Good Emirates Airline Business Strategy Essay Example
Strategic planning is an essential process that enables organizations to plan their operations in such a way that that will ease in achieving the set strategic goals and objectives. It involves evaluating the current position of the organization’s performance as well as formulating and implementing new strategies and techniques that would improve the current situation. Strategic planning is influenced by the company’s vision and mission statement as they help the strategists understand the value and direction of the company while the objectives are essential in understanding where the company wants to be. Core competencies and core brand is also an essential factor in strategic planning as it defines the organization’s best strategy and best product that could be used in speeding up the strategy implementation plan. Achieving a successful strategic plan requires various considerations which mainly includes conducting an analysis on internal and external environment of the business. Some of the factors to consider when formulating a strategic plan
A thorough strategic planning also involves the application of tools and techniques that are essential in understanding the company’s internal and external environments (Abraham, 23). The internal analysis is carried out by use of the SWOT analysis that identifies the company’s strengths and weaknesses as well as the existing opportunities and threats. Conducting a PESTEL analysis is another technique that enables the analyst to understand the external environment of the organization while competitor analysis using tools such as Porter’s five forces provides an effective picture of the organization’s market positioning and competitive advantage. This paper therefore, applies the use of strategic planning tools and techniques in planning and implementing an effective strategic plan to the Emirates Airlines, an aviation company based in Dubai in the United Arab Emirates.
About the Emirates Airlines
Emirates airlines, also known as fly Emirates, is one of the leading global airline companies based in Dubai, United Arab Emirates. It is a subsidiary company of the Emirates Group and has emerged to be one of the major hubs in the Middle East and it is owned by the UAE government. The company started operating in 1985 with only two aircrafts. As a result of growing demand for travel to and from Dubai especially due to increased tourism and business related travels, Fly Emirates has become one of the busiest airlines in the world, handling over two thousand five hundred passengers per week to 158 destinations in 55 countries globally.
The company has established its brand strategically as the best air travel option to the Middle East. This is achieved through the company’s mission of’ providing the best quality services for money spent and become the best preferred airline on all of its routes’. Together with the company’s vision of creation of a great company though excellent leadership and efficient decision-making process, Emirates Airline has dominated the market to become the leading airline in the Middle East in general. The company is strategically positioned as a premium airline mostly specializing in provision of travel services to upper middle class customers which has acted as the company core competency.
Emirates Airline has an already established brand name making the marketing easier. This is achieved particularly sponsoring events and soccer clubs that market the company’s brand name globally.
The company has possession of a fleet of aircrafts making it to be able to handle increasing capacity and demand for air travel in Dubai and to other destinations in the world. The company also has already established flight network with over 55 destinations in the six continents.
Emirates airline is the first airline in the UAE to provide efficient online booking services and self check-in services thus reducing congestion and delays.
Ability to provide long distance non-stop flights to North America which has reduced the airline to reduce the burden of connecting flights which is costly and time consuming to the customers. It also has adequate modern facilities having been ranked as the first airline to purchase the highest number of airbus super Jumbo in 2011.
The airline also has highly trained employees and also offers training program to enhance the company’s services to the customers. Currently, the company has over sixty thousand professionally trained employees.
The company enjoys a strong backing from the UAE government and the mother company, Emirates Group. The airline also has other subsidiary companies such as tour firm and hotels that provides an additional source of customers to the airline. The company’s strategic location in the UAE which is a major source of petroleum products makes the operations easy and cheap due the availability of adequate fuel.
Emirates airlines rely heavily on the international Onward Moving traffic that is likely to interrupt the company’s flights schedules. In addition, the company provides premium services to high end clients, thus ignoring the middle and budget class travelers who constitute the highest percentage in global air transport. In addition, the airline provides limited services to the US destinations which are ranked as the highest source of air travel customers.
The airline is strategically located and there is increased demand for trade and tourism in Asia and Middle East, hence increasing the travel demand to the region.
