Etihad Airways is an Abu Dhabi based airline company that was founded in 2003 under a royal decree. The airline has a fleet of over 100 aircrafts and flies to over 120 destinations across the world. This firm plays an important role in boosting the economy of this country. According to the statistics given by Bamber, Hoffer, Kochan, and Nordenflycht (2014), Etihad Airlines made a profit of over half a billion dollars in 2009 from its operations. This is a massive contribution to the growth of this country’s economy. At this stage, it is important to analyze the operations of this firm in order to determine its ability to manage the market forces.
Products
Etihad Airline is an airline company that offers travel services. It offers a range of travel products based on the needs and capacities of its clients. It has the economy and business class as some of the main products in the market. However, sometimes it also offers chartered services when the government or private entities make requests. Each of its products is designed to make unique needs of its customers in the market. According to Bamber, Hoffer, Kochan, and Nordenflycht (2014), Etihad Airline also offers cargo services to some selected markets. Cargo services are specially designed to meet the needs of merchants who engage in importation and exportation of various products from one part of the world to the other.
Market Segments
According to Jha (2013), segmentation is an important marketing activity that helps a business entity to profile its customers in order to help in designing the products that can serve them better. For Etihad Airways, market segmentation is always done based on the income of the targeted customers. The first target group, which accounts for over 65% of the company’s regular customers, is the middle class. These regular travelers have no cheaper alternatives other than to use the services of the airline companies. They are very sensitive to the pricing strategy that a given airline uses, and this makes it necessary to charge lower prices in order to meet their purchasing capabilities. They always use the economy class. The lower upper class forms another important segment. Inasmuch as they are conscious of the of the prices charged by the airlines, they want a little touch of class in the products they use. These people are willing to pay an extra fee for extra comfort when travelling. The last segment that Etihad has not paid close attention to is the upper uppers. These very rich individuals probably own their personal jet. They would come to hire planes from this company. They are not very regular, and this makes them an unattractive market segment.
Target Market
Etihad Airline had the Middle East as its main target market when it was starting its operations. However, the firm has grown very first over the past few years. Currently, the firm targets the market in North and South America, Europe, Asia-Pacific, and parts of Africa. With over 120 destinations in 54 countries, the firm has experienced a massive increase in its market share. According to the report by Bamber, Hoffer, Kochan, and Nordenflycht (2014), the firm has plans to focus on a new target markets in emerging economies. For instance, there has been a renewed focus to target the Nigerian market with new products. The Nigerian market is particularly lucrative because of the large population and the rising number of middle class population. The economy is currently the largest in Africa. A special focus is also given to the Indian and Brazilian markets, which also have massive population and impressive economic growth. As many other airlines across the world, Etihad Airways is increasing its focus on the middle class who form the largest market segment in this industry.
Expansion Possibilities
Etihad Airways has been facing stiff competition in its current market. Jha (2013) says that in the current competitive market, firms are forced to look for overseas market in order to manage the raging competition. Etihad Airlines has realized that it can only achieve success in this industry if it expands its operations. That explains why the firm expanded the size of its fleet from 78 fleets in 2009 to about 102 fleets in 2013. The firm is planning further expansion on the size of its fleet in order to sustain its expansion plans to other global destinations. In order to sustain the competition posed by regional and international airline companies, this firm will need to increase its planes and employees.
Conclusion
Etihad Airlines is one of the fastest growing airline companies in the Middle East. The firm has experienced massive success in the local and regional market, and this motivated its management to move to the global market. Despite the challenges it is facing in the global markets, the firm has been making impressive advancement in this industry. Its success has played a major role in enhancing the growth of the Emirati Economy.
References
Bamber, G., Hoffer, G., Kochan, T. & Nordenflycht, A. (2014). Up In the Air: How Airlines Can Improve Performance by Engaging Their Employees. New York. Cengage.
Jha, A. K. (2013). Institutions, Performance, and the Financing of Infrastructure Services in the Caribbean. Washington, D.C: World Bank.
When organizations launch their operations, they always aim at maximizing profits in the process of meeting their customers’ tastes and preferences. Markedly, the stakeholders have to ensure that the firm attains its strategic goals and objectives. In their objectives, organizations attempt to expand their services, recruit, and retain many competent employees, as well as comply with the stipulations of company regulations of ensuring that they submit tax returns to the tax office of the country in which they operate. The Etihad Airways has been playing significant roles in the business sector of the UAE and the Gulf Cooperation Council (GCC) region. The crowded Gulf region airspace has experienced stiff competitions among key players like the Emirates Airline, Qatar Airways, Jazeera Airways, and the Etihad Airways. In expanding its services across the Gulf region, the company intended to assert its presence in the airline industry. With their excellent connectivity and several weekly flights across the region, the Etihad Airways has benefited directly or indirectly the economy of the UAE as well as the GCC region (Etihad Airways Annual Report 2013, 2014). The report seeks to expound on the contributions of the Etihad Airline to the growth and development of the UAE and the GCC.
The United Arab Emirates airline is state-owned; Etihad Airline, which is based in Abu Dhabi began operating in 2003, and, markedly, by the end of 2012/2013 fiscal year, it had carried 11.5 million travellers. From its base in Abu Dhabi, the company flies to 111 traveller and freight destinations in the Americas, Europe, Middle East, Asia, and Africa (Competition in the skies, 2014). Apart from owning a fleet of 105 airbus and Boeing Aircraft, the company has equity investments in Jet Airways, Virgin Australia, airberlin, and Air Serbia. According to the Etihad President and CEO, James Hogan, the company is also on the verge of enacting equity investments in Swiss-based Etihad Regional and Alitalia. With all these investments, the Abu Dhabi State-Owned airline boasts of having an employee base of over 20,000, as well as serving 111 announced or existing destination in 63 nations globally. In addition to the 11.5 million passengers, Etihad Airways recorded 486,752 tons and overall revenues of $6.1 billion at the end of 2013. James Hogan believes that the company still needs to venture into many destinations, especially in Africa. Clearly, the existence of the airline firm has led to construction and expansion of many terminals. The continued expansions in its services are clear indications of growth of the business sector, not only in the UAE, but also in the greater GCC member nations.
