Innovation and Management Decision Making [Etihad Airways]

This article discusses the importance of equity alliance for Etihad Airways and recommends solutions to flourish its business. It also explores the role of leadership in making innovative decisions and creating a cohesive work environment. The article includes industry analysis and recommendations for the new CEO of the company.

Running head: INNOVATION AND MANAGEMENT DECISION MAKING
Innovation and Management Decision Making
[Etihad Airways]
Name of the student:
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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

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the organizational level (Iturrioz, Aragón and Narvaiza 2015). To facilitate a shared vision,
leaders must first make up their mind for that as without being involved in the process things will
not happen. At the next stage, it is important that the leaders have the required skills in him or
her to support the facilitation of a work environment where the visions are shared (Iturrioz,
Aragón and Narvaiza 2015).
How could the new CEO inspire others toward a common purpose?
The new CEO of the Etihad Airways need to focus a lot on making the personal or
organizational vision shared with the others. This will make the others feel happy and attached to
the organizational values. The Etihad Airways may have several benefits of implementing ‘a
shared vision’ at the organizational level. The first and foremost benefit may come in the form of
dedication to works from employees (Roueche, Baker III and Rose 2014). They may feel
attached to the organizational values. Additionally, this will also facilitate the teamwork which is
extensively necessary to successfully complete a project. Employees may be able to deliver their
best to potentials which are not the case where a shared vision does not exist (Roueche, Baker III
and Rose 2014). According to the authors Holmberg, Larsson and Bäckström (2016), leadership
skills set the examples for employees and the others in the concerned organization. In the light of
the mentioned-facts, it can be assumed that executing the leadership skills will be the advisable
move now for the new CEO of the Etihad Airways. This will not only ensure a change in
strategy but will also set examples for the management and the employees. As opined by
Holmberg, Larsson, and Bäckström (2016), this can be said that if leadership examples are
noteworthy in organizations, this helps to motivate the participation of the management and the
employees.

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How would you create an environment that promotes creativity and risk?
There are numerous harms of not having ‘a shared vision’ at the organizational level. The
first and foremost harm may be experienced in employees having less dedication to the
organizational values. There may be some employees who in such situations may feel like they
have the only purpose to serve their needs which is to have good perks and benefits. They will
feel attached to the organizational vision if their needs are satisfied or else (Roueche, Baker III
and Rose 2014).
When vision is not shared at the organizational level this may mean an authoritarian
leadership institute where employees are forced to do works or sometimes the extra work
(Holmberg, Larsson and Bäckström 2016). Employees are pressurized to work for longer than
their normal duty hours which are an open invitation to employee turnover. Additionally, few
employees may also commit suicide as it may be an intolerable situation for them and they have
no other options also (Roueche, Baker III and Rose 2014).
How would you build a cohesive and spirited team?
Leadership failure to explore a social work environment may result in big losses. This
can be understood from an example of Yahoo CEO Marissa Mayer who failed in executing a
cohesive work environment (Fortune 2018). The CEO had faced a continued sag in the profits.
The expensive magazines were being slashed which had previously been launched as her central
strategy. Most importantly, the CEO had failed to understand the importance of ‘a shared vision’
which is evident in her strategy that was confined to retain its key employees only (Fortune
2018). However, a shared vision indeed gives values to every single employee. The analysis of
the Etihad Airways and the industry analysis have helped to find some factors of which some

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may be the opportunities for the Etihad and the rest can be the issues. However, in addition to
this, there can be some other issues as well as loss of competencies, information leakage, loss of
operational control, partner’s quality performance and others. In other words, it can be said that
the existing alliance strategy might produce some challenges in future. On the other hand, the
alliance strategy that Etihad has may exhibit some real benefits in future like the speed to market,
reduction of political risk while entering a new market and others
How would you share power yet maintain accountability?
The example just validates a point that the Etihad Airways need to have an effective
leadership exploration from the new CEO of the company. The new CEO, as discussed earlier,
needs to focus on implementing ‘a shared vision’ at the organizational level. The shared vision
might produce some results that have not happened yet. There are probabilities that an equity-
based alliance approach of the company is not competitive. There are speculations also regarding
the alliance strategy of the new CEO like whether the CEO will continue with the same or will
adopt a different alliance strategy. A socially oriented environment will be required in order to
attain the recommended target. Such an environment will be created by sharing the vision at the
organizational level and by letting the others realize that they are also an integral part of the
organization (Iturrioz, Aragón and Narvaiza 2015).
How would you build a sense of wellbeing?
The speculations should find its answer in a cohesive work environment which is formed
from a shared vision at the organization-wide. This means that the new CEO should first look for
forming a cohesive work environment while following some recommended strategies. Moreover,
after the advised span of time, the CEO may be able to decide whether to continue with the same

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alliance strategy or adopting a new strategy. Strategic alliances have been the key factors to
further the business in the irrespective of the industries. Airline industry like any other industry is
also inspired from the same fact; however, different airline companies follow the different
alliance strategies like the joint venture or the equity-based alliances (Albers, Wohlgezogen and
Zajac 2016).
Recommendations
The new CEO of the Etihad Airways should give emphasis on forming a cohesive work
environment. This will help the organization to get the collective supports of others as well.
Moreover, such change may foster innovative thoughts at the organizational level. Innovation is
indeed important to enhance the competency level in the airline industry. The Etihad Airways
needs to develop a creative work environment where employees have associated values to the
organizational vision.
The next recommendation will be to select a few more partners that may be supportive
in fulfilling the short-term goals. This may produce some changed results. Additionally, there is
a need to share appropriate information with the partners. A reliance on partners in this regard
will not be advisable.
The Etihad Airways should also look for monitoring the equity-based alliance in
short-term. This is advised as the time span will allow the new CEO of the company to monitor
the difference of implementing ‘a shared vision’ at the organizational level.
Conclusion

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To conclude, this can be said that the new CEO of the Etihad Airways should look for
creating a cohesive work environment where others will also be involved in the shared
organizational vision. The observance of change after implementing the shared vision may be
decisive for the new CEO. The new CEO should be able to make decisions after the advised time
span on whether to continue with the equity alliance or change to a new alliance strategy. The
advised time span is indicated towards a short-term period.

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References:
Albers, S., Wohlgezogen, F. and Zajac, E.J., 2016. Strategic alliance structures: An organization
design perspective. Journal of Management, 42(3), pp.582-614.
Etihad Global. 2018. Enjoy great fares on flights and holidays from India to the world -
Etihad.com. [online] Available at: https://www.etihad.com/en-in/ [Accessed 13 Feb. 2018].
Fortune. 2018. The World's 19 Most Disappointing Leaders. [online] Available at:
http://fortune.com/2016/03/30/most-disappointing-leaders/ [Accessed 13 Feb. 2018].
Holmberg, R., Larsson, M. and Bäckström, M., 2016. Developing leadership skills and resilience
in turbulent times: A quasi-experimental evaluation study. Journal of Management
Development, 35(2), pp.154-169.
Hussain, R., Al Nasser, A. and Hussain, Y.K., 2015. Service quality and customer satisfaction of
a UAE-based airline: An empirical investigation. Journal of Air Transport Management, 42,
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Iturrioz, C., Aragón, C. and Narvaiza, L., 2015. How to foster shared innovation within SMEs'
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Northouse, P.G., 2015. Leadership: Theory and practice. Sage publications.

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Roueche, P.E., Baker III, G.A. and Rose, R.R., 2014. Shared vision: Transformational
leadership in American community colleges. Rowman & Littlefield.
Roy, A., Sana, S.S. and Chaudhuri, K., 2015. A joint venturing of single supplier and single
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