Strategic Management for Emirates Airlines

This paper discusses the challenges faced by Emirates Airlines in the current aviation industry and recommends strategies to overcome them. It analyzes the global aviation industry, key trends, business strategies of Emirates, competitors, and issues faced by the airline. The paper uses Porter's generic strategies and Ansoff matrix to recommend cost leadership, service differentiation, and market focus strategies for Emirates. It also recommends market development, product development, and market penetration strategies using Ansoff matrix.

Running head: STRATEGIC MANAGEMENT
Strategic management
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Introduction
Airline sector is one of the most competitive and potential sectors in the current business
scenario due to the reason that this sector is rapidly growing along with the inflow of the new
competitors. Moreover, in the recent time, it is identified that the airliners brand majorly from the
Asian and Middle Eastern regions are gaining the global market hold over the traditional western
countries based legacy carriers (Williams 2017). This is mainly due to the reason that with the
emergence of the low cost carrier service across the world along with the growing popularity, the
conventional premium and legacy carriers are facing the challenge in staying viable in the
market. In along with these issues, the newly emerged challenge for the airliners is the increasing
price of jet fuel. It is the key requirements for any airliners and ever increasing trend is affecting
in their profitability (Borenstein and Rose 2014). Thus, in between the increasing competition
and increasing operating cost, it is a challenge for the airliners including both the legacy as well
as the budget carriers to maintain their profit margin and business viability.
Emirates are one of the leading airliners in the current civil aviation sector and are
considered as the fourth largest carrier in the world. They are based in Dubai, UAE and operating
between more than 80 countries and 150 cities. Hence, Emirates are having worldwide presence
with having more than 250 aircrafts in their fleet. It is also identified that Emirates are owned by
the government of Dubai as the single undertaking (O’Connell and Bueno 248). Thus, they are
gaining the advantage of government support along with having the access to larger funds.
However, as discussed in the above section, the key issues are posing challenges for Emirates as
well and it is important for them to review their internal competencies in dealing with these
challenges.

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This paper will discuss the entire case scenario of Emirates and the relevant global factors
in their business. Both the opportunities as well as threats will be identified. In the next part, the
identified factors will be critically analyzed and solutions will be provided based on two strategic
management tools.
Global aviation industry
As discussed earlier, global aviation sector is highly competitive in nature with the
presence of multiple competitors and limited market size. It is reported that in 2019, the global
aviation sector will witness the gross loss of $4.7 billion and this will also take a toll to the
average profitability of this sector. This is due to the reason that previous year, this profit margin
was 35.5 billion, which will come down to less than 30 billion due to the expected loss. There
are number of reasons being identified for the low profitability of the global aviation sector (Wu
and Cheng 2013). One of the major reasons is the decreasing trend of the passenger traffic that is
reducing the revenue. On the other hand, the increasing cost of operation due to the increase in
the fuel cost is further creating pressure on the airliners in managing their profitability. Thus, it is
important for the airliners to come up with innovative solutions in bypassing the cost of
operation and increasing the profitability.
Key trends in the current aviation industry
One of the major trends in the current aviation industry is the alternate sources of revenue
due to the reason that flight services are not only the only source of revenue for the flight
operators rather than selling different consumer good items in the flight, merchandises and added
payment for baggage are the added sources of revenue. Hence, in the recent time, Emirates will
not be profitable enough only by offering their core services but they should also look out for

