Innovation and Management Decision Making [Etihad Airways]

Running head: INNOVATION AND MANAGEMENT DECISION MAKING
Innovation and Management Decision Making
[Etihad Airways]
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Introduction
Innovation and management decision making skills are two different concepts but have
interrelation to each other just like a cause-effect process (Kogan et al. 2017). In the highlighted
section, Innovation is the cause which is when used by the leaders in the different organizational
practices it produces an effect that inspires the management of decision making. Leadership can
be defined as a set of ideal characteristics which can be used for making innovative and strategic
decisions (Northouse 2015). Leadership is very important as it helps to make innovative
decisions which are very necessary to have a sustained business.
The main purpose of this assignment is to analyse the importance of equity alliance in
regards to the Etihad Airways. Moreover, the paper also recommends few solutions that could
help the Etihad Airways to flourish its business by being with the equity alliance itself.
What actions should the new CEO undertake?
It has been the strengths of the Etihad Airways that it has successfully imitated the
footsteps of Emirates in two ways such as by proving a few long-haul jets and leveraging the
location of Abu Dhabi International Airport (Etihad Global 2018). These two factors, in
particular, the location-specific facts have helped the company to prosper. The location is one of
the favorite stopping points in the Middle East countries for air traffic between Australasia &
Europe and between Asia & Africa (Etihad Global 2018). However, it appears that it has
deviated from the Emirates in regards to joint venturing which is termed as one of the profitable
strategic alliance modes. Etihad Airways instead has moved with an "equity-based alliance"
where alliance companies are dependent on each other for an allowed share in the newly formed

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alliance company. The strategy has so far not looked very productive and has also been criticized
by top airline companies like the Ryanair (Etihad Global 2018).
The Etihad Airways has opportunities in the form of a new CEO Tony Douglas.
However, it all depends on his decision-making skills and the strategy that will be taken. The
new CEO might wish to continue with the same strategy or to adopt a different strategy. Etihad
Airways may also face some challenges in the form of one of the partners experiences the
financial challenges, ineffective management, information leakage and many others (Hussain, Al
Nasser and Hussain 2015).
How should the new CEO set an example for others?
Apart from a brief analysis of the Etihad Airways, industry analysis in the UAE may also
present a clearer picture of the opportunities and the issues that the Etihad Airways will face in
the future. The entrant of a new airline company in the Middle East circle is comparatively
challenging (Hussain, Al Nasser and Hussain 2015). This means the future competition will
largely be related to the strategic alliance policy rather than any other new strategies. The power
of suppliers is higher as the suppliers are very few in numbers. Moreover, the bargaining power
of suppliers is quite higher in the airline industry (Hussain, Al Nasser and Hussain 2015).
The bargaining power of airline companies in the Middle East countries is very low
(Hussain, Al Nasser and Hussain 2015). The involvement of advanced technology and a strategic
capability will then be highly needed for being cost-effective and acquiring a highly profitable
venture. These strategies will provide the much-needed competitive advantage. The threat of
substitutes can be regarded as low as a quick arrival to the destination is becoming a symbol in
both the domestic and the international circle (Hussain, Al Nasser and Hussain 2015).

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Competition can be regarded as very high because Emirates is far much ahead to Etihad in terms
of aircraft and the carriers (Hussain, Al Nasser and Hussain 2015). .
The new CEO of the Etihad Airways should necessarily analyze the competency of the
equity alliance that it supports over the joint venturing. Nevertheless, joint venturing looks much
more competitive than the equity-based alliance. This is due to a fact that in an equity-based
alliance only percentage of stakes are bought in the other airline companies from a different
country of origin. This provides a chance to enhance the operation area and the net revenues;
however, this does not allow access to resources of the partner company which is a part of joint
venture indeed (Roy, Sana and Chaudhuri 2015). On the other hand, the joint venture will require
a much bigger investment than the equity-based investments of the Etihad Airways (Roy, Sana
and Chaudhuri 2015). This is due to all such complexity it is advisable that the new CEO of
Etihad should necessarily analyze the competency level of the company. This will ensure
whether to continue with the same strategic alliance or switch over to a joint venture.
What should be the new vision of the future?
The existing vision of the Etihad Airways is focused on facilitating a changing
environment when needed and exploring a truly 21st-century experience to customers (Holmberg,
Larsson and Bäckström 2016). The vision for future should remain the same as it has necessary
elements that are needed to become competitive at the global level. However, there have been
some issues with the execution of the vision so far. The new CEO of the company should strive
to the best in order to meet with the contents mentioned in the vision statements. Most
importantly, there is a need to ‘Inspire a Shared Vision’ to have a positive change in the market
reputation for the Etihad Airways. However, this is indeed a challenge to foster a shared vision at