billboards are good tool for advertising, they are attractive and people everywhere could see them.
4. Product:
•Emirates is always the first to offer the high-quality, latest technologies and services to their customers.
•Gives travelers the ability to send and receive emails and SMS messages from any class and the first airline to implement TVs in all classes
5. People:
Management of Emirates Airlines are able to promotes the sharing of a common goal among their employee, hence, make the organization and its team work efficient together. As they work together, they are able to focus on the needs of the entire organization which is to sustain their competitive advantage.
6. Process:
•Emirates Airlines services includes the following key operating departments such as the First and Business Class Lounges, Special Services like assisting disabled passengers and unaccompanied minors, Customer Relations, Baggage Services, Check-in and Boarding, and the Millennium Airport Hotel(Emirates Wing).
7. Physical Evidence:
•Emirates fly planes release carbon dioxide through fuel burning. However, while flying planes, Emirates wants to make a different by focusing on how to be an ecologically-efficient organization. They use fewer resources and creating less waste and pollution.
TARGETING ANALYSIS:
Targeting:
Emirates caters to high ranking executives and businessmen belonging to the age group of 30-60 who are looking for luxury and comfort in travel. It serves all customers regardless of nationality
Segmentation:
•Emirates segments its market into two major categories, the profitable (business travelers) and the unprofitable one. These can be further divided on the basis of the average length of trip, the frequency of trips and the brand loyal customers
•Business class passengers are the most profitable to Emirates and are willing to pay for their luxurious services as price is relatively inelastic for them. Emirates offer these travelers great Wi-Fi services and more room to work and hence they prefer nonstop trips
•Emirates loses out where the economy class travelers are concerned as they are very price elastic and prefer to choose low cost carriers.
Marketing Plan:
1. Marketing Penetration (Improving In-fight Service)
· Retain and boost market share of Emirate airlines product and services.
· Protect market dominance of Emirates airlines existing markets.
· Driving out competitors by restructuring mature market.4) Enhance usage of existing passengers.
2. Marketing Development (Extending New Routes)
•The objective of Emirates airline is building up Dubai into a popular aviation center that will finally serve as an important universal long haul hub
•It provides an alternative to the traditional European airline hubs as Heathrow Airport (London), Charles De Gaulle (Paris) and Schiphol(Amsterdam).
3. Product Development (Private Suite)
•Introducing new services into existing markets implies product develop strategy which involves the development of skill and requires business to customized services that can apply to current markets.
•Emirates airline has more services for business travelers that is reason why Emirates airline introduce high quality first class private lounges to attract business travelers.
•The premium class private suit would be fully outfitted with personal storage, coat cabinet and desk and individual mini bar. Long seat reclines to become fully horizontal couch and TV wide screen
4. Related Diversification (Low-cost carrier)
•The low cost airline offers lower prices than traditional airline by fascinate promotion. The low cost has flexibility fare that is one reason why some is switching cost to them.
•Emirates Airlines be supposed to slightly spread from current marketing objectives to obtain the low cost airline market share and to retain its customer base of UAE expatriate market.
EFE Matrix
ð The External Factor Evaluation (EFE) Matrix of Emirates Airlines
CPM Matrix
The Competitive Profile Matrix (CPM) MATRIX OF Airlines Industry
QSPM Analysis
QSPM (Quantitative Strategic Planning Matrix) for Emirates Airlines
Key Factors
|
Alternative 1-
Promoting Dubai Expo 2020 |
Alternative 2-
Promoting Qatar Expo 2020 | ||||
Weight
|
Alternatives Scores
|
Total Alternatives Scores
|
Weight
|
Alternatives Scores
|
Total Alternatives Scores
| |
Strengths:
| ||||||
Early and simple check-in
|
0.2
|
2
|
0.4
|
0.2
|
4
|
0.8
|
Good strategies in decision-making
|
0.15
|
2
|
0.3
|
0.15
|
3
|
0.45
|
Maintain a strategic location
|
0.1
|
1
|
0.1
|
0.1
|
4
|
0.4
|
Considers the first airline in the world
|
0.09
|
3
|
0.27
|
0.09
|
2
|
0.18
|
High quality standers compare to competitors
|
0.14
|
1
|
0.14
|
0.14
|
2
|
0.28
|
Weaknesses:
| ||||||
Focusing too much on their high-end achievements
|
0.11
|
2
|
0.22
|
0.11
|
3
|
0.33
|
High prices comparing to other airline companies
|
0.1
|
2
|
0.2
|
0.1
|
2
|
0.2
|
Don’t have an available hub in Abu Dhabi.
