Gsbs6060 Strategic Management : Company Assessment Answers

The report reflects on the strategic management of Emirates airlines, and detailed assessment of the strategies of the company through tools which exposes the efficiency of the business. The organization’s missions and strategic aims and objectives is highlighted in the report and further the other strategic options which can be availed by the company is also reflected. The mitigating steps, policies frameworks, expectations of the interested stakeholders is also described in details. Emirates has been an exemplary organization to discuss and justify its strategic aims and objectives.

Answer:

Introduction:

The report establishes an understanding of the strategic management of the company Emirates Airline. Emirates Airline is the national airline of UAE with over 100 destinations and a massive fleet of 137 aircrafts. It is a young booming organization existing for over 25 years. Despite being very young it has become one of the most prominent and prestigious airline. The excellent business process, information and communication systems, advanced technology has earned it to become one of the top airline of Dubai. Reaching over 60 countries, its annual growth has always been over and above 20 percent (Elbanna 2013).

Organisational vision, leadership and ethics

The organization has been strategically planned with short term and long term goals and objectives which has helped to garner excellent number of passengers. The organization has never compromised on the quality of the service hence managing a vibrant growth in a short span of 25 years. Many factors had made the company to outgrow its reputation as it has been voted as the fifth best airline across the globe by Skytrax, a research consultancy of United Kingdom. Further, Emirates enjoy a competitive advantage which has enabled it maintain its brand position among rival companies in the airline industries. The foremost quality of the company to provide a safe journey, quality food and service. Emirates was one of the first airline which introduced a personalized entertainment system which has then set a benchmark for the other airlines. The comfort journey has been completely overhauled by the company for passengers to have a newer experience with comfortable seats, ICE systems, LCD screens, laptop power outlets on seats and many other facilities. Thus the company has earned a greater competitive advantage in the market and in the industry too (Squalli 2014). Emirates airline is at the booming stage where the companies has grounded its strong hold in the airline industry to give a cut throat competition to the other rivalries in the industry. Fostering a constant growth, the company has excelled in managing its exigencies more promptly and reinforced human resource has been a compelling force behind its success.

Goals, Values and Performances

The annual growth of Emirates has never been lesser than 20 percent in the period of 25 years since its inception. The annual report of Emirates highlights 21.2 million passengers and 1.3 million of cargo and thrusts on the fact that the company has increase its passengers to over one million in order to incur profit (Squalli 2014). The company aims for providing one of the best services emphasizing over quality over quantity. This aim will flourish its growth and propel the density of passengers, cargo and aircraft indirectly. However, the company has accounted over 40 percent of the movements of the flights operating in and out of the Dubai international airport. In the financial year of 2014-15, the company has witnessed revenue of over $24.2 billion, thereby incrementing 7.5 percent over the previous year revenues. The passengers has also grew over 11 percent in this period. The company targets to grow more than 20 percent every year. The cargo has also been improved over this period of time thus accounting for 5.6% which is targeted to further jump to over 10 percent in a phased manner (Redpath, O'Connell and Warnock-Smith 2017). The profits of the airline company which rose to over 38.3 % in the backdrop of low oil prices and strengthened US dollar (Squalli 2014).

Critical evaluation of the components of current organizational strategy

The company targets to increase its profits every year thus doubling it gradually. Increasing the passenger seats, advanced services and safe journey has been the major driver. Due to frequent air accidents, the airline has been monitoring its operations more proactively to avoid any crisis which can trigger issues for the company. Accounting for seventh largest airline in terms of international passengers across the globe, the airline has immense potential to in terms of both passengers and freight. Emirates stands at the pedestal in the Middle East and have tapped major market in the airline business. Increasing demand for air travel in Middle East, Africa and Asia, the airline have expanded exponentially to fulfil the demand of the thus availing an airport which can be used for over 24 hours a day.

Factors affecting the strategic aims of organizational strategy

Political factors- Due to Gulf war pre-existing in the Middle East, Emirates experienced a downturn of the competitors while Emirates sustained to fly during the last few days of the war. Further, the Middle East has been haven of internal conflicts and crisis which directly impacts the business operating in the gulf region (Lasserre 2017).