The entry of the Etihad airline in the GCC region made the Jazeera Airways and Qatar Airways to join calls for a unified airspace in 2009 given that it was a potential bottleneck for the Gulf Cooperation Council (GCC) region’s growth and development. Similar to the liberalization witnessed in the European airspace in 1997, the President and CEO of the Etihad Airways holds that the move would be beneficial to the economy of the GCC region. He explains that more routes will make it possible for the airline industry to reach and even surpass its potential. From this analogy, the transport liberalization implies more aircraft to operate in the region. As a result, there will be several constructions of aircraft to match the needs of the growing sector. Importation of aircraft materials as well as the technocrats increases the technology base of the business sector (Competition in the skies, 2014). Infrastructural development plays critical roles in the overall growth of a country’s economy, and with the construction of more aircraft and expansion of airports in the GCC region, the Etihad Airline is helping in the overall growth and development. For example, the competition among Qatar, Emirates, and Etihad Airlines in the GCC region has seen countries like Saudi Arabia, the UAE, Bahrain, Oman, and Qatar allocate large-sums of money for building new airports and expanding the present ones. This is clear evidence that Etihad Airways has created direct impacts to the growth and development of the UAE and the GCC’s economies. The initiatives of placing old aircraft and constructing new terminals and expanding existing ones are meant to improve travellers’ experience. In the Dubai Air Show of November 2013, the Etihad Airline, just like its competitors – Emirates and Qatar Airlines, placed orders for aircraft costing QR243.88 billion ($67 billion) to help it meet the needs of the expansive market (Competition in the skies, 2014).
In easing the movements of passengers and cargos in this region, the Etihad Airline is helping in reducing the time and cost of trade if the consignments were to use an alternative means of transport to their destinations. This point borrows heavily from the concept of international trade. By using air transport, businesspersons find it easy to reach the target customers with their products at relatively low prices. Therefore, the Etihad Airways, just like other airline firms in the region, has enhanced trade within the UAE and its environs – the GCC region. Apart from being a tax-compliant firm, the company offers flexible flight schedules to meet the needs of tourists visiting the GCC region. With tourists coming from regions like the US and Europe, the company has been able to bring into the UAE and the GCC region great revenues in terms of foreign exchange. For example, the Etihad Airline and Air Seychelles recently made changes in their schedules in order to serve the interests of their guests (Etihad Airways and Air Seychelles enhance connectivity with new Abu Dhabi-Seychelles schedule, 2014). The changes are expected to take effect from 1st December; it will ensure that tourists and other passengers have more convenient travel preferences.
From an overall analysis, the Gulf airlines, which have a global traffic share of 9%, projected a profit of 12% of the global target by the end of 2014 (Competition in the skies, 2014). This reveals the great extents that the Etihad Airline and its counterparts have moved in their pursuit to offering better services to their passengers. A report from International Air Transport Association (IATA) in 2012 revealed how the Gulf carriers have extensively expanded the economy of the region. These import-based economies get effective transport from the Etihad Airline in order to diversify their services.
In retrospect, the expansion of the Etihad Airline has resulted in the growth of the tourism industry in the GCC region. Besides, its ability to offer quality and flexible services to its passengers and cargos are clear indicators of the company’s support in growing and developing the economy. The more than 20,000 employees working for the company are able to improve their living standards. As an indicator of economic growth, the company has reduced the rate of unemployment. The Etihad Airways has also continued to adopt new technologies in all its key departments in order to continue offering outstanding services to its customers. In October 2014, the company partnered with SAP SE to provide latest technologies in the airline industry (Etihad Airways Selects SAP as a Strategic Technology Partner for Business Transformation, 2014). The move has led to the development of the IT solution firm. Clearly, the operations of the Etihad Airways have impacted positively on the economies of the UAE and the GCC region.
References
Competition in the skies. (2014). Web.
Etihad Airways and Air Seychelles enhance connectivity with new Abu Dhabi-Seychelles schedule. (2014). Web.
Etihad Airways Annual Report 2013. Web.
Etihad Airways Selects SAP as a Strategic Technology Partner for Business Transformation. (2014). Web.
By definition, the core product of a good/service represents the intangible part of that product. In a nutshell, this is an attribute of a product that a client considers beneficial, and as such, renders it valuable to the beneficiary.
With respect to Etihad Airways, this attribute is derived from the benefits that come with air transport as opposed to the other modes of transport. One advantage of air transport is that it is extremely fast.
With this advantage, it is suitable for transportation of highly perishable goods that require short-time delivery period between the producer and the consumer.
Another advantage that comes with air transport is that it does not require an initial capital investment in terms of infrastructure. Since it requires no tracks to move on, it is relatively less costly as compared to the other modes of transport.
Also, with air transport, one is guaranteed of access to areas that are deemed inaccessible courtesy of the topography or the nature of the land.
Furthermore, with air transport, one can overcome the physical barriers including the mountains, taking a vector course to the destination thereby minimizing on both the cost and time wastage.
Actual product, on the other hand, represents the tangible aspect of a product. In a synopsis, these are those attributes that one enjoys, firsthand, when using a product. With Etihad Airways at spectacle, these attributes include array of services offered by the airline.
This includes the Etihad Pearl Business Class, “which is fitted with a state-of-the-art adaptable chair cum flat bed, a 15.4-inch personal television set, a comfortable dining table, plug points, headsets and lights with dimmer settings” (Rodrigues 56).
To access a relatively swanky experience, one goes for Diamond First Class. This package provides an “excellent five star boutique hospitality and services” (Rodrigues 59). To this, we have a posh Poltrona-Frau Leather seat that is convertible to a flat bed.
Moreover, this kind of package is where one can experience privacy since it is fitted with doors. Apart from the other services provided for in the previous package, this one is fitted with a 23-inch screen, a mirror and a personal wardrobe.
Finally, the Coral Economic Class, as the name suggests, is an economical package meant for all passengers. This has its own luxuries that include a 10.4-inch screen, a coat hook and a cup holder.
Also, these classes are distinguishable by the menus provided. To this end, the first two classes enjoy a special menu cum services as opposed to the Coral Economic Class.
