The purpose of this paper is to conduct the full strategic
appraisal of Emirates Airline company culminating in the generation,
evaluation and selection of strategic options for the firm in its efforts to
continue to grow and develop. This document will assign the principles of
strategic management by using strengths and weaknesses, competencies and VRIO
framework as well as the strategy clock by Bowman followed by, Porter’
framework and Ansoff’s and TOWS matrix.
The Emirates company was established in October 1985, when the first
flights were lunched with only two aircraft flying from Dubai. Additionally,
according to the Emirates Story, company goal was always “quality, not
quantity”. Emirates has evolved into a globally influential
travel and tourism conglomerate known the world over for our commitment to the
highest standards of quality in every aspect of our business.
This organisation is wholly owned by the Government of Dubai and has grown in
scale and structure not through protectionism but through
competition. The competition that grows its number of international carriers
taking advantage of Dubai’s open-skies policy. Furthermore, the Government of
Dubai treats Emirates as independent business unit that prospers because of it.
Since the very beginning the airlines continued to grow and it was inter alia
awarded with International Cargo Division, Airline IT Developer and Destination
Management and Leisure Division and.
It is also worth mentioning, that the business expanded
from 2 aircrafts to a fleet of over 230 planes and over 140 destinations in
more than 80 countries around the world, and still escalating and its net
profit reached $1.9bn for 2015-16.
Part 1 External Analysis
1.1. Macro-environmental Analysis – PESTES Analysis
This section describes broad macro-environment of the
organisation by using PESTEL framework analysis. This framework provides wide
overview and highlights six environmental factors like P – political, E –
economic, S – social, T – technological, E – ecological and L – legal. This
range of influences underlines more than the economic forces that the
organisation need to consider, this incudes market and non-market aspects of
strategy. Also, all those factors are interconnected and only going through
each of the six PESTEL factors raise a wide range of potentially relevant
problems, as follow:
Political – describes the role of the
state and other political factors. This inter alia includes: government policy,
political stability or instability in overseas markets, tax policy, foreign
trade policy and its restrictions even, labour and environmental law.
In this case, Emirates Airline follows the rules and regulations of the
Government of Dubai as well as it helps to achieve governments aim, which is promoting
Dubai as an ideal tourist and investment destination. For instance, while
flying with Emirates there is no need for a turist to pay extra for visa to
enter the United Arab Emirates (UAE); The airline has also signed agreements
with other countries like USA or Australia. For example, according to Alcacer
and Clayton (2014) article, company introduced Sydney (Australia) – Auckland
(New Zealand) route to cover 12 hours waiting time that would normally took
place before returning to Dubai; In political factors, there is an influence of
potential terrorism and wars, which may affect the service. And for those
reasons, the operation planning team calculated areo-political considerations,
where entering the market was limited to restrictions in certain countries, due
to air service agreements forcing Emirates to either enter preemptively or hold
out for a better opportunity.
Economic – refers to macro-economic
factors such as exchange and interest rates, business cycle and differential
economic growth rates around the world as well as disposable income of
consumers and businesses and hence, how these factors would
influence the success and profits of the company.
Emirates is one of the third-largest global airline company, which makes them
stable economically (see appendix, Table 1, page…..).
Figure 1, shows constant profit even in the years of struggle during the
financial crisis. In this instance, throughout the years, the UAE government negotiated
bilateral aviation agreements and supported Emirates’ entry into new markets,
which was not only beneficial for Emirates, but also for Etihad Airway based in
neighbouring Abu Dhabi.
On the other hand, not everything went smooth within
the company’s’ strategy plan. As reported in the article by Alcacer and Clayton
(2014), back in 2010 the Canadian market was partly blocked by its government,
giving Emirates the opportunity of only three flights per week. This was a
result of Air Canada standing for the flagship carrier followed by further
suspension access. Although, this affected Emirates at some level the plans
were moved into a new
route to Seattle, which was relatively close to encourage Canadian
– includes influences like changing culture and demographics, more to the
point, shared beliefs and attributes of the population for example, health
awareness, career attitudes or age. These demands are a subject to changes in
fashionable changing environment too. As it is with any product or services
available on a market, the originality of it may pass and for that reason, the
new pricing an promotion strategies need to be applied followed by, adjustment
towards ethnicity and overall taste. As from the Emirates point, the crew is
responsible to “note frequent fliers’
preferences and subsequently personalise their experience” Alcacer et. al.
(2014). This contains of assisting with missed connection flight, stocking
favourite magazines even serving customer’s preferable food and drinks, but
this is not only about the returning client. Emirates offers per-ordering
online option, where even economy class passenger have an option to order its
food beforehand. For example, vegan or halal meal.
In addition to above, Emirates puts emphasis on
cosmopolitan cabin crew speaking the language that is in majority of the to
particular flight and in their premium class highlighting its in-flight suites
and bars and top-end service.
