Etihad Airways: Strategic Management and Business Analysis Report

This report provides a strategic management analysis of Etihad Airways, focusing on its business and corporate-level strategies. It examines Etihad's competitive advantages, including its strategic partnerships and resource-based approach, and assesses the external environment using Porter's Five Forces model. The report highlights the airline's strengths in delivering quality services and building a strong brand image. Key findings include the influence of external factors and the need for effective strategies to capitalize on environmental changes. The report also identifies challenges such as high competition and the bargaining power of suppliers, offering recommendations for Etihad to sustain its competitive edge in the airline industry. The analysis covers various aspects, including business objectives, marketing strategies, and digital marketing efforts.

Strategic management

EXECUTIVE SUMMARY
Strategic management is basically a procedure which includes continuous planning ,
monitoring, analysis of all those things which are important for an enterprise in orde4r to achieve
desired objectives. The findings of the report shows that Etihad airways has number of
capabilities as well as competencies which it could use for gaining competitive advantages. The
other fact which has been discovered is that business operations of the Etihad is highly
influenced by external factors and in order to gain the benefit of changes in external environment
firm need to develop an effective strategies.

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................6
RECOMMENDATION ..................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Strategic Management is the continuous planning, monitoring and analysis of all the
essentials for an organization in order to meet the goals and objectives in better way. On the
other side, through strategic management process, the leader of the firm assess the company's
present situation and determine the effectiveness to implement them into the working area. The
chosen firm for this report is Etihad Airlines which is the second largest flag carrier of UAE and
also the carrier of Abu Dhabi. The report will describe the current business and also the strategy
or capacity to sustain the competitive advantages. Further, report will uses two models in order
to describe the internal and external analysis of the firm. Lastly, study provides two specific key
issues which currently Etihads faces and also provide recommendation for the same.
MAIN BODY
Current business level and corporate level strategy of Etihad.
Ethihad is among the one of the most popular airline which is located in UAE But an
organisation has its operations in Shri Lanka as well. Business entity has gain popularity for
delivering quality cabin crew services. Etihad has been successful in building good reputation
around the world. An enterprise has its business operations at global as well. In addition to the
airways services, Etihad provides other services also which includes holidays as well as cargo
services. Board of directors, executive and audit committee is mainly responsible for governing
the operations of company. An organisation provides in Flight entertainment services to
customers. The main purpose of Etihad is to meet its customer expectations by offers clients
with airline career services .In addition to this, an enterprise also intends to provides its
customers with luxurious airline services (Morden, 2016). Vision of Etihad airline is to achieve
leadership position in an industry by providing customers with high standard of cargo services.
Business objectives of Etihad is to earn high profit. It is the corporate level and business level
strategy which has helped Etihad in achieving success and gaining competitive advantage in the
market.
Business level strategy is basically a procedure in which firm mainly focuses on core
competencies for satisfying their clients. In simple words. Company mainly concentrates on
identifying the detail actions which are required to be taken foe delivering high valuer to
customers and for gaining the competitive advantage in sector. Corporate level strategy is
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basically a decision taken by management in an organisation that further have overall as well as
significant effect on business performance. It is basically a type of strategy which mainly have
great influence on management, human resource and also on financial performance of an
organisation. In addition to this, Etihad has adopted the strategic approach to approach to
expansion,
Strategic partnership is the business level strategy which is adopted by Etihad. An
organisation has formed strategic partnership with other enterprises especially career companies
so that it could provide more services to its clients. The strategic partnership strategy has
assisted firm in increasing its capability and competitiveness. In relation to Etihad, the strategic
partnership strategy has enabled an enterprise to offer connecting flights even to destinations it
officially do not fly to itself (Hitt and Duane Ireland, 2017). The strategic partnership strategy
has also provided Etihad with an opportunity to have access to new market and to earn higher
profit. An organisation has tried to form strategic alliance with other organisations such as Sky
team as well as one world. But by entering into strategic alliance management in firm
discovered that there were no membership options for the airlines. In addittion to this, Etihad has
also made investment in other firms , for instance , an organisation has stake in companies like
Air Berlin, Virgin Australia, India's Jet airways etc. The investment strategy has provided
enterprise an opportunity to increase its business network which has proven to be beneficial in
relation to increase in customer base. Through the strategic alliance as well as partnership
strategy , Etihad has been able to develop more innovative services for its customers. Both
strategic partnership and alliance strategy has helped Etihad in gaining the competitive
advantage. Etihad has form strategic partnership with Alitalia as well as Air Berlin. An
organisation has adopted the more sustainable approach to growth which has helped an
enterprise in becoming global player in aviation industry. An enterprise has restructure itself
which has provided enterprise a chance to develop more competencies which could be helpful in
relation to sustaining competitive advantage.