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new and innovative sources. Customer engagement is also a key factor in the ensuring the
positive return from the market. Gone are the days when the customers are bound to avail the
services offered to them. Currently, it is the service providers who engage with the customers in
determining their needs and requirements and design the service accordingly (Lee, Seo and
Sharma 2013). Thus, Emirates will not be able to increase or develop their business even by
offering the premium and quality services. They should also engage with the target customers in
offering distinctive and differentiated services.
Business strategies of Emirates
On the basis of the major challenges being identified for the aviation sector, it is
important to review the existing business strategies of Emirates and the extent to which they are
effective enough. It is identified that they are operating as the premium service provider in the
market and are more concentrated towards creating premium service experience for the
passengers rather than just offering no frill services. Thus, the business strategy of Emirates is
more concentrated towards enhancing the profitability over volumes. On the other hand, the
existing business approach of Emirates is more towards the long haul services over the shorter
haul services (Guercini et al. 2014). This is due to the fact that Emirates are majorly plying as the
international carrier than the domestic carrier and thus long haul services between the countries
are majorly offered by them. The current fleet design is also proving the point that they are more
concentrated towards the long haul services because of the fact that wider body aircrafts from
Boeing and Airbus are mainly used by Emirates. However, in this case, they are missing out on
the potentiality in the shorter haul routes that to be done by the narrow bodied aircrafts. Hence, it
can be concluded that there are few negative and positive factors associated with the current
business strategies of Emirates.

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Identification of the competitors
Identification of the competitors is important for analyzing the business potentiality of
Emirates due to the reason that the more intense will be the competition, the more will be the
challenges for Emirates. The major competitors for Emirates are Qatar Airways and Ethihad
Airlines. They are the closest competitors for Emirates because all of them are originating from
the same Middle Eastern regions. In addition, both the Ethihad and Qatar Airways are catering to
the same premium customer segments and operating on same routes (Chen and Hu 2013). On the
other hand, the national and legacy carriers from other countries such as Qantas Airways and
Cathey Pacific are also considered as the competitors of Emirates. Moreover, these competitors
are posing larger set of challenges because they are having the market leadership in the regions
where Emirates are not. Competitors such as Qantas are having their sub brand of low cost flight
services, which are further helping them to cater to lager target segments (Hsu and Liou 2013).
In this case also, Emirates are trailing behind some of their major competitors.
The above discussed airliners are the direct competitors but apart from them, the low cost
budget carriers are also posing challenges for Emirates. This is due to the reason that in the
current time, majority of the flight passengers does prefer no frills and low cost flight services
over asking for premium experiences. Airliners such as SouthWest and Jetstar are catering to the
larger volume of target segments compared to Emirates (Pels, Njegovan and Behrens 2017). In
addition, these airliners are operating in the shorter haul routes and popular destinations, which
are not being accessed by the legacy airliners. It is also reported that the average cost of
operation for the low cost carriers is also low compared to the premium players, which is further
enabling the budget carriers in offering the services in more competitive price position.

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Identification of the issue
Thus, from the above analysis, it can be concluded that the major dilemma for Emirates is
seeking out the perfect balance between the competitive market scenario and increasing cost of
operation. Increasing the flight fare will help Emirates in overcoming the challenge of increasing
cost of operation. However, on the other hand, this will reduce the potential target customer base
for Emirates. Hence, it is a major dilemma for Emirates in deciding their business approaches. In
addition, it is also challenging for them in deciding the corporate strategy because premium
services are having higher rate of profitability while the low cost services are emerging in the
market.
Briefing note analysis
There are number of issues and dilemmas are identified for Emirates, which should be
resolved. In this case, porter generic strategies and ansoff matrix will be used. This is due to the
reason that generic strategies will be beneficial in determining the most effective business
strategies for Emirates while ansoff matrix will be beneficial for determining the potential
business development tactics.
Porter generic strategies
According to the Porter generic strategies, there are majorly three business approaches
that can help the entities in gaining competitive advantages. These will be applied over the
business operation of Emirates in order to review their applicability and effectiveness.
Cost leadership strategy