Technological – refers to influences
such as the internet, nano technology or the rise of new composite materials.
In this case scenario, Emirates use the technology as application available on
client’s smart-devise as well as it offers wide rage of integrated technology
services available during the flight (in-seat phone, SMS and email, wi-fi in
the sky). The company also, invested in
safety and cost control system called Flex Tracks. This technology is an in-air
routing system integrating real-time data allowing an aircraft to utilise favourable
weather conditions such as jet streams.
Ecological – means ‘green’, where the
environmental issues like waste, pollution and climate change are considered,
but not only this, these are part of outside regulations which can impose
additional costs. For example, previously mention in technological part, the
Flex Tracks system, which led to reducing over 3,800 tons of fuel on daily
flight to Australia and it was accounted for over 12,000 tonnes decrease in CO2
emissions over one-year period. This example, also, falls into
macro-environmental analysis like ecological factor, see below.
Legal – embraces legislative and
regulatory constrains or changes like health and safety, equal opportunities,
consumer rights, advertising standards even product labelling and product
safety. As of the example included in “Emirates Airline: Connecting the
Unconnected” (2014), Emirates looked into expanding, more to the point, adding
new services into new cities in China, where the main concern was, government
restrictions, allowing Emirates serve only three main airports. Additionally,
in 2017, the company announced 38 weekly flights to
Shanghai, Beijing, Guangzhou, Yinchuan and Zhengzhou.
The above analysis was used to uncover issues likely
to have a major impact on the future of the company itself also, it revealed
threats and opportunities, especially within the first four factors (PEST),
that are important while entering new countries.
1.2. Industry Analysis – Porter’s Five Forces
To conduct industry analysis, the Porters Five Forces
will be used in this section, to determinate the attractiveness of an industry in
term of five competitive forces. These incudes, threat of entry, threat of
substitutes, power of buyers, power of suppliers and finally, extend of rivalry
between competitors. Once this framework is completed, with five forces falling
onto a high level, the industry is not attractive to compete in and vice versa
(Figure 1, next page).
According to Dudley (2017), the Middle East airline
industry is the fastest-growing industry in both capacity as well as revenue
per passenger per kilometres, with largest carriers such as Etihad based in Abu
Dhabi and Emirates in Dubai.
Furthermore, UAE aviation industry is not only a local,
but international industry, where Emirates maintain the newest fleet in
business, with average plane 6.4 years of age. Also, the company
differentiating itself through services to increase customer loyalty and hence
company’s value, and this is based on avoidances of direct competition with
low-cost competitors based on price Alcacer et. al. (2014).
Porters Five Forces framework – Emirates
As it is showed on Figure 1 above, the aviation
industry is highly competitive, but Emirates has what it takes. Starting with great
investment capital, including $99 billion investment on its brand-new fleet and
$4.5 billion dedicated into Terminal 3 in 2014. Also, investing in growing
markets in the BRICS (Brazil, Russia, India, China and South Africa) countries.
The 2014 investment was spent on Airbus 380s and Boing 777Xs supplied by two
main suppliers, which rises the competition among them and hence, make it very
high. But not only this, the supplier of raw material and technology, even
labour and services, can be seen as a power over the company. As of the power
of buyer and substitutes availability, this industry is competing on so many
levels, which allows customers to shop around, compare the prices and switch
from one airline to another, which then leads to huge pressure falling on the
company and affects the consumer’s sensitivity to price changes. Furthermore,
the airline industry is an attractive industry as the high profits can be made,
but it is not easy to enter due to regulations and patents requirements
additionally, Emirates is the national airline of Dubai and it was supported by
Even though, the rules to enter UAE marketplace may
seem to be hard to go into, but Dubai itself is a fast growing and attractive
place to invest same as the Dubai’s airport location and for that reason, it
brings huge increase of airlines landing and taking off from Dubai’s airport.
1.3. Opportunities and Threats of the external
is a developed company, that continue to growth for the next generations of
more advanced services
Government of Dubai will increase its profit due to expansion of airports in
Dubai and Abu Dhabi
like Dubai Air Show promotes Middle East
government is successful in negotiating agreements from USA to Asia
and their plans for growth
in fuel prices
and terrorism as its location is in politically instable region
of aviation security and insurance costs will rise operational expenses
of low-cost airlines
in carbon footprint regulations
Part 2 Internal Analysis
The second part of this paper focuses on internal
analysis, which is a combined review of an organisation’s strengths and
weaknesses. By providing detailed inner analysis of the business, including
perspectives of marketing, operations or finance for strategic use. It gives a
good sense of company’s basics competencies, where the required improvements
can be established. Those requirements than, help to meet consumer’s needs
within business marketplace.