In context of Etihad , an enterprise has adopted the resource based approach. It is the
strategy which has provided management an ease in ensuring that all the essential resources such
as technology, manpower and other equipments are available. The resource based strategy is
formulated by management in an organisation is designed around further development of
strategies. It is the business level strategy of Etihad which has assisted business entity in
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accomplishing desired objectives. Management in an organisation has integrated all its business
procedures which are required for supporting their value proposition. It is the integration
strategy which has enabled an organisation to deliver high value proposition to its clients.
In addition to the above, it is the marketing strategy implemented by Etihad which has
assisted busies entity in developing the strong brand image in the market. An enterprise mainly
concentrate on promotional activities for developing new innovative services for its clients. It is
decision taken by management in Etihad related to establish business in Abu Dhabi is considered
to be as best as it has helped an organisation in gaining the competitive advantage. In addition
to this, an organisation has developed lounges for its individual customers. It is basically a
marketing strategy which has been successful in capturing the attention of customers towards
firm. Youth program has been organised by Etihad which has helped business entity in gaining
the competitive advantage (Holloway, 2018. ). In addition to this, management decision related
to implementation of an effective pricing strategy as a technique of acquiring competitiveness
has been successful in relation to the enhancement of firm performance in the market. It vis an
effective marketing strategy which has helped Etihad in fostering business growth and assisted
firm in gaining the competitive advantage. Digital marketing strategy adopted by an organisation
has assisted them winning over their competitors.
In order to determine the external environment of the company, it is quite beneficial for
the firm to use Porter five force which helps to analyse the competition of a business. As the
Etihad Airline operating in many countries and also the first airline in Arab world who offer the
online services to their customer with better pricing. In addition to this, using the model,
company also determine some driver of industry which may affect the business in positive or
negative way (Porter five force of Airline Industry, 2018). Thus, it describe five factor which
affect the industry and these are as mention below:
Competition in the industry (high): High competition is the biggest driver in the quoted
industry. In an airline industry, the rivalry is high between many companies. It is so because
there are different variety of airline companies who provide best aircraft services as well as good
services to their passengers (Moutinho and Vargas-Sanchez, 2018). In the same way, Etihad
Airlines also face the direct competition with Emirates Airlines at domestic level and on the
other side, it also have rivals such as Air Arabia and Qatar Airways. On contrary, UAE Aviation
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Sector also increases number of fleets rapidly and thus, it force the quoted firm to do the same in
order to remain in the competition as well. Further, to sustain in this competition environment,
many companies tries to expand own market share by providing good quality and best price
services to their customers with exclusive promotions. It is so because it helps to remain them in
competition.
Threat of new entrants (low): The new entrant in airline industry cause threat to
existing firm and it is so because they offer better services in low rate. Thus, it is also analysed
that in airline industry, the threat is low but level of entry barriers is high, because there are many
challenges which must be considered while entering such as capital requirements, customer
loyalty, access to distribution and switching cost etc. These are not possible for any new entrant
and as a result, this sector may end up to encourage new airlines (Steiss,, 2019). That is why,
Etihad Airline faces low threat of new entrant in airline industry.
Threat of Substitute (moderate): The threat of the substitute is different from the
domestic and international airlines. Such that in the regional or domestic level, people generally
prefer car or hire people who can drive their cars, even they sometimes uses train for travelling
within a same region. On the other side, for international travelling, people uses airlines from one
country to another because it is one of the most safest and time saving method. In addition to
this, there are many countries, where local facility is also not available such that UAE and for
them the threat of substitute is weak for the airline industry (Ethiraj, Gambardella and Helfat,
2018). Moreover, on the other side, at the time of global recession, the airline industry faces
negative impact because most of the customer uses cheaper flights services due to hard economic
terms and this affect the growth of Etihad Airline in negative way.
In addition to this, in order to opt this situation, the company should provide best quality
of services at low rates and this helps them to overcome from the situation. With the same, the
growth of quoted firm also increases as well.
