Strategic Management Of Emirates Airlines

Vision and Values

Discuss about the Strategic Management Of Emirates Airlines.

Emirates airlines is a Dubai based airline, which is a part of the government owned organisation, The Emirates Group. Emirates is the fourth largest airlines in the world, with a fleet size of 265 and 155 destinations. The Emirates airlines was formed in 1985 under the royal family of Dubai’s patronage (emirates.com 2018). The airlines is headed by Ahmed bin Saeed Al Maktoum who is still now the chairman and CEO of the company. Emirates operates a fleet of wide body aircrafts, particularly Boeing and Airbus. The Emirates was formed as a result of Gulf Air’s cutting off services to Dubai. Pakistan International Airlines leased them a Boeing 737-300 and an Airbus A300B4-200 for the operations to begin in 1985 with additional technical and administrative assistance (emirates.com 2018). The Emirates airlines has now become an inseparable part of the UAE identity. It also operates in the cargo airlines sector in the name of Emirates Skycargo. It has been one of the largest cargo carriers in the world.

The vision of the Emirates airlines is to inspire travellers all around the world to travel with ease. The growing popularity and worldwide network promises best in class in flight experience, accompanied with international cuisine and service. Moreover, the company also believes in managing a profitable growth by developing an enhanced and world class global distribution network (Skycargo.com 2018). This will lead to the addition of value to the customers’ needs with a relentless focus on innovative solutions and sustainable cost cutting services.

The mission of the Emirates airlines is to develop the most efficient airline system in the world with the largest and efficient fleet of wide body aircrafts. The company also aims to deliver the best standards when it comes to customer satisfaction. Maintaining the best product quality and also support business logistics through innovation and enhanced services (Skycargo.com 2018).

The main objective of the Emirates airlines is to increase their profits and annual benefits. The enhanced services aims at attracting more customers and business cargo. The objectives of the Emirates include increasing market shares at a considerable rate without compromising the quality of services and reputation. Expansion of fleet and increasing frequencies between travel destinations aims at expanding the market. Moreover, the cargo sector also requires considerable growth for increasing the market share. Increasing the cargo capacity by certain percent every year is another objective of the Emirates airlines.

Mission

The company should aim at increasing the market share and aim at preserving its reputation. This can be done by increasing the business by adding more aircrafts to the fleet and developing more world class services.

The opportunities are the factors which highlight positive potentials of the company which can help the company to develop in future.

One of the opportunities that the Emirates airlines has is its large number of subsidiaries. The subsidiaries provide additional profit for the parent company and by providing different services for the satisfaction of a large number of customer needs. Some of the subsidiaries of the Emirates airlines are, Emirates SkyCargo, Skywards and Emirates Aviation College. These subsidiaries provide a number of services in the different growing markets and have the potential of increasing benefits to a larger percentage in the future (Nataraja and Al-Aali 2011).

Moreover, development of better entertainment services such as TV and music system in every seats for the benefits of the customers can help them draw more travellers towards them who want to avail a luxurious journey.

The threats are the factors that analyses the negative aspects that can place the company in potential risk in the future. The threats that face Emirates airlines as potential risk are Market demand, competitor behaviour and rising fuel prices.

Market demand in the aviation industry is the prime concern for airline companies. Empty seats in regular flights are a major concern for the flight operators as it seriously affects the costing and operations financial management of the company. Emirates provides the best services and quality and regularly checks market demands for avoiding these sort of problems. However, this problem is always a major threat concerning the aviation industry.

Competitor behaviour is another potential threat for a big company like Emirates airlines. The highly competitive market always makes the competitors aware of each other’s strategies and adopt accordingly. These does not allow the company to adopt a long term marketing strategy. The competitor behaviour hence, is a major concern for the industry where they have to be regularly monitored and developed accordingly.

Rising fuel prices are a major threat to the Emirates airlines (Wadud 2015). Increasing fares to maintain an expenditure and profit balance can pose a severe threat to the growth of the aviation industry. This can draw away the customers towards airlines who provide cheaper fares.

Political factors: The political factors are a direct influence on the aviation industry. It is always easy to target the aviation industry as it is a sensitive business concerning hundreds of lives. Wars and terrorist activities are always a major threat for the aviation industry (van Niekerk and Pizam 2015). Emirates airlines are similarly affected by political factors. Global aviation companies like the Emirates are always affected by the global political factors. Moreover, there are air space agreements due to different political turmoil all over the world. These affect the industry’s growth where their market share is directly affected by these regulations.   

