Emirates Airline: Global Strategic Management Analysis Report

This report presents a comprehensive strategic analysis of Emirates Airline, a leading global airline. It begins with an overview of the company, its vision, mission, and key challenges, including increased competition, rising fuel prices, and political issues. The report then delves into the external environment using PEST analysis, examining political, economic, socio-cultural, and technological factors influencing the airline. Porter's Five Forces are applied to assess the competitive landscape, including the threat of new entrants, supplier power, buyer power, threat of substitution, and competitive rivalry. The internal environment is analyzed through Porter's Value Chain, identifying primary and support activities, followed by a TOWS matrix to formulate strategic alternatives. The report concludes with recommended strategies for future growth and sustainability, offering valuable insights into Emirates Airline's strategic management.

Running head: EMIRATES AIRLINE 0
Global Strategic Management
Emirates Airline

EMIRATES AIRLINE 1
Table of Contents
1. Introduction........................................................................................................................3
1.1 About the company..........................................................................................................3
1.2 Vision...............................................................................................................................4
1.3 Mission.............................................................................................................................4
1.4 Key Issues Face by Emirates Airline...............................................................................4
2. Analysis of External Environment.....................................................................................6
2.1 PEST Analysis.................................................................................................................6
2.1a Political Factors..........................................................................................................6
2.1b Economic Factors.......................................................................................................6
2.1c Socio-cultural Factors.................................................................................................7
2.1d Technological Factors................................................................................................8
2.2 Porter’s Five Forces.....................................................................................................8
2.2a Threat of new entrants................................................................................................9
2.2b Supplier Power...........................................................................................................9
2.2c Buyer Power.............................................................................................................10
2.2d Threat of Substitution...............................................................................................10
2.2e Competitive Rivalry.................................................................................................10
3. Analysis of the Internal Environment..............................................................................11
3.1 Porter’s Value Chain Analysis.......................................................................................11
3.1a Primary activities......................................................................................................11
3.1b Support Activities.....................................................................................................13
3.2 TOWS Matrix.................................................................................................................15
4. Recommended strategies..................................................................................................16
5. Conclusion........................................................................................................................18
References................................................................................................................................19

EMIRATES AIRLINE 2

EMIRATES AIRLINE 3
List of Figures
Figure 1: Emirates Airline's Logo..............................................................................................4
Figure 2: Increase in Jet Fuel Prices..........................................................................................5
Figure 3: GDP of UAE...............................................................................................................7
Figure 4: Yearly Population Growth Rate in UAE....................................................................8
Figure 5: Competitors of Emirates Airline.................................................................................9
Figure 6: Value Chain of Airline Company.............................................................................11
Figure 7: Emirates Fleet Size Growth......................................................................................14

EMIRATES AIRLINE 4
1. Introduction
The aim of this report is to introduce Emirates Airline, its vision, mission, products, and key
issues. Further, this report will analyse the external and internal environment and provide
strategy alternative and recommendations for sustaining the company’s future growth.
1.1 About the company
The Garhoud, Dubai, UAE headquarters based airline, Emirates, was founded in 25th March
1985 and it started its business of providing commercial air transportation services on 25th
October 1985 worldwide (Emirates, 2018a). The company is a subsidiary of ‘The Emirates
Group’, and it is wholly owned by the Investment Corporation of Dubai’s government. In the
aviation industry, the corporation has gained a prestigious rank due to its effective business
strategies that focus on encouraging fair competition, open skies policies, and transparency.
The fleet size of the firm includes 270 aircraft, and it has planned to add more than 20 aircraft
in the future (Planes Potters, 2018).
Currently, the company fly its passengers to more than 155 destinations in over 80 countries
around the world. Each week, more than 1,500 Emirates flights departed from Dubai airport,
and they fly its passengers on six continents (Altaf, 2017). The corporation has employed
more than 64,768 employees around the world (Emirates, 2017a). The services of the
company include worldwide destinations, regionally inspired cuisine, world-class facilities,
industry-leading in-flight entertainment and others. The seating options offered by the firm
include a full suite with doors, horizontal bed (without doors) and sleeper seats.
In 2017, Emirates Airline generated a profit of US$340 million, and the Emirates Group
reported a profit of US$670 million. The company reported a drop of 82.5 percent in its
profits as compared to 2016 profits. It is the first drop in the firm’s annual profit in previous
five years which caused due to competition, US dollar’s rise and travel restrictions (Al
Jazeera, 2017). As per Latest Oxford Economic Report, the aviation industry will contribute
US$53.1 billion in the economy or 37.5 percent of the GDP of Dubai by 2020. It is also
predicted that in the report that more than 754,500 jobs will be supported by the aviation
industry (Gulf News, 2014). Emirates Airline plays a crucial role in contributing to the
country’s economy as it is the largest airline in the Middle East.

