Macro Environmental Analysis of Emirates Airlines in Singapore Market

This report provides a macro environmental analysis of Emirates Airlines in the Singapore market. It utilizes PESTEL and Porter's Five Forces frameworks to assess the political, economic, social-cultural, technological, environmental, and legal factors impacting the airline's operations. The analysis identifies both opportunities and threats, such as Singapore's stable political climate, strong economy, and technologically advanced population, as well as rising labor costs and environmental regulations. The report also examines the competitive landscape, including competitive rivalry, bargaining power of customers and suppliers, threat of substitutes, and threat of new entrants. The findings suggest Emirates enjoys advantageous conditions, but strategic recommendations, such as implementing CSR policies, are offered to mitigate potential risks and enhance the airline's competitive position. The report concludes with a summary of the key findings and their implications for Emirates' business strategy in Singapore.

Running head: MACRO ENVIRONMENTAL ANALYSIS OF EMIRATES
Macro Environmental Analysis of Emirates
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Executive Summary
The following report focused on the macro environmental factors playing crucial role in
determining the operations of Emirates Airlines in the Singapore market. PESTEL and Porter’s
five forces analysis have been conducted on the target market in relation to Emirates. The results
reflects advantageous condition the company is enjoying in the market. However, some of the
threats that have been identified can easily be resolved with the implementation of the strategic
recommendation made in the final part of the report.

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Contents
Introduction......................................................................................................................................3
PESTEL Analysis............................................................................................................................4
Description...................................................................................................................................4
Analysis of Emirates....................................................................................................................4
Porter’s Five Forces Analysis..........................................................................................................7
Explanation..................................................................................................................................7
Analysis of Emirates....................................................................................................................7
Strategic Recommendation..............................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Introduction
The purpose of this report is to understand the macro environmental factors playing
important role in altering business process for the Emirates Airlines in Singapore. Macro
environment is considered as one of the key determinant of business success. Importance of
macro environmental analysis is critical due to the uncontrollable nature of the factors. Managers
of an organisation cannot control these factors, which makes in necessary for constant analysis of
the factors and upgrade business process for gaining competitive advantage in the market. There
are various tools in marketing, which helps organisations in analysing the market condition.
Some of the widely used macro environmental analysis tools are PESTEL and Porter’s five
forces analysis tool. The PESTEL analysis helps identifying the market situation, whereas, the
Porter’s five forces analysis helps in identification of competitive situation in the market.
Emirates Airlines started its venture in 1985 with just two flights. However, the company
initially started as dnata with five ground staffs for handing the services in Dubai international
airport. Their aviation organisation grew over years until 1985 when Seikh Mohammed bin
Rashid Al Maktoum and Mr Flanagan entered the airlines industry with their two flights. They
have grown since then and as an international airlines company (emirates.com, 2018).
The company now is a full-grown international airlines company providing their services
to the selected few around the globe. The vision of the company remains same form its initiation
days to provide quality services to their customers. Emirates airline focuses on the quality
instead of quantity, which positions them in the elite class airlines service provider in the global
market (emirates.com, 2018). The company modifies their services depending on the operating
region for increasing customer satisfaction.

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PESTEL Analysis
Description
One of the commonly used frameworks or tools in macro environmental analysis is the
PESTEL analysis tool. This gives marketers the bird’s eye view over the external environmental
factors from different angles. The PESTEL stands for political, economic, social-cultural,
technological, environmental and legal factors of the external market (Zalengera et al¸2014).
These factors however, can be considered as the primary factors as the framework has
considerably modified over time and the components are adjusted according to the need of
individual business organisations.
Figure 1: PESTLE Framework
Source: (Ho, 2014)
These factors associated in the framework helps developing idea of the particular
viewpoints. For example, political perspective helps identifying the political situation of the