Objectives

Economic factors: The economic factors are the direct influences on the profit of the company. Moreover, these factors help to analyse and forecast the potential economic development of the company and the future capital and profit analysis. The Emirates airlines is a subsidiary of the UAE government which provides huge capital support to the company (Kotsi and Michael 2015). This has resulted in the massive development of the infrastructure and facilities that are provided by the company. These developments has in turn resulted in larger profits and increased market benefits. It is evident from the analysis that the economic factors play a very important role in determining the success of the company.

Social factors: The social factors such as the customer demands play a huge role in the aviation industry. The customers look for customized services that can provide them with luxurious comfort during their travels. The airline companies should hence adhere to these factors to maintain a good customer relationship which can directly provide them greater market share and profits. The Emirates airlines provide customized solutions for the customers according to demographic changes (Shaw 2016). The regional services according to country specific needs, regional cuisine, and greater number of comfortable flights according to the growing population are some of the factors that allow the Emirates to maximize their profits. However, the huge infrastructure can pose a threat if there is a sudden drop in customers in the future and the company should be ready to deal with such situations.

Technological factors: The aviation industry should always be aware of the technological developments of the modern society and ready to adapt to them to provide quality services to the customers. The latest technologies can attract more people who are mainly drawn towards the technologically advanced services (Venkatraman 2016). The better security systems and the in-flight safety due to the technological advances has the potential to draw more people towards air travel who earlier used to consider the safety issue as a major hindrance for air travels. However, technological advances can also prove to be a negative aspect for the airline industry as the present scenario has seen decreasing number of business travels to conferences which are now primarily held in video conferences.

Legal factors: The policies of the aviation companies are directly affected by the laws and regulations of different countries in which they operate (Klophaus 2016). The legal issues vary in different countries and hence the companies like the Emirates airlines has to be always cautious in dealing with local and international legal regulations. Different policies according to different regional laws can influence the company’s profits accordingly.

Vision and Mission Statements

Environmental factors: The constant environmental changes is a global issue and the airline companies are also affected. The environmental factors which can affect the Emirates airlines are weather changes and climate issues (Arjomandi and Seufert 2014). The home country UAE has a dry warm climate, but the destinations to which they travel have a variety of climates. The company should have strategic plans to tackle these sudden emergency situations in order to provide better and quality service to its customers.

The competitive profile matrix (CPM) is determined by considering the different critical success factors which are important in the aviation industry. The factors which are to be considered are Advertising, Quality of Services, Price Competitiveness, Management, Financial Position, Global Expansion, Customer Loyalty and Market Share (Bhattacharjee and Dey 2015). These factors are to be compared with two main competitors of the Emirates airlines to understand the sector which is to be focused for further development.

Emirates airlines has some major strengths with which it develops its business operations and secures its existing and potential markets (Hill Jones and Schilling 2014). Some of the internal strengths are:

• Successful management of product development and new services for gaining new market.
• Introducing subsidiary firms and investing on new markets to channelize its operational structure.
• Maintaining a successful customer satisfaction rate and development of loyalty among customers.
• Strong capital investment from the government of UAE helps Emirates airlines invest in robust development of infrastructure (Abeyratne 2016).
• Strong global presence and market share.
• Operational flights to a large number of destinations and presence in five continents.
• Strong promotional and sponsorship activities make Emirates a global name.

However, Emirates airlines has to face certain internal weaknesses which need to addressed for the better development of the company’s business in the future. Some of the weaknesses are:

• The company’s rapid expansion and aggressive marketing should be balanced with its infrastructural development.
• The company still has to improve on developing product range. Though the company is investing in research and development, compared to some of the other companies, Emirates has to go a long way.
• Emirates airlines faces a higher attrition damage in the work force which can be a major threat in running the huge operational business (Mumtaz 2017).
• The management structure of the Emirates airlines requires development as they face problems in managing different work cultures in regional markets (Cline 2016).

The above discussion analyses the different factors affecting business of the Emirates airlines and the recommended objectives and strategies accordingly are:

• The Emirates airlines should maintain a proper and more developed human resource system which can prevent the high attrition damage the company faces. In that case, the company should address this issue to have a more efficient management system for the operation of the huge business structure.
• The Emirates airlines while investing in newer products and services should decrease the product gap and increase newer products which can cater to more customer choices.
• The Emirates airlines should be always updated about the modern technological trends and develop accordingly to compete with the large players of the industry(Logothetis and Miyoshi 2016).
• More investment in promotions and regional markets can help Emirates airlines to reach out to more people and pose as the number one choice for flight options.
• The Emirates airlines should maintain a sustainable fare structure to compete with the other aviation companies who offer cheaper rates.