Presence of middle and budget class travelers who could aid the airline increases their market operations. This is coupled with the increase in demand for air transport globally, as a result of need for efficient and fast modes of transport to various destinations.
Increased innovations and technological advancement is another opportunity that could help the airline achieve their strategic goals including the construction of low fuel and high speed aircrafts that helps in reducing environmentally related issues.
Possible increase in fuel prices is a threat to the company as this will increase the operational costs. In addition, the association of the region with terrorism related issues has reduced the inflow of travelers especially tourism related travels, thus reducing the total projected flights. The existence of competing airlines especially the low cost carriers also poses a competitive threat to the airline, especially due to their high dependence on the high class customers.
Product line and product positioning (BCG matrix)
Emirates airline is known to provide premium services with the products mainly targeting high and upper middle class clients as the core competency strategy. This product positioning strategy categorizes the airline as a cash cow in the BCG Matrix. The company is able to generate high income in the mature industry. The generation of higher return on assets has enabled the company to finance its research and development plans and pay the dividends to the shareholders. In addition, the cash flow indicates a promising future for the company’s financial stability.
PESTEL analysis involves a careful analysis of the external factors, namely political, economic, social, technological environmental and legal issues that could have an impact on the operations of Emirates airlines.
Political and legal factors
Emirates airlines have benefited from various trade agreements between the United Arab Emirates and other countries in the world. In addition, political stability in the country has enabled the company to advance especially since it is wholly owned by the government. However, the operations of Emirates airline are affected by political issues such as insecurity and wars, for instance, the 9/11 bombing in the US. Issuance of travel advisories by some countries is one of the political factors that are likely to negatively impact the operations of the airline.
Dubai and the rest of Middle East region is developing economically at a high rate. The developments in real estates and Dubai as a major tourism hub in the region have increased the number of flights from different parts of the world. This impacts to the growth of the company positively. In addition, the airline is strategically located as the best option to any person willing to travel to Middle East, either for business or leisure. The current economic issues such inflation and financial crisis are likely to interfere with the operations of the company.
Increasing global population and the abrupt increase in middle class indicate a possible source of new customers for the airline as this is likely to increase the demand for air travel. In addition, the increase in literacy level as more people have access to formal education is likely to increase the number of flights for the company as well as provide highly trained aviation personnel, thus cutting on the costs of training the employees. However, the existence of insecurity and terrorism affects the operations to various destinations.
The modern technological innovations and advancement affects how businesses are operated. This is because; organizations rely on technology in managing various operations, decision-making, as well as managing customers’ transactions among other functions. There is a need to keep up with the technological developments as a way of achieving a competitive advantage through innovations and eased business operations.
Environmental concern is a major factor that is affecting the operations of the aviation industry. This is because of the associated environmental issues, mainly air and noise pollution from the emissions by the aircrafts. The push for sustainable environmental conservation by activists and international organizations such as the United Nations Environmental Program (UNEP) has a diverse impact on the operations of the company. Occurrence of natural disasters and climate change may also interfere with the flight schedules.
Porter’s five forces
Porter’s five forces is also another strategy of analysis the company’s market positioning by analyzing the power of competition and stakeholders. Competitor rivalry in the region is moderate as Emirates Airline’s major competitor is Etihad which is not well developed. However, the company faces competition from other major competitors such as Qatar airways and Air Malaysia among other established international airlines. Availability of substitutes in the region is however limited due to the location of Middle East to the rest of the world. The threat of new entrants is also minimal due to the complexity in regulations and financial requirements in the aviation industry. Power of the suppliers is high as the company relies on two major suppliers; Boeing and Airbus. However there is little chances of competition between the suppliers. Power of buyers is high in international demand due to the existing competition and availability of budget airlines. Their power is however low in the Middle East.
