Emirates Airline Company: Strength and Weakness

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Introduction

Scientific innovations and inventions in technology and transport networks have led to the growth of the transport industry; the airline industry has grown to be a multibillion industry. The United Arab Emirates air transport industry has grown domestically and internationally; the UAE is the main player in international business-enhancing further development in the industry. The country’s main air transport companies are Emirate Airlines Company and Etihad Airline Company. The airline industry is faced with numerous opportunities, challenges, and threats; however, it is an important industry in the wake of globalization. This paper analyzes Emirates Airline Company; it will look into its strengths and weakness as well as opportunities of the company.

Brief History of Emirates

Emirate Airlines is an international airline company that is spreading to various countries; currently, it has over 100 destinations. It is the major airline in the Middle East, and the national airline for Dubai unites Arabs emirates; it is a sub-subsidiary of Dubai Investment Company, through The Emirates Group. The company was incorporated on May 25, 1985, as an international flight company and made the first fright was Dubai-Karachi; in the first months of operations, the company was operating Mumbai and Karachi and then followed by Delhi in September.

The company was incorporated with the assistance of the government of Dubai’s royal family, but the intervention of the government was limited. By the year 1987, the company had expanded its destinations to reach eleven destinations. Emirates Airline is one of the few world start-ups that recorded a break-even in the first year of service (The Economist, 2005/6); since then, the company has grown from strength to strength. In 2007, the company was rated the eighth-largest airline company in the world in terms of international passenger transport. The earlier airline that operated in the area was Gulf Airlines; the airline was affected by the Gulf war, and Emirate airline saw enjoyed the benefit of all this.

The fiscal year that ended in March 2010, the company had employed 36,652 employees all over the continent. The performance of the company has been on a gradual increase; in the year 2009/ 2010, the passengers that used the online were 27.4 million, up from 22.7 million reported in 2008–09, the loaded cargo in the same period increased by 12.2% to 1,580,000 tons up from 2008–09: 1,408,000 tons. Its headquarters are in Dubai, United Arab Emirates. The current key people are Ahmed bin Saeed Al Maktoum (Chairman/CEO), Maurice Flanagan (Executive Vice-Chairman) and Tim Clark (President). The slogan of the company is the slogan “Fly Emirates. Keep Discovering” (Emirates (airline) 2011).

Emirates strength and weaknesses

To undertake a strengths and weaknesses analysis of the company, the paper will undertake a S.W.O.T. analysis of the company. SWOT analyzes a company’s internal strengths and weaknesses. If focus on the following four areas: strengths, weaknesses, opportunities, and threats that a company has. The above areas can be addressed as follows:

Strengths

As a competitive and globally recognized airline company, Emirates Airline has been able to diversify its businesses to different parts of the world and be able to compete effectively; the company has strong brand name and boosts as the national carrier of Dubai. With its strong brand name, the company has been able to operate in over 100 destinations; it has an experienced crew team who has a remarkable customer service. According to March 2010 letter to shareholders, the company had 36,652 employees of different nationalities; the diversity assists the company offer-quality service to people of diverse regions and nationalities.

For example in planes that fly to Arab countries, the company has a pool of Muslim crews to serve in the planes; this improves customer service. The company has embarked on having modern technology and equipments; the move to computerization and adoption of technology has enhanced customer service and reduced cost of doing business in the company. The management of the company led by Sheikh Ahmed Al Maktoum, the Chief Executive Officer, is well experienced and makes strategic and timely decisions to remain competitive. The company have innovated in-flight entertainment and communication systems, which has made it a pacesetter in the industry (Emirates Airline Company Corporate Website, 2011).

Weaknesses

Companies always have some internal weaknesses that limit its level of growth. In the past, the company has suffered from optimism where it has engaged in unsuccessful diversification and approach; this has lead to loss in the company. Due to the growing transport industry, the company has been accused of focusing on high-end acquisitions and diversification in spite of the risky effects of such decisions; in most cases the internal weaknesses of the company are something that can be dealt with if internal processes are effectively looked into. Recently, the company was gotten off-guard by the new development of low cost planes. This proves a deficit in its research and development team; it has not been very robust. Another weakness that can be seen in the company is its human resources retention policy; there is a high staff turnover to the disadvantage of the company.

Opportunity

Opportunities in any industry is the ability of the company to have long-term competitiveness is the ability to develop continuously new generations of services in the industry; the company has the opportunity of taking advantage of emerging needs of airline transport in the global arenas. One opportunity that the company is having is globalization; the world is becoming a global village; to support globalization, transport and communication networks are having an increased demand. The company being a player in the industry is likely to enjoy high demand of its services so, when strategic decisions and alliances are made, then the company can tap in the market effectively. Another opportunity that faces the company is an increase in international trade. Demand for cargo and passenger transport is on the rise.

