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COURSE PROJECT

STRATEGIC MANAGEMENT

AND POLICY

CHOSEN COMPANY:

EMIRATES AIRLINES, DUBAISUBMISSION DATE:

STUDENT NAME:

STUDENT ID:

PROFESSORS NAME:

UNIVERSITY OF MODERN SCIENCES

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TABLE OF CONTENTSEXECUTIVE SUMMARY .................................................................................................................................. 3

INTRODUCTION ............................................................................................................................................. 4

MISSION ........................................................................................................................................................ 4

OBJECTIVES ................................................................................................................................................... 4

STRATEGIC OVERVIEW .................................................................................................................................. 5

Market Penetration .................................................................................................................................. 5

Product Development ............................................................................................................................... 5

Market Development ................................................................................................................................ 5

Diversification ........................................................................................................................................... 5

SWOT ANALYSIS ............................................................................................................................................ 5

Strengths ................................................................................................................................................... 5

Weaknesses .............................................................................................................................................. 6

Opportunities ............................................................................................................................................ 6

Threats ...................................................................................................................................................... 6

COMPETITORS ANALYSIS ............................................................................................................................. 6

British Airways .......................................................................................................................................... 6

Qatar Airways ............................................................................................................................................ 6

Etihad Airways........................................................................................................................................... 7

American Airlines ...................................................................................................................................... 7

PEST ANALYSIS .............................................................................................................................................. 7

Political Factors ......................................................................................................................................... 7

Economical Factors ................................................................................................................................... 7

Social Factors ............................................................................................................................................ 7

Technological Factors................................................................................................................................ 8

KEY ISSUES AND RECOMMENDATIONS ........................................................................................................ 8

ESTIMATED COSTS ........................................................................................................................................ 8

IMPLENTATION ISSUES ................................................................................................................................. 9CONCLUSION ................................................................................................................................................. 9

REFERENCES ................................................................................................................................................ 10

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EXECUTIVE SUMMARYThe author(s) have chosen Emirates Airlines as the subject for this project. Emirates Airlines is based in

Dubai, UAE and is considered as the biggest airlines in the region of the Middle East and ranked amongst

the top ten globally.

The airline started generated profits in the ninth month of its operation and the revenues increased by$100 million every year during the early 90s. The strategy employed by the Emirates Airlines as a whole

is to offer customers a way to travel that offers convenience, value for money and high-class travel. The

company has pursued a 20% annual growth rate in profits since its inception and has been able to do so

effectively. It is an award winning airlines with the youngest fleet of aircraft in the world. The strategy of

market development, diversification and product development has led Emirates to become one of the

leading airlines in the world.

The airlines has seen tremendous growth ever since the inauguration of the organization. Diversification

forms a core part of the airlines with cargo services added in the first phase of the development where

over 20% revenue is generated today. Emirates Airlines envisions the development of market leadership

achieved by sheer innovation and maintenance of high business standards. Today, it is one of thestrongest brand names in the world.

The report, after a brief introduction, follows with the mission and objectives of the company. Emirates

Airlines was analyzed using two main models of SWOT and PEST addressing many factors that can

impact the growth of the company or otherwise downfall. Porters Five Forces Model was briefly

discussed to pinpoint the strategies that were used in the early years of the company leading towards

the maturity stage on the lifecycle. Various issues were addressed based on the competitors analysis

and future of the company when it comes to strategy implementation, development and pursuit. Of the

many airlines present around the globe, four main competitors were inquired upon namely; British

Airways, Qatar Airways, Etihad Airways and American Airlines.

Key issues were highlighted followed by recommendations to overcome these issues based on modern

day complications. The recommendations were then given a touch of reality by estimating time frame

and project costs to be incurred.

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INTRODUCTIONEmirates Airline is based in Dubai, United Arab Emirates. It is the subsidiary of The Emirates Group

owned by Investment Corporation of Dubai under the government. The organization is the biggest

airlines in the region of the Middle East, slowly making its way to the top, with over 3,400 flights in a

week flying to more than 150 cities in 74 different countries. In terms of passenger kilometers, Emirates

Airline is ranked among the top ten carriers globally. The organization was founded in 1985 and since

then, has become the fourth largest airline in the world. Beginning with a mere capital of $10 million

and two wet-leased aircrafts, Emirates is now one of the strongest brand names in the aviation industry

(EmiratesGroup, 2014).

