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Dissertation study into the etihad airways' global growth strategies to achieve rapid growth in the airline industry.

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The Etihad Airways was started in 2003 and it was on a goal to be one of the great international carriers and it has become successful in that. It is the national airline of the UAE and at present one among the most impressive and fastest emerging airlines in the globe. The airline functions near to 1000 flights per week serving 66 destinations across 44 nations from its home base in Abu Dhabi. Main areas served by the company are Europe, Asia, North America and the Middle East and major targets include London, Moscow, Mumbai, Damascus, New York, Toronto Kuwait, and Islamabad. Etihad Airways' fleet consists of 57 Airbus aircraft.

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Dissertation study into the etihad airways' global growth strategies to achieve rapid growth in the airline industry.

  1. 1. Get your 1st class custom-written paper with 10% off at http://writinghub.co.uk/ An investigative study into the Etihad Airways' Global growth strategies to achieve rapid growth in the Airline industry. Explore more free essays, assignments, and research papers at http://writinghub.co.uk/
  2. 2. ABSTRACT The Etihad Airways was started in 2003 and it was on a goal to be one of the great international carriers and it has become successful in that. It is the national airline of the UAE and at present one among the most impressive and fastest emerging airlines in the globe. The airline functions near to 1000 flights per week serving 66 destinations across 44 nations from its home base in Abu Dhabi. Main areas served by the company are Europe, Asia, North America and the Middle East and major targets include London, Moscow, Mumbai, Damascus, New York, Toronto Kuwait, and Islamabad. Etihad Airways' fleet consists of 57 Airbus aircraft. Its fast development has been the fastest in history of aviation and with more than 100 aircraft orders in the pipeline there is more growth to come. It was certainly motivated by the runaway success of Dubai’s Emirates which in several ways it is similar to. Sheikh Khalifa bin Zayed Al Nahyan the Emir of Abu Dhabi leads the airline but day to day management is vested in Australian James Hogan. Etihad’s progress has been amazing with the multi award winning airline, a real risk to staid legacy carriers who are moving down market. Etihad also has a widespread freight subsidiary called Eithad Crystal Cargo. The brand concept was included entirely throughout all customer touch points – from ticketing to final destination. The loyalty system provides flexible rewards for both business and leisure travellers, and a variety of personal preferences varying from communications to in-flight preferences. Guest-centric strategy of Etihad has been at the base of its growth and assures to guarantee sustained distinction in this very competitive market. 2
  3. 3. TABLE OF CONTENTS An investigative study into the Etihad Airways' Global growth strategies to achieve rapid growth in the Airline industry. .........................................................................................................................................1 ABSTRACT...................................................................................................................................................2 TABLE OF CONTENTS..................................................................................................................................3 CHAPTER 1..................................................................................................................................................6 INTRODUCTION..........................................................................................................................................6 1.1. Introduction.....................................................................................................................................6 1.2. Background of the Research............................................................................................................7 1.2.1 Overview of the Airline Industry................................................................................................7 1.2.2 Overview of Etihad Airways.....................................................................................................10 1.2.4 Basis for Selection....................................................................................................................13 1.3. Research Problem..........................................................................................................................13 1.3.1 Research Questions.................................................................................................................14 1.3.2 Analysis of the Problem...........................................................................................................14 1.4 Aim of the Research.......................................................................................................................15 1.5 Objectives of the research..............................................................................................................16 1.6 Scope of the study..........................................................................................................................16 1.7 Limitations of the research.............................................................................................................17 1.8 Outline of the study........................................................................................................................18 1.9 Conclusion......................................................................................................................................19 CHAPTER 2................................................................................................................................................19 CRITICAL LITERATURE REVIEW.................................................................................................................19 2.1 Introduction....................................................................................................................................19 2.1.1 Benefits of critical literature review........................................................................................20 2.1.2 Literature Search Strategy and Sources...................................................................................20 2.1.3 Critical literature review structure including keywords...........................................................22 3
  4. 4. 2.1.4 Limitation of the Literature Review.........................................................................................23 2.2. Business growth and strategy........................................................................................................24 2.2.1 Introduction.............................................................................................................................24 2.2.2 An Overview of Business Growth Strategy..............................................................................24 2.2.3 Empirical and Theoretical Frame Work of Business Growth Strategies...................................25 2.2.4 Strategies of Etihad Airline......................................................................................................27 2.2.5 Conclusion...............................................................................................................................28 2.3 Globalization and Global market....................................................................................................29 2.3.1 Introduction.............................................................................................................................29 2.3.2 An Overview of Globalization..................................................................................................29 2.3.3 Global Market and Marketing Theories...................................................................................30 2.3.4 Conclusion...............................................................................................................................34 2.4 Airline Industry and Etihad Airways................................................................................................35 2.4.1 Introduction.............................................................................................................................35 2.4.2 Empirical Frame Work of Airline Industry and Etihad Airways................................................35 2.4.3 Conclusion...............................................................................................................................37 2.5 Middle East Economy.....................................................................................................................38 2.5.1 Introduction.............................................................................................................................38 2.5.2 Middle East Economy and Businesses.....................................................................................38 2.5.3 Conclusion...............................................................................................................................41 2.6 Conclusion about Literature Review...............................................................................................41 2.6.1 Theoretical Frame Work of the Research................................................................................41 2.6.2 Empirical Evidences Found......................................................................................................42 2.6.3 Key Authors of the Research Work..........................................................................................43 CHAPTER 3................................................................................................................................................44 RESEARCH METHODOLOGY......................................................................................................................44 3.1 Introduction....................................................................................................................................44 3.2 Research Philosophy and Approach...............................................................................................44 3.2.1 Importance of Pragmatism Philosophy....................................................................................45 3.2.2 Why Inductive Not Deductive?................................................................................................46 3.2.3 “Onion” Model Application.....................................................................................................47 4
