Emirates Airlines has the position of a leader in the aviation industry. Their onboard system is considered to be one of the most innovative entertainment systems in the whole flying industry due to its comfort and technology. The firm’s aim is to grow and expand its destination coverage, which is directly influenced by its marketing strategy. However, being one of the fastest growing airlines in the world, Emirates Airlines’ largest challenge is to assure that its corporation stays relevant and is consistently accepted throughout the industry. To develop their services further, Emirates Airlines can focus on social media to create a network of loyal consumers and foster close relations with its passengers.
Emirates Airlines aims to be the best aviation company and offer steadily high quality services and products on each route they fly. They offer their services to diverse customers, namely for people with high level of income who are searching for luxury, including families and business people.
Any new airline company considers entering the airline industry unattractive as the competition is strong, the demand is low, and the costs of operation are increasing. However, Emirates Airlines benefit their market position and strategy by creating an excellent defense in opposition to its competitors. The analysis of its internal and external environments showed that the corporation management can clearly identify its competitive advantage and capabilities and understand how competitive it is in the business. The analysis also required Emirates to respond to alterations in context of threats, opportunities, economic downturn and technological progress. The Emirates Corporation evaluated its strengths and weaknesses as well and recognized the need to develop new strategies to stay sustain.
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Emirates Airlines has a superior position in terms of service delivery. The company recruits professional employees who can be friendly and courteous and talk diverse languages, which gives customers comfort and ease while interacting. However, the company lacks local worker. That is why the company, together with the government, attempt to train locals to be employed in the company as well as retrain current workers. Moreover, Emirates Airlines invested in College of Emirate Aviation, which represents the principal approach to staff recruitment, not minding the immediate return of investment in staff training. Therefore, it is significant for Emirates to deliver high-quality services because the following purchase of a customer will be associated with an individual experience of the services.
The airline industry is currently considered to be one of the most fast-growing and competitive industries in the world because it enhances world trade, economic growth, tourism and international investment. Emirates Airlines takes a significant place among the global airline companies. It was established in 1985 by Dubai government possessing just two aircrafts. Emirates Airlines has recently become one of the fastest rising airlines and considered to be the fifth most profitable flying corporations in the world. Emirates Airlines is struggling to achieve its mission, which is to offer consistently value for money, offer high-quality service and to be the best airline in the globe. Accordingly, the corporation orients on customers’ needs, innovations and providing advanced services, including offering personal entertainment services in all classes, 22 audio channels, 18 TV channels, and online booking service that enables consumers to search, book flights and choose seats. The paper aims at strategic analyzing of Emirates Airlines to define the major issues faced by the company and produce recommendations to deal with them.
The Organization’s Current Business and Operations
Nowadays Emirates owns 152 aircrafts, which fly to 151 destinations in 80 countries across the universe. Emirates transport 51.9 million passengers and 2.5 million tons of cargo (Annual report 2016). The cabin crews of the Emirates include employees of 95 nationalities. This flying corporation buys different planes, the most popular of which is Airbus A380, which makes the organization the world’s largest buyer of Airbus’s super-jumbo. Nearly 700 Emirates Airlines flights depart Dubai every week to six continents’ destinations. In fact, flights of Emirates account almost 40 per cent of all flights from and to Dubai International Airport. The Emirates Group struggled to become an immense organization, employing over 50,000 people and covering 50 brands (Annual report 2010). Being locating in the United Arab Emirates, the airline connects the four parts of the world. Dubai International Airport serves passengers who change their destination in the Emirates. Their location in the Middle East gives possibility for positive growth in tourism, air travel, and the aviation industry. Moreover, they continue to expand their partnership with other airflows over the world (Emirates Airline 2016).
Emirates Airlines generated a net profit of $964 million, with an increase of $777 million on revenues of $11.8 billion, which is a clear sign of effective response to the demands in each area of the business. Emirates can also catch up with new challenges and ideas from their experience in the global environment and leave outdated traditional practices behind. The following two examples illustrate this philosophy.