Economic factors- The economies of scale plays an important role to propel the business, which can be done to expand. Emirates build the largest floor space at a whooping cost $4.5bn, Terminal 3 which is the largest building in the world. This helps the business to expand and fulfill the demand of the increasing demand of the passengers and encourage freight movement.

Globalization- In a globalized world, it is important for the company to cut across the cross cultural barriers and meet the demands from nook and corner of the world (Stacey 2007). Globalization has fostered greater mobility and communication which has enhanced the growth of Emirates as there has been rapid rise of mobility of the people throughout both domestic as well as international fronts.  

Innovation- Innovation plays a vital role to attract new customers and retain the old one. It helps in regaining the diminishing popularity of the business and adds new interest among the passengers. It is important for the business to invest and conduct research and development for encouraging innovation. Emirates was the first to bring innovation in the passenger seats by bringing personalized entertainment systems which helped in building the brand image and position in the market.   

Analysis of the Strategic aims and objectives

Environmental analysis- The environment forms a crucial aspect which is influences the operation of organization greatly. The managers need to be aware of the dynamic environment and make decisions accordingly. Emirates airline operates in the Middle East which has been a storehouse of the rich natural resources and massive amount of source to extract fuel for airlines. Thus, it acts as a facilitative factor for the company to grow and sustain for a longer period time and meet urgent demands in the short period.

Industrial analysis- UAE was a fishing village at the southern part of the Arabian Gulf which has now grown to become one of the leading trade centre. The business have also grown manifold over years thus the due to increasing economic and industrial growth of the region.

Industrial Analysis through Porter’s five forces Analysis  

Threat of new entrants- In an intense level of competition, allows new firms to enter into the market. Emirates exploits the market by acquiring major market share and occupying the highest echelons in the airline business. Despite enjoying the topmost ranks in the business the company, the company is vulnerable to the emerging new entrants which has the potential to exploit the potential. However, maintaining a highest quality like that Emirates is difficult as it is regarded as the leading airline firm in Dubai. The entry of the new comers in the airline business is not easy as the sector requires huge investment in aircraft, human resource, license and many other legal and political regulations make the entry difficult and time consuming. Emirates being at the top airline industry it can maintain its business and profit through consistent planning and executing its strategies properly.

Rivalry among established companies – Emirates faces a considerable amount of struggle with that of competitors like Eithad Airways, QANTAS and others. With the increasing demand of the passengers, it becomes essential for the Emirates to tackle the demand strategically and compete against its rivals with effective strategy to tap the potential through competitive prices, discounts, attractive meals at affordable prices. Presence of domestic as well as international customers, extent of the exit barriers neutralize the effect of the intense competition among the rivalries.

Bargaining power of buyers- The bargaining power of customers in booking tickets is very less since t is based on the demand of the customers. Due to rapid growth of globalization the bargaining power of the customers has not been able to influence the pricing strategy. Further, Emirates has maintained the quality of the service very high and standard for which it has to maintain and incur the expenses from its respective customers (Nair et al. 2013). Business class have a wider range of services for which the customers has to pay a higher price for luxury services. Emirates is known for its brand position due to which customers are willing to pay any price for the lavish and luxurious style. However, in case when the demand is very high during holidays, Airline often tend to follow a surge pricing strategy. These reduce thee bargaining power of the customers.

Bargaining power of suppliers- The factor inputs like the fuel whose prices have plummeted in the recent years have propelled the business (Porter 1980). Due to lower costs incurred in fuels it has been a boon for the industry. Historically, Dubai has been a storehouse of natural resources hence abundance of the oil and natural resources has also been beneficial for the company. Gulf has attracted a plenty of human resources from the domestic as well internationally from South Asian countries like India. These resources often migrate due to attractive opportunities and benefits and being a top brand, many factor inputs like labor and capital are easily accessible for the organization. The policies of the business have witnessed a vibrant growth which has been a driving force behind the business.

Substitute products- Emirates brand position in the market has become a prominent and well known product and alternatives available is hard to match the service offered by the company. The expertise, human resource team, cabin crew members are highly maintained which has actually been a benchmark for many rivalries. Thus the superiority enjoyed by the company cannot be has made the other airlines like Eithad airways to upgrade its services.  

