Emirates strategic objectives, values and diversification

Emirates airline values dictate how employees respond to challenges, opportunities, and people. Customer satisfaction, emotional attachment, leadership, dependability, accountability, innovation, community participation, professionalism and teamwork, and high quality of service are the airline’s essential values (Andy 2010). Within its operational routes, the carrier has diversified its investment portfolio into airport services and infrastructure development (Naeem 2014). The company also provides cab services at several airports to ensure that passengers arrive securely at their destination. The firms maintain the “”open skies“” policy, which allows them to fly in any country without fear of punishment (Emirates group 2017). Airlines participate and support environmental initiatives towards a future sustainable environment which improves the corporate image. The company’s objectives include offering excellent and high standard quality and services to customers (Squalli 2012).

VRIO framework

Using the Barney Jay’s VRIO framework, we can understand the competitive advantage of the Emirate airlines and the reasons behind its triumph (Baaghil 2013).

Financial status

The airline’s stable economic condition, its extensive capital, and support from the government enable the company to take advantage of the opportunities prevailing in the airline industry (Alvexo 2017). The capabilities are inimitable by the new entrants and small competitors. Thus, making it a valuable and rare, and provide a competitive advantage (CA). However, it is imitable by the large market players such as Qatar and Etihad Airways, hence, providing the comparative parity in the respect to larger competitors.

Facilities and equipment

Emirates have its threshold resources which include office equipment, flights, and financial resources, and headquarter (Emirates group 2017). It is a valuable and rare resource yet not hard for the large market players (LMPs) to imitate with time. However, it proves to be costly for the new entrants and small companies.

Technology resources

Its core competencies include IT development and route policy strategy. A critical success factor for the emirate’s success is to optimize the operational process (Naeem 2014). It proves to be rare and valuable and costly to imitate for the small and large market players. Therefore, it is a sustainable CA and profit generator (Emirates group 2017).

Management and strategic planning

The Emirates airlines is an international carrier in Dubai, which is politically stable area and having its strategic location, particularly, for passengers in transit (Lindsay 2011). The focused strategic plan formed by the Sheikh and executed by the skilled management team makes both the planning and management team to have value, rare and costly to imitate (Saeida et al. 2015).

Staff

The Emirates provides unique information to its workforces, and it is pervasive to improve their skills without costs. The airline’s vice chairman has more than 50 years’ experience in the aviation business (Emirates group 2017). The Airline invests in the training and development, and offers an impressive salary package for the high performance and efficiency (Squalli 2012). Although, it is achievable by the competitions. Location of the Dubai is strategic and a scarce resource that provides a power line a high demand for their services (Burghouwt 2012). Human capital resources are rare as well. For instance, the Sheikh Ahmed, is an object of value and a scarce resource, and his image has significant contribution to the airline (Squalli 2012).

Airlines brand image

A strong brand name with loyal customers is crucial to the company’s progression. The Emirates has proved that reliable brand name company is most untactful for the customers (Emirates group 2017). The emirates reputation and its brand value are valuable, rare and costly to imitate. The company offering high-quality services at comparatively higher make it hard for the LMPs to compete with the airlines (Squalli 2012).

Retailer management

The company has a good relationship with the suppliers thus promoting its services for more awareness. However, it can be imitated by the large firms with the classy distribution channel.

Innovative structure

Emirates Company has differentiated services such as offering modern and latest facilities such as comfortable seat, new e-ticketing system and advanced aircrafts. All the elements distinguish the company and help to attract new customers. Emirate’s innovation is one of the critical factors for the capturing significant market position. The arrangement generates a new and creative idea, and thus promotes the growth of the airline services. The innovative structure is rare and costly in the short run. But it can be imitated by the large companies in the long term. The carrier was the first in the world to provide the Television screen in its airlines and the first to introduce the e-ticketing system in UAE (Squalli 2012). Through the market segmentation, the airline gained the competitive advantage as it was the only company in the UAE providing training by using the latest technology called plane simulator (Desai et al. 2014).

Resources

Valuable?

Rare?

Costly to imitate?

Exploited by the company?

Competitive implication

Finance status

yes

Some extent

yes

yes

Comparative parity, competitive advantage to small competitors and new entrants and relative parity to large competitor

Facilities and

Equipment

yes

yes

Some extent

Yes

Comparative advantage and large competitors

Technology

resources

yes

yes

yes

Yes

Competitive advantage

Management and planning

yes

yes

yes

Yes

Competitive advantage

Staff

yes

yes

yes

Yes

Comparative advantage

Brand image

yes

yes

yes

Yes

Competitive advantage

Retailer and management

yes

no

Some extent

yes

Competitive parity

Innovative

structure

yes

yes

Some extent

yes

Sustainable competitive advantage in respect to small competitors and new entrants. Temporary competitive advantage to large competitors.