  5. 5. 3.3 Research Study on Etihad...............................................................................................................49 3.3.1 Designing of Questionnaire.....................................................................................................49 3.3.2 Sample Selection Techniques..................................................................................................50 3.3.3 Data Collection........................................................................................................................51 3.3.4 Pilot Testing.............................................................................................................................51 3.3.5 Dependability and Validity ......................................................................................................52 3.3.6 Generalisability........................................................................................................................53 3.3.7 Process of Research Analysis...................................................................................................53 3.4 Alternative Method........................................................................................................................54 3.5 Issues about Ethics.........................................................................................................................54 3.6 Research Limitations.......................................................................................................................55 3.7 Conclusion......................................................................................................................................56 CHAPTER 4................................................................................................................................................57 DATA ANALYSIS AND FINDINGS................................................................................................................57 4.1 Introduction....................................................................................................................................57 4.2 Presentation and Analysis of Secondary Data................................................................................58 4.3 Findings from Secondary Data........................................................................................................61 4.4 Presentation and Analysis of Primary Data.....................................................................................63 4.5 Findings from Primary Data............................................................................................................75 4.6 Conclusion......................................................................................................................................78 CHAPTER 5................................................................................................................................................79 RECOMMENDATIONS AND CONCLUSION.................................................................................................79 5.1 Introduction....................................................................................................................................79 5.2 Conclusion .....................................................................................................................................79 5.2.1 Objective 01 - Critical Evaluation of Organizational Growth....................................................79 5.2.2 Objective 02 - Pursued Marketing Strategies..........................................................................80 5.2.3 Objective 03 - Pursued Organizational Strategies....................................................................81 5.2.4 Objective 04 - Influences Of UAE Government and Middle East Economy..............................82 5.2.5 Summary of Conclusion...........................................................................................................83 5.3 Recommendations..........................................................................................................................83 5
  6. 6. 5.4 Future Research..............................................................................................................................84 REFERENCES.............................................................................................................................................86 APPENDIX.................................................................................................................................................91 CHAPTER 1 INTRODUCTION 1.1. Introduction The world economy is changing rapidly over the years and it has influence on all sectors of industries. Due to these changes international airline industry and transportation industry turn out to be competitive and profitable industries. In later twentieth century the world economy process encompassed with radical changes which made changes in to the business and consumers buying behaviours (Morrison, 2006). Tremendous development of the globalization activities make more demand for the air transportation than ever and it guide to increase of air traffic growth in the world. In 2010 world travel industry have the benefit of some development after hard 2008-2009 period. In modern world, Middle East airline industry is growing considerably and many new airline companies are challenging big airline companies and it create a condition where profit margins become shrinking rather it was. In 2009 major airlines of the industry incurred net loss of USD 9.9 billion and it was USD 16.8 billion in 2008. Yet, with current economical growth after wrest economic crisis, industry is expected to make USD 2.2 billion profit in year 2010 (James, 2010). As recent Middle East airline Etihad Airways achievements are remarkable, some awards including World’s Leading Airline at the World Travel Awards in 2009/2010 and many more global and regional awards showed that organization is challenging established airlines in the globe. Furthermore, in 2008 at Farnborough International Air Show Etihad proclaimed the biggest aircraft order in commercial aviation history for up to 205 aircraft – 100 firm orders, 55 options and 50 purchase rights (Oxford Business Group, 2009). So, factors suggest that Etihad is looking for high development in commercial airline industry. In 08 years of commercial 6
  7. 7. operation organization achievement shows that there should be some strategies, which they have pursued to get fast development in short period of time. In this research it is going to assess the strategies followed by the Etihad Airways to get fast development in the airline industry. Researcher will analyze empirical and theoretic frame work connected with the case study and will be gathering data to assess research aim. This study is in the theme of strategic management in international business environment (Oxford Business Group, 2009). 1.2. Background of the Research The global airline industry is likely to make profit after some of its hard times. Nowadays, Middle East airlines are rising in the airline business. By means of the huge inflow of risk capital their achievements are remarkable. Etihad which is a younger airline is progressing quickly and it creates lot of research opportunities for researchers to examine Middle East Airline industry (James, 2010). 1.2.1 Overview of the Airline Industry The growth of transportation industry increased the process of globalization as pointed by Morrison (2006). With the globalization airline industry turn out to be more profitable industry as it was linking nations faster than before. North America region is the market leader followed by the Europe and Asia –Pacific in the airline business. The following graph demonstrate the development of airline passengers traffic by place and is suggesting that Middle East region is rising for the airline industry in terms of passengers traffic (Oxford Business Group, 2009). 7
  8. 8. Figure 1 Growth of Airline Passenger Traffic by World Region (Balobaba et al. 2009) Airline industry is extremely unstable industry and very responsive for the market variation. During the period of first Gulf War in 1991 and after 2001 September 11, terror attack in air traffic has fallen all over the world drastically (Balobaba et al. 2009). Furthermore it took many years to bring back the industry and the following world airline net profit graph demonstrated the unpredictability of industry success. 8
  9. 9. Figure 2 World airline net profit 1987-2007 (Balobaba et al. 2009) Due to economic crash in the globe in 2008 and 2009 years also incurred net loss on the whole and in past few years dozens of new discount airlines have been started in emerging countries and some are getting big success in the competitive airline industry (Adib nd). In the meantime, Emirates as Middle East based airline has engraved out a place for itself as a main long-haul airline and for that airline employ the policy of routes spanning over the globe covering key hub in Middle East. Furthermore, according to World Travel and Tourism Council (WTTC), 72.2 million workers were in the travel and tourisum industry in 2009, which was anticipated to develop to 81.9 million employees in 2010. WTTC expecting to on that basis, group assesses whole effect of the industry on global GDP at $5.47 trillion or 9.4% of global GDP for 2009 furthermore this will develop by 4.4% annually between 2010 and 2020, on an 9
  10. 10. inflation-adjusted basis (Plunkett, 2008). In the meantime, growth of aircraft manufacturing will make key alterations to the worldwide airline industry. The modern sophisticated aircraft, Boeing’s 78 planed their product launch in early 2011and this craft offer enormous developments to passenger comfort with very long international range. Besides that engine allow developing fuel efficiency around 20% so these technical alterations will have important improvements to the airline industry in near future. Furthermore, there will new direct routes open, for instance there will be new fleets from Europe to emerging Africa and Southeast Asia destinations. So, it is fact that global airline business is growing considerably and owing to its unpredictability make challenging situation for the organization in the air transportation business (Blanke, 2009). 1.2.2 Overview of Etihad Airways Etihad Airways, established in July 2003 by the Royal (Amiri) Decree is the national airline of the United Arab Emirates. Though, organization has taken another four months to begin their commercial operation but Etihad manage to add at least one new route as it began. Following fast development in today Etihad Airways is operating “fleet of 57 aircraft operates close to 1000 flights per week, serving an international network of 67 destinations in 45 countries” (www.etihadairways.com, 2011). The organization which regarded as the fastest growing airline in the airline industry and capital of the UAE, Abu Dhabi, is the airline hub. The Middle East based airline organization is considering hospitality and culture and they are encouraging city of Abu Dhabi as attractive business location in Middle East region. Organization has get important success in the airline industry and awarded numerous international and regional awards with World’s Leading Airline at the World Travel Awards in 2009 and 2010‟ (www.etihadairways.com, 2011). In comparison with other regional airline Etihad development is remarkable and recent survey in 2010 benchmarked Etihad success in last seven years with Middle East set up airlines of Qatar Airways and Emirates Airline. That it has identified to attain development Etihad attain in last 07 years period, it has taken 18 years for Emirates and 13 years for Qatar Airways. 10
  11. 11. Figure 3 Strategic Comparison (Etihad Airways Business Review 2010) As discussed in above, Etihad proclaimed the biggest aircraft order in the commercial aviation history for up to 205 aircraft of 100 firm orders, 55 options and 50 purchase rights (www.etihadairways.com, 2011). The Etihad is improving their aircraft, in Business Class, Economy Class, and First Class cabins. Furthermore, organization is offering some value adding service like some ground services for instance limousine pick-up in 19 targets, and high quality lounges in Abu Dhabi, Frankfurt, Manchester, Dublin, and London. 1.2.3 Theoretical frame work associated of the research Moreover, taking into account the research background it is important to examine theoretical framework associated with the work, like examined above the total work is falls in category of strategic management in universal business environment. As explained by the Morrison (2006) in global business environment understanding of culture, environment and development of 11