• The Emirates airlines can develop a renewed business model in which they can monitor the causes of high attrition in work force and how it can be tackled.
• The Emirates should appoint an advanced research and development team who can constantly update the company’s services and products according to the modern technological advances.
• The company should balance its other expenditures to tackle the rising fuel prices (Gurtu, Jaber and Searcy 2015)and accordingly balance the rising fare structure.
• The company should maintain legal teams to deal with the different regional laws and political threats. Moreover, maintenance of good relations and cultural balance with regional communities can lessen the distance between the company and the potential customers.

• A constant monitoring and competitor behaviour should be tracked in order to be aware of the competitor strategies (Moutinho and Vargas-Sanchez 2018).
• Development of marketing strategies and promotional activities according to the present marketing trends can help evaluate the failure of the older system and highlight the required changes.
• A strong customer feedback system can help to monitor the specific customer needs and in turn develop future strategies for better customer satisfaction (Hussain, Al Nasser and Hussain 2015).
• A higher and free cash flow system can help in the unhindered development of the infrastructure which can evaluate the earlier systems and how much it has helped to increase the market growth compared to the older system.

Conclusion:

The overall discussion hereby, highlights the strengths and weaknesses of the Emirates airlines which has identified by analysing the company’s present market share and market growth along with the visions and strategies of the company. However, the present situation of the company is in a favourable position but with the increasing number of competitors and development of the strategies and advanced marketing techniques might put the company in potential threat of falling short of future market demands. The discussed recommendations analyse these threats and develop some strategies to address them for the sustainable development of the company in the future.

References:

Abeyratne, R., 2016. Air Transport and the Law of Investment. In Competition and Investment in Air Transport (pp. 207-214). Springer, Cham.

Arjomandi, A. and Seufert, J.H., 2014. An evaluation of the world’s major airlines’ technical and environmental performance. Economic Modelling, 41, pp.133-144.

Bhattacharjee, D. and Dey, M., 2015. Competitive Profile Matrix: A Theoretical Review. ABAC Journal, 35(2), pp.61-70.

Cline, H.E., 2016. Hijacking Open Skies: The Line Between Tough Competition And Unfair Advantage In The International Aviation Market. J. Air L. & Com., 81, p.529.

emirates.com (2018). About us | Emirates. [online] Emirates. Available at: https://www.emirates.com/english/about-us/ [Accessed 14 Jun. 2018].

emirates.com (2018). History | About us | Emirates. [online] Emirates. Available at: https://www.emirates.com/english/about-us/history.aspx [Accessed 14 Jun. 2018].

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Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

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Kotsi, F. and Michael, I., 2015. Planning and Developing ‘Destination Dubai’in the Context of the United Arab Emirates (UAE). Planning for Tourism: Towards a Sustainable Future, Oxfordshire-Boston, CABI, pp.149-168.

Logothetis, M. and Miyoshi, C., 2016. Network performance and competitive impact of the single hub–A case study on Turkish Airlines and Emirates. Journal of Air Transport Management.

Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI Tourism Texts. Cabi

Mumtaz, S.H., 2017. Analysis of Mental Health Issues and its Implications On Cabin Crew at Emirates Airlines (Doctoral dissertation, Middle Tennessee State University).

Nataraja, S. and Al-Aali, A., 2011. The exceptional performance strategies of Emirate Airlines. Competitiveness Review: An International Business Journal, 21(5), pp.471-486.

Shanbhag, M., Dutt, M.L. and Bagwe, S., 2016. Strategic Talent Management: A Conceptual Analysis of BCG Model. Imperial Journal of Interdisciplinary Research, 2(7).

Shaw, S., 2016. Airline marketing and management. Routledge.

Skycargo.com (2018). Visions & Values – Emirates SkyCargo. [online] Skycargo.com. Available at: https://www.skycargo.com/english/about-us/vision-and-values/ [Accessed 14 Jun. 2018].

van Niekerk, M. and Pizam, A., 2015. How Do Terrorism and Tourism Coexist in Turbulent Times?: Introduction to a Conflicting Relationship. Terrorism and the Economy: Impacts of the Capital Market and the Global Tourism Industry, p.118.

Venkatraman, R.R., 2016. Empirical Study on Effect of Employee Engagement to Achieve Maximum Customer Satisfaction in the Airline Industry–A Case Study of Etihad Airlines. American Scientific Research Journal for Engineering, Technology, and Sciences (ASRJETS), 26(3), pp.155-163.

Wadud, Zia. “Imperfect reversibility of air transport demand: Effects of air fare, fuel prices and price transmission.” Transportation Research Part A: Policy and Practice 72 (2015): 16-26.

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