5MACRO ENVIRONMENTAL ANALYSIS OF EMIRATES
market and helps determining the opportunities and threats they poses on the business. Similarly,
economic factors helps understanding economic condition, social factor identifies the cultural
stance, technological factors notes down the technological development in the market,
environmental factors studies the demography and surrounding environment related to the
business and legal stance lastly communicates the laws that is governing the target market (Ho,
2014).
Analysis of Emirates
This section of the report will identify the macro environmental factors that provides
opportunities and threat to the organisation.
Political – The country represents a stable political condition since its independence. This further
communicates the low rate of economic risk for the international organisations in expansion of
their venture in Singaporean market as it provides sense of political security to the companies.
The stable developing political condition along with the democratic government facilitates in the
constant development of the economic condition of the nation (Rodan, 2016). This further
provides a better standard of living for the population of the nation and peace. However, the
opposition party has less freedom of speech and regulated by the legal suits.
The stable political situation and absence of political dilemma will provide Emirates
Airlines opportunity of uninterrupted business operations in the country. This will considerably
reduce company’s expenses in the country.
Economical – GDP of Singapore reflected a figure of 296.98 SGD as per 2016 annual report
(tradingeconomics.com, 2018). Moreover, the average monthly income rate as per the 2017
calculation reflects 4795 SGD in 2017, which is considerably, which can be considered as

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moderate to high (Tradingeconomics.com, 2018). Moreover, the average purchasing power of
Singaporean population is 36,324 SGD, which sometime overshoot the purchasing power of
USA population. This enables the company to enjoy greater profit margin in the market. The
country again reflects a stable economic growth with growing opportunities for the international
and domestic business expansion. However, the labour cost in Singapore is on a rise due to the
labour shortage. This is a considerable threat for Emirates in Singapore, as it will significantly
increase the operational cost.
Socio-cultural – The tendency of holding traditional cultural value is present in the Singaporean
population, despite of the increased modernisation and westernisation being reflected in the
younger generation. This is an opportunity for Emirates to provide customised regional services
to their customers. This strategy adopted by the company helps them in satisfying market needs.
Moreover, literacy rate of the population reflects significantly high figures that create the urge of
foreign education among the Singaporean population (Noor & Leong, 2013). The increased
disposable income of the Singaporean population enabled them to afford international flights,
which was earlier restricted to the wealthy segment of the population. However, the low cost
flight options available for the target population threatens Emirates in their luxurious services as
the customers’ demand is shifting towards economic flights.
Technological – The country has gained a level of technological advancement that encourage
the population for using the modern technology in daily life. This will help Emirates in their
promotion, ticket booking and other activities using technology. Moreover, this provides
Emirates the opportunity to provide the technologically advanced population a greater
technological support in their long haul flights (Islam, Al Mamun & Amanullah, 2017). This will

7MACRO ENVIRONMENTAL ANALYSIS OF EMIRATES
help in trust building process as technological integration in the flight not only enables the
customers to enjoy a luxurious flight, but also provides them a sense of safety in the flight.
Environmental – The current environmental crisis of the country led to formation of strict
environmental control policies for the businesses operating within the country (Tan et al, 2014).
This makes Emirates strictly follow the environmental well-being of the country by reducing the
air pollution that is the primary concern of the airlines. This calls for the need of strong CSR
policy while operating in Singapore. Moreover, increasing energy price can be another thret for
Emirates in their operation within Singapore (Heracleous & Wirtz, 2014).
Legal – Singapore is considered as one of the easiest country for international business
expansion. The country has open investment regime, with restriction limited to the financial
services, professional services, and media sectors. The range of investment incentives offered by
the country along with tax holidays and concessions and other concession schemes makes it
favourable market for Emirate. The Income tax Act and Economic Expansion Incentives creates
smoother path for the international investors to enter the market (sso.agc.gov.sg, 2018).
Moreover, the country has no as such restriction in foreign exchange transaction and capital
movement, which enables Emirates Airlines to move their funds freely in and out of the country.
Porter’s Five Forces Analysis
Explanation
Porter’s five forces market analysis tool is a simple but effective tool proposed by Michel
Porter. Markets widely use this tool for identification of the competitiveness of the market for
positioning them in advantageous compared to the rivals (E. Dobbs, 2014). The five forces
altering the nature of the market as identified by this tool are bargaining power of the suppliers,

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bargaining power of the customers, competitive rivalry, threat of substitution and threat of new
entry.
Figure 2: Porter’s Five Forces Analysis
Source: (E. Dobbs, 2014)
Analysis of Emirates
This part of the report focuses to identify the competitive challenges faced by Emirates
Airlines in the Singapore market.
Competitive Rivalry
The competitive rivalry in the airlines industry is different compared to other industries,
where the competition is accounted for the companies running in the same route. This means that
the companies that are accounted as rivals are the ones that fly to the similar destinations.