First, with the start of the economic crisis, which hit the world and Dubai in particular, financial institutions stopped borrowing the money. However, Emirates created a new financial tool that generated substantial excitement in the financial and aviation sectors and was rewarded by an industry award.
Second, from the point of view of advance technology as well as a new level of consumer safety, Emirates plans to become the first flying corporation in the world to introduce the Smart-Runway and Smart-Landing safety solutions to decrease the risk of runway excursions and incursions.
Emirates Airlines implemented customer service as the heart of the company operations and any current strategy of company development. They can resolve and keep evolving in this sector, increasing the frequencies, network and expanding service standards and append more value to the customer needs. Emirates Airlines aims at following high-quality standards despite the crisis or other global issues. They try to keep challenging to ameliorate their product and pioneering unique ideas and innovations. Their strategy facilitates continuing growth of the company due to its ability to adapt to the customers’ rising requirements (Benham 2008).
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Emirates Airlines is a global company influenced by the external environment. Operating in the most developing and necessary industry such as aviation, the corporation faces opportunities as well as threats on its way. Both of them affect the aviation industry considerably.
Emirates Airlines’ opportunities are really huge as they have the ability to continuously develop new generations of more advanced airline services (Kotler 2012). The corporation struggles to be competitive at the international level, which makes it develop new technologies and services for the customers to be satisfied and continue using the airline. The localized capabilities enhance such a possibility. Moreover, the UAE is evolving as a tourism country, which attracts many tourists every year who use Emirates Airlines. The current Internet capabilities also promote growth in the industry.
One more opportunity of Emirates Airlines includes its location in the Middle East, which makes the corporation powerful. Every day hundreds of thousands flying machines land and take off in the Emirates airports. The UAE is a progressive and rich nation, and its income per capita is constantly rising, which gives an excellent opportunity to aviation. The population of the Emirates, which consists mostly of emigrants, is constantly growing. Moreover, the Emirates government invests huge sums of money in the development of the airline industry, which attracts high-class aviation engineers and other staff to live and evolve the flying corporation. Due to the above opportunities, the industry continues to grow, raise its income and attract new customers.
Along with opportunities the company possesses some threats, which it efficiently struggles. The location of the Emirate assumes both opportunities and threats for the corporation as the country is situated in the politically unstable region, and terrorist activities have recently increased in the Middle East. The territory is affected by hurricanes and earthquakes, which influences the development of the company badly and scares off potential customers. For example, an earthquake in 2005 in the Al-Arabian channel had a negative impact on tourism (Annual report 2016).
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One more threat is posed by rival companies, such as Deutsche Lufthansa AG, British Airways Plc and others, which run in a strong competition to Emirates Airlines. Those international companies are on the top of the flying business, and the Emirates must constantly struggle to be in line with them. Each Emirates’ compliance carries an advance to huge international airlines. Moreover, Emirates Airlines are threatened by the new companies entering the market and the raise of low-cost airlines. Thus, the Emirates Company must always be alert to promote all the innovations and not allow the competitors win this business issue.
The Emirates Porters Five Forces
Threat of new entrants: all appearances in the aviation industry seem to have high entry barriers, and the finance is the main entry barrier. Moreover, new entrants in the industry pose some danger to the existing companies by offering more a appealing product at low cost. The threats of the airline industry are low in comparison with barriers, which are high. New entrants challenge Emirates Airlines to invest more capital in purchasing new crafts, introducing new projects, and attracting customers. However, if the airline company has a strong image in the market and excellent goodwill, it will effortlessly compete with new dangers at the period of entry.
Threats of services or substitute products: the threat of services or substitute products arises due to the presence of a substitute in the market for any product and service. For example, there might be other means of travelling in the same country or area, but this threat does not concern Emirates Airlines as they connect continents with mileage, which limits the possibility to switch to other services than airlines.