EMIRATES AIRLINE 5
Figure 1: Emirates Airline's Logo
(Source: Emirates, 2018a)
1.2 Vision
To make the experience of civil aviation flight safer for its passengers and leading and
sustaining growth by focusing on providing industry-leading services (Emirates, 2017a).
1.3 Mission
To become the world leader in the aviation industry by delivering the world’s best in-flight
experience to our passengers (Emirates, 2017a).
1.4 Key Issues Face by Emirates Airline
Increased Competition
Emirates Airline has provided in its announcement of half-year performance for 2017-18 that
stiff competition resulted in decreasing its profits in 2017 (Emirates, 2017b). The company
was under pressure to reduce its ticker prices due to fierce competition from other airline
firms such as Etihad Airways, British Airways, Singapore Airlines, Lufthansa, Malaysia
Airways and others. According to the International Air Transport Association (IATA), the
growing regional competition in UAE is one of the major factors that negatively affect the

EMIRATES AIRLINE 6
growth of already established airline companies such as Emirates Airline. The newest “super-
contender” in the UAE aviation industry, the Turkish Airline, is a particular threat to the
Emirates Airline (Dudley, 2017).
Hike in Fuel Prices
As provided in the data of IATA, the jet fuel price worldwide has increased in 2017 which
negatively affected the profits of Emirates Airline (IATA, 2018). The increased fuel prices
resulted in increasing the operating cost of the firm which resulted in increasing its ticket
amount that adversely affected the company’s growth.
Figure 2: Increase in Jet Fuel Prices
(Source: IATA, 2018)
Political Issues
The aviation industry has faced negative impact of Trump administration due to the
introduction of travel restriction on Muslim-majority countries called Executive Order 13769
which effect from 27th January 2017. Due to the fear of ban policies, the number of people
using UAE based airlines such as Emirates Airline for visiting the Middle East has reduced.
The passengers fear that they might face problems re-entering the United States after visiting
Middle East (Dehghan, Otten, Ross, and Shaheen, 2017). Therefore, it negatively affected the
profits of Emirates Airline as the passengers reduced. However, the number of people using

EMIRATES AIRLINE 7
UAE based flights to the US has increased which is positive for Emirates Airline (Maceda,
2017).
2. Analysis of External Environment
2.1 PEST Analysis
A PEST analysis is a framework which assists in scanning macro-environmental factors of a
corporation that influence it business which assist top-level management in creating strategic
business policies (CIPD, 2017).
2.1a Political Factors
There are a number of political factors that influence airline corporations that operates in
Avaiation industry in UAE such as change in government regulations, foreign trade policies,
environmental protection laws, taxation laws, stability of the government, terrorist activities,
government attitude towards the company and others. For example, the ban imposed by the
US President Donald Trump on different Muslim-majority nations resulted in negatively
affecting the business of airline companies because the number of people visiting the Middle
East has reduced (Parasie, 2017). The threat of terrorist attacks negatively affects the
profitability of corporations because it reduces the number of travellers in the country. As per
the research of Stephenson (2014), the number of travellers using UAE based flights to visit
Middle East countries has reduced because of the threat of terrorist activities. The negative
impact of terrorism affects the business of airline firms operating in UAE.
2.1b Economic Factors
The economic factors that influence the business of airline companies include GDP trends,
income level, inflation rates, wage controls, currency convertibility and others. For example,
the GDP growth of UAE has dropped significantly in 2017 (from 3.04 percent to 1.34
percent) which adversely affected the business of firms operating in the aviation industry
(Figure 3) (Statista, 2018). The hike in jet fuel prices in 2017 also negatively affected the
business of airline enterprises operating in UAE since it increases their operating costs
(Figure 2).

EMIRATES AIRLINE 8
Figure 3: GDP of UAE
(Source: Statista, 2018a)
2.1c Socio-cultural Factors
The socio-cultural factors that influence the business of airline companies in UAE include
change in lifestyle, consumer activism, demography, literacy rates, population and others. As
per the data of IATA, the number of travellers using airline as a mode of travelling has
increased 7 percent in 2017 (IATA, 2017). This data shows a potential growth in the profits
of airlines as the number of Asia-Pacific market share has grown and people prefer to pay
extra for luxury travel. The Middle East market share in number of passengers has grown 9.1
percent over 2015 which is also positive for airline organisations. On the other hand, the
population growth rate of the country is low (1.41 percent) in 2017, and it is increasing at a
substantial slow pace. From 2016 to 2017, the population growth rate has increased from 1.26
percent to 1.41 percent, and it is expected to grow up to 1.5 percent in 2018 (Figure 5)
(Worldometers, 2018). The slow growth in population negatively affects the business of
airlines operating in UAE. Airline companies focus on improving their social image by
investing in different charities and social causes.