Bargaining power of customer (low): The industry faces low rate of bargaining power
of customers such that buyer affect the industry such that they reduce the price and also bargain
for the high quality and additive services as well. As the buyer in airline industry is strong
because they carry a lot of passengers and they have low switching cost but have many choices
in the market as well (Höglund, Holmgren Caicedo and Mårtensson, 2018). As the industry
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have low rate of bargaining power of customers and it is due to customer always match the
prices which a firm offers to others and then they chooses the low price products and services.
In addition to this, for the ease of customers, the airline industry also uses the advance
technology that is e- ticketing which provides the chance to people as well as flexibility in order
to search for the best airline company. Even the strategy also ease the operational system of the
firm and attract wide range of customers as well.
Bargaining Power of suppliers (high): Currently it is also most affecting driver of the
industry and the power of supplier is also high, because those limited suppliers have a control on
market because of high demand of the products which are manufactured. On the other side, the
supplier also affect the industry by raising the price and minimized the quality of products as
well (Holloway, 2018). As the airline industry have few suppliers at global level that is Boeing
and Airbus and that is why, it affect the airline industry's success. Hence, because of this
dominance, supplier have an upper hand from Etihad and in order to reduce the high power of
suppliers, quoted firm has to buy in bulk services.
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CONCLUSION
From the above report it is stated that the strategic issue which is faced by Etihad's in
2019 is relating to the less airlines route in golf areas where there are more chances of earning
profits. As it is determined that Etihad cut its network from the major countries where there are
more chances of gaining increment in terms of passengers ratio and also profits gained. With this
strategic issue, it results in examining the loss in financial structure of the airlines. The memo
indicates that there is significant loss in the Reuters which is relating to disporting the routes to
the most profits gaining countries. Due to not affording to the facilities which is provided by the
airlines to their passengers, they cancel the orders of 10 Airbus A360neo aircraft which they
placed order in 2013. Due to having not accurate planning regarding the airlines routes, which
resultant in getting more profits to the airlines if they focus on point to point routes. By not
having the sufficient finance to mange the internal activities of the airlines, they cut the amenities
such as free pyjama to the business class passenger or any complementary chauffeur services
which attract the interests of passengers towards the airlines.
The another strategic issue arises in case of cutting its operating costs which resulting in
laying off the pilots to find new jobs. By not managing the costing of the pilots they are planning
to cut off its pilots from Etihad and giving them the opportunity to join Emirates. As major
proportionate of pilots refuses to grab this opportunity and also not Linked with Etihad for flying
their planes. As compared to other airlines services , they reduce various facilities regarding
providing entertainment to their passengers which distract the interest of passengers towards
such services.
RECOMMENDATION
From the above strategies issue which affiliates the performance of Etihad in 2019 is
relating to:
 Improving the core operating cost so that they can afford the best pilots in this airlines.
By competing with Qatar and Emirates the services which they are providing are unique
and attracting the interest of passengers for longer time period. Thus, the management of
Etihad had to properly interpreted the layoffs of the airlines so that they provide new
employment opportunities to their pilots.
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 Investing more in right perspective such as investment is to be done in respect of foreign
carriers or starting new flight in golf countries where there are more chances of getting
profits. As majorly business occurs in golf areas where people invest the money not in
getting premium needs but by the facilities which the airlines is providing to their
passengers.
 The performances are also down in respective of not getting the limited seats which is
provided by Etihad to their passengers. Thus, airlines had to provide more facilities
which they can get high paying passengers and through such services they can manage
their operation cost effectively. By increasing the weight which is carried by Etihad
regarding carrying cargo also helps them to increase their reputation and recover losses
from such ways.
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REFERENCES
Books and Journals
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Steiss, A. W., 2019. Strategic management for public and nonprofit organizations. Routledge.
Ethiraj, S. K., Gambardella, A. and Helfat, C.E., 2018. Theory in strategic
management. Strategic Management Journal.39(6). pp.1529-1529.
Höglund, L., Holmgren Caicedo, M. and Mårtensson, M., 2018. A balance of strategic
management and entrepreneurship practices—The renewal journey of the Swedish Public
Employment Service. Financial Accountability & Management.34(4). pp.354-366.
Holloway, S., 2018. Changing planes: A strategic management perspective on an industry in
transition. Routledge.
Makadok, R., Burton, R. and Barney, J., 2018. A practical guide for making theory contributions
in strategic management. Strategic Management Journal.39(6). pp.1530-1545.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship. pp.45-63.
Morden, T., 2016. Principles of strategic management. Routledge.
Online
Porter five force of Airline Industry. 2018. [Online]. Available through:
<https://www.essaytyping.com/etihad-airways-analysis/>.
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