case study of Emirates Assignment

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How effective is low cost strategy in theairline industry? A critical analysis ofRyan air and Emirates
ACKNOWLEDGEMENTI would like to deliver sincere thanks to my mentor who provided appropriate guidelineto me for completion of current dissertation. I would also like say thanks to my colleague andother team members for their support in data collection. Their contribution made it possible forme accumulate data and analyze the same in the light of research aim.2
ABSTRACTCosting is the most important element for any organization as it determine theprofitability. It decides the profit to be derived from sales turnover of the corporation.Implementation of low cost strategy an organization can easily cope up with changing scenarioand create competitive edge in the marketplace. The main aim of current study is to analyze theeffectiveness of low strategy. In this regards two corporations such as Emirates and Ryan airhave been considered. The objectives of study consists of different cost strategies adopted by twoorganizations under study. Similarly, relationship between low cost strategy and growth ofairline industry has been considered for collecting large amount of data in the direction of aim ofthe study.In order to conduct study different tools and techniques have been used for collection andanalysis of data. Here, quantitative study has been done along with deductive approach. Also,both primary and secondary data have been collected in the light of research aim and objectives.In addition to this, descriptive research design has been applied in the research for presenting theinformation in accurate manner. Furthermore, regression analysis has been used to analysis thecollected data so as to produce valid outcome and reach at the aim of the study.Collected data reveals that for Emirates airline low cost strategy does not have anyimpact on price of products and services. It is because low cost strategy tend to reduce operatingcost but not the prices. However, management can bring modification in the pricing structureaccording the requirement. On the contrary, for Ryan air low cost strategy has direct impact onprices of services. Here, the main motive of corporation is to offer services to all types ofcorporation. Owing to this, low cost of operation as well as marketing is kept. Also, companykeep same type of plane so as to reduce extra cost of maintenance and training.3
TABLE OF CONTENTSCHPATER 1: introduction...............................................................................................................71.1 Background of research.........................................................................................................71.2 Statement of problem.............................................................................................................91.3 Rationale of research............................................................................................................101.4 research questions................................................................................................................101.5 Research aim and objectives................................................................................................101.6 Research methodology.........................................................................................................111.7 Structure of research...........................................................................................................11CHAPTER 2: LITERATURE REVIEW.......................................................................................142.1 Introduction..........................................................................................................................142.2 Cost strategies adopted by the businesses in Airline industry.............................................142.3 Importance of low cost strategy for Emirates and Ryan air.................................................172.4 Relationship between low cost strategy and growth of Emirates and Ryan air...................20CHAPTER 3: SCOPE OF RESEARCH.......................................................................................233.1 Introduction..........................................................................................................................233.2 Operations of the sector.......................................................................................................233.3 Performance of sector..........................................................................................................233.4 Major challenges facing the sectors.....................................................................................243.5 Current issues in context of the sector.................................................................................243.6 Justification of the choice of the firm..................................................................................253.7 Conclusion...........................................................................................................................25CHAPTER 4: RESESEARCH METHODOLOGY......................................................................264.1 Introduction..........................................................................................................................264.2 Research philosophy............................................................................................................264.3 Research design...................................................................................................................274.4 Research approach..............................................................................................................274.5 Data collection....................................................................................................................284.6 Research methods................................................................................................................284.7 Ethical consideration............................................................................................................294.8 Sampling..............................................................................................................................294