Finally, when we focus on the non-physical aspect of a product, we are referring to the augmented product. Basically, this refers to those attributes that add value to a product, either at a premium or not.
In a summary, these include warranties, additional features, delivery and customer care services among others. With regards to the Etihad Airways, this aspect of the product includes those factors cum services that are related to the competitive advantage.
To this end, the Etihad Airways provides for the Dine and Meal services, Chauffer services, both Medical and Religious needs, and “The Spa and Lounger Services” (Rodrigues 60).
Furthermore, its clients enjoy Contemporary Technology and Innovations. Importantly, the customers enjoy a cordial relationship that is shared between Abu Dhabi, its commercial hub, and Singapore.
By including Mexico City as one of its destinations, Etihad Airways can serve two groups of clients; at first, one should speak about businesses that rely on air transportation. In this case, one should speak about UAE companies that employ Mexican expatriates. Overall, in this way, Etihad Airways can benefit various organizations that may want to operate in the UAE or Mexico. Furthermore, the company can serve the needs of honeymooners and leisure travelers. The management should pay attention to affluent and middle-income clients. These individual and corporate customers can come from both Mexico and the United Arab Emirates. This is one of the points that should be taken into account by senior executives. To attract a greater number of clients, the company should increase public awareness about its new offerings. In particular, the company should focus on the availability of flights to the new destination. Additionally, they should provide information about the potential sites that can be of great interest to tourists. For instance, affluent customers coming from Mexico may be interested in visiting Emirates Palace, Etihad Towers, and so forth. In turn, Emirati visitors may go to various destinations such as the Marietas Islands. These are some of the strategies that should be considered by management. In total, there will be one direct flight from Abu Dhabi to Mexico City, and two connected flights.
Forecasted revenue
At this point, it is rather difficult to determine the revenues that the company can derive from this policy. However, there are certain approximate estimations that the management should consider. In particular, one should take into account that 3000 workers and 50 000 employees from Mexico come to the United Arab Emirates (Shaikh Muhammad receives Mexican Foreign Secretary, 2014). A significant percentage of these individuals can come to Abu Dhabi. Additionally, the company may expect to serve at least 11 percent of these customers. It should be noted that nine major companies serve this destination, and one can assume that the market share of these corporations will be approximately equal. Additionally, the company may charge about $ 1, 277 for a one-way ticket. In this case, one should speak about the economy class. In turn, a round trip will cost about $ 2.000. Given these data, the company will derive about $ 11 777 777 only from Mexican tourists. It should be noted that these projections are based on the premise that clients will choose only economy-class tickets. Additionally, the company may quickly increase its market share. These are some of the main details should be taken into account while assessing the profitability of this policy.
Price of the product
While setting the prices for this particular destination, the management of Etihad Airways should focus on the policies pursued by such airlines as Qatar Airways and Emirates because customers often compare Etihad Airways with these two companies in terms of price and quality. In particular, the economy tickets should be priced at about $ 1 2 77. In turn, first-class and premium tickets will cost approximately $ 2000 and $ 4000 respectively. It should be noted that the price of Etihad Airways will be slightly higher than those of Emirates (2015) that set the price of economy tickets at about AED 4440 which equals $1198. These are the main details that can be singled out.
E-transformation, defined as usage of information and communication technology to improve the performance of a company, is presently an area that many companies are embracing. The top management of companies comes up with possible ideas of incorporating information technology into their daily business activities to improve their performance in their various industries. Some of the major areas of emphasis by the executives are the business operation processes and customer experience (Tsai 57). Etihad has adopted new techniques in informational technology that has made it one of the most competitive airlines in the market that consequently controls a sizable market share in the aviation industry. The case study highlights the airline’s e-transformation in the development of the aviation industry by using different information technology techniques to better their services.
Main body
The aviation industry’s future depends on the visions and efforts put across by the people in the industry to eliminate or improve traditional or outdated practices (Travels &Tours par.4). Behind the success, there are several factors, which include embracing information technology. The information technology techniques put in place should help the airlines in cost reduction, efficiency in customer service, and improved communication. Etihad’s investment in information and communication technology has led to an increase in efficiency and productivity. The airline has improved communication with its clients globally through Facebook, Twitter, and LinkedIn. Customers are also able to communicate within the social media networks all over the world, and this has tremendously increased Ethad’s customer base.
The airline has also developed a PointsPay loyalty program where clients can earn points depending on their frequency and mileage of travel. Customers are able to redeem their mileage points online as well as in stores worldwide. The system is very secure since it has to authenticate the personal identification number of everyone who wants to access an account. The system will, therefore, deny access to a person who logs in with the wrong credentials. It also generates statements of accounts for any transaction made online.
Etihad Business Connect is another technological program developed by the airline for small enterprises with loyal frequent travelers of fifty and below in number. Etihad airline rewards them for frequent use of the airline during their travels. The travelers can choose an administrator to be in charge of an account that they will hold with the airline. The administrator updates the group’s account for each traveler, each time one travels.
The more one travels, the more they accumulate points. The group also accumulates points depending on the frequency of travels made by the members. The clients or the group can redeem their mileage points and change to cash or to any other preferred reward from the airline. This technology has raised the customer base of the airline. The clients also have developed trust in Etihad Airlines, as they feel honored and believe that they also benefit in some way.
The airline has also fitted its seats with WI-FI points giving customers the opportunity to search over the Internet for publications, journals, and magazines to read online instead of the hardcopies distributed by the airline crew, which are not friendly to the environment. This practice makes the airline a good protector of the environment. The customers are also able to do their businesses over the Internet as they travel, and this has improved their commitment to the airline.
The airline uses its website to improve the customer experience. The clients are able to make online flight bookings and check-ins. The check-ins take place between twenty-four to two hours before the departure time. A receipt obtained online is printed and presented at the luggage check-in counter. There has been an automation of the airline’s operations, which ensures that the customers can easily access important information. The airline has reduced fraud cases due to the use of the website as there is a validation process put in place to control the transactions taking place.
Etihad employees are also able easily to access the information which they may require from anywhere at any time using the handheld gadgets provided by the airline to use for transactions. They are also able to send real-time information and updates without any hindrances. This helps in saving time and using the correct updated information (Tsai 57).