9MACRO ENVIRONMENTAL ANALYSIS OF EMIRATES
Emirates is currently operating around the globe from their Singapore base, where the major
intensity of the flights are in European, Middle East and North American market (Cheng, 2013).
The major competitors in of the company in these high frequency routes are Singapore Airlines,
Etihad, Qatar and Lufthansa. However, the quality service provided by Emirates and the value
proposed considerably reduce the threat by building customer loyalty.
Bargaining power of Customers
Bargaining power of the buyers again depends on the number of competitors operating in
the same route as Emirates. The range of routes offered by Emirates is considerably high
compared to the other competitors in the market such as Singapore Airlines, Lufthansa and
Etihad (Cook, Tanner and Lawes, 2012). All the competitors mentioned above provides
luxurious flights for comparatively similar price. This increases the bargaining power of the
buyers as they get to compare the offers provided by the airlines (Babić, Tatalović & Bajić,
2017). However, the quality of services in Emirates is significantly high, and the company
focuses on the regional specifications that gives them competitive advantage in the market. This
helps them building brand loyalty, which again facilitates in reducing the bargaining power of
the buyers.
Bargaining power of the Suppliers
The supplier switching cost for the company is significantly high, as there exist duopoly
in the fleet supply. Boeing and Airbus has captured the global fleet supply market, which
considerably increases the bargaining power of the suppliers. The vast number of airlines helps
them in the process of increased bargaining power (Ciliberto & Williams, 2014). However, the
bargaining power of the supplier in case of engines is comparatively due to the oligopoly nature

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of the market. The competition lies between a few competitors namely Rolls Royce, Pratt and
Whitney, and General Electric. This communicates strong supplier power in the industry that
puts Emirates in relatively weak position.
Threat of Substitute products
The Emirates being an airline organisation enjoys relatively low threats from the
substitute services. Moreover, Emirates in Singapore only has international flights that again
reduces the threats if substitutes. Though there are other modes of transport available for the
customers in Singapore to travel to their international destinations, the services provided by the
airline industry is short time consumes that makes it more feasible for the customers (Abeyratne,
2016). Moreover, the elite services provided by Emirates in the market with their region specific
products and services facilitate them to enjoy a significantly less threat from the substitute
products.
Threat of new entry
The main activity of Emirates in Singapore market is based on the long haul air travels.
The company only has long haul travels that considerably reduced the competition in the market.
Again, there are only a few competitors in the international market that operates in long haul air
travels that reduces the changes of new competitors enter the Singapore market (Stockport,
2012). Moreover, high brand value of Emirates in the market also reduces the threat from new
entrants.
Strategic Recommendation
The first recommendation that can be made for Emirates while operating in Singapore is
the formulation of CSR policies in order to safeguard the environmental interest of the country.

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This is due to the environmental policies that is the result of environmental degradation of the
country.
The second possible strategic recommendation for Emirates to adopt in their Singapore
market is the consideration of low price travel for the target population. This is due to the
customer preference for economic travel. Emirates can formulate strategies for providing
luxurious travel experiences by formulating loyalty discounts schemes for their customers.
The company can reduce their flights to the destinations for holding greater value in the
market. This will align their operations with the vision of greater quality with comparatively less
quantity service provided. This will help them avoiding the cost issue faced by limiting the
customers to loyal customers with greater need of luxurious travel.
The company can further focus on the region specific services aligned with the society
and culture of the target market. This will help them proposing greater value to their customers,
hence, increasing the demand in the market.
Conclusion
It can be concluded from the discussion that Emirates is enjoying favourable situation in
the Singapore market due to the less competition in long haul flights. The political, legal,
technological and other environments are also favourable for the company. However, some
modifications as recommended in in the report will help them capturing greater value in the
market.

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