The profitability ratio i.e. operating margin of Emirates is lower than Air France and Lufthansa, depicting the profitability of the competitors and showing that how well it has been managed.The revenue of Emirates after covering operating expenses are reduced than competitors. As an addition, the return on asset sof Emirates airline is more than Air France but lower than Lufthansa, depicting that the company has earned profits in relation to its overall resources. Further, the non-financial factors include leader ship and management at Emirates Airline; the talented leaders have accelerated the growth of the company through quality customer service, excellent management techniques and highly skilled diverse workforce.The company has designed corporate social responsibility program to make positive differences in the communities through community involvement and employees engagement. It has placed its great value on social responsibility and corporate citizenship and believes that the business ethics are integral to the growth and continued success. In contrast, Air France has aimed to reduce its environmental footprints by partnering, improving processes and operations,innovating in the supply chain and by mobilizing industry as well as its entire staff, whereas; Lufthansa connects economies, people, cultures driving social progress and economic growth.
Since, the company has been recognized as a market leader;this has allowed it to develop an advanced aviation services through research & development by following market trends in the industry.The company has desired working environment, strong brand image, high quality in services.These advantages should be emphasized and maintained to keep its leading position high amongst strong rivals and lower the impact of intense competition. The failure to forecast and variation in demand can be solved by powerful capability and variation in the management approaches to work in the crises. Being a main customer of Boeing and Airbus, the company should take an advantage to after sales service and bargain price terms, which would lower the operational cost. The dis economies in scale should be overcome by having an expansion via reaching budget travelers and low-cost airlines. The company should invest in E-commerce to strengthen the IT infrastructure which would result in reaching more customer, lowering the cyber threats, and reducing operational cost (Watkins, 2007).
The VRIO analysis of Emirates Airline indicates the core competencies which include use of advanced technology, exceptional customer service, trained personal strategy,operating strategy and financial resources.All these resources are valuable, imitable and exploited but not rare, providing temporary advantages. Additionally, the strong track record of leadership team is valuable, rare, exploited and is non imitable, thus providing strong competitive advantage, and the pricing strategy is valuable, imitable, exploited and is not rare, providing temporary competitive advantage. Additionally, the access to critical raw material for the successful execution is valuable, rare, imitable and exploited, providing sustainable competitive advantage.
Notably, the business model of Emirates has paved the way to become a market leader. The Emirates airline’s strategies include quality control strategy, differentiation strategy and extensive aviation training strategy.The global alliance and partnership, and use of trained programmers is one of an excellent addition to the portfolio of Emirates’business strategy.
One of the significant core issue with Emirates Airline is building the profitable business model, how it would select technology, new routes and equipment, and manage its human resources, branding and marketing and government relationship.It requires internally consistent strategy that would capitalize on the market opportunities across geographic markets. It is recommended that the company should continue working on its strategy of organic growth, and making investments in services and products to offer value proposition and an outstanding experience to the customers.It should become more receptive to partnership and target the untapped markets as well to enjoy the first mover advantage. Furthermore, it should capitalize strategic alliances and make investments in R&D for having an innovation. Also, the company should enter into the low cost market penetration due to economies of scale and absolute cost advantage. Amongst 7cs, the most foremost and important factors include skills, strategy and system that would allow the company to remain a substantial and a magnificent market leader by incorporating innovation and expertise.
Questions for class discussion?
- How Emirates can capitalize location and make access possible to the maximum population in minimum time frame?
- How should Emirates make new routes to serve the new markets......
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