Conclusion
Etihad Airways have been successful in applying and adopting the latest techniques that make them very competitive in the industry. There is improved data security through the use of platforms that meet the industry standards and applications that ensure strict adherence to business rules. In customer service, the use of technology has enabled the airline to create avenues for interacting with customers easily. The airline is able to get feedback from the customers on its services and, therefore, able to evaluate the areas in which it needs adjustments. The applications of the above technologies have translated into high levels of customer experience, productivity, and overall success of the company.
Works Cited
Tsai, Hui-Liang. Information technology and business processing reengineering: New perspectives and strategies, Portsmouth, England: Greenwood Publishing Group, 2003. Print.
Travels & Tours. “Innovation was the key to success for Etihad Airways” Travels and Tours Magazine, (2013): 4-5. Print.
In business, innovation is a crucial factor that develops entrepreneurial spirit and purports financial prosperity. In a competitive business environment, companies invest, conduct research, and struggle to manufacture new products that satisfy the customers’ needs. In UAE, DU telecommunication and Etihad Airways are some of the most successful companies that have been identified. This report will describe the two companies, touch upon their innovative strategies, and discuss some of the factors that should be considered when conducting a feasibility analysis.
DU Telecommunication
This is a company that was introduced to provide technological services, including data, voice, and content services. Although it was founded eight years ago, its innovativeness has enabled it to challenge bigger service providers (Emirates Integrated Telecommunications Company, n.d.). In fact, this uniqueness formed the basis of selecting the company for this report.
Besides the fact that the company provides a wide range of services, it also targets different segments of customers, including individual consumers, businesses, and carriers. The businesses include both the small and large corporations while the carriers comprise entities that provide data networks as well as telecom services. For consumers, the company provides such services as fixed calling and data provision to both individuals and households that have subscribed with the company.
The company has about two thousand employees drawn from sixty different countries to serve the customers in a variety of languages and encourage globalization (Aboutus, 2012). The company works to promote, develop, and use talents in order to increase the level of innovation and provide employment opportunities. The application of these strategies has led to a gradual rise of the company, and it was named the best mobile broadband network provider in 2013. This rating was taken from the recent research that was conducted by ARC Chart Company. The rating strongly based on the premises that the company had about 6.5 million subscribers in the UAE and registered the annual revenue of 10 billion in 2013.
Etihad Airlines
Etihad Airline is a national company that has been extremely innovative in regards to its services, processes, and organizational management. Although it was established ten years ago, it has been capable of competing with other multinational companies and attaining a strategic global position. In essence, it has been recognized as one of the fast growing airlines due to the innovative capability envisaged by the employees and managers (Elmorchid et al., 2013). Having considered these aspects, the company was regarded as an appropriate choice for this report.
One crucial development that has taken place in the company is the creation of partnerships with other airlines. In this regard, Etihad has partnered with other companies such as Aegean, Aer Lingus, and Air Astana Airlines. The alliances enable Etihad to provide their services to about 325 destinations worldwide (Balakrishnan, Jayashree & Michael, 2011).
Further, the company has partnered with some rail networks so that customers are served by trains once they reach the respective airports. Having portrayed its capability to offer proficient services to customers, the company has received various awards that include the World-Leading Airline and the Best First-Class in 2013 and 2011 respectively. The awards show that the entrepreneurial capability of the company is not only existent, but also sufficient for honorary recognition in the world.
Apart from focusing on profits, the company is committed to community building in the United Arab Emirates and the entire world. It fulfills this by sponsoring cricket and football games that bring people together and unite the world. In addition, it has a commitment of ensuring sustainable development by encouraging maximum utilization of energy, minimizing the amount of waste, and providing health conscious services among other measures.
What Should be Included in a Feasibility Analysis?
Product
In a feasibility analysis, the involved personnel must identify the products that are being offered to customers. Accordingly, the benefits of the products should be described in order to show how the goods and services are better than the ones available in the market (Oprea, 2010). In addition, it should elucidate the channels that will be used for distribution, identify suppliers, and describe the patent. This should be accompanied by an analysis that determines whether a product is beneficial or not.
Price and Profitability
Economically, it is evident that price is the most crucial determinant of business success since it is the main factor that influences demand and supply. Accordingly, the feasibility analysis must illustrate how a product will be priced in relation to the available goods and services. In essence, it is recommended that the gross margin should be set to cover the expenditures. Although community businesses make profits, what determines their feasibility is how they use the surplus. Essentially, the price and investments should be used to determine profitability when they are compared with the cost.
Plan for Further Action
The feasibility analysis should evaluate the futuristic value of a business in order to determine whether it is advisable financially. In this regard, the analysis should establish the resources that are needed to start the business. In addition, the concerned personnel must consider the viability of an idea, people who will be involved in the process of implementation, and the organizational objectives.
Market
When conducting a feasibility analysis, it is essentially critical to consider the market (Spreckley, 2011). First, a businessperson must determine whether there is a market for products. The evaluation must be based on whether the market availability can be proven or not. If it can be proven, the owner of a business should proceed to identify the size of the market since this is a pertinent issue when it comes to determining the scope of operation.
Importantly, the feasibility analysis should make future projections and determine possible fluctuations that may affect the business financial solvency. In addition, other aspects, such as the expected annual growth of the market and the factors that affect its development, must be discussed in detail. Essentially, market feasibility is the most challenging part of the entire undertaking. Extensive research should be conducted in order to determine the highlighted issues.
Target Market Feasibility Analysis and Gathering information about it
Target market feasibility analysis refers to a detailed description of the current scope of potential consumers of a product. This evaluation seeks to determine the people who are interested in the goods or services that are provided by a company. Critically, the most important undertaking in this analysis is the collection of information about the target market. There are three major ways in which a company can obtain this information. First, the involved personnel can use previous statistics related to the product consumption and people who consume it. Alternatively, they can use information from industries that provide related products or conduct a research.
Conclusion
It is evident that DU telecommunications and Etihad Airlines are some of the most innovative companies in United Arab Emirates. They have been in business for less than one decade, but they have made a huge impact as far as innovation is concerned. In addition, it has been established that feasibility analysis should include a detailed description of the product, market, price, and futuristic plans among other things.