EMIRATES AIRLINE 9
Figure 4: Yearly Population Growth Rate in UAE
(Source: Worldometers, 2018)
2.1d Technological Factors
Various technological factors influence the business of airline companies operating in UAE
such as total spending on research and development, new product innovation, energy
availability, the skill level of the workforce, and others. The companies use the latest
technology in its aircraft to providing high-quality luxury experience to its customers, for
example, many corporations are investing in modern wide-body fleets that reduce noise and
used lower engine emissions (Parmar, 2013). The airports in UAE require airlines to use
carefully planned flight plan and optimise routes to save fuel and increase efficiency.
Organisations invest billions of dollars in biofuel that are cost competitive, technically safe
and truly sustainable (Lane, 2014). The government of UAE is focusing on building “smart
cities” that use technology for providing various conveyances to public. The concept of smart
airports requires airline companies to use technology in their operating such as ticket
booking, passengers identification checking, flight scheduling and others. The Smart Gate
technology is popular in airports of UAE which reduces the time taken in check-out and
check-in for passengers (Shouk, 2017). These technological advancements assist airlines
operating in UAE to improve their performance and attract customers who appreciate luxury
travel experience. However, new advancement of technology in aviation sector poses a threat
to the enterprise such as artificial intelligence, robotics, Blockchain, biometrics and others.
2.2 Porter’s Five Forces
The Porter’s five force model assists is analysing the competitive advantage in which a
product, services or corporation works. The five forces include threat of entry, supplier

EMIRATES AIRLINE 10
power, buyer power, competitive rivalry and the threat of substitutes (The Economic Times,
2018). These factors shape every industry and help in identifying its strengths and
weaknesses.
2.2a Threat of new entrants
The threat of new entrants is high for Emirates Airline. The competition faced by the
enterprise is increasing with the entry of new competitors in the aviation sector. The Middle
East government provide various good sources of finance options to airline corporations
which increases the competition for Emirates Airline. The main new competitor of the
company is ‘Turkish Airline’ which is providing fierce competition to the firm due to its
luxury and relatively cheap flying experience (Gazzar, 2016).
Figure 5: Competitors of Emirates Airline
(Source: CAPA, 2014)
2.2b Supplier Power
The two main suppliers of Emirates Airline include Boeing and Airbus. They are the major
suppliers in the aviation industry and the competition between them is considerably high. The
demand of low fuel consumption and efficient aircraft is growing rapidly in the aviation
industry and being the major players in the market, Boeing and Airbus are focusing on
manufacturing new low-cost aircraft (Zhang, 2017). Emirates Flight Catering Co is the

EMIRATES AIRLINE 11
catering suppliers of Emirates Airline which handle its catering requirements. The company
is a subsidiary of Emirates and it ensures that demand of each customer is fulfilled (CAPA,
2018). Food Point is the food production facility which offers luxury catering food services to
passengers traveling with Emirates (Emirates Flight Catering, 2018). Emirates Airline has a
positive relationship with the suppliers, but they can refuse to work with the firm in economic
turmoil, therefore, the power of suppliers is high.
2.2c Buyer Power
The bargaining power of buyer for Emirates Airline is moderate. The buyers are divided into
two groups for the enterprise. The first group include individuals who purchase tickets for
personal or professional travel reasons. Emirates Airline offers high-quality luxury services to
its passengers and charges high ticket prices, therefore, the income level of the passengers
affects the firm’s business. The second category includes travel agents that provide the
facility of booking tickets to customers (Emirates, 2016). The firm is required to maintain a
positive relationship by providing them discounts and offers since they promote the business
of the enterprise.
2.2d Threat of Substitution
The substitution of air travel includes other modes of transportation that include bus, train,
car or boat. The airline corporations have an advantage in this section since they are the
fastest mode of transportation which provides benefits to the airline companies. Emirates
Airline also offers high quality, luxury and comfortable travelling option to its customers
which attract them towards the services of the enterprise (Emirates, 2018b). In domestic
market, Etihad and Air Arabia are the substitutes of emirates airlines which also provide
luxury services to customers. Therefore, the threat of substation is low for the Emirates
Airline.
2.2e Competitive Rivalry
The competitive rivalry in the aviation industry is intense, and Emirates Airline faces fierce
competition from established as well as new competitors. Due to huge profits and
government financial support, the number of competitors in the aviation industry is
increasing. According to Skytrax, Emirates Airline is the world’s fourth top airline company
in 2017, Qatar Airways being the first (Skytrax, 2017). The company has dropped from its
position of number one in 2016 to number four which shows the intensity of the competition
in the industry.