Emirates Airline: Connecting the unconnected Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Emirates Airline: Connecting the unconnected Case Solution

Economic

The economic growth of the country was high,followed by the inflation rate of around1.62 percent in the year 2013. Similarly, the interest rate was only one percent;but, the labor cost was expected to be lower in comparison to the labor cost of the European state. Employees did not receive any pensions, but were provided with benefits like tax free incomes, healthcare plans, free residential planning and end-of-service benefits.

Competitive:

The competitive structure of the aviation market was primarily dominated by the legacy carriers of Europe in their home market, which made them susceptible to compete in the market with low-cost carriers. This led towards a decrease in the ticket prices and margins on the fares of short-haul, significantly. Many of the players like Air France, British Airways and Lufthansa operated with high labor cost,devoting a large share of revenue. The efficiencies of scale were reaped in terms of low margins and perceived saturation of the market. However, the entire Gulf region was dominated by three players: Emirates, Qatar Airways and Etihad.

All these three firms competed against the gateway to the Middle East and experienced rapid growth over the period of 10 years. This was followed by the addition of new destinations, and an increased seat capacity by order placement of new planes. This allowed these three players with the ability to represent a distinct push to lead the market and build strong premium brands for the provision of premium passenger experience, supported by the addition of new fleets, modern facilities of airport and high quality service.

Porter Five Forces Analysis

Rivalry

The competitiveness in the aviation market is high due to the presence of leading and low-cost players in the market. The aviation industry includes: European players like British Airways, Air France, and Lufthansa. Whereas other domestic players include Qatar Airways, and Etihad, and Turkish Airline. The expansion of the network service by such competitors was mainly based on airline alliance i.e. one world alliance, SkyTeam Alliance, and Star Alliance, making up to 84 percent of the global aviation traffic.

Threat of New Entrant

Considering the competitiveness of the market; the new entrants are required to make heavy investments to design and develop the capabilities of the fleets that meet the passengers’ needs and demands. In order to make successful entrance in the market; the new players are required to have high brand value, have an accessibility to distribution, negotiation or agreement with the state’s government to allow an access in the particular state. Thus, the threat of new entrants is lower.

Threat of New Substitute

The availability of substitutes to the aviation,mainly includes other forms of transportation like boat or cruise, train, bus or car, in order to reach the destination. The difference between the costs is quite high as compared to the aviation. Due to this reason, it is considered that some of the transportation's can significantly turn out to be more costly in comparison to a plane ticket. Thus, the threat of new substitute is moderate.

Bargaining Power of supplier

For the manufacturing of airplanes; the airline organizations are mainly dependent on the suppliers because the airline companies are mainly differentiated on the basis of their amenities. Similarly, the long-term contracting does not provide both the supplier and the organization to switch,leading towards more favorable credit terms. Thus, the bargaining power of supplier is low.

Bargaining Power of Buyer

The preference of passengers to choose Emirates for travelling tends to be based on first-class service, direct flights to different states across the globe and availability of amenities which are not found in low-cost aviation services. But, the majority of the customers seem to be reluctant to avail premium services,which provide benefit to the low-cost players to have an increased revenue generation. Due to this reason; the bargaining power of buyers is moderate.

Critical Success Factors

The critical success factors of the organization mainly include its location and small local markets, which lead to the quick expansion of business to the international routes. Secondly, its distance of Dubai from the congested airspace of Europe is minimal aviation traffic, allowing the flights to connect at any time of the day. The relationship of Emirates with the government i.e., ICD played a role of sole shareholder, which assisted in fostering the cooperation between the airline, airport and the city. Similarly, the entrance of Emirates in the new markets was supported by the UAE government, through the negotiation of bilateral aviation agreements in the foreign regions.

2. Please conduct SWOT analysis to identify Emirate’s competitive advantages over the competitors.

SWOT Analysis

Strength

The adoption of the flat organizational structure encouraged the organization's lowered costs, autonomy and flexibility.
The organization had around 55,000 employees, which mainly included 17800 flight attendants and 3500 pilots.
The passenger base of Emirates at global level hailed from around 148 countries, who spoke more than 50 languages.
The airline received World Travel award from the travel industry for consecutive three years of providing best and first-class service to its passengers over past ten years.
Emirates made heavy investments in the control and safety systems of the organization.
The launch of newer planes brought an improvement in the passengers’ experiences and increased the efficiency of fuel consumption.
The entrance of Emirates in underserved markets with fixed demand, provided the organization with a first-mover advantage.

Weakness

The premium strategy adopted by Emirates was quite weak, which allowed the competitors, in particular its regional counterparts to copy it.
The fare of Emirates are quite higher despite the lower labor cost in comparison to other players in the market.
The organizational management is more focused towards diversification as compared to the challenges posed by the industry and risks associated with the entrance in the new markets.

Opportunities

For the long-term competitive advantage; the organization has the capability to lead the continuous development of new generations based on the usage of advanced technological approaches.
Reduction in the fares would bring an improvement in the profit generation, because Emirates contributes to a small part of the global airline profit worldwide.
Entrance in the underserved markets would allow the organization to gain its foothold in the market and capture the ensuing growth.

Threats

Inability of the organization in-bringing reduction in the cost might benefit the low-cost players in the market, resulting in its declined revenue generation.
Lack of strategic focus to deal with the risks and challenges would negatively influence the position of the organization, in the international market...............................

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Emirates Airline: Connecting the unconnected Harvard Case Solution & Analysis