Environmental Analysis Of The Strategies Used By Emirates Marketing Essay

Introduction

Emirate Airline is trying to use strategies that will enhance their competitive advantage in the market. Accordingly, the corporate strategy and management of a business describes the process of directing and leading the business operations within the company by exhausting their available resources extensively in order to attain the organizational objectives. This includes business plan conceptualization and monitoring the implementation of the efficiency and effectiveness of the strategy. The company considers unique strategic management to identify and enumerate the aims of the company so as to come up with sound business practices to gain profit and satisfy the needs and demands of the target market.

The Emirates Group is a highly profitable business with a turnover of approximately US$ 12 billion and over 40,000 employees. Emirates airlines global network flies to over 100 destinations across 6 continents, operating a modern fleet of over 130 wide-bodied aircraft. Today the Airline has orders worth over US$ 58 billion for 170 more of the latest aircraft, with plans to operate many more destinations in the months and years ahead. They employ high quality people of over 150 nationalities. In addition to lifestyle and tax free salary benefits, the Emirates Group also offers professional development opportunities to help employees develop new skills and grow their careers successfully.

Background of the company

Emirates Airline was founded in 1985 by the government of Dubai. The airline industry started its operations with flights to Mumbai and Karachi and then followed by Delhi.  Today the industry is a subsidiary of The Emirates Groups which is headquartered in Dubai, UAE.  The company has been provided with different recognitions and in 2007 Emirates was noted to be the eight-largest airline in the global market in terms of international passengers being carried and the fifth-largest in the global market with scheduled international passenger-kilometers flown. Emirates are also known for being one of the only five airline industries that operates in the entire wide-body aircraft feel. Emirates Airlines is one of the few airlines, which hardly felt the economic, and aviation downturn of the last few years. This is due to the great marketing efforts to promote Dubai as a tourist destination with attractive tax-free shopping.

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Since Emirates started its business operations, they are able to gain competitive position and advantage in the market place. Since its launch in 1985, the airline has received more than 250 international awards for excellence. The success of the company can also be attributed with their marketing and business strategies which are able to compete and stay competitive in the airline market. Emirates Airlines is committed to achieve its mission, namely offering consistently high-quality value-for-money service and to be the best airline on all of its routes.

Strategy Analysis

The management of Emirates Airlines has always been constant to look out with its rival companies and their overall status as well as events internally and externally. Analysis of the status of the strategies and approaches as well as resources of the business is very important as it enables the company to determine how they will be able to sustain competitive advantage in the years to come. This also enables them to determine their strengths and how they will maximize their strengths and eliminates their weaknesses (2004).

Emirates Airlines has been considered to be at the forefront of industrial aviation throughout the years. The company successfully navigates through the company’s different highs and lows. Having flights to more than different cities all over the world, Emirates Airlines corporate strategy gives importance with the diversity of their stakeholders, specifically with their clients. As the company is committed with the diversity of their clients, the diversification management approach of the company enables them to ensure that clients and communities receive excellent service provided by passionate and dedicated staffs and employees.

Emirates Airlines are in the business to provide the passengers with sage, dependable and most of all friendly transportation to their valued clients along with other relevant industrial services. The current approach of Emirates Airliners is to put itself as an airline industry leader with a focus strategy in the airline industry. The management of Emirates Airlines expands their business to reach more clients which enable them to be more profitable (1997).

The marketing approach of Emirates Airline is also considered as a customer-oriented approach. The management has been able to cater each of various types of clients. They have been able to implement routes to a broader range of destination all over the world. It can be said that the strategy of Emirates Airlines is a good strategy and it enables the company to provide total commitment and support organizational operations.  Through this strategy, Emirates Airlines outperform most of their competitors in the airline industry. Through the strategy used by the Emirates Airlines, they have been able to gain market share and improved the overall demand for air travel among clients (1994).

External environment (PESTEL Analysis)

PESTLE analysis is a useful tool for understanding the industry situation as a whole and is often used in conjunction with SWOT analysis to assess the situation of an individual business in this case emirates airlines.

Political factors

The political environment refers to how the government policies like Current taxation policy, Future taxation policy the current and future political support, Grants, funding and initiatives, Trade bodies, Effect of wars or worsening relations with particular countries has effect on emirates operations. The political environment has little or no effect on emirates as the Government of the United Arab Emirates founded emirates Airlines. Emirates Airline plays a major role in helping Dubai government achieve its objective of promoting the city as a preferred tourist destination.

Emirates Airline has been protected by the regulations and policies formulated by the Dubai government and other countries where they are operating. Since Dubai government is the sole owner of the industry the company has been able to adhere to the policies given by each government to make sure the company will be able to conduct business operations successfully and effectively. The company also formulates their own protection strategies against any governmental restrictions and limitations.

Furthermore, any airline that has been created with government cash has an advantage over private sectors. Indeed oil money that is making this competitor so strong and the government of Dubai goes out of its way to make sure Emirates is successful. (Emirates annual report 2008)

Emirates Airline has been very fortunate during the 2000s and beyond. The political scene in the region has been favorable because most countries in the Asian Pacific have been making agreements that facilitate better trade between countries especially in relation to the aviation sector. These agreements between themselves and other countries like the United States and the European continent have opened up Emirates to the world.