  12. 12. right strategy in right time make the success. Etihad Airways, as the quick growing airline, there should be some strategies which organization has developed; by recognizing those important strategies followed by the organization add significance to researcher. Though, taking into account strategy development this may have clear link with earlier academic theories. So, in this research it is considering following theoretical framework for the intention of critical assessment of strategies pursued by the Etihad airways. Theory or Theoretical Frame Work Author of the Original Work / Respective Research Material Author Relevance to the Research Work Porter Generic Theory of competitive advantage Porter (2004) - Competitive Advantage Analyze the Etihad Airways competitive strategy using the model. Marketing Process of Organization Kotler and Armstrong -Principles of Marketing 12th Edition Analyze marketing process of organization applicable for Etihad Airways 4P General Marketing Theory Kotler and Armstrong -Principles of Marketing 12th Edition Application of 4P to the Etihad Airways strategy development process Ansoff’s Product-Market Expansion Grid Kotler and Armstrong - Principles of Marketing 12th Edition Analyze Etihad Airways strategy of business development using the model PEST concept specifically PandE impact on business Used data published in www.economist.com and IMF Analyze Middle East political and economical impact on Etihad Airways. Table 1 As a result, growth of airline industry and major development of Etihad in the beginning stage is an inspiration for this research. Furthermore, emerging Etihad Airways challenging establish 12
  13. 13. Middle East Airlines so it made improved platform to examine strategies followed by the company. 1.2.4 Basis for Selection Conducting the rational for selection it can generally classify in three diverse sections as academic, industrial and personal, so in following it is offering suitable details for rational under each of these sections.  Academic: There is different academic research that has been done regarding the airline industry by different researchers. As described above, Etihad as a beginner in the industry its performance is surprising. Although its performance is excellent, there are incomplete researches accessible about Etihad Airline. So, researcher believe that this would add value to the academic world and people who study the Etihad Airways and strategy progress will be benefited by studying this research in the future.  Industrial: As Etihad is a surprising performer, crucial evaluation of their strategies pursued to attain such type of competitive position will be benefited to the other organizations who are in the industry and who plan to enter into the industry when improving their strategies.  Personal: Through this type of research I hope to use my knowledge that I have procured from my studies. In addition, I am looking career in a section of business consultation in management so this kind of research will improve my knowledge and talents in analyzing business and their development jointly with strategic options accessible. 1.3. Research Problem The research firstly plans to crucial assessment of the growth strategies being followed by the Etihad Airways. Here is a clear research problem, and a clear, sharp focus about the major development of the airline. So, the central research problem is, 13
  14. 14. • What were the crucial strategies that were pursued by the Etihad Airways to become quickly developing airlines in history of the airline industry? 1.3.1 Research Questions On the basis of above central research question, researcher has made various research questions to resolve all through this study, the following will elaborate those research questions,  What are the significant organic developments of the Etihad Airways throughout the last four year time in parts of financial, operational, marketing, and other development areas?  What are the significant marketing strategies that were developed by Etihad to become successful airline in a small period of time?  What are the significant operational strategies that were developed by Etihad to become successful airline in a small period of time?  In which ways central government of United Arab Emirates and Middle East economy influence for the crucial development of the Etihad Airways? 1.3.2 Analysis of the Problem As discussed in the opening of the chapter, nowadays airline industry is going through major changes and these alterations offer important opportunity for the airline companies. Currently, Middle East airline industry is progressing considerably corresponding to the world air transport industry development. Most of the beginners of Middle East airlines in the area are challenging big airline companies and it makes circumstances where profit margins become shrinking rather it was. Etihad, which was among the beginners of airline, is challenging developed airlines in the area and outside the area. This research is crucially examining the development strategies being followed by the Etihad Airways. In such situations evaluating of organization development is vital to recognize strategies behind such a fast development. So, 14
  15. 15. the researcher crucially assess organic growth of the Etihad Airways in the last four year period in regions of financial, operational, marketing, and other likely development areas (National Airline of the UAE, 2009). Secondly, after reading the background and crucial review of the literature researcher has recognized that there are numerous significant marketing and operational strategies affecting development of the airline business. Though, in order to assess which extend those aspects linked with the quick development of Etihad Airways business, researcher going to assess crucial operational strategies and marketing strategies followed by the Etihad Airways. As discussed in the beginning session, Etihad’s developments are inspiring and by comparing to the other Middle East airlines their performances were surprising. As a result, researcher determined to recognize and assess those marketing and operational strategies followed by the organization (National Airline of the UAE, 2009). Etihad Airways belongs to UAE government and the impact of the government is not possible to ignore. Under the topic of research background most of the matters connected with the research problems are examined. Actually, most of the research on the problem was done through analysis. So, here there is a real research problem, (crucial assessment of government influences over development strategies) and an obvious, sharp focus (National Airline of the UAE, 2009). 1.4 Aim of the Research The research is primarily intending to look into the crucial assessment of strategies followed by the Etihad Airways in recent history. In this study, researcher is viewing to evaluate Etihad performance of the universal challenging airline industry. Moreover, reason behind their considerable achievement in small period of time being awarded as World’s Leading Airline at the World Travel Awards in 2009/2010, would crucially assess reason of this study. A major part of the study allocated for empirical and theoretical framework connected with organization development and assessed integration of those empirical evidence and theoretical framework for the Etihad airways. As a review of the whole work used sources of 15
  16. 16. data as corporate information, existing material on corporate strategies associated to past and current development, and human resources concerned in notifying or executing these policies. 1.5 Objectives of the research In order to cope with the above central research aim the following main objectives will meet the cause of the study,  The research will crucially assess organic developments of the Etihad Airways in the last four year period in parts of financial, operational, marketing, and other development regions possible and important.  The research will crucially assess marketing strategies followed by Etihad Airways to attain major development in comparatively small period of time in competitive and unstable world airline industry.  The research will crucially assess operational strategies followed by Etihad Airways to get major development in comparatively small period of time in competitive and unstable universal airline industry.  The research will crucially assess central government of United Arab Emirates and Middle East economy’s influence for the major development of the Etihad Airways (Andersson, 2005). 1.6 Scope of the study The research discovers Etihad Airways’ developments in small period of time, together with the vital regions of growth during last four periods, the operational and marketing strategies pursued by the organization to gain such major growth, and how central government of UAE and Middle East economy influenced organizational development. Data was collected from both survey and available secondary information regarding the company and its development (United Arab Emirates, 2006). The study is stimulated by the progress of world airline industry and the gap of the information about Etihad Airways as a beginner with excellent performance. The majority of the publication connected with well created airlines like British Airways, 16
  17. 17. Ryanair, Southwest Airline and lots of more developed airlines in North America and Europe region. The survey can fill a void in the literature relating to the survey of emerging Middle East airline performance of airlines like Etihad Airways, as there is less empirical study to date on progress of Etihad Airways (United Arab Emirates, 2006). 1.7 Limitations of the research All through the work researcher has recognized numerous key drawbacks connected with the research study. Generally those limitations can be categorized in four main areas like availability of time, collection of data, availability of data, and availability of resources (Levine, 2010). Availability of Time: This study is a part of the MBA work and very restricted time is given from the University. So it is practically not possible to analyze all the important strategies followed by the Etihad. Though, to cope with strike time frame researcher has selected cross-sectional time horizon to continue with the work. If researcher can expand obtainable time horizon then the quality of the results and findings of the research will add more value to the academic and commercial world (Levine, 2010). Collection of Data: Since the researcher is an MBA student it is tough to collect data from organization, as researcher not establishes himself as a researcher, organizations are reluctant to give information. Moreover, workers are getting pay for their duties and hectic global organizations are demanding more work from the worker so their time availability to give information is very restricted. Besides that, researcher has sent his survey questions to the general email address of every nation, so genuineness of the information and truthful feedback is one more drawback of the work. Although researcher asks for information sample size of 50, the response rate is low as 34% (Levine, 2010). Although some offices like London Heathrow Etihad office rejects to provide information. These are the main issues associated with the data collection limitations. o Accessibility of Data: Etihad is a beginner in the market and it is a private owned organization, so, obtainable information about the company is very restricted. Actually 17