2.1. Emirates Value Chain
The value chain means delivering
competitive adgantage over its competitir to a customer, Also, it is essencial
for managers to understand which activities are especially important for the
organisation and which to undertake to create that value. Picture 1 showes
value chain framerwork developed by Michael Porter (Johnson
et. al., 2015).
part of value chain model contains support activities highlighted below:
Infrastructure, is drawn from vertical integration, so
for example, Emirates and the Government of Dubai partnership or tax-free
Emirates Human Resources Management of over
55,000 employees in 2014, with the Emirates Aviation College recruitment and
development centre. This company offers its crew incentives like tax-free
income and reward programme to enhance staff performance.
Development, this company own its technology research
centre, which gives the company opportunity of the latest technology onboard,
for instance, Emirates Wi-Fi while in flight.
The company’s Procurement
is based on demand sourced via multiple channels outside Emirate group, like
the fleet of airplanes manufactured to extend Emirates aircraft ranges,
innovations and develop additional amenities.
The second part of value chain contains of primary
activities: operations, this airline
company is reducing the time that a passenger would spend queuing for check-in
as well as it reduces the time within the connection flights the minimum of two
hours. Additionally, company provides help desk, lounge or chauffeur pic-up
and sales Emirates advertise themselves as a premium brand
with all the health and safety measures in place and luxurious in-flight
experience, but not only this, the company is involved in many different events
globally (rugby, motorsports, horse racing, to name few).
service includes, in-flight entertainment like 3,000 channels of movies,
TV, music and games, on demand and in multiple languages as well as company
provides movies with Audio Description and Closed Captions if you’re hearing or
visually impaired. On top of that, onboard internet and phone connection as
well as Skyward’s sale, where points can be spent on partners in the industry
of car rental, hospitality or retail and lifestyle even banking. Furthermore,
24 hours access to customer’s account via smart devise friendly application, so
boarding pass, food ordering section or flight update.
The competency framework describes the knowledge,
skills and attributes needed for people within the company, which means that
each specific role has its own set of competencies required to perform the job
effectively. Moreover, the way to approach each role, linked with individual
performance to the aims of the business. The main and unique competencies are
listed in a table below:
Threshold resources: ticket office, friendly
and trained crew, airport and aeroplanes, fuel suppliers
Threshold competences: ability to
provide high number of flights, great customer service, health and safety
policies and measures
Distinctive resources: Dubai hub
location connecting the world, good relationship with the Government of
Dubai, tax-free location, trained crew, effective operational planning team
able to forecast future demand
Distinctive competences: comfort onboard,
increasing brand’s name, visibility via sponsorship, reliability a great
2.3. VRIO framework
VRIO framework is a tool, that can be used to analyse
company’s internal resources and capabilities in order to obtain if they can be
source of sustained competitive advantage. According to this framework,
resources must be V – valuable,
achievement of opportunities and neutralisation of threats; R – rare, controlled by one or more
firms within the trade; I – imitable,
difficult to imitate and O –
organisational support, must be suitably organised to support capabilities, see
Table 2 below.
Customer service level
2.3. Strengths and Weakness of Emirates Airline
of the company’s size, one of the world leading company
on diversified market
and increasing the cargo shipping to over 2.5 million tonnes in 2017,
including: Emirates Pharma, Emirates Wheel and Emirates Fresh on offer
ground-breaking partnerships, for example, an official sponsor for English
Premier League club – Arsenal Football Club
of double-decker airbuses
Miles scheme, where collected points can be exchanged with inter alia EasyJet
small in the USA market
all changes and approaches were a success, for example, entry into Canadian
on high-end market
as country is in the 114th position in the world for freedom of the
press Rabass et. al. (2015)
To sum the internal analysis up, Emirates is the
fastest growing airline in the world and with the conducted analysis it can
prepare itself to tackle future air transportation demand. The core
competencies of Emirates allow the company to stand out from their competitors,
operate economically and serve customers with strengthen brand.
Furthermore, this company support long haul flights
and aims to connect the whole world from Dubai’s airport that is open 24 hours.
Long-distance flights mean fewer stopovers, which then turns it into an
advantage on a fuel consumption and airport operational fees. Also, it is worth
mentioning, that this company runs larger capacity aeroplanes and hence is able
to transport higher number of passengers at one time. In fact, the fuel consumption
is also reduced by owning newer and more advanced airplanes.
Emirates Airlines has also, effective pricing strategy
that is affordable, where passengers are more likely to pay a bit more for the
The airline invested also into customer service to ensure
customer satisfaction. This is reflected in the latest access to booking flights
technology alongside increased customer communication.
Additionally, according to Kerr (2016), in a past
decade the Gulf carrier received $42bn in hidden subsidies, which violated
aviation agreements between the US and the UAE and Qatar. With this in mind,
Emirates may increase its fleet to US. Also, falling oil prices slowed the
economic growth in important markets for Emirates, including oil-producing
countries like Russia, regions of the Middle East and some nations in Asia and