Economic Factors

Economic conditions affect how easy or how difficult it is to be successful and profitable at any time because they affect both capital availability and cost and demand. If demand is buyout and the cost of capital is low, it will be attractive for firms to invest and grow with expectations of being profitable. In opposite circumstances firms might find that profitability throughout the industry is low. The timing and relative success of particular strategies can be influences by economic conditions. When the economy, as a whole or certain sectors of the economy, are growing, demand may exist for a product or service which would not be in demand in more depressed circumstances.

Emirates airline is one of the world’s largest and competitive industry in terms of airline. Emirates airline is said to have a stable and successful economic stability. In spite of many dangers that they encounter in different parts of the world, the management of emirates airline sees to it that they would be able to surpass such struggles and strives to have a better economic condition. Unlike many other airlines, Emirates Airlines is one of the few airlines, which hardly felt the economic and aviation downturn of the last few years. This is due to the great marketing efforts to promote Dubai as a tourist destination with attractive tax-free shopping. Dubai is known as the City of Gold, known for its commerce and tourism in the Middle East. From shopping, to clean white sand beaches, to the dozens of luxury hotels including the Burj Al Arab the world’s first seven star hotel. Emirates Airlines also promotes its hub in Dubai as the best geographically positioned connecting point between Europe and Asia/Australia. Dubai is also known for its trade, which attracts more cargo. This is why Emirates Airlines only operates wide body aircraft to be able to accommodate the increasing international and regional growing cargo market demand.

The airline’s profits rose every year. Emirates Airlines has announced a record net profit of US $429 million for the financial year 2003/20004. This represents a 73.5 percent improvement over last year’s net profit. The airline’s revenue also reached a best ever $3.6 billion, which is up to 37 per cent from last year. Emirates Airlines carried 10.4 million passengers during the financial year, an increase of almost two million passengers or 23 per cent more than the year before, from this we can see that emirates airline is doing well (emirates annual report 2008).

Social factors

The socio-cultural environment encapsulates demand and tastes, which vary with fashion and disposable income and general changes can again provide both opportunities and threats for particular companies. Over-time most products change from being a novelty to a situation of market saturation and as this happens pricing and promotion strategies have to change. Emirates Airlines should be aware of demographics changes as the structure of the population by ages, affluence, regions and numbers working and so on can have an important bearing on demand as a whole and on demand for particular products and services. Culture plays an important role in the Flight Operation. The crew is supposed to be aware of the culture of the passengers and should provide the services to the customer’s delight. For example, the crew in flight to Saudi should be very careful before offering liquor to the customers.

Similarly, the crew should not offend the Muslim passengers during the holy month of Ramadan by offering them snacks/drinks. Hence, during an interruption recovery exercise, it is important to place the right crew at the right place.

Threats to existing products might be increasing, opportunities for differentiation and market segmentation might be emerging. Emirates airline is being affected by the situation of the society in which they are operating. Along with this, emirates airline tries harder to make sure that each society is given equal chances to take advantage of the resources given by the organization. The company adheres to having good reputation and relations in the society that they belong (2004).

Technological factors

Technology is widely recognised by various literatures on strategic management, as part of the Emirates Airlines it is used for the creation of competitive advantage. The emergence of information technology and internet affects how emirates airline has been operating in the past years. The company adopts different IT/IS systems and use internet to reach their customer all over the world and to know the latest trends in the global business. The company also uses facilities which helps them improved their productions and operations. However, technology external to the industry can also be captured and used, and this can be influenced by government support and encouragement.

Dubai is keeping up with the bleeding edge technology and providing the required infrastructure to its residents. Dubai Internet City, which is developed by Dubai government in order to promote e-commerce in Dubai, had a tremendous revenue growth in past. It was more than 100 percent during the first 3 years and this year alone the rise is expected to be more than 65 percent.

New technology could provide a useful input, in aviation service industries, more technological advances have been made since the early days. Today many new aircrafts have been introduced by Airbus and Boeing with great entertainment facilities and now operates one of the youngest and most modern fleets.

Environmental factors

The environment is becoming of great importance now days as the concern of global warming keeps rising. Emirates are concerned about the level of pollution created by their large fleet of aircrafts, Recycling considerations of items used on board their aircrafts. For example, on every flight emirates recycles head phones used instead of disposing them which might pollute the environment. Emirates airline develops environmental protection strategies to adhere to worldwide need. They are joining the environmental protection campaign by sponsoring some organizations having this type of advocacy.

Emirates are concerned about the attitudes to the environment from the government, media, and consumers. Current and future environmental legislative changes, it is known fact that Airline Companies need to adopt strategies that provide them with a good corporate image. For instance, Emirates takes part in environmental sustainability projects such as tree planting and exercises extra caution in terms of the quantity of waste that they send to the landfill. This is something that seems to be taking a lot of attention from Airline companies. The issue of recycling is also taking up a lot of precedence in the Airline industry. Emirates are offering recyclable cutlery to their clients in order to further this campaign. All in all, it should be noted that most environmental campaigns in the Airline industry are part of the corporate responsibility strategy within a specific Airline Company.

