Strategic Management Processes and Porter’s Five Forces Analysis of Emirates Airlines (Term Paper Sample)
Advanced Strategic Management- Emirates company
Advanced Strategic Management
Emirates Airlines is a game changer in the aviation industry. This is because its influence on the market continues to restructure the dynamics of the global travel market. The company operates in the aviation industry, a market that is characterized by intense rivalry and growth due to the increasing number of travelers. Emirates Airline is part of the Emirates Group and is under the ownership of the government (Emirates.com, 2018). The Airline is headquartered in Dubai. The company serves more than 154 cities and is the largest airline in the Gulf Region. It is also the fourth largest airline across the globe in terms of revenue and passenger traffic (Emirates.com, 2018). The Government unveiled the Airline in 1985 following the decision of Gulf Air to reduce its trips to Dubai. With an initial start-up capital of $10 million, the Airline adopted strategic operations to achieve profitability and growth(Emirates.com, 2018). Despite being the most successful airline in the region, Emirates Airlines is still pursuing further growth strategies. This paper seeks to conduct an audit of the strategic management processes and planning adopted by the company
Vision, Mission, and Goals of the Company
Emirates Airlines operates using the following philosophies:
Mission: The mission of the company is to provide the best quality services to its customers.
Goal: The Company has an objective to provide quality services as opposed to quantity. As a result, over the years the organization has evolved to be an influential player in the tourism and travel.
Vision: The vision of the company is to make the aviation industry sustainable and safe (Emirates.com, 2018)
Analysis of the Emirates Airline Mission and Vision Statement
A comparison of the Emirates Airlines mission and vision statement to the declarations of other leading competitors in the region can result to several judgements. Qatar Airways is one of the rivalry companies whose mission is excellence in everything we do (Qatarairways.com 2018). One the other hand, Etihad has a mission that involves giving a refreshing welcome to the guests. The vision of the company is vision is to be the best airline in the world, connecting the globe via Abu Dhabi. (Ethihad.com, 2018). A keen evaluation of Emirates Airlines mission and vision using the 9-Factor Matrix can be executed as follows
9- Factor Matrix
Organization ComponentsEmiratesQatar AirwaysEtihad AirlinesCustomers Yes Yes YesProduct or services NoNoNoMarkets NoNoYesTechnology NoNo No Concern for survival No NoNoPhilosophy YesYesYesSelf-Concept YesYesYesConcern for
Public Image YesNoNoConcern for EmployeesNoNoNoScore 4/93/94/9
Based on the finding above, it can be stated the mission and vision statements of all the companies are effectively communicating the agendas of the organization. However, it is essential device a mission statements that communicates many goals not just one single objective. Also it can be stated that Emirates Airlines mission statement is geared towards investment by providing quality to the customers. Nevertheless, it is imperative to develop a mission and vision that defines its markets and integrates other essential components in the matrix.
External analysis – Appraisal of the Company’s Opportunities and Threats
Introducing new aircrafts into its fleet is one of the opportunities that the airline can leverage on to expand its growth. The new aircrafts will enable the airline to use the modern airports effectively. The airline can also enhance the quality of its services. In order to earn more revenue and increase profitability, the airline should identify new markets and expand its operations in the markets. The airline can also leverage on its fleet of planes to boost growth and profitability. Moreover, the airline should take advantage of the promising political environment to boost its growth. The prospective social environment characterized by speed, growing population, and globalization present significant growth opportunities to the organization.
Competition from other international flights operating in the Middle East region poses a significant threat to the airline. In addition, the airline has to adjust its prices in response to the increasing fuel prices. This could reduce the number of price-sensitive customers that seek its services. The constant changes in government regulations and policies also threaten the smooth running of the airline’s operations. The airline’s consideration as a well-reputed and top-leading airline is a threat in itself since it compels the management to ensure that the standards of its services concur with the reputation of the brand.
Emirates conducts an external analysis of the industry environment as part of their strategic planning. The company uses the External Factor Evaluation (EFE) for its environmental scanning. As noted in the Emirates Airline strategic Plan for the year 2016, the company mainly evaluates its capacity in the region and how it can open up new markets in regions such as China and the United States.
It is, however, essential for the company to use additional tools of analysis in its environmental scanning. This is because the External Factor Evaluation (EFE) is not sufficient to provide an overview of the current market and the dynamic changes that occurs in aviation industry. As argued by the Market-Based View (MBV) of strategy, external market orientation and industry factors should be the primary determining factors of performance (Caves & Porter 1977). As a result, Emirates should adopt more tools of environmental analysis.
Porter’s Five Forces Analysis
Porter’s Five Forces evaluate the market environment within which the airline operates by considering five crucial elements: threat of new entrants, threat of substitute products, competitive rivalry, bargaining power of suppliers, and the buyer’s bargaining power (Porter, 2008).
The airline faces significant threat from other airlines that offer both regional and international flights (Gurbuz, 2013). Its competitors in the regions include Etihad and Qatar Airways. The global rivals include Singapore Airlines, British Airways, Jetstar, and Virgin Australia. The vibrancy of the competitors coupled with their significant market share has a significant effect on the airline’s profitability and revenue. Therefore, the airline has to develop and implement strategies to counter the competition and retain its competitive edge in the market. In the quest to subdue its competitors, the airline has depended on informed product design and marketing strategies by ensuring that customers receive the highest value for their money.
Threat from New Entrants
According to Gurbuz (2013), the airline also faces a massive threat from new entrants besides the threat from competition. The prospects provided by the transport and cargo sectors fuel threats from new entrants. The entrants do not necessarily stem from the local market. In fact, majority of the new entrants emanate from the regional and international markets. The new entrants leverage on joint ventures and alliances to destabilize the local market.
Bargaining Power of Consumers
The bargaining power of consumers in the sector is high (Gurbuz, 2013). The existence of many airlines provides customers with many options thus contributing to their high bargaining power. Consumers of airline services demand quality services among other aspects such as reliability, safety, security, affordability, and convenience. Therefore, the success of an airline in the sector depends on its ability to meet the aspects.
Threat from Substitute Products
The airline sector faces significant threat from substitute products such as teleconferences and other modes of electronic communication (Gurbuz, 2013). Postponement of travel plans by tourists has also weakened the demand for air travel as tourists and other travelers wait for the prices to reduce. Airlines have responded to the threat by lowering the price of air tickets to lure customers to purchase the tickets.
Bargaining Power of Suppliers
The bargaining power of supplies is high based on the fact that the main suppliers originate from biggest manufactures of aircraft in the world which is Boeing and Airbus. There is a stiff competition between the two firms (Ostrower, 2016). As a result, both companies would want Emirates to
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