  18. 18. there are no appropriate researches initiated about the Etihad’s strategies followed. Furthermore, organization is in the Islamic religion believing area, so the accessible financial information also link to Islamic Banking. This restriction affected worth of the study. o Accessibility of Resources: Researcher is an MBA student and the accessibility of monetary support is restricted. So, it is hard to access some of the information without meeting the necessary people. If research got chances to interview few key workers in the Etihad Airways, the value and importance of the result will be further. Therefore, the availability of financial resources for travelling and collecting information was another restriction of the work. 1.8 Outline of the study Chapter Name Brief Outline of the Study Chapter 01- Introduction This section analyses the research background and the rational for choosing the subject and in addition, work enhanced areas of research aim, objectives, problems, problem analysis, and drawback. Chapter 02- Critical Literature Review This part analyze empirical and theoretical framework connected with the research objectives. Furthermore, starting of the chapter examines the significance and methodology of literature review. Chapter 03- Research Methodology This part analyses process of research and methodology followed to perform study. Chapter 04- Data Analyzing and Findings This part present the primary and secondary data collected and evaluate the data to acquire information. Besides, in this part recognized the key information connected to the research objectives. Chapter 05- Conclusion and Recommendation Analyze to what extend researcher meet his desired objectives and suggest some strategies to Etihad based on the findings. Chapter 06- Personal Development Researcher describes personal growth due to this dissertation and area required to be improved. 18
  19. 19. Table 2 1.9 Conclusion This section draws the basic outline of the study with stress of the study specifically on the objectives. The episode described rational behind the choice of the work and research objectives from this study. In later part of the section it crucially analyzed drawbacks connected with the study and its affect on the entire work of the researcher. As a whole, the chapter discussed in detail about the background of the research, motivation for work and detailed explanation about findings going to be. CHAPTER 2 CRITICAL LITERATURE REVIEW 2.1 Introduction While considering research, crucial literature review is essential owing to numerous reasons and this section of the work is nearly one third of total work the researcher is doing. In crucial literature review, it is looking various angle of the original research question accompanied by empirical work and various theories existing. It is totally important to have crucial assessment of earlier work before carrying on with the new works to recognize and analyze what have been done in the past history connected to the current research. Crucial literature review can be explained as the vital abstract and assessment of current conditions of knowledge associated to the particular subject matter with views and evaluation of the current researcher. Though, structural and methodical decisive literature review verifies appropriate 19
  20. 20. background for the new research and offer appropriate foundation for new research (Saunders et al, 2009; Walker and Butler nd). 2.1.1 Benefits of critical literature review Saunders et al. (2009) pointed out various benefits of critical literature review for the research. • Appropriately structured literature review offers a sound background to expand research aims and research questions by crucially analysing empirical and theoretical proof. • Crucial literature review offer chances to the researcher to recognize existing knowledge gap connected to research area and offer improved platform for upcoming research. • By carrying out crucial review, researcher is able to capture and gather strong proof and associated knowledge for the research and it disregard work copying. • Crucial review explore the data associated to the subject matter, research question and it offer sound understanding of appropriate theoretical structure connected with the research (Iatrou and Oretti 2007). 2.1.2 Literature Search Strategy and Sources While crucially reviewing literature it is very important to know dimension and area that have to discuss for the significant research. So, researcher must have clear boundaries and suitable scope about the research literatures. In addition, while doing crucial review it is extremely significant to have correct literature search plans to recognize and choose the most suitable literatures and sources for literatures to add more value for research. Therefore, the following section discusses significant approach for the thesis to choose literatures and assess most suitable sources for the literatures (O'Connell and Williams nd). 20
  21. 21. The above research focuses on the part of airline industry and globalization impact to the airline business and how organization responds for universal competition to become booming company. Additionally, research concentrates on specific airline company, Etihad to know likely strategies followed by them to become unbeaten universal player in the airline industry with major affect of globalization, although this is a research devoted to affect of globalization to the airline business growth. The researcher will be discussing certain literatures connected to these areas and build up review structure can be seen in the next section. However, in this part concentrates on literature search plans and sources (O'Connell and Williams nd). The following literature review section is divided into three main areas to discuss in details. Each of the part will contain between 1,300 to 1,500 words discussing literatures associated to the subject matter and each of the part will discuss between 6 to 9 empirical and theoretical literature given by different writers. As Saunders et al. (2009) described, this review will start with more general scope connected to each part and narrow to most specific parts of the research questions. It will offer short summary of the key ideas and at the end it will review key writers’ ideas. In addition, discussion will reduce to particular area relating with the research questions and empirical evidence and highlight the most vital theories and proof connected to the research questions (Clark 2010). To have proficient literature review it is important to define parameters of the literature going to be. As a result, defined research parameters for literature are as follows Parameter Narrow Scope Broader Scope Langue Specifically Middle East Airline industry Airline industry in the World Subject area Growth strategies, Etihad Airline, Globalization impact to airline business, Middle East economy, Marketing strategies Business growth, Airline industry, Globalization impact for business, World economy, Business Strategy Business Sector Airline Industry Service 21
  22. 22. Geographical Area United Arab Emirates, Qatar Middle East Publication Period Last 5 years Last 15 years Literature type Scientific journals, Refereed journals and books, News papers Journals and books Table 3 Literature review strategy (Taneja, 2008) In the following literature review, to be further efficient and value adding to the research it is essential to choose most genuine sources which are available in near past. For the research it will greatly depend on the repeat journals like The Economist both printed and web site, news papers like The Times, Financial Times most possibly the web site versions, scientific magazines published about the airline industry which is accessible in the British Library, and some of the universities suggested books obtainable in the collage and personal library as sources (Taneja, 2008). 2.1.3 Critical literature review structure including keywords • Business Growth and Strategy: In this part it will discuss common theories connected with business development, development plans, and some of the key argument about the strategies growth. Besides, in the part possibly it will add some of the empirical evidence associated to the business development and strategy growth. • Globalization: Elaborate discussion about globalization and its impact to the business growth and mainly airline industry. In addition, in this part it discuss about the global market and its openings specially airline business. Furthermore, key arguments about international changes impact for the airline business sector together with empirical evidence. • Airline industry and Etihad Airways: The most significant part to the research questions and deep discussion about airline industry particularly Etihad’s position as new performer in the market. Any empirical research evidence, upcoming forecasts and likely theories will discuss here so far as probable. 22
  23. 23. • Middle East Economy: A further important part in the entire research and here will be discussing literature connected with current economic progress of Middle East nations, ongoing matters and impact to the business sector more closely airline business, and Islamic culture impact to the airline business as some empirical evidence showed that airline business effect by the cultural and national believes. • Key words: Business development, development plan, development opportunities, Globalization, universal market, Airline Industry, Etihad Airways, Economic growth, Middle East Economy, Islamic Religion Influence, Pricing model, consumer satisfaction, reliability, security, Cost Management, Investment. 2.1.4 Limitation of the Literature Review • Time: For the whole research time allocated is very less. In such small period of time require reading literature, expanding proposal, building up questioner, data collection, data analyzing and research presentation. Therefore, this is a big restriction for the detail critical analysis. In addition, limited time obtainable for the administration with supervisor and it will have an effect on quality of the work. • Word Limit: For the whole research obtainable word limit is around 20,000 and this has use for whole research presentation. So, this will be another restriction to present more literature elaborately. • Resource availability: Including of the supervisor time obtainable and finding most suitable resources will be a further restriction. Additionally, as MBA student in small period of time finding literature will consume cost and it is another resources drawback. (Murphy et al. 2010; Schmid 2006) 23
  24. 24. 2.2. Business growth and strategy In this part of vital literature review it will be discussing empirical and theoretical framework connected to business development and business strategy growth for improved corporate future. This part will analyze structural argument associated to the business development strategy in universal changing business environment and how it impacted to the Etihad Airways (Building Brand Value and Influence in the Airline Industry nd). 2.2.1 Introduction In the past, businesses growth strategy improvement has developed considerably. In today businesses are looking development chances outside their main territory and whole globe became one single market for the business (Morrison, 2006). Most of the literature has developed in relation with academic practices and owing to fast business growth many new thoughts, theories has developed considerably. Furthermore, owing to high competition and too much demand, universities, research organization, individual business personalities and students carried out big number of empirical researches about business progress. In this part, critically analyze some of those previous works which are important to the core research questions. 2.2.2 An Overview of Business Growth Strategy Kumar (2010) refers that business growth means major development of turnover, profitability, product or service and significant lessening of time taken for conveying client requirement and inventory. Yet, this is not practically accepted in all circumstances as non profitable organizations are not looking financial point of views as development perceptions. Even some organizations are taking into consideration development in both organic and inorganic which make them to more consumer satisfaction. Though, Kumar’s (2010) argument is satisfactory while concern with financial development and shareholder value increase in profit oriented organizations. Furthermore, taking into account service sector practically there is no inventory and it’s basically service oriented by using people gathered talents. So, Kumar’s (2010) 24