Environmental protection is one of the most essential aspects to be considered by many businesses. All organizations should consider the environment in their actions or there is a possibility of facing problems within the society.

Legal factors

In the past, most governments within the Asian Pacific used to operate under a paternal government policy. Governments felt that they had to protect airlines against external factors, but after the recent policy changes, Airline industries have now been opened up to competition and this is the reason why air carriers like Emirates have grown. They can now follow the rules of economics to sustain competitive advantage instead of worrying about government hindrances. This means that there are less legal hitches when running operation in the region.

The policies and regulations provided by the government, both local and international allow the company to be more cautious in their business actions. To avoid problems in line with their business practice, Emirates sees to it that all their actions are legal and aspired to highest standards. Emirates Airlines needs to be concerned about Legislation in areas such as employment, competition and health & safety Future legislation changes, Changes in law, Trading policies, Regulatory bodies.

Environmental analysis of the strategies used by Emirates Airline

Strength

Emirates have adopted a very unique business model. They decided to focus on diversified market and by considering and entering the cargo shipping which led to its current position as one of the top global brands. The management is always looking for ways of coping with their current situation. This is the reason why the Airline has been able to tackle some of the global economic problems that have attacked the aviation industry.

The Company was given the World Airline Entertainment Association Award for the third year running. Emirates are effective at including technology in its customer care. The Company had an in-flight entertainment system during the world cup in 2006. It was able to give all its passengers access to the matches. Those who may not have been interested in watching the entire match were give updates. It has gained a wide esteem for the inclusion of email services for all its passengers. It also allows live text news for customers in their aircrafts. The Company was also the first to introduce a Digital Widescreen System in 2005. This was something that has not been included in other Airline Companies of the world.

Weakness

Not all of diversification and approach have been successful and this can be considered as weaknesses of the company. Emirates Airlines is quite reputable in the Asian Pacific Continent. The company has marketed itself very well in the region and can be seen from the table below, it is one of the most successful companies in the region.

Airline Market Share

Emirates 39%

Air India 2%

Gulf Air 8%

Qatar Airways 13%

Sri Lankan Airlines 4%

Singapore Airlines 26%

Thai Airways 8%

The company’s market share is analyzed in other regions of the world, such positive and encouraging results were not seen. Some regions such Australia has not embraced the services and benefits that come with using an Emirates Airline Aircraft. Emirates need to improve its performance in the global market. Most successful companies are those ones that adopt a global dimension and decide to spread their success to other regions of the world.

Additionally, Emirates is rather conservative about the issue of Labor Unions. This could be the reason why the company has shied away from diversifying its Airline operations. They fear high labor costs and this is coming in the way of its improvements. The Company needs to disregard some of the labor cost that come with expansion because these costs will simply be offset by the higher rate of returns that will be achieved by the company after the passage of time.

Opportunities

The basis for long term competitiveness is the ability to develop continuously new generations of more advanced airline and aviation services. Therefore one of the company’s opportunities is to tap into more markets as a result of the innovations being introduced in the aviation. Localized capabilities enabling or even enhancing such co-operation will always make a difference when it comes to first-mover advantages.

The opportunity to penetrate new growth markets where internet adoption still has room to go, Leveraging Emirates Airline’s infrastructure business to get first choice and stronger position against rivals is also an opportunity. They also have the opportunity to get ahead of their rival companies with the trend of considering the internet market also shows cases new opportunities for the company. The Asian Pacific region has an association for its airline companies. During the year 2006, the association registered an overall increase in passenger traffic of about twenty three percent. It was also found that in the year 2004, the overall traffic in the region grew by 24%.

China provides the highest potential for growth and profits. The Asian Pacific Region found that traffic to and from this country had reached all time high. Such positive figures indicate that there is a huge airline market in China and that the Emirates Airline needs to expand some of its operations to this country. It is also crucial from this company to understand that it can boost its performance in that country by making their services even better by marketing themselves aggressively within China.

Threats

Rival companies are major threats to the business. Emirates Airline inability to keep up with innovations and recognize its demand creates a threat for them. The legal and political environment in the countries where they operate in could potentially affect the business negatively. These risks can be used by their rival companies to their advantage and take Emirates Airline by surprise, with the latter realizing too late that they are not the industry leader anymore.

Overall air transport within the Asian Pacific region has improved. While this can be seen as an opportunity for attracting more clients to the region, it can also be seen as a threat. The positive growth means that more and more Airlines are improving their positions within the industry. It is very likely that Emirates will be facing stiff competition within the market. Emirates have been dominating market shares in the Middle and Far East. This position could be a problem if the company relaxes.

Emirates Airline has to deal with an increase number of competitors in Dubai. This is because they have realized how profitable the route is. Such competition could potentially lead to diminished business. Emirates have adopted a competitive strategy. The company believes that it is quite possible to still soar above the rest even when there are other players in the market. Emirates encourage more competition because this means that overall standards in the industry will increase and there will be greater acknowledgment of good performers within the industry.