Stakeholders’ analysis role and importance
The operations of Emirates airline is closely influenced by the role of various stakeholders. Management is one of the major stakeholders that plans and implements various strategic plans, thus ensuring that the company has a focus on what needs to be achieved, and how these plans will be achieved. Customers are other stakeholders and they play a vital role of ensuring the operations of the company go on as projected. Without customers, the company is unable to operate, thus making profits.
Employees also plays a role of ensuring the needs of customers are met in the most professional and efficient manner. Shareholders play a role of financing the operations of the airline and expect returns in terms of profits and dividends (Wittmann and Reuter, 89). This prompts the management to come up with strategic measures that will enable the company to meet the shareholders’ expectations. General public also plays a vital role of observing the impacts that the airline’s operations have to the society, particularly in terms of environmental impacts and socio-economic benefits.
Based on the company and market analyses of Emirates Airline, it is evident that the company could do better through a strategic marketing and sales plan so as to target new market segments for their services. This involves the incorporation of the 4Ps of marketing to expand the current operation to attract new customers. The company currently utilizes extensive promotion in different places across the world and their products are well known for their quality and high standards customer service. Thus, price is the strategy that will be used to attract new customers into flying with Emirates Airline. Currently, the airline caters mainly for high class and upper middle class. The current strategy involves introducing a new pricing strategy for middle and budget class travelers especially due to the rising demand for air transport. This is a strategy for maximizing cash inflow while providing services to different types of people travelling to Dubai. This is also a strategy that will inhibit penetration of other major competitors offering budget packages into the Middle East market where Emirates airline is currently the main hub.
Roles and responsibilities of personnel who are charged with strategy implementation
Marketing manager is the crucial personnel mandated with implementing this strategy. The core responsibilities of this person include provision of the necessary training for the marketing team, allocation of duties, supervision, planning on the channel and contents of the marketing process, monitoring and evaluation of the effectiveness of the process and constant reporting to the senior management on the progress of the marketing campaign (Rumelt, 134).
Financial manager is also important personnel in implementing this strategy. The personnel is the handles all financial related issues including advising the management whether the strategy is worth of the estimated costs and preparing various financial records (Wittmann and Reuter, 127). His main roles in this case involves provision of the required finances to implement the marketing strategy, monitoring on the usage of the resources, preparing projected costs and expected sales from the campaign, and preparation of the financial reports.
A-Accountable I- Informed
Estimated resource requirements for implementing a new strategy
This project requires funding to compensate the research and marketing teams and channels that will be used in advertising. The financial breakdown involves three phases to cover expenses for the market research phase, training and marketing materials and marketing expenses. Estimated time is to plan and implement the marketing strategy is six weeks while the actual campaign should take six more weeks before the evaluation of its effectiveness commences.
Strategy implementation progress
The implementation of the new marketing strategy will take place in four different phases namely; market research, selection and training of the marketing team, field marketing, evaluation and control initiation of the new budget travel. The work breakdown is illustrated in the following Gantt chart.
Project planning is an essential tool that enables organizations to identify their market positioning and come up with strategic plans that are essential in gaining a competitive advantage. In the case of Emirates airline, several opportunities exist within the aviation industry, particularly due to the growing demand in air travel among the middle and budget class customers. As a way of taking advantage of this emerging market trend, a strategic marketing and sales price that utilizes varied pricing as the main marketing strategy will enable the company to diversify to a new market niche that the company had failed to explore before. However, additional research is necessary to determine the extent profitability of this new venture and how exploring the new market would affect the company’s core products and competencies.
Abraham, Stanley. Strategic Planning: A Practical Guide for Competitive Success. NY: Emerald Publishing Group, 2012. Print.
Rumelt, Richard P. Good Strategy / Bad Strategy. NY: Crown Business, 2011. Print.
Wittmann, Robert & Reuter, Matthias. Strategic Planning: How to Deliver Maximum Value Through Effective Business Strategy. London: Kogan Page Publishers, 2008. Print.