|
0.11
|
2
|
0.22
|
0.11
|
1
|
0.11
|
Does not cater to middle class & budget traveler
|
0.08
|
1
|
0.08
|
0.08
|
2
|
0.16
|
Sum Weights
|
100%
|
100%
| ||||
Opportunities
| ||||||
Develop more advanced airline services
|
0.15
|
4
|
0.6
|
0.15
|
3
|
0.45
|
leveraging markets Emirates Airline’s infrastructure business
|
0.1
|
3
|
0.3
|
0.1
|
2
|
0.2
|
New market opportunities ( Asia & Africa)
|
0.05
|
0
|
0
|
0.05
|
3
|
0.15
|
Economic co-operation free trade agreements with many governments
|
0.09
|
2
|
0.18
|
0.09
|
3
|
0.27
|
Abundance of human capital in the region
|
0.1
|
1
|
0.1
|
0.1
|
2
|
0.2
|
Threats
| ||||||
The increase of the Fuel price
|
0.15
|
3
|
0.45
|
0.15
|
3
|
0.45
|
Rival computers are major threats to the business
|
0.12
|
2
|
0.24
|
0.12
|
2
|
0.24
|
Political instability in the middle east region
|
0.11
|
2
|
0.22
|
0.11
|
1
|
0.11
|
Growth strategies of Qater Airways & Etihad Airways
|
0.08
|
1
|
0.08
|
0.08
|
2
|
0.16
|
Dubai debt crises
|
0.05
|
2
|
0.1
|
0.05
|
1
|
0.05
|
Sum Weights
|
100%
|
100%
| ||||
Sum Total Alternatives Scores
|
4.20
|
<
|
5.19
| |||
Attractive Score:
1 = not acceptable;
2 = possibly acceptable;
3 = probably acceptable;
4 = most acceptable;
0 = not relevant
Comments:
By using QSPM (Quantitative Strategic Planning Matrix), Emirates Airlines should take “Alternative 2 - Be more Global”. Because of the sum of total attractiveness score is higher than “Alternative 1 - Promoting Dubai Expo 2020”
Financial Analysis
Competitor Analysis
Key Competitors of Emirates Airlines
Qatar Airways
Qatar Airways was established in 1994. It has 44 fleets linking 69 international destinations. Its services and events, gives the company special position amongst its competitors. The success of Qatar Airways comes from its aggressive growth plan that includes the construction and development of the new Doha international airport, which will include the world’s largest aircrafts' hangers to be used for maintenance of Qatar Airways. Additionally, by 2009 Qatar Airways plans to get 36 aircrafts from Airbus, including two A380, for Qatar Airways. (Airline website, AmeInfo)
British Airways
British Airways is ranked # 2 in Europe and one of the biggest in the world. They have 300 planes and 216 destinations in 94 countries. The key success factors of British Airways are: it’s a member of the largest alliance and it is known of its technology projects in offering unique services, such as touch screens service and being the first in implementing full flat beds.