  25. 25. description cannot accept entirely for universal theory however part of the argument is adequate in many occasions. Hess (2007) initiated idea for business development and he referred business development as creating more consumers, launching new products, and enhancing operation efficiencies. Therefore, taking into account Hess’s (2007) argument it is further suitable than Kumar’s (2009) argument as Hess (2007) not narrow the business progress as financial progress as Kumar (2009) said. Hess (2007) argued wider range focusing essential three elements of the business which are clients, product and operation. So, taking into account Kumar and Hess business growth definitions, Hess (2007) concept is satisfactory in various occasions than Kumar (2009) as this can be applied in service sector, non-profits organization and profit oriented manufacturing organization. So, the development parameters depend on the organization objectives and aims (Ethihad Airways, 2010). Mayer and Wit (2004) argued organization management repeatedly taking into account what organization has to attain, mainly which representing the purpose of organization existing. Additionally, they argue strategies are course of action for accomplishing organization’s intention. So, taking into account above development and organization purpose there is a clear link between organization purpose and progress. Based on the organization purpose they are determining parameters for development. As a result, organization strategies are directly focusing on attaining organization purpose. Hence, Mayer’s and Wit’s (2004) argument can redefine organization strategies as course of action for attaining organization development within the firm’s decided parameters (Meyer and Wit, 2004). 2.2.3 Empirical and Theoretical Frame Work of Business Growth Strategies In Porter’s (2004) opinion competition is the core of the achievement or fall down of organization. Therefore, competitive plans are important for the organization to do well in competitive market. Porter has developed generic competitive strategies to gain accomplishments in the market. According to Porter (2004), business can obtain competitive advantages by three main policies of Cost Leadership, Differentiation and Focusing. However, 25
  26. 26. in some events, businesses were achieving successes by practicing mix strategies. In airline industry budgetary airlines are a different section and rest of the airlines usually practicing mix strategies of differentiation and cost leadership, but goal is brought probably worldwide clients for big commercial airlines. In addition, depending on the empirical research made by Raynor (2011) concerning the Southwest Airlines, he recognized disruptive policies of innovative operation. Cost reduction did not convey considerable financial results till they procured high fuel efficient aircraft. Furthermore, he argued cost effectiveness and competence is not the only basis to make higher financial return. The reality they pointed out was to make considerable financial return required, novel cost reduction policies combined with enabling technologies. Hence, taking into consideration Porter’s (2004) argument, differentiation, cost leadership and focusing are not only the competitive advantage aspects but also technology playing considerable position in attaining competitive advantages amongst competitors (National Airline of the UAE, 2009). Lynch (2007) argued while developing corporate strategies, the nation’s economic activities, social and cultural behaviour should not be overlooked and growth of strategies depending on the environmental viability. In addition, taking into account Lynch’s (2007) arguments corporate strategies are influencing by the surroundings where they are privileging. Depending on opportunities, threats and resources accessibility, organizations are developing their long-standing strategies. Furthermore, Lynch points out those emergent strategies consider logical and rational process of execution to attain higher 26 Figure 2.2: Porter Model (Sources (Porter, 2004))Figure 4
  27. 27. shareholder return. Further considerably attaining long-standing corporate purpose depends on opportunities accessible in organization surroundings and abilities of taking the opportunities (Building Brand Value and Influence in the Airline Industry nd; Lynch 2007). Latest empirical research done by the Too and Too (2010) recognized fast variations of the external business environment force. The business has to consider internal potentials and resources accessibility as basis for developing competitive advantages. In addition, they recognized in present scenario very little comprehension is done on internal abilities that are suitable for infrastructure asset management. So, they highlighted it is very important to focus on internal abilities while taking on new business strategies. Furthermore, in view of Too and Too (2010) findings, it is totally vital to realize organization’s strength and weakness while developing strategies. So, Lynch (2007) also described while developing strategies not only opportunities and threat of the environment but also strengths and weakness of the firm have to be considered (Too and Too, 2010). 2.2.4 Strategies of Etihad Airline It is significant to examine all these strategy and development concepts discussed above and Etihad’s performance with respect to those concepts. Going back to Kumar’s (2010) and Hess’s (2007) argument of development, as profit seeking service Sector Company, Etihad is more close to Hess’s (2007) arguments. The organization consider organic development and they have been taking into account profit development, operational capacity development and number of customer growth as organizations progress for last eight years. Particularly stressing last three years operation, organization pointed out in 2010 that they have increased their operation capacity in terms of number of aircraft by 9.6%, revenue by 28.2%, passenger carrying by 13% and freight handling 20% (www.etihadairways.com ). As a result, there is obvious relevence between arguments of Hess (2007) and Etihad’s view of business development (Hess 2007). While taking into account Porter’s (2004) competitive advantage theories, it is highly questionable where Etihad is fitting. Organization is considering broad goal as competitive 27
  28. 28. scope as, Etihad highlighted their dream and mandate as “The goal and overall ambition of Etihad Airways is to be the best airline in the world” (www.etihadairways.com ). So, it is true that organisation is looking for very big and broad market as competitive scope. Therefore taking into account competitive benefit, organization is practicing mix strategy as there is no budgetary airline like Ryan International Airlines or Southwest Airline and there are no proof that organization trying to distinguish from other. In that sense, company is in a middle position. Therefore, as conclusion Etihad is looking for broad market with mix strategy. Yet, going back to Raynor (2011) finding Etihad is more bothered about technology and most of their aircrafts are new product which has high fuel efficiency as in samples Etihad with modern aircraft of 06, B777 aircrafts, 19 A330-200/300 aircrafts which are the most modern aircrafts in the industry. Therefore, Etihad is considering technology as important factor for organization’s achievement. In addition, growth of Abu Dhabi will have major impact to the Etihad performance and its present strategies link with the Abu Dhabi and Middle East’s development and this will discuss in later part of this chapter (Bamber, 2009). 2.2.5 Conclusion To wind up the above discussion, business growth means considerable progresses of organization abilities in areas of financial, operation, production and clients. Yet, growth view of particular organization depends on the organization purpose of existing. As a result strategies progress of improved corporate future will determine organization’s intention. Additionally, while taking into account business development and growth strategies competition cannot separate and in the competitive business environment to achieve competitive advantages there are three main strategies of Cost Leadership, Differentiation and Focusing initiated by Porter. Yet, later on empirical evidence recommend that only Porters theoretical frame work will not be enough to get competitive advantage and it is essential to join with enabling technologies. However, further empirical and theoretical evidence recommend while developing corporate strategies that it is very important to examine opportunities and threat in the environment and organization strength and weakness previous to building any corporate strategic decision. 28
  29. 29. 2.3 Globalization and Global market In this part of critical literature review, it will be discussing empirical and theoretical framework connected to globalization and impact for business. This section will assess structural argument connected to globalization and its impact to the businesses while doing business in varying business environment. 2.3.1 Introduction International trading is not emerging concept, it has been occurred over centuries between nations and there were historical proof regarding the universal trading. Though, with the recent boom of telecommunication and transport industries (Morrison, 2006), the idea of global trading encompasses with radical variations and considerable progress. Furthermore, in second half of the twentieth century interdependency of the countries has been increased considerably and this has opened entrance for globalization idea to occur. This part crucially analyzes some of literatures about globalization which are significant to the core research questions (Doganis, 2010). 2.3.2 An Overview of Globalization Beck (2003) described that no longer have any nation in the globe kept on without linking to other nations and hence several economical, cultural and political systems from each other. He describes that today globe is moving to new era of business, cultural and social together with interdependency. As Beck (2003) described, today businesses are thinking entire globe as single market for their product and service. Etihad is looking for a future of world’s best airline and no longer has organization considered national geographical limitations. With respective to the airline business, business model itself is a globalization business and they provide transportation between nations (Beck, 2005). Ali (2000) described that most international organization use their home country government power to obtain concessions in international trading. Further described that most of the big multinational corporation greatly attached with the governments and owing to globalization 29
