Case Study: Emirates Group
Introduction
The Emirates Group is a government-owned organization that offers airlines (Emirates) and ground-handling services (Dnata). It is based in Dubai, United Arab Emirates, and its business model is diversified and incorporates modernity. Diversification is evident with different services provided by Emirates and Dnata. Incorporation of modernity is seen as the organization uses an online booking and gives Google Now cards. Nonetheless, Emirates Group faces strategic challenges due to global unrest, fluctuation in fuel prices, and strategic alliances.
Macro-Environmental Analysis
One of the tools that can be applied in analyzing the macro-environment of Emirates Group is PESTEL, which is an acronym – Political, Economic, Social, Technological, Ecological, and Legal – of Factors that affect organizations.
The political aspects include the government of Dubai being the owners of Emirates and the formation of strategic alliances by several airlines to outdo the rivalries. In the Economic aspect, the company’s revenue both from the Emirates and Dnata has increased in the financial years ending in 2018 to 2019 (pg 6). Similarly, its competitors, like Singapore Airlines and British Airlines, also their revenues, show an upward growth (pg 8). In the Social factor of the tool, there are several transformations in the society of Dubai like it is one of the fastest-growing city globally, and living standard is also excellent (pg 2). In terms of technology, the Emirates group hands out Google Now cards and provides services email, TV monitors, and SMS services to their customers. The ecology and legal factors include the changes in the average strength of the employees (pg 5 & 6) and open-skies policy (pg 1), respectively.
From the PESTEL analysis, opportunities and threats can be inferred. The opportunities include open-skies policy, government ownership, and growing population. The threats are like strategic alliances and stiff competition.
External Analysis
The external Analysis of Emirates Group can be achieved by utilizing Porter’s Five Forces. The threat to a new entrant is high because of an open-skies policy; however, the capital and maintenance costs tend to lower the threat. Substitute threat is high because there are many regional and international organizations offering the same services as Emirates Group, for instance, Singapore Airlines, Delta, British Airways, among others (pg 8). The bargaining powers of buyers (who are mostly passengers in regards to Emirates Group) is high. It is because substitutes are numerous, and the switching cost is significantly low as other competitors, notably Ryanair (pg 8), offer very high discounts. The supplier power of bargaining is too high. It is due to that significant numbers of the Emirates’ aircraft are Boeing and Airbus (pg 6). Therefore, the rivalry will be great as all the elements of Porter’s Five forces are high.
Due to these factors, Emirates Group has made strategic choices such as diversification – Emirates and Dnata – and creating value – it offers multiple services, such as a spa, and latest movies, in the different traveling classes.
Strategy Position
Emirates Group has strategic positions that advocates for its strength. The strategic positions and strengths can best be described by VRIO (Week 3) and SWOT analysis, respectively.
VRIO is an acronym of Value, Rarity, Inimitability, and Organizational Support. It has created value by diversifying its business model and subsequently trying to meet the wants and needs of the consumers. For instance, it offers first-, business-, and economy-classes. In Rarity, it was the first airline to give Google Now cards in the Middle East. In the third part of VRIO, Inimitability, Emirates has formed several partnerships, which are not alliances. One of the airlines they have partnered with is Quantas (a member of One World) (pg 10). According to the CEO of Quantas, this type of partnership is novel and distinct (pg 10). The final part of the tool is Organizational support. The C-Suite of Emirates comprises of competent individuals who report to the CEO. They are seven, each working in distinct business units (pg 3).
The strength of the UAE organization includes being the leading airline in the Middle East, which serves 85 countries and has diverse traveling classes. Nonetheless, there exist weaknesses in it. There is no female in the C-suite, and several strategic alliances exist, like One World and Star Alliance.
Conclusion
Emirates Group is a government organization headquartered in Dubai, UAE. It is one of the largest airlines in Asia and flies to all continents. Although it is strategically positioned, it faces stiff rivalry; therefore, it needs to make additional strategic choices to gain a competitive advantage. It can do this by using the TOWS matrix.
Strengths
| Weaknesses
| |
Opportunities
| SO: Maxi- Maxi Strategy 1. It should open a student’s class (S1, S4, O1). 2. Research where the tourists are coming from and offer a to and fro trip (S1, O3) | WO: Mini-Maxi Strategy 1. Forming of a strategic alliance with airlines in countries where students and tourists are coming from (W2, O1, O2) |
Threats
| ST: Maxi-Mini Strategy 1. It can increase its scope by forming strategic alliances (S1, S2,T1,T2) | WT: Mini-Mini Strategy 1. Create strategic alliances as this will give it a competitive advantage and will be in a better position to offer high discounts due to economies of scope (W2, T1, T2, T5). |
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Reference
Case study of Emirates Group