COURSE PROJECT STRATEGIC MANAGEMENT AND POLICY

CHOSEN COMPANY: SUBMISSION DATE: STUDENT NAME: STUDENT ID: PROFESSORS NAME: EMIRATES AIRLINES, DUBAI

UNIVERSITY OF MODERN SCIENCES

TABLE OF CONTENTS
EXECUTIVE 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 ................................................................................................................................. 9 CONCLUSION................................................................................................................................................. 9 REFERENCES ................................................................................................................................................ 10

EXECUTIVE SUMMARY
The 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 the strongest 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.

INTRODUCTION
Emirates 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).

MISSION
Emirates 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 of the cleanest and best out there with consistent value for money offered to its customers irrespective of class and destination.

OBJECTIVES
As 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 destinations beyond; Promotion of Dubai as being progressive, safe, technologically advanced and modern commercial centers in the Middle East; Display of extraordinary in-flight experience, award-winning services, fleet, safety record and global reputation; Becoming the leader in the aviation industry by focusing on the organizations professional and well-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 Communication Entertainment) Systems offer every passenger a new and interactive way to communicate, get free in-flight entertainment services and information such as weather, speed, altitude, time of arrival etc. Such services set Emirates Airlines apart from other airlines around the world (Emirates, 2014).

STRATEGIC OVERVIEW
Strategies 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 and quickly 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 led to the creation of the company. Middle East is being penetrated by Emirates as guided by their deliberate policy.

Product Development
While 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 Development
As an example, consider Emirates geographical expansion into the United States of America. This is a very typical example of market development.

Diversification
While 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 ANALYSIS
The 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

Present in an Oil Rich UAE Boasts millions of satisfied customers increasing its profits and reputation Covers over 70 different countries One of the largest airport hubs and the largest in Middle East

Weaknesses
Emirates Airlines relies heavily on transits or passengers that are moving onward High costs of maintaining the current position and market standards because of increased competition High operation because of heavy investments in growing fleet High-priced tickets No hub in Abu Dhabi International Airport which is the capital of the UAE Fairly young airline]

Opportunities
With the growth of income per capita in the UAE, number of passengers flying may increase Expansion of the airport and fleet in Dubai and the UAE Overall growth in the population globally means higher traffic eventually Dubai serves as an international hub and tourist spot which is forecasted to have increased number of tourists EXPO 2020 will bring high number of visitors to Dubai New fleet and terminal specially designed for the A380s More destinations to fly to

Threats
Competition is increasing in the Middle East Fuel costs are rising globally which can lead to even higher ticket prices Change in government policies could change the entire organization of the Emirates Airlines Rise of low cost airlines The e-ticketing system is subject to computer hacking and viruses

COMPETITORS ANALYSIS
British Airways
With over 300 planes flying to 216 destinations in 94 different countries, British Airways is ranked at the second spot in Europe. British Airways is a member of the largest alliance when it comes to the aviation industry and is also known for its technological advancements for example the introduction of touchscreens on the airplanes. British Airways was also the first airlines to introduce full flat beds onboard. These being the key success factors of the airline, however the ticket price is relatively very expensive especially if flying to Middle East and Asian countries.

Qatar Airways
Qatar Airways originated in the year 1994 and is a part of the Oneworld alliance. The fleet of over 100 aircrafts flies to over 100 international destinations across the globe. The construction of the new Doha International Airport also known as Hamad International Airport is set to include the worlds largest

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

Etihad Airways
It 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 increased awareness amongst people. The fact that Emirates Airlines does not have a hub in Abu Dhabi gives Etihad Airways a significant edge.

American Airlines
American 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 Factors
Political 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 Factors
Modern 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 Factors
An 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 of expatriates 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.

Technological Factors
The introduction of mediums where a person can communicate face to face without having to be present physically is effecting the airline industry in a negative way if one considers business trips and meetings. On the other hand e-booking system and online check-in facilities offered by Emirates Airlines reduces time spent and cost of printed tickets. These online services should be incorporated deeply into the systems of Emirates Airlines since the internet users are increasing every day and much of most of the transactions conducted happen online (State, 2005). It is safe to say that the Emirates Airlines are at their maturity stage with them growing profits at an exponential rate every year. The barriers to entry are high considering the high costs of operation and purchase which directly reduce the threat of new entrants. Aviation industry is dominated by Boeing and Airbus which indicates an increased power of buyers and intensity of rivalry between suppliers. PEST analysis clearly indicates that the aforementioned factors directly influence the total passenger traffic which is what the revenue of an airline is based on. Retaining and increasing passenger traffic is the key to success for Emirates Airlines.

KEY ISSUES AND RECOMMENDATIONS

Competition is on the rise with new entrants in the Middle East and the rise of low-fare airlines around the world. Emirates Airlines is at its maturity and offensives strategies coupled with rapid expansion should be considered. The operational costs of the airline is on the rise and will continue to go north with increasing fleet and oil costs. Investments in the R&D department could help in developing technologies to save fuel moreover, improving maintenance processes can result in reduced maintenance costs. Increased investment in machinery and technology can help reduce labor cost for example the installation of selfservice kiosks which reduces human interaction. While Emirates is the primary brand, to tackle with the low-fare airlines, Emirates Airlines need to come up with a subsidiary that would target the audience who cannot afford high-fare tickets. These customers need to be squared by Emirates since they prefer low-fare airlines. Expo 2020 will bring a lot of tourists and passengers to Dubai and to address to all those new passengers, Emirates Airlines should consider expansion to several cities across the world. In order to facilitate increased flights to different countries, an entire new terminal should be constructed at the Dubai International Airport and a possible new airport in Abu Dhabi. Fleet size should also be increased to cater to increased traffic.

ESTIMATED COSTS
Terminal 3 at Dubai International Airport took four years to complete having been announced in November 2004 and inaugurated in October 2008. The terminal can handle 47 million passengers in a year and was built with a total cost of $4.5 billion (DuabiAirports, 2014). The strategy to introduce an Emirates Airlines subsidiary to handle customers looking for low-fare travel should see another terminal built before the Expo 2020 starts to bring in passengers seeking economical travel. This terminal, given the facts regarding Terminal 3, can be completed in one year at one-third the price of Terminal 3. This owes to the fact that the fleet will be a subsidiary and will not be very popular

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 ISSUES
If 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.

CONCLUSION
While 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.

REFERENCES
Airliners. (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-reportsstatistics.aspx?id=7 El Namaki, M. S. (2006). Is this the Right Strategy? Montreal: Montreal International Centre for Management. 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