MISSIONEmirates airline strives to be the best airline to take the skies and offer high-quality services, and value

for money consistently on every route (Emirates, 2014).

Emirates Airlines is comparatively a young field with an ambitious mission. The organization started with

two leased aircrafts and has seen growth ever since. In terms of the services, Emirates Airlines is one ofthe cleanest and best out there with consistent value for money offered to its customers irrespective of

class and destination.

OBJECTIVESAs every organization, Emirates Airlines has a set of goals which are detailed as follows (El Namaki,

2006):

Positioning of Emirates Airline as a global carrier of choice to the Middle East and destinationsbeyond;

Promotion of Dubai as being progressive, safe, technologically advanced and moderncommercial centers in the Middle East;

Display of extraordinary in-flight experience, award-winning services, fleet, safety record andglobal reputation;

Becoming the leader in the aviation industry by focusing on the organizations professional andwell-trained management.

Emirates Airlines originated in Dubai, UAE, and since then has become one of the more powerful brand

names in the aviation industry. The organization is striving hard based on the mission statement and set

objectives and is known for its innovative and customer-oriented services. They offer personal

entertainment system in First, Business and Economy class with access to over 18 TV channels and 22

Audio Channels. The introduction of ICE (Information CommunicationEntertainment) Systems offer

every passenger a new and interactive way to communicate, get free in-flight entertainment servicesand information such as weather, speed, altitude, time of arrival etc. Such services set Emirates Airlines

apart from other airlines around the world (Emirates, 2014).

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STRATEGIC OVERVIEWStrategies employed by Emirates Airlines is a direct resultant of the environment it operates in which

can be closely looked upon by employing the use of Porters five forces model which discusses the

threat of new entrants, power of suppliers and buyers, substitution and rivalry.

The threat of new entrants is a low entry barrier with finance being the major issue which is easily andquickly available in the Middle East. As far as the technologies and expertise go, they are readily

available. Boeing and Airbus being the main suppliers ensures that the power of suppliers is quite high

but not abominable. This results in reduced power of buyers in Middle East concerning the airline

industry. While the airline industry is in rapid growth, the availability of substitutes specifically in the

Middle East is limited whereas the competitive rivalry is high (El Namaki, 2006).

The strategies employed by the Emirates Airlines include penetration, product development, market

development and finally diversification.

Market Penetration

Middle East serves as the prime segment for Emirates Airlines and it is in fact this very segment that ledto the creation of the company. Middle East is being penetrated by Emirates as guided by their

deliberate policy.

Product DevelopmentWhile Emirates does not regularly introduce changes in the product mix, they constantly change the

product specifications and the types of services they offer. For example, the introduction of online

check-in system.

Market DevelopmentAs an example, consider Emirates geographical expansion into the United States of America. This is a

very typical example of market development.

DiversificationWhile still in the first phase of development, Emirates introduced cargo and storage market which is an

example of diversification. It is arguable that these diversification tactics are somewhat a part of market

and product development which led to an improvement of asset and capital expenditure.

SWOT ANALYSISThe internal and external environment for Emirates Airline was analyzed using the SWOT model for

analysis (Thomas, 2011).

Strengths Emirates Airlines is the a member of the Arab Alliance It is the first airline the Middle East to offer Online Booking and Check-In services Flies on long routes for example Dubai to USA Emirates Airlines possesses the largest purchasing power at any given time The labor force is un-unionized Frequent Flyer Program

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aircraft hangars. Qatar Airways intense growth strategy has led to its humongous success over the past

few years.

Etihad AirwaysIt is strongly backed up by Abu Dhabi government and they fly over 5,000 flights per week reaching over

60 different countries. They invest heavily in sponsorship programs which provides for increasedawareness amongst people. The fact that Emirates Airlines does not have a hub in Abu Dhabi gives

Etihad Airways a significant edge.

American AirlinesAmerican airlines was founded in the year 1930 and is the largest airline in the world when it comes to

the total number of passengers carried in a year. They carry over 80 million passengers every year and

that was made possible owing to the fact that American Airlines is the proud owner of over 626 aircrafts

that serve 273 different cities around the world. American Airlines is also in alliance with Oneworld. In

the United States, the have five major hubs in Dallas, New York, Los Angeles, Miami and Chicago. It was

the first to launch the frequent flyers initiative. The key success factors of this airline include the size and

the innovative services offered and introduced.