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Cost leadership strategy refers to the offering of the products of services at the lowest
price possible in the market. Hence, the lower will be the cost of the offerings, the more will be
the target customer segments and sales volume and market penetration. In the case of Emirates, it
is recommended that cost leadership strategy should be initiated by them in terms of introducing
a new sub brand. The new sub brand should be a separate entity to Emirates and should bear
different name and intellectual property. This new brand will offer low cost budget flight
services in the shorter haul routes and will follow the cost leadership policy (Banker,
Mashruwala and Tripathy 2014). However, in order to gain the maximum market return from the
implementation of cost leadership strategy, the new brand should have different business
strategic intent to Emirates. For instance, they should maintain fleet of particular aircraft model.
Airbus A320 and Boeing 757 are the two most popular and fuel efficient narrow bodied aircrafts
available in the market. Maintaining uniformity in the fleet will reduce the cost of maintenance
for Emirates and low stock requirements (Kaliappen and HIlman 2013). In addition, the narrow
bodied aircraft will be more fuel efficient, which will also reduce the fuel bill for Emirates.
Hence, the operating cost will get lowered and fare can also be offered in competitive price
position.
Service differentiation
Apart from the cost leadership strategy, service differentiation can also be effective for
the business of Emirates. This is due to the reason that with the help of the service
differentiation, they will be able to stand out in the competition and added value propositions can
be offered to the customers. It is also recommended that service differentiation should be offered
in terms of physical evidence such as aircraft interior designs and ambience, service delivery
process and ground services. In terms of the aircraft specifications, color, seat designs, leg room

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space can be differentiated to offer the distinctive experience to the customers. In terms of the
service delivery process, passenger can be provided with more convenience in terms of baggage
handling and lounge facilities in the airports (Zehir, Can and Karaboga 2015). Passengers can be
provided with RFID tags for enabling them in tracking the movement of the baggage in the
airports. Hence, offering the differentiated approach will be beneficial for Emirates in creating
unique positioning in the market. This will also enable to charge higher as customers are willing
to pay the extra for the added services.
Market focus strategy
Market focus strategy will enable Emirates in targeting a particular market segment and
offering the services according to their preferences and expectations. It is recommended that
Emirates should target only the premium customers for their existing services and the new sub
brand should target only the budget customer segments. Thus, the positioning should be different
for the two brands and should design the service portfolio accordingly. If the respective brands
can meet the requirements of their particular target segments, then the probability of retaining the
customers will be more. In addition, it should also be noted that pricing decision should also be
initiated according to focused market trends. It can be ensured that both the services of Emirates
and their new sub brand will be in accordance to the changing market trends and will not trail
against their competitors.
Ansoff matrix analysis
Ansoff matrix will be used to recommend the most potential and effective market
development strategies for Emirates. According to this model, there are majorly four probable

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approaches that can prove fruitful for them. The following section will apply each of these
strategies from the perspective of Emirates.
Market development
With the help of the market development strategy, Emirates will be able to expand their
business and market presence beyond their existing regions. It is identified that Emirates are
already having extensive presence across the world with having their footprints in more than 80
countries. However, they should further increase their presence majorly in the western counties.
This is due to the reason that Emirates are majorly having their presence in the Asian and
European regions. Moreover, the above discussed strategy of introduction of new sub brand will
also help Emirates in expanding their market. This should be noted that with the help of the
market development strategy, Emirates will be able to continue with their existing services in
increasing their sales volume.
Product development
Similar to the market development strategy, product development strategy can also be
beneficial for Emirates in developing their business in the long term. This is due to the reason
that with the help of new products or services in place, extent of the target customers will get
increased for Emirates. In this case also, the introduction of the sub brand for budget flight
services will be effective in developing new market segments. As with their existing services,
Emirates are already catering to the premium customers and with the introduction of the budget
services, middle income level groups can also be catered.
Market penetration

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Market penetration can also help Emirates in increasing their sales revenue and passenger
traffic. In this case, it is recommended that they should offer economic and business class tickets
across all their flights. This will ensure that customers from different income levels can be
targeted. In addition, it is also targeted that the excising services of Emirates should be started in
the shorter haul and domestic routes in different regions. This will help Emirates in penetrating
in the particular market and ensuring the maximum return from there. Market diversification is
not discussed as it will not be applicable for Emirates because they will stay in the airline
business only in the long term.
Conclusion
This is being concluded that increasing fuel cost and emergence of low cost competitors
are the key challenges for Emirates in their business. In addition, the saturation of the global
aviation sector is also restricting the market opportunities to a large extent. It is recommended in
this report that Emirates should introduce a new sub brand for offering low cost budget flight
services. It is also concluded that Emirates should differentiate their services with their core
competitors for added value to their customers. This will help them to develop their business
further.

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