Threats

The company is facing an increasing competition from other players in the Gulf region such as Abu Dhabi-based Etihad and Doha-based Qatar Airways. There has also been an influx of low cost planes, which have affected the prices in the company; they include Air Arabia and Fly-Dubai. Other than competition, the company is facing unfair business operation with the recent move being a move by Canadian government and two UAE airlines to deny the company landing rights to Canadian three major cities; Toronto, Vancouver and Calgary. Some European countries like Germany have been concerned about the company’s pricing, routes and landing rights.

The world security situation poses a danger to the airline industry; more people are shying off from using planes, as they are not aware of the security threats that await them. Cases of air rage are on the rise making people to fear using air transport for short distances. For example, September 11 terrorists attack in the United States, SARS epidemic in Asia, and the spread of H1N1 flu virus in 2009. The world financial crisis has affected trade in the world and Emirates is not spared either (Hitt, Hoskisson & Ireland, 2003).

Emirates employees, Information technology and legal situation

Emirates employees people of different nationality, cultural back ground and manage them to have a winning team; the human management department is mandated with the task of developing an orchestrate team. According to the company’s official website, the company has over 40,000 employees of different nationalities. The site observe that the nationalities and cultural background represented in the company is more that 160; the company has an always ongoing recruitment.

To maintain the high number of staffs, the company has effective human resources management which includes appropriate payments, favorable working conditions and motivational measured. Currently, the company is believed to be operating in over 100 destinations and is worth over US$ 67 billion for 204 more of the latest aircraft; the entire portfolio is managed internally by the human resources management controlling flying crew, people on the ground and other administrators.

The technology adopted by Emirate is a high tech technology which ensures that things are controlled and operate effectively. Different operations are supported by different technologies, for example 3000i system from Panasonic Avionics Corporation supports the company internal entertainment while Inmarsat’s satellite system offers the company with internet and television services. The main company that provides the company with information technology needs is Emirates Group IT (EGIT) supplies IT solutions; it has systems that support on fright and on the ground plane operations. The company has close linkage with Emirates airline and operates as the airline business main technology developer to improve services and operations of the company.

Emigrates has an internal legal department mandated with the task of ensuring that things are operating according to the legal requirements in the country of operation. When the company is making an international venture, the legal team has the role of advising it on the best approach and how they should handle the situation. In case the company has been sued, the department works for the benefit of the company (Emirates Airline Company Corporate Website, 2011).

Emirates external environment

To analyze the external environment of Emirates, this paper will use Porter’s five forces. In 1985, Porter came up with five forces that affect a business. The forces can be used to gauge a company’s competitiveness and its market position. Emirates has been a leader in airline industry, the following are the external factors facing the company:

Supplier’s power

Suppliers’ power means the ability that suppliers of goods and services have on the success of the company; Emirates depend on different suppliers for various goods and services, it is also a mean of supply used by different clients. Some of these services may be licenses and permits offered by different countries allowing the company to land on its airports. The world has embarked on “open air” policy were access to different destination has been facilitated by the use of designated routes. For the supply of normal operational materials like fuel, uniforms and outsourced services, the company has maintained good relations with its suppliers. It has an integrated supply chain management, which ensures there are commodities when needed.

The main problem that the company is having is entry in some “green” destinations and some European countries. For instance, it has been denied access for political and ideological reasons. One such place is in London Heathrow and Paris Charles de Galle airports, where the company was given second-class degree airports. This limits the company’s growth and operations (Dubai Government, 2006).

Barrier to entry

Barriers to entry mean some special attributes and business secrets that companies in an industry enjoy; they use the advantages to bar competitors. Every industry has some barriers to entry that affect a new company negatively. It may be trade secrets, operational costs involved or economies of scale. Emirates Airline has been denied access to some destinations, like in Germany and some countries like Canada has limited the destinations it can land. This affects the company’s operations negatively. The emergence of low cost planes has created a barrier to entry of domestic market in some countries like the United States of America. This has reduced the competitiveness of the company in such areas.

Threats of substitutes

Substitutes mean other means of transport that the customers can use instead of using the services of Emirates. The aviation industry has high competition and customers have a variety of choices to choose. There are prestigious planes companies that the company has to compete with; the model of the Emirates planes allow for first class, business class and economy on the same plane. However, there are companies offering these classes in individual planes. This gives them a better choice. The industry is facing intensive competition from the entry of low cost planes; they have affected domestic transport more than international transport.

Buyers’ power

Customers are the backbone of a company; the airline industry customers are rational thus they choose a carrier that suits them. This has created some price wars among airline companies a move that have led to reduced business at Emirates.

Rivalry

The airline industry is highly competitive and a small deficiency in a company can led to the company’s failure. Some factors are beyond the control of a company but they affect it negatively. Such factors include world economic performance and technological developments (Hitt, Hoskisson & Ireland, 2003).

Evaluation of the company’s S.W.O.T. analysis and the external environment

The strength of the company can be used to outdo the threats and risks in the industry; the main advantage that the company has is its strong financial base coupled with a strong financial strength. The company operations are in the international arena so a combination of the above two factors will work to the benefit of the company. At the end, the company will come up a stronger company. The potential of the company offers the company a strong competitive strength, it is likely to continue in the leadership role in the industry and in the future, it is likely to continue diversifying its businesses to other countries.