Bargaining power of customers: the competition among companies is intense. The company may experience a threat now or in the future because nowadays buyers have an ability to make demands on their products with regard to higher services, lower prices, or product quality. Thus, Emirates Airlines is unlikely to reveal a high level of turnover over time because of the price reduction as well as investing more in the innovations (Johnson, Whittington & Scholes 2011). Buyers nowadays have a huge choice of products, thus they might find competitive offers and schemes as well as better service or cheaper tickets with other service supplier.
Suppliers’ bargaining power: Airbus and Boeing are two most influential aircraft producers among the world’s airlines. All airlines are constantly placing the orders for the latest aircrafts to either of the companies. Being a large buyer, Emirates Airlines still faces the threat of spending higher sums than indicated before or even delays of delivery. Moreover, the company relies heavily on the above suppliers because the required products are differentiated when suppliers own high expertise. The suppliers can influence prices, change market trend, and manage quality of their services and products. Lastly, suppliers advantage from the presence of a large number of substitutes because over hundred airlines are nowadays operating in the industry and plan expansion (Nguyen 2010).
Existing firms’ rivalry: The rivalry trend in the airline industry is very high and fierce due to availability of a huge number of airlines in the business, which offer better services at lower cost. In general, 37 airlines fly to and from Dubai. The chief competitors to Emirate Airlines are Etihad Airways, Air Arabia; local competitors are Qatar Airways and Gulf Air, and the main international competitors in the airlines industry are Singapore Airlines and British Airlines. Besides, vast capital costs and high prices of fuel are also barriers to this industry (Namaki 2007).
Strengthens and Weaknesses
Emirates Airlines is the global aviation corporation, which has strengths as well as weaknesses. In the light of rapid development of technology and superb service strategies, Emirates goes in the front lines of the aviation industry, owning the most modern fleet, global market, highly-skilled staff and a significant market share. These resources are vital to success of Emirates Airlines. The company has developed an excellent infrastructure such as exclusive terminal, a home-based airport, and supporting services. Further, the finance of the company is highly stable, which promotes a competitive advantage over competitors. The staff’s skills and management’s competence together with powerful dedication are essential to success. This can be proved by the 11/9 event in America, when lots of airlines declared bankruptcy and Emirates Airlines underwent a little crisis.
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The company managed to benefit an absolute cost advantage, including Dubai’s tax free environment, an ultra-efficient airport, and particularly low labor cost, which is less than 20% when other competitors strive with 34-40% (Stanik, Smith & Erakovic 2007). Moreover, Emirates Airlines possesses a strong brand loyalty; they have built its brand notably during the last two decades. More and more consumers have become loyal and selected the airlines when travelling because of high product quality, excellent service and product innovation. Cost competitiveness is crucial for a capital responsive industry such as aviation. It is essential that good managers can maintain operations costs at a minimal level to generate higher profits. Emirates Airlines are nicely established with tight alliances in international destinations. The company is continuously investing in its fleet and as a result enjoys high profitability. The corporation can increase capacity and still maintain stable costs in comparison with other market players. Emirates Airlines can also have access to worldwide markets with a larger considerable geographical coverage. Thus, such a condition creates a bigger barrier to new entrants due to high scope and costs of business.
However, Emirates Airlines has some weaknesses, which make their work harder. First, the company has a lack of local professional staff, and almost all skilled staff strengths are based on expats. Second, the firm relies financially on export of oil, which results in financial deficit in case oil prices fall. Business markets have become evidently segmented. The airlines with the boosting budget have enticed passengers and created stronger competition while customers were appointed as more process-sensitive. These facts require Emirates Airlines to reconsider their strategic development.
Emirates Airlines possesses powerful resources and struggles to overcome some challenges met on its way to success. The company also has distinctive strengths, which include online booking. Booking via the Internet allows customers buy services and products quickly and easily, which is very significant given the current hectic life. One more benefit of company services is timely delivery as well as ability to maintain point to point routing.