References
Aboutus. (n.d.). Web.
Balakrishnan, M. S., Jayashree, P., & Michael, I. (2011). Etihad: contributing to the UAE vision through Emiratisation. Emerging Markets Case Studies Collection, 1(1), 1-7. Web.
Oprea, A. (2010). The importance of investment feasibility analysis. Journal of Property Investment & Finance, 28(1), 58-61. Web.
Spreckley, F. (2011). Connecting the UK to the world and the world to the UK, the British Council is the UK international cultural relations body. Social Enterprise Planning Kit, 1(3), 1-68. Web.
In the case of Etihad Airways, the operational links between the different subsections of the organization depict the performance of the airline. Within just 10 years, Etihad has risen to the same level as other airlines that have been in operation for over a century. Operations management in the air travel industry is a complex process (Slack, Chambers, & Johnston, 2010). It entails forecasting, capacity planning, scheduling, managing inventories, quality assurance, locating facilities, employee motivation, and training among many others (Stevenson, 2005). However, Etihad Airways has endeavored to ensure that it takes care of every detail with utmost precision.
In its short history, Etihad has scooped ‘The World’s Leading Airline’ award for four consecutive years (Center for Asia Pacific Aviation, 2013). It first won the award after operating for only five years and ever since, it has stayed at the top spot every year. This implies that the airline offers quality services to its passengers. In the line of expansion, Etihad Airways has grown its passenger base from 340,000 in 2004 to 10.29 million in 2012 (Center for Asia Pacific Aviation, 2013). The exponential growth of customers makes Etihad to be one of the fastest growing airlines in the history of aviation globally.
It currently serves 86 passenger and cargo destinations on its own with a fleet of 159 aircraft (Etihad Airways, 2013). It runs an ambitious expansion program, which has seen it acquire 2.987 % stake in Air Lingus the Irish national carrier, 29.21 % stake in Air Berlin Germany’s second largest airline, 10.5% in Virgin Australia, and is soon increasing the stake to 19.9 % and 40 % stake in Air Seychelles (Center for Asia Pacific Aviation, 2013). It also runs a capacity enhancement program that will give it the capacity to handle 40 million passengers by the year 2030.
Etihad Airways has divided its global business operations into six geographical regions, which are each presided over by a regional vice president (Etihad Airways, 2013). These include the Americas, Europe, Africa and the Middle East, the UAE and Oman, Asia Pacific North and the Indian Subcontinent and Asia Pacific South and Australasia (Center for Asia Pacific Aviation, 2013). Under these heads are sales teams in every market that Etihad operates. Besides such a team, Etihad also cooperates with its affiliates, which include Etihad Holidays, Hala Abu Dhabi, and Etihad Cargo among others to ensure that it delivers premium services to its customers.
In other arrangements, Etihad also runs facilities that enable it to maintain contact with its customers at levels, and thus acquire a good public image. Such facilities include Global Contact Centers, Etihad, and Global Accounts that dedicated global sales teams operate and offer services in 15 different languages to accommodate all. Etihad Airways is thus an airline that has gone to great lengths in ensuring that its services surpass the expectations of clients.
Discussion
Efficient management of operations has the potential to place an organization in any industry at the top in terms of performance. Essentially, if an organization adheres to its vision and mission, it must ensure that all the operations perform optimally. According to Stevenson (2005), the basic function of any organization, department, or individual process is to transform a raw material, industrial product, or resource into a valuable output that meets demands of clients. It is important to note that every activity that occurs in an organization is part of a process. Technically, several interlinked processes form an operation.
Within the setting of Etihad Airways, many operations take place as individuals and groups work towards achieving the goals of the organization. This makes process management an important aspect of operation management in Etihad Airways because through it, the organization has managed to increase the number of its clients exponentially. Stevenson (2005) elaborates on the variables that interact within the setting of an organization to deliver the desired results. Besides the operations department, two other key departments in Etihad are the finance department and the marketing department.
The figure below outlines the relationships.
Figure1. Illustration of the relationships among marketing, operations, and finance departments, (Stevenson, 2005, p. 15)
In the figure above, the three functional areas need to cooperate very closely for the success of an organization’s operations. This implies that the finance department overlaps with the operation department in some areas such as budgeting and analysis of investment proposals, and thus they have to share information and cooperate. This makes operation management central in any organization (Slack, Chambers, & Johnston, 2010). For it to deliver its core functions effectively, it further interacts with other functional areas. This relationship is shown in the figure below.
Figure 2: Functional areas of operations (Stevenson, 2005, p. 16).
The relationship between operations and the legal department is necessary, especially when dealing with issues such as signing of contracts. Similarly, all the other departments play particular functions that aid operation management. For instance, the Management Information Systems (MIS) department handles the flow of information within and out of the organization. Hence, it suffices to say that all the sections and subsections of an organization have direct links with the operation management department. The links must have some relationships, which enhance operation management for an organization to run effectively.
The achievements credited to Etihad Airways are explicit indicators of its commitment to the business activities that enhance its efficiency and effectiveness. Operation management is at the heart of all these activities. The sub-division of the Airlines’ operations into geographical regions aims at ensuring that the operations are manageable. Placing of regional operations under regional heads streamlines coordination of all the operations. The establishment of partnerships with other airlines, service companies and its affiliates all add to this mix of channels through which Etihad Airways seeks to reach its customers. These are its value additions or transformation endeavors, which give meaning to what they deliver to clients.
The process of operation management in the aviation industry is complex, but Etihad Airways has managed to arrange many operations well and coordinate them with such precision, which has made it emerge as the best airline every year. The airline has diverse employees who come from 126 different nationalities (Etihad Airways, 2013). These employees are able to attend to clients in 15 different languages. Besides this, Etihad is running expansion programs, which indicate that its departments are coordinating well, and sharing information in a manner that allows it to prepare adequately for the future. For instance, by 2009, Etihad was capable of handling 12 million passengers, yet it only carried 10 million passengers up to 2012.