Assessment and expectations of the stakeholders

Managing stakeholders and retaining them is important as they are expecting constant returns for their investments made in the company. The stakeholder expect to know the company’s annual, quarter, as well as monthly profits, the adequate returns on the investment made in the company. A greater say in the management of the company enables the organization to retain them more promptly. They need to be well informed of the decisions taken by the organization on the crucial issues which eases the decision making process (Johnson, Scholes and Whittington 2008). The policies and framework of the company should be well defined, the financial targets to achieve, the strategic management of the company to tap the potential of the market when the demand is skyrocketing should be further organized and intimated with them periodically. Emirates has been publishing reports of the performance of the company regularly to keep the investors, shareholders, credit rating companies and other interested parties well informed about its mitigating steps and constant growth and turnover. Structural management of the company is vital for the business to tackle crisis which crop up frequently. With the rising carbon footprint due to the massive pollution and emission released by the airline has garnered attention from many international organizations about the efforts to manage environmental hazards like air pollution created by the airline organization. Emirates to comply the emission norms have published its Environmental report in accordance with the Global Reporting Initiative (GRI) following the G3 principles of materiality, stakeholder inclusiveness, sustainability context and completeness thus making the whole framework of the report credible. A detailed analysis of the fuel efficiency, noise performance, energy procurement, water efficiency, water management, green infrastructure has been presented. Emirates stakeholders are well informed of the detailed information of all the basic operations of the business through this report which ensures the due interests of the stakeholders are maintained which enhances the sustainability of the business and retain the interests of the investors. Compliance to the environmental norms in the backdrop of rising temperatures, climate change, global warming and other external costs bear by the world, restores an innate confidence in the stake holders which is quintessential for the business to grow and flourish exponentially.

Corporate Strategy of Emirates

The corporate strategy as laid down by the Emirates business model, the organization believes in the commitment to the true international commitment and open skies. The company recognizes open global economy is important for free and fair trade, fuller employment and economic growth (Whittington 2001). Open market is essential to ensure effective liberalization of the economies. Dubai has over 120 scheduled international airlines and Emirates strives consistently to cater to the demands of its most important stakeholder- customers. Emirates has grown over the years to become the largest supplier of ground handling, flight catering in the Middle East, advanced IT solutions for booking tickets conveniently and instantly, instant refund mechanism in cancellation of the journey, safe cargo and travel services and latest technology for expediting the process of reaching the customers in a phased and organized manner to simplify the whole process to the customers (Christensen 2013). Emirates aims to protect the customer’s safety, staff and assets through an incessant commitment which a customer is looking for amidst the recent concerns where frequency of airline accidents has been surging in the recent years. Emirates consider its interests and fulfillment of the interests of the customers as of paramount importance and as a personal responsibility. This is ensured through proper recruitment process to select candidates of high caliber and train the existing staff adequately (Kumar and Steenkamp 2013).

Organization strategic position and progress towards its strategy

Emirates is being strategically managed by the Chairman and the CEO Sheikh Ahmed bin Al Maktoum. The President of Emirates Airline is Mr. Tim Clark and the President Group of services is Mr. Gary Chapman and both of them is supported by a senior management team, who are responsible to manage the several business units in proper synchronization with the larger goals and objectives of the organization. The strategic position of Emirates is based on five corporate values of service excellence, innovation, people, financial strength and safety. Emirates is moving towards its goal by implementing its targets and moving towards achieving its strategy on these foundation (Mintzberg 2007). The service excellence strategy has enabled the company to deliver products and service of higher quality and secure enthusiasm of the customers by plying on the innovation in its strategies. The innovation in its strategies has fostered to stand as a true market leader in providing latest products through technological improvements so as to integrate the needs of the customers in its policies.