SWOT analysis

Strengths

A number of the destination: a large number of passengers from various places can fly on the airline at any place they wish.

Government backup: Dubai government owns the Emirates and thus gives support to the organization (Lindsay 2011).

Human resources: Emirates can get skilled employees due to the motivation and continuous training and development (Emirates group 2017). They give reward and benefits, impressive salary packages and reduce the labor cost and increase the employee’s loyalty.

The Emirates have Dexterra mobile platform to assist front-office mobiles solutions that will increase customer’s services interaction (Emirates group 2017).

Quality customer service: airline provides a high-quality service to the passengers and hence creates the loyalty to the Emirates (Squalli 2012).

Weaknesses

Prices: the Emirates ticket is comparatively higher than the other airlines such as Qatar and Etihad Airways.

Emirates airlines were established in 1985, and therefore it is a young airline (Staff 2006).

The airlines do not have any hub in Abu Dhabi airport which is the capital of the UAE.

Opportunities

Increase in the number of UAE population: more people would use the airlines as the population grows especially the expatriates (Staff 2006).

Tourism sector: the government of Dubai possesses the tourism projects which attract numerous tourists (Peter and Anandkumar 2011).

Expo 2020: global events in Dubai will attract and bring a large number of people and business to Dubai (Lindsay 2011).

World travel and tourism council project that there will be an annual growth in the number of UAE tourist as a result of impressive newly constructed public entertainment places and luxury hotels (Peter and Anandkumar 2011).

Threats

Budget airlines: the emerging of the new carriers with low cost will attract many passengers with their budget prices (Staff 2006).

Terrorism and wars especially the Yemen, Iraq, Libya and Syria: there is no political stability in the region surrounding Dubai due to the terrorist events (Lindsay 2011).

The rapid improvement in the aviation security and insurance cost will upsurge the airline’s operational value (Naeem 2014).

The airline might incur billions of losses due to the escalating fuel prices which causes the operational cost to be higher.

Internal factors

Strengths

S1:Established brand

S2:High quality service

S3:Strong management

S4:Utilization of information technology

S5:Government back-up

S6:Skilled human resource

S7:A large number of destination

Weaknesses

W1:No own maintenance, repair and overhaul facilities

W2:Comparatively higher price

W3:Young airline

W4:No hub in Abu Dhabi airport

External factors

Opportunities

O1:World Expo 2020

O2:Increase in the number of the population

O4:Tourism sector

O5:Impressive newly constructed public entertainment and hotels

Threats

T1:No political stability

T2:Budget airline

T3:Escalating fuel prices

T4:Rapid improvement in security and insurance cost

Tows matrix

Tows matrix allows development of the strategies that Emirates airline should follow to succeed by matching the quadrant of the SWOT to each other, understanding which internal factors affect the external factors.

In the strengths-opportunity quadrant, the airline can use its brand value and specific customers to penetrate into the new market segment. Customer loyalty, brand name, and organization capabilities, skilled staff, and management of Airlines enable to succeed in new markets and improve its service (Squalli 2012).

In the weaknesses-opportunities quadrant, the airlines must reduce to be able to take the opportunities on new market penetration, flourish in the airline industry and sustain a position in the existing market segment.

In strengths-threats quadrant, if the airline utilizes the current strength and resolves the weaknesses as mentioned earlier, it will turn significant threats to emergency of the Qatar and Etihad Airways with the low price subsidiary (Staff 2006). Consequently, the major of the weaknesses should reduce so as to eliminate the significant threats (weaknesses-threats quadrants).

strengths

S1:Established brand

S2:High quality service

S3:Strong management

S4:Utilization of information technology

S5:Government back-up

S6:Skilled human resource

S7:A large number of destination

Weaknesses

W1:No own maintenance, W2:repair and overhaul facilities

W3:Comparatively higher price

W4:Young airline

W5:No hub in Abu Dhabi airport

Opportunities

O1:World Expo 2020

O2:Increase in the number of the population

O3:Tourism sector

O4:Impressive newly constructed public entertainment and hotels

S and O

Promotion packages for the world Expo 2020

Establishing tour package and keeping the price low

W and O

Expanding the fleet

Keeping the price low

Threats

T1:No political stability

T2:Budget airline

T3:Escalating fuel prices

T4:Rapid improvement in security and insurance cost

S and T

Maintain a good relationship with governmental officials

W and T

Recruiting staff for maintenance, repair and overhaul facilities

Key strategic issues

Currently, Emirates are finding challenges in its operation. The Dubai is a safe place, but it is surrounded by instability, with wars in Libya, Iraq, Yemen, and Syria, and low demand in the vital oil markets section (Lindsay 2011). The Emirates are experiencing stiff competition from Etihad and Qatar which are expanding their fleets and route network and developing impressive new air point terminal. Weak economic growth in some part of the globe has kept the prices under pressure and demand low. The Emirates have been spending heavily on expanding its fleets and related infrastructure projects. Thus, the flight is not immune to the over-capacity, exchange volatility, price pressure, political uncertainties and security threats (Leeham 2017).