Etihad values its employees just as it values its clients. The value that Etihad has for its employees is evident as facilities of employees that claim a reasonable portion of Etihad’s resources. The modern facilities that Etihad is putting up also serve to improve the working conditions of its employees. This also shows that Etihad has well-coordinated human resource management, which supports motivation and welfare of employees. Therefore, examination of the results of the operation management in Etihad Airways shows that it manages its operations exceptionally well. Exceptional management of operations has made Etihad Airways to earn prestigious awards in the airline industry.
References
Center for Asia Pacific Aviation (2013). Facts and Figures. Web.
Etihad Airways (2013). The Etihad Experience. Web.
A person’s ‘frame of reference’ influences the way they understand organizations. As a result, several theoretical perspectives have been developed by scholars in the field of industrial relations to help understand organizations. According to Cradden (2011), the three notable theoretical views that have been developed are the unitarist, pluralist, and radical perspectives.
Each of the perspectives demonstrates particular views of workforce relations; thus, they give different explanations regarding conflicts arising in the workplace and the role played by worker’s unions in organizations (Cradden 2011). This paper shows how the unitarist, pluralist, and radical perspectives can be applied to Etihad Airways.
Unitarist Perspective
According to Combe (2014), an organization that adopts the unitarist perspective is viewed as an integrated system. There is the assumption that the top executives and all other subordinate staffs are motivated by equal interests and objectives. When a firm uses the unitarist perspective, all the employees are perceived as loyal to the organization. Consequently, the forming and joining trade unions are opposed actively (Aswathappa 2007).
The unitary theory would fit well at Etihad Airways in many ways. For instance, Etihad Airways is under the authority of the United Arabs Emirates (UAE) government, which does not support the creation of trade unions. Therefore, all the employees working at the Etihad should be united to realize the goals that the management sets to be achieved over a particular period.
An employee working at the Etihad Airways can adopt the unitarist perspective to help them become proactive, multi-skilled, and flexible. It can help the employee to fit into different situations that may arise while on duty. Also, the employees would be encouraged to contribute to the organization’s decision-making process. The top executives at Etihad Airways can promote unity and harmony in the organization by applying the unitarist view.
First-line managers utilizing this perspective can be more responsible for their actions. Managers can also design mechanisms to recognize and reward successful employees in a move to retain them and promote unity at Etihad Airways. On the other hand, the Etihad’s employees may not have a chance to voice their grievances, as doing so may be viewed as a sign of disunity and a threat to a harmonious existence in the organization.
Pluralist Perspective
According to Aswathappa (2007), an organization that operates under the pluralist perspective is viewed as having many different sub-groups. Therefore, workers’ unions are allowed to represent the employees. In the eyes of a pluralist, various conflicts arising in an organization are considered as normal and as a means through which positive change can be realized.
The adoption of the pluralist perspective at the Etihad Airways could have different implications. For instance, various trade unions could spring up and stir conflicts between the managers and employees. These unions could defend the rights of the members to a point where several collective bargaining agreements could be needed between the Etihad Airways and the trade unions.
The use of arbitration could be adopted to offer amicable solutions when disputes arise. According to Combe (2014), a pluralist perspective is widely recognised than a unitarist perspective because organisations use their power to ensure that neither the employer nor the employee suppresses the other.
Radical Perspective
According to Combe (2014), the radical perspective views industrial conflicts as pertinent in the realisation of amicable industrial relations. However, the perspective does not encourage as many conflicts as a pluralist view does. Advocates of this perspective argue that employers can endure more without their employees than the employees can bear without their jobs (Aswathappa 2007).
Applying the radical perspective at Etihad Airways can result in more employees becoming members of trade unions, thereby encouraging more conflicts (Cradden 2007). According to Aswathappa (2007), the unions can fight against the oppression of the employees by the employers. Therefore, the radical view can be a welcome perspective because both the employers’ and workers’ interests can be met. Eventually, it can improve the performance of Etihad Airways in terms of its quality of service.
Conclusion
The three mostly used theoretical perspectives in understanding organizations are the unitarist perspective, the pluralist perspective, and the radical viewpoint. A company may choose to adopt a particular theoretical perspective, depending on how the managers want to run the organization. The unitarist view calls for unity and harmony in an organization, where the employees and employers are driven by the same interests, goals, and objectives.
Those who develop conflicts are viewed as outlaws and traitors. Trade unions are allowed to emerge when a firm applies a pluralist perspective. The unions defend the rights of the employees. It is common to have conflicts if an organization utilizes a pluralist perspective because conflicts are viewed as avenues for positive development.
Finally, a radically-oriented organization experiences an increase in the formation of workers’ unions. However, conflicts are very few. Etihad Airways can adopt any of these three perspectives. However, the top executives should consider that trade union are not allowed in the UAE. Therefore, it would be more appropriate to adopt a unitarist perspective that promotes unity only.
Reference List
Aswathappa, K 2007, International Hrm, McGraw-Hill Education, Tata.
Combe, C 2014, Introduction to management, Oxford University Press, Oxford.
The presented report will be focused on the ways Etihad can increase its capabilities and achieve set goals through the 2016-2026 destination statements. Furthermore, there is a developed strategic linkage map that covers the main activities the company implements in order to achieve desired outcomes, also illustrated in the map.
Content Summary
The paper contains Etihad Airways destination statements that span across four perspectives of the business: financial, customer, process, and growth with two statements related to each of the perspectives. In the financial sphere, Etihad Airways contributes up to five billion dollars to the UAE economy annually and increases the partnership revenue up to three times by 2026. In the customer sphere, Etihad maximizes the effectiveness of on-ground specialty commodities for customer’s comfort and safety and extends the range of available in the air facilities and commodities to cater to the needs and requirements of various groups of customers.
In the process perspective, Etihad provides up to 150 destinations for the customers without cooperation with other airlines, with cooperation – up to 400 destinations globally and extends the capabilities of the cargo transportation department to fly cargo. Lastly, in the learning and growth perspective, the company provides new jobs and creates training and support for already existing employees and is a member of a global alliance.
Remarks
The report will be beneficial for future research on the topic of how a global corporation can increase its revenue and build a strategy targeted at achieving this goal.
Introduction
The report is targeted at the management of the Etihad Airways that is interested in maximizing the company’s presence on a global scale, providing immaculate services for its customers, and the increase is revenue both through cooperation with other global carriers and as a separate company. The primary aim of the report is to outline possible outcomes for the company, along with proposals of activities that are targeted at their achievement.