PEST ANALYSIS

Political FactorsPolitical factors such as wars and terrorism has a huge impact on the airline industry owing to the fact

that tourism is directly impacted. For example, terrorist activities in Syria, USA, UK, Lebanon, Qatar and

wars in Afghanistan and Iran by the global powers have made certain regions unattractive for tourists

greatly reducing air traffic. Moreover, political instability affected business relations between the Middle

East by creating difficult for the Emirates Airlines to join any alliance such as the Oneworld.

Economical FactorsModern airports that support the latest technology is the key ingredient to a success of any airline. Total

investments by UAE when it comes to developing airports in Dubai and Abu Dhabi exceed Dh 71 billion.

These developmental programs are set to take course in the coming twenty years. The development of

said airports are bound to enhance economy, create alternative sources of revenue i.e. tourism,

increase number of tourists and air traffic. Such factors will drive the economy sky high which is what

Emirates Airlines should focus upon (Development, 2005).

Social FactorsAn increase in the world population and the population of the UAE can be co-related to an increased

number of tourists. Population is growing globally and in the UAE and that can potentially bring in more

fliers. Dubai is a multicultural place with increasing number of expatriates. The growing number ofexpatriates will ensure increase revenues for the airline firms because the expatriates will need to travel

to and from their home country. While the population is growing, viruses such as Bird Flu and other such

diseases ensure the decrease of travel to certain areas and countries, significantly impact the number of

passengers traveling every year in a negative manner.

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straightaway. Going by this assumption, the terminal size need not be as big as the other terminals in

the Dubai International Airport. A fleet of 20 Boeing 737-100s should be enough to handle the traffic

initially. If the company starts to generate revenue, the fleet size and the number of destinations can

then be increased. This fleet of 20 Boeings should cost around $32 million per piece (Airliners, 2014).

IMPLENTATION ISSUESIf Emirates Airlines opts to reduce airfares further, the profitability will decrease significantly. Emirates

Airlines is making considerable profits with the airfares as it is so coming up with a subsidiary is the

better solution. The problem is time. It will take hierarchical rethinking, changes in structure of the

organization, human resources, investments, construction period and contract. The aforementioned will

need a lot of time and effort to be implemented which would impact the overall business activities of

the Airlines itself. Emirates Airlines, as the rest of the world, is in constant battle with the global

economic recession and at a time like this, sanctioning the construction of an entirely new terminal and

introduction of a new fleet may just be very risky. In the long-term, the project can be very successfully

if implemented carefully.

CONCLUSIONWhile the airline industry is a suitable investment for current players, a new entry is unattractive

because of high costs and high number of competitors. Emirates Airlines employs the use of attractive

strategy and marketing positioning which creates a perfect defense for any competitor that may rise.

There are obstacles along the way of future growth including political and economic factors, but careful

strategizing can pave the way for continuous growth and, profit and revenue generation.

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REFERENCESAirliners. (2014, January 15). Boeing 737-100. Retrieved from Airliners:

http://www.airliners.net/aircraft-data/stats.main?id=91

Development, E. (2005). UAE Interact .Abu Dhabi: Ministry of Information and Culture in the UAE.

DuabiAirports. (2014, January 15). Fact Sheets. Retrieved from DubaiAirports:

http://dubaiairports.ae/en/media-centre/facts-figures/Pages/factsheets-reports-

statistics.aspx?id=7

El Namaki, M. S. (2006). Is this the Right Strategy?Montreal: Montreal International Centre forManagement.

Emirates. (2014, February 14).About Emirates. Retrieved from Emirates:

http://www.emirates.com/pk/english/about/about_emirates.aspx

EmiratesGroup. (2014, February 19). The Company. Retrieved from The Emirates Group:

http://www.theemiratesgroup.com/english/our-company/our-history.aspx

State, C. (2005). Qualitative Analysis of the Company's Current State.Chicago: Current State.

Thomas, S. (2011, December 4). Emirates Airlines. Retrieved from Samthomasuae:

http://samthomasuae.hubpages.com/hub/EmiratesAirlines