Singapore Airlines
Singapore Airlines is one of the most respected travel brands founded in 1947. It has a fleet of 90 aircrafts and it flies to more than 60 cities in 30 countries. Many factors cause Singapore Airlines success, such as young and efficient fleets, educated staff, top ranked travel gateway and its low cost airlines known as “Tiger Airways”, plus it’s a member of star alliance airline networks. (Singapore Airlines Company Information)
American Airlines
American Airlines was founded in 1930 and is positioned as the largest airline in the world in terms of the total passengers transported of 80 million yearly. It has the highest number of aircrafts that reach up to 991 and serve 172 cities with five main hubs. Also it is first to launch the loyalty program “frequent flyers”. All of these are considered as the key success of this airline. (American Airlines)
Breakeven Analysis
It is observed that for year 2013, the company was incurring managed to have a positive gross margin of 885 AED million. On year 2013 the Fixed Cost of Emirates Airline was 87620 AED million meaning to achieve the break-even point the company will have to make sure that it has at least a sales volume that gives around 99 times of the gross margin in year 2013.
The company earned AED 1.24 AED for each Revenue of 100 AED. In 2013 the Fixed cost of the company is 87620 AED Million
So we have to earn (100/1.24) * 87620 = 7066129.032 Million
KSF Analysis (Industry key Success Factor)
1. Technology – related KSFs
· With an average aircraft age of six years, Emirates has one of the youngest fleets of any airline.
· Emirates flight operations include the most up-to-date techniques for saving fuel and emissions.
· Developments in aircraft and fuel will continue to help reduce the environmental impact of our operations.
2. Manufacturing - related KSFs
· Engineering Materials Management section is responsible for developing policies, processes and procedures to optimize inventory investment and operating costs. This includes forecasting, procurement planning, storing, usage, repairs, stock reviews, replenishment, obsolescence and disposal of materials.
· The Procurement section supports the airline operation by outsourcing and contracting all aircraft commodities, such as fleet, power plants, equipment, spares etc.
· Engineering Projects section has expert knowledge and experience in the evaluation, specification and negotiation of aircraft acquisitions. It monitors the process from inception, through inspection during aircraft assembly, to delivery and acceptance.
· Reliability, safety and on-time performance are pre-requisites of a successful airline and Engineering excellence is the only way by which this may be achieved. At Emirates Engineering Training, we provide a wide range of intensive technical training programme.
Fully equipped to ICAO standards, Emirates' extensive facilities include basic engineering, machine, welding, composites repair, airframe, engine and avionics workshops.
· Emirates provide a wide range of technical training covering the whole Emirates fleet. The Engineering School is GCAA and EASA 147 approved and provides courses to EASA level 1, 2 and 3 and ATA level 1, 2, 3 and 4 standards.
3. Distribution - related KSFs
· Emirates flies to more than 140 destination over six continents
· Emirates have standard e-ticketing system
· Entire journey can be book through emirates.com
4. Marketing - related KSFs
· More than 50 divisions dedicated to providing innovative, quality travel and tourism services.
· Emirates has been committed to sponsorship in both the UAE and around the world for over twenty years,
· Emirates have branched out into leisure and retail, adding hotels and tourism firms to their ever-expanding portfolio.
· Emirates publish two in-flight magazines, each of which is a prime opportunity to reach some of the most sophisticated readers in the skies.
· TV advertising on Emirates offers an effective way to reach millions of people.
5. Skills and Capability – related KSFs
· Emirates have a very talented workforce for every internal department.
6. Other types of KSFs
· Have strong financial report
· Patent protection
Strategy Evaluation and Contingency Plan
Strategy is the long term planning to achieve business objectives through arrangement of resources of organization within a difficult environment, to fulfill the market needs and also satisfaction of stakeholder’s expectations".(Dibb.S, Simkin. L, 2008)
Emirates Airlines Strategies
Emirates Airlines has a good and effective business model which is very helpful to gain company objectives and help to company become leader in the airline Industry . Following are strategies of the emirates airlines strategies.
Quality Control strategy
This is the basic and fundamental strategy to achieve goals of any organization so in this way airlines have very attractive and best strategy to control its quality and standard of the brand.