The report consists of four interconnected parts. Part I consists of the Company’s background on the global market of airline services in which it operates, Part 2 presents the Etihad Airways destination statements for the future ten years. These statements cover the sphere of finance, expectation of customers, capabilities, and processes within the company, and the learning and growth perspective. Part 3 of the report illustrates a strategic linkage map that shows the desired outcomes of the companies and the activities that go towards achieving these outcomes. Part 4 analyzed the three outcomes exhibited in the previous parts as well as the outputs that result from the company’s activities.
Company’s Background
Etihad Airways is one of the leading air transportation providers in the world, with the main office situated in Abu Dhabi. Launched in 2003 by the Royal Decree, the company has set a number of ambitious goals for developing a brand that will be valued and recognized globally. Due to the tight competition with airline companies that have decades and generations of experience, Etihad Airways had to come up with a strategic plan to overcome the competitiveness. The new business model Etihad Introduced to the airline industry was the collaborative growth model that consisted of a three-tier approach toward the business – investments into other airlines, organic expansion of new territories where the company would provide flights to, and the codeshare partnership (Etihad Airways, 2013, p. 6).
The collaborative growth model has proven to be successful as it enabled Etihad Airways to deliver high-quality services on a global level and achieve significant growth in revenue that could not be achieved if the company decided to act without any collaboration. By the end of 2014, Etihad Airways was able to offer its customers more than a hundred destinations worldwide on their own, at the same time providing up to four hundred destinations through the partnership with other airlines.
When assessing the collaborative growth model critically, it is important to note that it has decreased the ability of the company to compete with other airlines since tight cooperation has been introduced. In order to expand the possibilities of Etihad Airways on a global scale, the company has to consider branching out into new territories by themselves to capture an appropriate spot on the market.
Etihad Airways 2016-2026 Destination Statements
Financial Aspect
Etihad Airways contributes up to five billion dollars to the UAE economy annually.
Etihad Airways is a contributor to the economy of Abu Dhabi. Supporting more than 180,000 jobs or twelve percent of non-oil jobs, the company can become a significant player in the process of diversifying the economy that is strictly focused on the oil industry. Furthermore, Etihad Airways has encouraged foreign airline transportation companies to invest in the UAE (Fast Facts and Figures, 2015, p. 6).
The activities involved in this step of financial expansion are cost structure improvements, customer value increase, and asset utilization increase.
Thus, by means of a partnership with other companies (discussed below), Etihad Airways is to increase the income of the UAE economy in a sphere that is not related to the oil industry.
Partnership revenue has risen up to three times by 2026.
Partnership revenue had increased by 30% in 2013 compared with 2012. With the stable increase of partnerships and participation in global alliances, Etihad Airways will be able to triple its initial partnership revenue by the year 2026.
The activities involved in this step of revenue increase include revenue opportunities expansion and cost structure improvement.
The outcome is in the increase of overall revenue for the company that will be able to satisfy new and existing customers and expand its coverage globally.
Customer/Public Expectations
C1: The effectiveness of on-ground specialty commodities for customer’s comfort and safety is maximized.
When it comes to immaculate customer experience, on-ground services that occur before departure are crucial.
Etihad Airways provides its premium-class customers with transportation services to the airport in twenty-eight destinations worldwide and premium lounges in only five destinations.
The activities involved in the maximization of safety and services in the on-ground facilities include service and price improvements and partnerships with other service providers.
The range of the facilities should be extended in both territorial and class-specific ways. The company should look into providing on-ground service for non-premium customers, for example, quick check-in without any airport lines, transportation services, as well as waiting areas.
C2: The range of available in the air facilities and commodities is extended to cater to the needs and requirements of various groups of customers.
On-flight commodities are also included in the destination statement for the future ten years of Etihad Airways’ development. The company offers an extensive range of classes that include the Diamond First Class, Pearl Business Class, and Coral Economy Class. To satisfy its customers, the company can offer upgrades for economy class customers if vacant places in the upper-grade classes are available.
Process and Capabilities
Up to 150 destinations for the customers without cooperation with other airlines is provided, with cooperation – up to 400 destinations globally.
The second half of 2015 was marked with Etihad Airways, adding three destinations to their map that included Tbilisi, Baku, and Dar es Salaam. These flights have facilitated the development of the tourism business in these cities. With these three destinations, the total amount of destinations offered by Etihad Airways will equal one hundred and ten (El Gazzar, 2014, para. 4).
The step towards underserved markets will facilitate the expansion of new territories and enable the airline company to increase the number of new destinations. On the other hand, cooperation with global partners will extend the possibilities of Etihad Airways to increase its global presence by means of offering additional destinations available from its partnering airways.
The capabilities of the cargo transportation department to fly cargo are extended.
Etihad Airways also operates the Etihad Cargo division established in 2014. Etihad Cargo carries a wide range of cargo to the destinations in Africa, Asia, Europe, and the Middle East. However, the number of cargo flights compared to passenger flights is relatively low.
Since the company offers transportation of live animals, dangerous goods, vehicles, and other types of cargo, the destination range should be extended further to cater to the needs of clients worldwide (Etihad Cargo, 2015, p. 14). The outcome of cargo and passenger destinations is closely linked to the company’s aim of increasing revenue and cater to the needs of customers worldwide.
Learning and Growth
LG 1: New jobs are provided, and training and support for already existing employees is created.
In total, Etihad Airways has provided more than 180,000 jobs by the year 2016. In itself, the company employs 9,000 workers.
Due to the extension of process and capabilities of the company outlined in the destination statements above, the increase in professional and trained personnel will become a benefit in the company’s growth. The frequency of hiring new employees is directly proportionate to the appearance of new destinations.
On the other hand, it is crucial to provide additional training for the already existing personnel. With the development of new technologies, employees should be aware of possible methods of serving customers and provide better value both in-flight and on-ground.
LG 2: Etihad Airways has become a member of a global alliance.