The invention of low airline industry is seen as the major threat that the company is facing; the company was seen to have an inability to keep up with innovations, or recognize its demand, creates a threat for them; however despite the threats brought about by the innovation in the industry, the company remains strong. It has the capability of venturing in the segment and enjoys economies of scale; and probably maintains a three level kind of business where it will be having, low cost planes, middle level planes and high-class planes. The move is likely to improve its business and competitiveness.

The company has the potential of converting its weaknesses and threats if the management can undertake massive research and development to see how it can strategize and meet the demands of the market (Horth and Alwyn, 2005).

Corporate level strategy

The Company’s main vision and mission is to be leader in the airline industry in the world; it aims at being an innovative company that respects its human capital needs; the company can be applauded for its efforts to keep in touch with its mission and vision. The company believes in corporate governance and ethical business and aims at doing ethical businesses; it has adopted current technology to endure that it offers high-class services with minimal pollution of the environment.

The company has a vision of caring for our employees and stakeholders as it grows its business to higher heights; the company understands that it can only remain competitive and profitable if it is sensitive of its employees needs and giving adequate returns to its shareholders. When employee’s issues are looked into, the company attracts high caliber staffs that are innovative and highly motivated for the good of the company.

As far as attaining of its corporate goals are concerned, the company is doing relatively well; it has remained competitive and a choice of many people; it also has high wage rates above the industry rate a factor that has made the company competitive in attracting quality, talented and focused staffs. The company pays satisfying dividends to its shareholders; this has made the company competitive and has ease in mobilizing capital.

Business-level strategy

The company has a hub-and-spoke business strategy, where it takes advantage of the existing business environment to come up with policies that improve its global business. The company’s strategy is highly responsive to any changes in world economies and improves its services with the wave of change. The company business strategy is built on hard-to-emulate mix of a well through geographic location, visional management, embedded in an ambitious and dedicated work force; the approach to business ensures that the company constantly develops new processes, ways of operations and products to fit the changing population needs.

The airline industry is having a number of competitors as well as consumers who have diverse needs; the customers can be classified as low cost customers, business class and executives. The company business strategy has two approaches; there are planes that represent each class, and some jumbo planes that can accommodate the three classes of people in one plane. The approach helps the company have a wide range of customers who consume its service. In peak seasons, the company ensures that it does not hike its price as other airline company does; this is a move to retain the confidence of consumers to the company’s services (Knorr, 2010).

Structure and control systems

To become a leader in an industry may not be as challenging as remaining the leader in the business; Emirates has embarked on different policies in the efforts of remaining competitive amidst of many changes in the industry; the main strategies can be divided into:

Innovations and technology adopting

The company has embarked on massive technology use, process and product innovations; this is in the aim of offering quality services at an affordable cost. In the wake of massive campaigns to conserve the environment, the company has embarked on environmental friendly technology.

Customer relation management and service delivery improvement: the company has embarked on improvement of customer services in the efforts of reinforcing the relationship with the customers. This assists in developing and maintaining loyalty in consumers.

Internal mechanisms improvement

The company has adopted numerous process improvement approaches to ensure that services within the organization are improved; the policies adopted include total quality management, six sigma, human resources management, green supply management, and quality improvement policies among others (Raab, 2008).

Recommendations

Despite the success of Emirates Airline, some strategic moves that the management can adopt to improve business in the company; the industry is highly competitive thus, the company should embark on strategies to strengthen their business in the United Arabs Emirates and the global market. Some scholars argue that Emirates Airlines hangs in the balance of low cost airline and conventional airline company; it is a high time that the company should define the business strategy that it adopts to assist in its business diversification.

The best weapon that the company has is continuous improvement of customer service; they should offer prioritized quality in customer services that ensures a memorable experience to consumers. When customer gets quality service, the company will benefit from customer satisfaction, loyalty, employee satisfaction and profit growth. To upgrade its services, the company should embark on consumer studies, trainings, and application of information technology to analyze consumer behavior and trends.

References

Dubai Government. ,2006. Dubai Strategic Plan 2015. Highlights, Dubai. Web.

Emirates Airline Company Corporate Website., 2011. Emirates. Web.

Hitt, M., Hoskisson, R. and Ireland, K., 2003. Strategic Management: Competitiveness and Globalization. South Western: Thomson Learning.

Horth, D., and Alwyn, T.,2005. The next low-cost threat. What does Emirates mean for Europe?, UBS Investment Research QSeries. Web.

Knorr, A., 2010. How Sustainable is Emirates’ Business Model? Web.

Ogilv, D., 2005. The Hub of the World. Business Heros. 1(1), pp. 36-40.

Raab, G., 2008. Customer relationship management: a global perspective. London: Gower Publishing, Ltd.

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