  30. 30. political and cultural relationship went into the new era. In addition, fast growth of information technology opened new market and marketing opportunities for business. In opinion of Ali (2000) government influence and technological influences are key success elements in international business. Understanding political environment and cultural variations make enormous success to the international business. Etihad Airway is the national airline of the United Arab Emirates and organization heavily getting the support from the local government. So, global trading being a government invested organization will flow further advantages to the organization. Basically, it is an enormous benefit with consideration to capital injects and influences to the other nations government while increasing business. Furthermore, in the airline industry technological factor cannot ignore and as Raynor (2011) described technology is a vital element in business achievement and Etihad is quickly absorbing technically advanced equipment and aircraft as strategy for achievement. Parker (2005) described globalization is not internationalization; so organization cannot utilize conventional boundary expanding actions. Actually, businesses have to consider further changes and hyper globalists’ plans to acquire clients to the organization. Taking into consideration airline industry, merely expansion goal no longer work out, rather than that airlines require being cautious in other aspects for instance customer service, modern aircraft, in-flight facilities and in-flight entertainments activities to obtain more business. Traditional concepts of safety, ticket cost and more targets are no longer competitive factors in airline business. Those are common circumstance or basic situation to perform the business and it will not make organization changed from others. As Parker (2005) highlighted in airline business there should be alterations and hyper globalists’ strategies to acquire market achievement (Davidson, 2008). 2.3.3 Global Market and Marketing Theories In business concepts, marketing cannot be ignored while making strategic decision. Organization like Etihad achieved huge success in short period of time in the competitive airline business. Marketing strategies are playing very important role in any business while 30
  31. 31. developing long-standing business strategy (Jain, 2012). Thus, considering Etihad Airways is worth to evaluate global marketing strategies in relation to original marketing theories. Kotler and Armstrong (2009) described that marketing is above any other business function and it is how organisation dealing with the clients. Maybe simply they have been highlighted managing beneficial clients relationship as marketing. In much deeper analysis marketing defines your achievement in competitive business environment. Understanding client requirement and reaction and providing them for a profit is the basic idea of marketing. As Kotler and Armstrong (2009) described understanding client needs and market place is vital while developing marketing strategies. In the situation of Etihad they are looking for global market as market place and various demands of the clients, some are cost concern passengers, some of them are eager about amenities offered by the Etihad during the trip, transportation service, cargo services, luggage allowances, and various other demand. Thus while pursuing strategies organisation have to know these clients necessity when following the strategies. In addition, delivering superior value service is bringing client back to the organisation and Etihad concern strategy of loyal program of consumers call “Etihad Guest” to widen gainful client relationship (Kotler and Armstrong, 2009). This is an idea of repeat clients and this offers chance of low marketing budget. Delivering good client experience will bring client back and Etihad proven that rising “Etihad Guest” membership from 750,000 in 2009 to 1,000,000 in 2010 by 33%. Thus taking into account Kotler and Armstrong (2009) argument Etihad developed strategies to widen gainful customer relationship. Below given diagram present theoretical frame work of the Etihad marketing strategy. 31
  32. 32. Figure 5 A simple model of the marketing process (Kotler and Armstrong, 2009, p. 5) Besides that, consider theoretical structure of the marketing strategy of 4P concept, application is obligatory to assess market and organization viability of taking on market. In this part it is analyzing 4P concept with respect to the Etihad Airways. The concept principally deals with product, price, place and promotion. Consider product Etihad Airways can classify as air transport provider, as most of the airlines are doing, Etihad Airways also offering variety of product for instance Diamond First class, Pearl Business class and Coral Economy class as product varieties for their clients. Depending on the client capacity and ability they have option of services to choose from (www.etihadairways.com ). Etihad Airways is further concerned about value of the service they offer and in-flight design of the aircraft to obtain more attraction of the clients, and they are more concerned regarding the In-flight entertainment activities as demanded by the clients. Superior service offering is one key motto of the organization, improvement of diamond first class and pearl business class is superb product development of the Etihad Airways. In 2011 Etihad Airways won two awards for “Middle East's Leading Airline First Class - World Travel Awards Middle East 2011 and Middle East's Leading Airline In-flight Entertainment - World Travel Awards Middle East 2011” proving these product improvement activities were achievements (www.etihadairways.com ). As far as price concern Etihad Airways strategy is different, there are no low cost or budgetary airline and no high price charging airline. Organization is practicing strategy with concerning pricing strategy. In 32
  33. 33. airline industry mix pricing strategy is familiar and as worked done by Givoni and Rietveld (2009), pricing is depending on the seasonal aspects and booking time. In addition, they highlighted pricing as sensitive factor in the airline business with the growth of low cost airline (Explorer Publishing nd). Place is one of the important success element in airline business. Importance of the growth of number of target highlighted by Givoni and Rietveld (2009) empirical research evidence and this will be discussing in detail at afterwards in this chapter. Dogra and Ghuman (2008) said it is basic matter in any organization how and in what way organization needs its service or product accessible to the clients to have profitable exchange. So, it is very crucial to have written channels and coverage of the product or service availability to get market success. Particularly in the airline business, there is further need for having big number of accessing points to the client to acquire more business. According to the Etihad website Etihad flies to 65 international destinations. Through its 28 codeshare partners, Etihad’s network spans a total of 157 cities on five continents as at 31st December 2010” (www.etihadairways.com ). As a basic strategy Etihad continues in improving its target to develop business and obtain more success and also evaluating their business growth target is key factor that they are considering (Dogra and Ghuman, 2008; Givoni and Rietveld, 2009). Kotler and Armstrong (2009) described promotion as activities that communicate the qualities of the product and influence target client to buy it. Though, today there are extra activities relating under the promotion. Advertising, sales promotion, public relationship and brand development are important activities of promotion. Etihad Airways is eager on promotional activities heavily and were improving their brand as a policy to obtain more clients. Etihad is offering sponsorship activities as brand development and promotional activity and give their sponsorship “as a Diamond sponsor of the Abu Dhabi Golf Championships, as a lead sponsor of the All-Ireland Senior Hurling Championships and As Shirt Sponsor of Manchester City Football Club” (www.etihadairways.com ) to increase brand image of the organisation. Those are some stragies they have followed to obtain considerable development in the airline business sectore. 33
  34. 34. Other than that to assess strategies followed by the organization, be able to make use of Ansoff’s Product-Market Expansion Grid. Using the Ansoff grid, Kotler and Armstrong (2009) described that the market growth is company development by recognizing and making new markets. As per the case of Etihad, organization is diminishing in to group of market development, as organization offers existing products to the new markets. Etihad Airways in the business of air transportation and their product is transportation service to the clients who would like to take a trip between nations. Organization did not alter any changes to the product, however they continue in developing their market all over the world (United Nations 2007). So, as per the Ansoff’s Product-Market Expansion Grid, Etihad airways is in the group of market development and for that organization is using concept of additional destination progress and attaining more mordent aircraft in to their balance sheet. though, organization is developing some other product also, mainly like most other airline Etihad is having own holiday business unit, in that point of view organization has developed new product in to their product portfolio. At last, they have some close connection with product development jointly with market development (United Nations 2007). 2.3.4 Conclusion To conclude the above discussion of globalization and marketing concepts globalization has offered considerable openings for the business. Though, to acquire this business advantages organizations have to build up good marketing plans. The Etihad Airways have attained major development in last 8 years period. In order to attain that they have been used numerous marketing concepts largely. Mainly, the general marketing concepts of 4Ps price, place, promotion and product management was expellant according to the literature and the market development and branding are further important strategies that organization has followed. So, above overall literature offer good platform to assess organization strategies followed to attain important increase in small period of time. 34
  35. 35. 2.4 Airline Industry and Etihad Airways In this part of critical literature review, the discussion is about empirical and theoretical framework associated to airline industry and Etihad Airways business. Section will assess structural argument connected to globalization and its effect to the businesses while doing airline business in varying environment of business. 2.4.1 Introduction Like Oum and Yu (2001) described, international air transport industry plays important position in the world economy by inspiring travelling and transportation between nations. The inflence of the air transportation industry to the other business areas cannot disregard in any situations. For the concept of globalization progress owing to major growth of transportation industry and telecommunication industry but fast development of the globalization, the impact of air transportation is vast. Large demand of the mobility, alteration of customer buying behaviour, further demand of globalization enhances the air transport industry. Yet, today overall inflence of the airline business to other business area for instance freight, hotel and tourism is huge (Oum and Yu, 2001). 2.4.2 Empirical Frame Work of Airline Industry and Etihad Airways Givoni and Rietveld (2009) argue while airline faced progress in demand, airlines have a tendency to answer more frequencies than by rising aircraft size. So, they argued in their research somewhat increase of demand for the aircraft airline increase the number of fleet for each target. As a result, by increasing number of fleet for particular target will meet the demand of the consumer. Further, Givoni and Rietveld (2009) explained more the target and more the nations covered by the airline, growth rate of the company are high. While airlines rising number of destination they are covering and frequencies of the fleet for each target, airlines gain more income. This is because of demand verity of the passengers as passengers are demanding more comfortable travel schedule than ever. Though, this will affect the airlines in other ways like when functioning large number of fleets for one target it may not function with full capacity of the aircraft. Although, aircraft travel with vacant passengers all through 35