Now Etihad Airways does not participate in a global alliance although it has a reliable portfolio of relationships with global airline carriers. For now, there are two types of relationships that exist between Etihad Airways and other global airlines these are Special Prorate Agreements and codeshare arrangements. Special Prorate Agreements are one of the most effective sources of gaining value for an airline company.
By means of setting up agreements with other companies, an airline is able to develop a network with new routes, extend the traffic capabilities with the help of discounted prices, and provide an appropriate level and quality of services for customers (Peluso, 2014, para. 4). Codeshare arrangement, on the other hand, is an agreement that exists between airline carriers allowing them to sell tickets for the same flight as if the flight is conducted by the same carrier, an approach widely used by Etihad.
The global alliance will allow Etihad Airways to establish its global presence in the industry of aviation. SkyTeam, Star Alliance, and Oneworld are the most prominent global alliances that offer its participants codesharing agreements, reduction of costs connected with maintenance, operation, purchases, as well as investments into other spheres of business. The outcome is predominantly linked to customer satisfaction; they will be able to enjoy lower ticket costs, an increased variety of departure and landing times, extended the range of new destinations, as well as the reduction of in-flight time.
Strategic Linkage Map
The primary outcomes for Etihad Airways are the increase in revenue, the satisfaction of the customers, as well as expansion of new destinations on the global scale.
Strategic Linkage Map.
Outcomes
Despite the fact that Etihad Airways claims an increase in the total revenue of up to thirty percent annually (Etihad Airways, 2015, para. 1), further increase as the primary outcome of the suggested activities will offer the company extensive possibilities. By satisfying the customers that will want to fly with Etihad again, the company will be able to expand its territorial presence thus gain more revenue for providing an extensive range of flights across the globe.
The financial, customer, and growth clusters of activity comprise a range of activities that should subsequently be measured with separate key performance indicators. If successful in their implementation, the clusters of activity will result in subsequent outcomes of revenue increase, customer satisfaction, and expansion of the company on the global scale.
Revenue increase is one of the most important outcomes since it allows Etihad to act upon satisfying its customers by offering top-quality services as well as expand their global presence by means of adding new destinations to its map. Customer satisfaction is an outcome that directly affects revenue increase since if customers are not satisfied with the services the company offers they will not add to the company’s revenue. Lastly, the outcome of expansion to new destinations is linked to the outcome of revenue increase since more destinations means more flights.
Reflection
The information learned in the class offered insights into how a business can broaden its capabilities and extend the range of the services or products it offers to customers. In terms creating a business model or a system of destination statement, the course has been beneficial for outlining main areas in which the analysis is the most effective.
Before conducting the research for the Etihad Airways destination statement, there was little known about the business. However, through the analysis of the company and through the design of the destination statement, it was learned that the primary objectives of an airline company are linked to satisfying the needs of customers, increasing revenue, and expanding the company’s coverage on the global scale.
Furthermore, from designing a system for the company, it was learned that all aspects of the business should be included in the system so that a company has a clear and a unified strategy. In addition, it was learned that the analysis of previous actions the company implemented is useful for finding out in which aspects the company was successful and what still needs improving. Designing an action system for an organization provides a skill of research and analytical thinking on the basis of such research.
The sources used in the research include the Etihad Airways Annual Reports, the Statement of the Facts and Figures of the company for the last decade as well as other articles and websites that provide extensive information on the current state of the company on the global market.
The designed system is different from the one the company previously implemented in a way that is more ambitious. Etihad Airways is used to setting smaller goals and develop their business gradually so that every detail is accounted for while the designed system is far more general and requires additional developments in terms of a detailed approach.
As part of understanding the organizational theory and its design, this assignment analyzes Etihad Airways, an airline company in Abu Dhabi. The organization theory has become a major area of study that provides an understanding of various issues of a firm. The airline company has established itself in the market as the world-leading airline.
Background
In late 2003rd, the royal decree, Amiri, established the firm’s operations. Its first commercial operations began in Beirut. It has since grown to be a benchmark of commercial aviation. Etihad has over 60 destinations that are centrally managed in Khalifa City, Abu Dhabi. The airline is maintaining its international workforce who stands at about 24,000. The company has also grown by its objectives through formidable partnerships and sponsorship deals that are of mutual benefit to the parties involved.
Also, the effectiveness of top management is attributed to its development since its establishment in the past decade. The company is barely turned 15 years old since its formal incorporation but has become a major landmark in the airline business. It can also be seen that the airline has diversified its operations in major cities in the world. This has been achieved through proper marketing and efficient service delivery.
Activities involved
Etihad Airways mainly provides services in the aviation field as its main commercial operation. This infers that it offers flight services which include passenger and cargo transportation in all its destinations. It owns multiple airplanes that operate all its destinations. The other auxiliary services that it offers include audit, tax, and human resource consultancies. These services have boosted the value added to the firm. It has marketed the firm to various segments of the economy.
As seen in its previous annual reports, the company has a better financial position. The statement of financial position has balanced assets and liabilities together with its financing activities (capital). Furthermore, the huge profits and revenues have offset most of its expenditures and have created favorable dividends to its shareholders. These annual reports attest to the company’s mission of being hospitable to its valued clients. Their main goal is to become the superpower provider in the aviation industry.
A model showing their value creation:
Value creation refers to the worth of a company created by its products. Most models will incorporate input, conversion, output, and environment. As for inputs, the airline has indulged in various resources at its initial stages. These resources include funds, high paid and qualified personnel, seminars, and workshops that come with proper training and various consultations. It results in positive eventualities.
At the conversion level, the airline tries to indulge the input resources into the meaningful delivery of services. Some things done at this level are proper directing and controlling, staffing with the right human resource panel, and planning of the overall structure. The output stage will include the real-time results observed. These results create value, if and only if, they are properly interpreted. The environment comes as a constraint. Therefore, for objectivity and other aims, some environmental factors are assumed to be held constant. This, therefore, means that the airline has fully evaluated its value chain and has allowed the environment to be the limiting factor that could hinder the airline business.
Conclusion
The Etihad airline, according to its design and organizational structure, is continuing to become a bigger and better airline provider. It has a rich background that gives a deep understanding of how the firm came to be. The firm has managed to be one of the best airline providers in the aviation industry by incorporating all the basic components of value chain creation.