The Major Strategic Issues and Challenges that the Organization Should Address
Although, the Emirates Company owns lots of strengths, it must address some issues and overcome challenges to flourish in the coming years. First, customer service is the primary issue the company must address. The new segments of services must be added constantly to support all the customers’ needs. This may require great effort for sales as well as huge investment in segment of marketing communication (Emirate group 2010). These services are divided into three segments, which include Leisure Travelers, Business Travelers, and Cargo. The passengers of the business segment need quality and service, such as comfortable seats, availability of lounges in airports, and expanded in-flight services. Leisure Travelers require lower costs of the tickets and a huge variety of destination routes to travel. Emirates Airlines pays a great attention to cargo traffic, which produces 20% of the company’s revenue, being one of the highest rates in the industry.
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Second, the corporation lacks local staff and must involve expatriates to work. It demands financial as well as corporation efforts to encourage workers to emigrate in the Emirates. The company must cooperate with the government to train the locals to be able to work in this industry. The government is in charge of developing local labor forces to support aviation with professional workers. Moreover, Emirates Airlines forces must be directed on constant development and re-training of its staff to follow all the global innovation of the aviation industry.
Third, Emirates Airlines should implement a strategy for introducing its e-business system, which aims at involvement of business travelers in utilizing company services. The corporation also has to develop the Internet advertisement and a self-check services system for the customers to control tickets sale and control flights. The information technology system facilitates maximizing the profit through the advancement in this area and signing a lot of contracts with international companies of the world. All these strategies can assist the corporation to withstand competition of the huge international companies, such as Air France or Luft Hansa, and new entrances, which are prepared to play on this market.
The success of every company depends on its ability to manage and overcome the difficulties and follow all innovations in the market. Emirates Airlines must constantly develop to remain in the top of the world’s corporations and maintain its profit as well as customers flow. Every new innovation must be implemented in the company, which will involve more consumers of the corporation services. Additionally, the existing services must be expanded by embodying new conveniences. Thus, analyzing of internal and external environments is a must for the company; It is necessary for Emirates Airlines’ management to identify its competitive advantage, capabilities as well as access how competitive the corporation is in the field. Such an analysis is rather significant as there are implications demanding Emirates Airlines to respond to alterations in changing context, such as threats, opportunities, economic decline, and technological progress. The management of Emirates Airlines should see the problems, understand their origin and develop new strategies to improve the business.
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One more strategy for the company to work on and develop is creating new destinations and increasing availability of its services. Nowadays, new aviation brands appear in the flying business quite often, plenty of them propose cheap tickets to hundreds of destinations over the world. Emirates Airlines must be in charge of them and try to make its services available for diverse classes of people. They should try to minimize the costs of their flights while providing high-class services. It is a strategic task of the company to be able to compete with the competitors in this fast-developing industry. Moreover, Emirates Airlines should always explore new routes and create flights to new destinations all over the world. The most favorable of them are destinations to the most remote regions, such as some countries in Africa or America.
To conclude, air transport has obtained great popularity nowadays, with hundreds of thousands of flights departing and landing in airports all over the globe. Its popularity lies in quickness and convince of air travels. One of the top players in the aviation business is Emirates Airlines, which make thousands flights to hundreds destinations every day. Each year the amount of its clients grow significantly due to the services they provide and their constant evolvement. Te strengthens of the airlines include the most modern fleet, highly-skilled staff, and the global market presence. These issues are significant to success of Emirates Airlines. The excellent infrastructure of the corporation also excites as they developed an exclusive terminal, supporting services, and a home-based airport. Apart from strong sides, the company has some threats and weaknesses, which it must overcome. The airlines struggle to compete with the global aviation corporations such as Luft Hansa, which is a rather tough task for the corporation due to the fact that new companies are constantly evolving in the market and introducing innovations. One more threat is the lack of local staff and the need to involve professionals abroad to work for their company. The location of the company is both strength and a minus as terrorism and unfavorable weather condition, such as hurricanes and earthquakes, have an adverse impact on the industry. However, its situation in the Middle East assists the company in their achievements. Thus, Emirates Airlines must always struggle to stay on the top and compete with its rivals.