  36. 36. the history Etihad functioning more number of fleet to more target as strategy to obtain further business (Givoni and Rietveld, 2009). Parast and Fini (2010) discover from their research in the airline industry that labour productivity is the most important reason for airline profitability development and further they have argued on-time performance has no relationship with profitability. The finding recommended for the airline profitability growth depending on the gas price, average annual maintenance cost, labour productivity and employee salary. Furthermore, with this recognition managing cost of the operation will increase the profitability of the airlines. Ahmed et al. (2010) recognized in their research that other than the personal experience national loyalty is a key element while choosing airline to travel. Besides, they argue personal experience, demographic variables and nation of origin as the key aspects for the client perception on the airline. Considering these findings, Middle East countries are mainly dominating by the Islamic religion and business and government decision are greatly influenced from their religious believes. Therefore with this research it creates flat form for argument of Islamic religion impact on the airline development in Middle East. These findings have clear link with marketing ideas argued by the Kotler and Armstrong (2009), as they have pointed out personal experiences of the customers bring repeat purchases to the organization. In addition, Etihad is based on the Islamic religion nation and most of the clients who belong to Islamic religion are faithful to their religion and they are more chosen to buy their own community product. Etihad as airline recognize these concepts and they are offering some benefits to the Islamic religion clients (Ahmed et al., 2010). Lin and Chang (2008) described on their research that controlling cost and skill to manage risk are key success elements in the airline business. These research findings will have a strong connection with Parast and Fini’s (2010) finding on cost management on gas and labours. They argue that in airline business risk and cost management play critical role and it has important impact to the client perception on the airline selection. Furthermore, taking into account Lin and Chang’s (2008) arguments the impact of cost and risk management in the airline industry cannot be neglected. Owing to appropriate cost management, some of the airline got the 36
  37. 37. further competitive benefits in the airline business. Risk management is another important element in the airline business (Lin and Chang, 2008). Doganis (2006) recognized that government ownership of the airline offers important capital support as organization required and about 70 global airlines, some are substantial size, are still belonging to the national governments. Adding to his arguments, although government support for the financial matter when it’s come to the management process state that management influence offer significant disadvantage to the business. In the above scenario, Etihad is government owned Airline Company and it is not public or private own organization. Taking into account Etihad, it is managed by the board of directors who are outside United Arab Emirates. So, the quality of the top management is competent enough to handle airline business in beneficial mode and they have proven it in near past. However, the argument offered by the Doganis (2006) cannot ignore with respective to the Etihad. Doganis (2001) on his empirical research recognized that the airline profit and fuel price has key association. Alteration of fuel price has important impact on the airlines profitability. Doganis (2001) explained that variation of 50-60 US cents will have impact of 12-15% of airline operation cost. Thus, organization has to handle risk of fuel price increase while developing sustainable future. As a whole, Etihad airways is concerning on fuel price increase risk management through fuel hedging agreements. Organization frequently increases fuel price hedging activities and in 2010 they hedged 82% fuel as strategy to handle fuel price increase risk. As a result, risk or volatility management is vital in airline industry. As Lin and Chang (2008) argued risk management is necessary in the airline business and Etihad as organization is able to handle their risk through hedging agreements (Doganis 2001; 2006). 2.4.3 Conclusion As a winding up of the above discussion there are numerous aspects impact for the development and sustainability of airline business. Different researchers and authors have recognized numerous reasons that justify the development of the airline business. Improvements of destination, increase of frequency of the fleet, labour productivity, cost 37
  38. 38. management are some of the important elements that determine success of the airline business. Furthermore, managing fuel price risk is another success factor in the airline business. Besides that literature shows that the involvements of central government offers capital inject facilities but it may have drawback while consider to the management. Though, on the whole there are numerous success factors that decide the airline growth. 2.5 Middle East Economy In this part of crucial literature review it will be discussing empirical and theoretical framework connected to globalization and impact for business. This section will analyse structural argument associated to globalization and its impact to the businesses while doing business in varying business environment. 2.5.1 Introduction Nowadays the Middle East part of the globe is going through drastic changes and political unbalanced condition. Libya war situation, unstable Iraq, Turmoil in Egypt and protest and political crisis in other nations make situation where unstable. Though, in these region nations have more control on the oil and natural gas prices over the globe. According to Richards and Waterbury (2008) Middle East region societies ranged from the very poor nations, like Yemen and the Sudan, to the very rich nations, like Saudi Arabia and Kuwait but culturally it is leading by the Islamic religion culture. Therefore, in now Middle East impact for the world economy is enormous; nations are rich with oil resources, which are directly effecting airline industry, and the impact of labour market, which also main cost potion of the airline industry cannot avoid at any situations (Richards and Waterbury, 2008). 2.5.2 Middle East Economy and Businesses Highlighting numbers www.economist.com website point out in 2009 around USD 150 billion value of fuel issued to the globe from Middle East and North Africa region and oil cost was just over USD 60 per barrel. And today the price of the crude oil barrel is nearly double and if prices keep on in the same rate regional fuel subsidies would rise to almost $300 billion this year. 38
  39. 39. That is almost 7.5% of the total GDP of the area and so, Middle East region’s skill of control over fuel prices in the globe is very high and the fuel price is the main cost impact for the airline business. Though, United Arab Emirates, where the Etihad belongs is rich with oil resources and this is huge benefit for the Etihad Airways operation. Doganis (2001) confirmed that the impact of the fuel prices instability and profit instability of the airline businesses has negative correlation. Increase of the fuel prices will guide to decline of profitability of airline business. Though, being a Middle East airline, Etihad got the sufficient chance of fuel price risk management and it has proven that they handle fuel price through hedging agreement. Moreover, International Monetary Fund (IMF) in their regional economic outlook of 2009 about Middle East and Central Asia described some attractive points about the Middle East economy. According to them the 12 oil exporting nations in which six of them representing Gulf Cooperation Council (GCC- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates) and Algeria, Iran, Iraq, Libya, Sudan and Yemen direct the world fuel price and they are accounting 65% of global oil reserves and 45% of natural gas reserves. In all of these countries, 50% of GDP contribute by these oil and gas reserves. Besides, this represents 80% of government revenue. So, those nations are wealthy with risk capital owing to inflow of cash from oil and natural gas exporting. In fact UAE also belong to GCC which are exporting oil heavily so the reality is government is prosperous with risk capital which can be invested in business. Etihad is national airline of the UAE; so organisation has ability of collecting risk capital without hassle. Richards and Waterbury (2008) further argued about the emering Middle East economy. According to them the area is wealthy with risk capital and nowadays they are concerning more growth of industrial and service sector. They clarified that till 2020 from 2010, around 25% of world construction will be in this area and it is growing more rapidly. Although nations are rich with capital investments and money, the economic distribution and social progress are far more behind the developed nation’s level. Furthermore, Middle East countries, particularly nations which are in oil exporting are considering more progress of service sector by offering employment opportunities to staffs all over the globe. As a conclusion, Richards and 39
  40. 40. Waterbury (2008) said, this region is investing heavily in service sector and they are getting employee from whole globe. The truth about the above argument is that the region is developing quickly for the service sector. Further, www.economist.com (2010) highlighted that Doha International Airport increasing capacity to 20 million customer to 2012 and 40 million clients a few years after that. Hence, in Middle East market it is truly emerging market for the airline industry and it is developing considerably during last few years and they are hoping huge growth in near future. As far as Doha International Airport is concerned it is the centre for Etihad Airways. The growth of Doha International Airport has direct impact to the Etihad Airways business. As organization is belonging to government of UAE, the government is looking for fast development of the airline by investing both airline and Doha International Airport simultaneously. Moreover, www.economist.com (2011) highlighted that UAE and Canada entered in to an contract which is permitting both nations to more landing slots for civilian flights to its government-owned airlines of Air Emirates and Eithad Airways. Though, both of these airlines are belonging to the UAE governments and it is reality that airline organizations enter in to the mutual agreements to acquire more and more business. Etihad Airways entered in to an agreement with Virgin Blue Group of Airlines to improve the business as a strategy to expand business. Besides that organization has around 24 agreements with Alitalia, All Nippon Airways (ANA), Korea’s, Bangkok Airways, Brussels Airlines, India’s Jet, Airways, Sri Lankan Airlines, Ukraine International and during 2010 year they have entered in another 8 agreements with Air Malta, Alitalia, ANA, ASIANA, Hungary’s Malev, Greek carrier Olympic Air, Siberia and Airlines (S7) and Virgin Blue as policy to improve business. More over, in 2010 mutual alliance income contribute was around 13% of airline total passenger revenue (www.etihadairways.com). Furthermore, www.etihadairways.com higlighted that their is huge development in Abu Dhabi in nere future witich impact to the etihad business. The nation is developing their engergy sector and they have invested around USD 21 billion with Korean consortium to build four nuclear power plants in the UAE and in cooperation with Etihad Airways Abu Dhabi Grand Prix. 40