4.9 Data analysis........................................................................................................................304.10 Validity and reliability.......................................................................................................304.11 Conclusion.........................................................................................................................31CHAPTER 5: DATA ANALYSIS................................................................................................325.1 Introduction..........................................................................................................................325.2 Discussion of the sample characteristics..............................................................................325.3 Research questions...............................................................................................................345.4 Conclusion...........................................................................................................................45CHAPTER 6: CONCLUSION AND RECOMMENDATIONS...................................................466.1 Introduction..........................................................................................................................466.2 Review of research objectives.............................................................................................466.3 Findings and answer to the research questions....................................................................466.4 Recommendations................................................................................................................47REFERENCES..............................................................................................................................51APPENDIX: QUESTIONNAIRE.................................................................................................545
Illustration IndexIllustration 1: Profitability of leading airline groups for 2014.........................................................8Illustration 2: Cost strategies.........................................................................................................14Index of TablesTable 1: Ryanair.............................................................................................................................32Table 2: Emirates Airline...............................................................................................................33Table 3: Emirates...........................................................................................................................34Table 4: Ryan air............................................................................................................................34Table 5: Emirates...........................................................................................................................35Table 6: Ryan air............................................................................................................................35Table 7: Emirates...........................................................................................................................35Table 8: Ryan air............................................................................................................................36Table 9: Emirates...........................................................................................................................36Table 10: Ryan air..........................................................................................................................37Table 11: Emirates.........................................................................................................................37Table 12: Ryan air..........................................................................................................................37Table 13: Emirates.........................................................................................................................38Table 14: Ryanair...........................................................................................................................38Table 15: Emirates.........................................................................................................................39Table 16: Ryanair...........................................................................................................................39Table 17: Emirates.........................................................................................................................39Table 18: Ryan air..........................................................................................................................406
CHPATER 1: INTRODUCTION1.1 Background of researchCosting is the most important element for any organization as it determine theprofitability. It decides the profit to be derived from sales turnover of the corporation. Withimplementation of low cost strategy an organization can easily cope up with changing scenarioand create competitive edge in the marketplace. The report under investigation is based onairline industry of of UK where case study of two corporations Emirates and Ryan air isconsidered. Here, Ryan air is operating in Dublin, London Stansted airports. It provides low costservices to large number of customers. Furthermore, Ryan air operates in 30 countries in Europeand Morocco in Africa.On the other hand, Emirates is the largest airline in the Middle East and has operation in144 cities in 78 countries across six continents. Airline industry is growing sector due toincreasing demand of air travel. The airline industry is contributing to gross domestic product ofUK by£51.966 billion. This in turn account for 3.4% of UK' economy, Furthermore, aviationindustry also provides huge total 200000 job in airline, 327000 aerospace and 4330000 jobs forairports and ground services (UK AVIATION CONTRIBUTING £52 BILLION,2013Accordingto this, Emirates announced its profitability of 1.5 billion US dollars. Furthermore, Ryana airgenerated profit of 1.1 billion US dollars in the same years.From the following corporations Emirates is the second corporation which is generatinghigh net profitability (Leading airline groups worldwide in 2014, based on net profit (in billionU.S. Dollars).2015). However, the pricing strategies of air line industry are the most prominentaspect to increase the sales turnover and meet demand of all types of customers in an effectualmanner. At present most of the airline corporations offers services at higher prices due toincreased prices of fuel and other maintenance charges. It forces management to charge highprices in order to recover cost. On the other hand, airline industry of UK is facing several issuessuch as European debt crisis, high fuel prices and continual cost pressure.7
(Source:Leading airline groups worldwide in 2014, based on net profit (in billion U.S. Dollars),2015)These factors are responsible for high cost for the services that are being rendered tocustomers. Owing to this, industry is also facing problem in meeting high demand of air travel.Furthermore, the topic under investigation focuses on benefits of low cost strategy for airlineindustry of UK.1.2 Statement of problemCost is the particular is the most important element for a product as company incurs thesame in order to produce that product and services. It helps to recover the direct as well asindirect expenses that have been incurred at the time of production of product. In the current erathe price of crude oil and other maintenance charges for the industry are keep on increasing.Owing to this, management of corporations are not able to lower done the price. This in resultdecreases the overall profitability. However, demand of air travel is keep on increasing alongwith increasing cost of airline industry like airport cost, fuel, staff as well as in-flight services.8Illustration1: Profitability of leading airline groups for 2014
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