Extensive Aviation Training strategy
This is another fundamental and key strategy of the Emirates for Aviation training .In this way company get maximum benefit through extensive training of its employees .In this way not only keep their employees with it but also open new opportunities for outsiders as well.
International Airline Information Technology Development Strategy
This is another fundamental and very important strategy of the company for development of its e-business system, self-check services system and also maximize the profit through its advancement in Information technology system in this way it make a lot of contracts with very big companies of the world.
Resort, Hotel and Tourism Strategy
This is also another fundamental strategy of the company for increased the numbers of tourist in this way it assist to local bodies and advice for development of new Hotels, Restaurants, new buildings etc.
Growth strategy
· New Bases.
· Expansion of existing bases.
· More opportunities available as airlines close/ consol.
· Cost, cost, cost (long term minimization).
· Efficient facilities.
· Demographics.
· Geographic.
· Strategic.
· Auctioned winter capacity.
· Increasing communication of benefits.
Recommendation
At the time of strong competition which refers to maturity stage of Airline Industry so each company should approach offensive and use the offensive strategy after in detail review its internal and external environment and all related factors which directly affect the company position.
The following recommendations are for Emirates airlines:
· Operational cost of Emirates is very high only due to huge investments on technologies, aircrafts and best quality services. Emirates should control its cost and should decrease its cost through improvement and development of operations activities.
· Emirates should improve maintenance process, effective and efficient flight schedule of the company and better utilization of the company resources like aircrafts etc. Another way for reduction of cost is advancement in its technologies by investment in technologies and in this way cut of labor cost. For example it is strongly recommended to new installation of self-check service system on all airports.
· In reply to the threat of low cost airlines in UAE market. Emirates should offer advance level services and control cost and this way no need to reduce the prices and in this order it should introduce its new brand as subsidiary which should be based on low cost.
· A subsidiary Extension in routes strongly recommended and should be special growth in tourism UAE. In this order to it should extend its route worldwide most attractive areas and Canada one of them. Joining with global alliance will help to increase its worldwide destinations in this way should offer more impressive and effective strategy for competing low cost airlines.
· Advancement in Information Technology is most important for progress of emirates airlines and in this order it should make contracts with E-Business Company for improving its services and increase the customer’s satisfactions. E-CRM is the latest technology and adopted by Emirates this strategy since increasing in numbers of the internet users and this way out for keep long term relation with customers.
Conclusion
Emirate’s Airlines make comprehensive analysis and review of company internal and external factors and its competitors and should develop new strategies for staying and keep good position in airline industry at this maturity time. Emirates Airline was started in 1985 from the Gulf Airlines. The airline has grown to become a renowned and preferred airline in long haul flights flying approximately 2,200 flights daily from its hub in Dubai. The Emirates Airline is owned by the Dubai government and is part of the Emirate Group. The United Arab Emirates owns the Emirates Group and dictates the policies that are to govern the operations of their companies.
Cheap pricing strategies has enabled Emirates Airline to remain profitable while maintain long haul flights. Lack of legacy costs has also contributed to the competitive advantage of Emirates Airline as it is not committed towards paying pensions since it is a relatively new company in the flight market, having operated only for 23 years (Perrault, 2003). Emirates Airline has also diversified into other new facets of investments such as airport management.
Emirates Airline believes in maintaining a free market and has successfully stayed away from mergers and alliances in order to remain competitive in its quest to provide excellent and quality flight services. The company has also embraced technology which has further given it a competitive edge against its competitors in the market.
The relative security within the Asian Pacific region has enabled Emirates Airline to expand and grow amidst instability in other regions of the globe. Finally, the involvement in various environmental initiatives has enabled the company to excel and gain a positive corporate image, hence making it more competitive in the flight market.
References
ð Fred. R David, Strategic Management: Concepts and Case (12/e) Pearson Prentice Hall