This has enabled to move forward consistently and mark immense growth in profits which has been beneficial for the company in the long term. Keeping the people in the nucleus while framing its current and long term strategy through efficient recruitment process, training and encouraging teamwork has enabled the company to delve into the desires and demands of the company effectively. This has been a major success for the people. The loyalty and commitment garnered from the people has been quintessential for the airline to grow manifold. The financial strength of the business has been achieved by determined selling of the products and services, meeting the emergency situations in case of conflicts, which has given a due fillip to the business. The finance and budget management of the company and its proper integration with its objectives has been efficient to fulfill the needs of the goals. Safety is the foremost priority of the business as well as the customers which been a centrifugal force to in binding the business effectively. Undoubtedly the organization has been successful in achieving the required targets in the designated time frame which has often allowed the company to overshoot its targets (Kim, W.C. and Mauborgne 2014). The creativity in managing the diverse emergencies has made the human resource also efficient where every crisis is taken as an opportunity to excel and develop advanced solutions for smoothening the business process and ironing out the issues adequately. The dedicated team of Emirates have also been actively participating through online media and advertisement, advanced grievance redressal mechanism to attend to the queries of the customers which enhances establishes a direct one to one communication with the customers, sorting queries instantly and robust feedback mechanism has helped the company to frame relevant strategy for the company. Fixing the loopholes and upgrade the services according to the suitability of the customers has enabled the company to meets its objectives more efficiently. Communication of the overall strategy to the human resource team has also instill a true spirit to achieve its targets more effectively (Christensen 2013).

Strategic option that can meet the revised strategic position

The strategic options which Emirates can deploy to meet its goals and objectives of the through framing of the better growth strategies like market development and product development. Market development is necessary to create effective demand in the lean season. Air travel has become cheaper and customer are looking for cheaper services. Emirates needs to come up with cheaper services to tap the potential who are willing to pay affordable amount to the other airlines. The growing middle class who are now opting for the travelling through air need to be catered through effective pricing strategy (Sundarakani, Abdul Razzak and Manikandan 2018). The services can be managed according to the services yet greater mobility among the people will not only popularize the company thus propelling its financial goals. The services can be diversified to attract newer customers, for example in case of crisis which has been frequent in the Middle East, the mobility of emergencies supplies should be met as a foremost priority to also cater the welfare of the people in the remote location. In recent years, Middle East has been facing various issues and company should deploy effective strategy to maintain the peace in the region as the constant conflict in the region can hamper the business greatly. Offering employment to the unemployed youth who seems more drawn towards extremism due to lack of employment opportunities can be further enhanced to tackle the situation. A peaceful environment is necessary to expand and flourish the airline in different parts of the region. Building business in the nearby countries and gradually expanding is quintessential considering the rising demand of the air travel among the public at large. Merger and alliances with other subsidiary units can also be an effective strategy further investing into greener technology can be deployed to combat the increasing carbon emissions (Ahlstrand, Lampel and Mintzberg 2001). The airports are now turning into zero emission grounds due to recent concerns of air pollution which has been considered as a major killer. The recycling of wastes, safe disposal and waste management, proper tackling of wastes and tapping the potential of green energy like solar powered airports which has been popular in the south Asian countries like India should be integrated to cut costs on fossil fuels. Resorting to renewable sources of energy has the encouraged the sustainability of the business, which has enabled the company to grow in the long term. The greener technology has not only beneficial for the company economically but also aims to assure the company is growing in compliance to the environmental norms and policies.

Conclusion:

The report has delved deeper into the strategies of Emirates reflecting on the corporate strategy and strategic management to ensure a sustainable and inclusive business. The challenges of the Emirates can be met adequately through establishing proper channels of communication and deployment of an integrated approach, proper framework of the corporate social responsibility, and improved goods and services. Periodic training of the human resource, effective supervision and control and adequate management of the team through effective leadership skills by the leaders is essential to synchronized growth among all quarters of the business. The customer needs and management of the services through improvised IT solutions has enabled to satisfy the needs of the stakeholders adequately. It is also necessary to ensure inclusive growth while the company is growing exponentially. Compliance to global norms in airline business and informed decision making process is necessary to inculcate right spirit and vigor in the business. Strategic management of the company is not only essential for the company to grow manifold but also maintain its quality and standards in providing goods and services to its stakeholders. The revamping of strategies according the dynamic needs of the market and industry is also an essential component to inculcate a right business strategy. Emirates have been exemplary in managing the business strategically while adhering the crucial factors like political, environmental, technological and social.

References:

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Elbanna, S., 2013. Processes and impacts of strategic management: Evidence from the public sector in the United Arab Emirates. International Journal of Public Administration, 36(6), pp.426-439.

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