The airlines can open another hub other than Dubai to reduce the political condition surrounding the region. Similarly, they can begin new routes worldwide to increase their awareness internationally (Lindsay 2011). Emirates should introduce new brand as subsidiary which should base on low cost to counter low-cost airlines in the UAE market. Emirates should also control and decrease costs through improvement and development of operational activities (Naeem 2014). The company should invest heavily on the technology to cut down the labor cost. Additionally, the airlines should improve maintenance process and strict flight schedules and better utilization of the company’s resources such as aircrafts. Advancement in information technology is crucial for the growth of the Emirates airlines and should make a contract with E-Business Company for improving its services to increase the customer’s satisfaction (O’Connell and Williams 2011).

Recommendation and implementations

Improving in-flight service: business focuses on selling existing products to existing markets that drive growth strategy for the market penetration. Telecommunication is essential in everyone daily life, to enable the passengers to make voice and data call over the airplane’s telecommunication system. Success method of using a system to allow customers to use their mobile phones for communication, which can increase market penetration (O’Connell and Williams 2011). The strategy will enable boost and retain emirates airlines segments, protect the emirate market dominance in existing market, drive out competitors by restructuring mature market (Staff 2006). However, if the approach fails; there is no a corrective action plan.

Extending new routes: due to the increase in the number of the services in a new market where business seek to sell their products and services, launching existing services to a new market segment is a possible method to achieve the strategy (Desai et al. 2014). The purpose of the new destinations is to gain market development. The flight needs to re-discover new target if flight occupancy is lower than expected.

First class private suites: an introduction of the new services into existing markets illustrates product development strategy, which involves the development of the skills and requires the enterprises to expand customized services that can apply to the current market. The first class privates are new products of Emirates airline (Emirates group 2017). Quantitative measurement of the function would be considering the number of the occupancy and booking. If the strategy fails, the corrective plan is reducing the ticket price.

Budget airlines: the strategy allows the emirates to exploit its competitive advantages in airline service qualities where a business sells new services to a new market segment (Staff 2006). It proves more risky strategy due to the limited experience in specific new market regions. Since it is a separate entity, there can be estimate financial result of operating profit that would be a good measure to evaluate the success of budget airline subsidiary.

Reduction in operational cost: the airlines should control its price by improving the maintenance process and developing operation activities (Naeem 2014). Advancement of the technology is crucial to reduce the labor cost. For instance, it can install new self-check services systems on all airports. Improvement of the technology is essential for the progress of the airlines (Staff 2006). The company should make a contract with companies such as E-business to improve its services. E-CRM is the latest technology, and since its adoption by Emirates, there is an increase in the number of the internet’s users which creates a good relationship with customers (Emirates group 2017).

References

Alvexo 2017, What’s the Financial State of Emirates Airline?,[online]. Available at: . Accessed 8 December 2017.

Andy Sambidge ., 2010. Emirates tops airline service quality survey . [ONLINE] Available at: Accessed 07 December 17.

Baaghil, S.A., 2013. The Power of Belonging: A Marketing Strategy for Branding. iUniverse.

Burghouwt, G., 2012. Competition from hubs in the Gulf and Turkey. Overview of Academic and Applied Research. Airneth presentation (17.10. 12).

Desai, S.S., Siddique, C.M. and Yaseen, Z., 2014. Segmentation of Airline Market in the GCC Region: Profiling Business Customers Using Low Cost and Full Service Carriers. In International Conference on Technology and Business Management March (Vol. 24, p. 26).

Emirates group 2017, annual report/2016 [online] Available at: accessed December 2017.

Leeham News 2017, Is Emirates in trouble?, [online]. Available at: . Accessed 08 December 2017

Lindsay, G., 2011. Cities of the Sky. America, 2010, p.14.

Naeem, M., 2014. An Analysis of the Emirates Airline Operation Management System.

O’Connell, J.F. and Williams, G. eds., 2011. Air transport in the 21st century: key strategic developments. Ashgate Publishing, Ltd..

Peter, S. and Anandkumar, V., 2011. A study on the sources of competitive advantage of Dubai as a Shopping Tourism Destination. In International Business Research Conference [online]. Available at: accessed 8 dec 2017].

Saeida Ardakani, S., Nejatian, M., Farhangnejad, M.A. and Nejati, M., 2015. A fuzzy approach to service quality diagnosis. Marketing Intelligence & Planning, 33(1), pp.103-119.

Squalli, J., 2012, November. The Performance of the Airline Passenger Market in the United Arab Emirates. In Economic Research Forum Working Papers (No. 724).

Staff writer. 2006. Emirates, Etihad and Qatar Airways . [ONLINE] Available at: . Accessed 07 December 17.