  41. 41. Other main global events consist of Abu Dhabi Film Festival and FIFA Club World Cup. As a result, to develop Abu Dhabi government is developing some museums and other sectors, particularly targeting tourist industry. As a result, all these elements suggested Etihad Airways in emerging market (Sull et al. nd). 2.5.3 Conclusion The discussion above created platform to examine impact of Middle East economy for the Etihad Airways. In modern world Middle East economy is growing quickly and its impact of the international and local airline industry are vast owing to control authority of the international fuel prices. In the above part, it examined growth of Middle East economy and emerging UAE market particularly with respect to the Abu Dhabi. In addition, above discussion went in an area of impact of emerging Abu Dhabi market for Etihad Airways. Besides, it was discussing numerous empirical evidences about the government influence for the airline business, particularly in the case of Etihad Airways. In the conclusion of this discussion it makes appropriate theoretical and empirical background to know empirical and theoretical influence to the researcher work. 2.6 Conclusion about Literature Review Although researcher offered individual conclusion for each sections of the entire literature review, it is significant to review vital information of the entire work to make improved background for upcoming works of the research. 2.6.1 Theoretical Frame Work of the Research Theory or Theoretical Frame Work Author of the Original Work / Respective Research Material Author Relevance to the Research Work Porter Generic Theory of competitive advantage Porter (2004) on his book of Competitive Advantage Analyze the Etihad Airways competitive strategy using the model. Marketing Process of Kotler and Armstrong on Analyze marketing process of 41
  42. 42. Organisation their book of Principles of Marketing 12th Edition organization applicable for Etihad Airways 4P General Marketing Theory Kotler and Armstrong on their book of Principles of Marketing 12th Edition Application of 4P to the Etihad Airways strategy development process Ansoff’s Product-Market Expansion Grid Kotler and Armstrong on their book of Principles of Marketing 12th Edition Analyze Etihad Airways strategy of business development using the model PEST concept specifically PandE impact on business Used data published in www.economist.com and IMF Analyze Middle East political and economical impact on Etihad Airways. Table 4 2.6.2 Empirical Evidences Found Empirical Evidence Author of the Original Work Relevance to the Research Work Fleet frequency and destination development Givoni and Rietveld (2009) Impact of growth of destination and increase of fleet frequency to the Etihad Labor Productivity Parast and Fini (2010) How labor cost impact to organization development National and cultural influence Ahmed et al. (2010) National and cultural influence of Etihad airways development Cost management Lin and Chang (2008) How overall cost management impact to organization progress Government influence Doganis (2006) UAE government influences on Etihad Airways strategy Table 5 42
  43. 43. 2.6.3 Key Authors of the Research Work Author of the Work Concept/s Kotler and Armstrong on their book of Principles of Marketing 12th Edition 4P General Marketing Theory, Ansoff’s Product-Market Expansion Grid, Marketing Process of Organization Givoni and Rietveld (2009) Fleet frequency and destination development Hess (2007) Business growth Doganis (2006) Government influence Ahmed et al. (2010) National and cultural influence Table 6 At the end of the entire discussion it was seen that there are numerous key authors adding further value to the research, few theories and empirical evidence connected with the whole research and those finding from literature improve quality of the work. From whole discussion it has recognized various elements that impact to the achievements of airlines business for instance, o Organic growth through aircraft, target, and fleet frequencies progress o Being in an rising market with government support o Risk and Cost managing o To attract consumers through application of appropriate marketing method. So, these whole factors created improved platform for researcher to discuss Etihad Airways plans followed in last 8 years to become booming Middle East airline. 43
  44. 44. CHAPTER 3 RESEARCH METHODOLOGY 3.1 Introduction There are some evocative facts regarding to the research, but Bryman (2004) said “Research is a methodical study to find out answers to a dilemma”. Researcher used a systematic approach to find out the answers of the fundamental research question of this research. A reality contains in every research that is it has an efficient technique to meet suitable solution for questions of that research. Consequently, in the study, technique to facilitate study eager in to do the research is considerably essential. Methodologies of a research is explained that how to perform the research in an appropriate structure to reach end. Furthermore it is describing that a method that researchers gather and evaluate data, attitude and approach of the researcher, finally what are the probable research sampling techniques and so on. During the next part will describe research values, approximation and appropriateness of that approach and values researcher has adopted for the aforementioned research. Moreover, segment will demonstrate the detail procedure of sampling, data compilation and intention group, designing of questionnaire, dependability, legality and moral problems related among the research (Saunders et al. 2009). 3.2 Research Philosophy and Approach Saunders et al., (2009) explained that research philosophy is the method witch researcher lookout the earth. Moreover, they have disagreed the significant matter is not the general research philosophy for research other than the proper study philosophy supported on the questions of the research. According to Saunders et al., (2009) the four main research philosophies are positivism, realism, interpretivism and pragmatism, for this research the researcher accepted pragmatism philosophy due to a number of reasons. An appropriate approach is necessary and important for accomplish the research. Whether researcher apply 44
  45. 45. deductive approximation, in which researcher expands hypothesizes and suggestions and designs research to check those premises and hypothesis, or inductive approach, in which researcher gather information, from which researcher build up assumptions and theories sustained on the evaluate data, is very important in the succeeding research (Saunders et al. 2009). 3.2.1 Importance of Pragmatism Philosophy Pragmatism research philosophy is utilizing the researcher in this research. For the reason that, ontology of the research is outside and research contain some views regarding to the research questions. Additionally, based on the manifold outlooks researcher is trying to identify and suggest finest obtainable response for the research (Saunders et al., 2009). In this research the researcher is trying to evaluate the guidelines chased by Etihad Airways to turn into competitive Middle East Airline. When using pragmatism philosophy research has get sovereignty of use examination experience and biased meanings. Pragmatism philosophy offers enormous possibility of amalgamate diverse attitude to construe information to achieve preeminent accessible answer for the designed questions of the research (Johnson and Christensen 2011). No other research philosophies are giving possibility to reach suitable conclusion for the designed research question when compared to pragmatism philosophy. Positivism, however ontology external is autonomous of social conduct so organization likes Etihad who are in the service area cannot remove societal manners when taking strategies. Philosophy itself may have drawback to find out finest answers for the research questions because of the researcher’s selection of the positivism as his research philosophy. Human thoughts are disregard in the realism and it is extremely subjective so type of a public study this philosophy may not correct. Compared to the possibility of pragmatism philosophy for the above research axiology of the pragmatism research philosophy will offer more opportunity to add researchers’ thoughts to the research. For this reason, researcher envisages a few strategies in this research based on 45
  46. 46. the literature and his personal experiment of the secondary data and is going to assess confirmation of those impressions. Hence, it is extremely imperative to give probability to the researcher to attach his personal outlooks to the research and pragmatism philosophy is the best alternative to include research values. As stated by the Saunders et al., (2009) value of the researcher plays an important role in pragmatism philosophy during the period of result interpretation. Moreover, this philosophy offers more flexible situation for collecting data than other available research philosophies. So pragmatism philosophy has been selected for this research (Stuhr, 2003). 3.2.2 Why Inductive Not Deductive? Figure 7 As stated by Trochim (2006) deductive approach of research works from common to more particular part of the research questions and several scholars describe this as top down 46
  47. 47. approach of the research. On the other hand, in inductive approach it is running with other system approximately in that situation. It can be illustrated as "bottom up" approach of research. In this inductive approach, based on the observation researcher can study more facts and reach most suitable answers for the research questions (Teddlie and Tashakkori nd). The purpose of this research is to gain close understanding about Etihad strategies pursued and achieve more qualitative analysis. Other than that, for performing this research the author intends more supple structure. In this research inductive is much more suitable than deductive. Essentially, foregoing research is social since research which is dropping to business management category. And researcher gathers some facts from the accessible sources to enlarge conclusion for the details about the company strategies. Qualitative data is the base for this research rather than quantitative data. Deductive approach condition is demanding much more quantitative data rather qualitative data therefore considering that aspect inductive approach is greatly fitting. Though, as an overall outlook of the research it is inductive approach supported research which researcher going to gather data and based on the data reach absolute conclusion. Etihad Airways is searching for superior worldwide development in airline division. The organization has grown extensively in a short period of time and is one among fast developing airline in the region. In such situation, to recognize their strategies followed to achieve important development in the industry, inductive approach is perfect (Saunders et al., 2009). 3.2.3 “Onion” Model Application 47
  48. 48. In view of Saunders et al. (2009) description, the researcher used research “Onion model” to expand improved research frame. Pragmatism philosophy as research philosophy and inductive approach as appropriate approach for the research is the explanation of the above description. Considering much profound methodology of the research, the current research policy is close to case study theory. Since, research frankly dealing with Etihad Airways and examined experiential and hypothetical outline related with the selected research questions. While this research committed to development strategies implemented by the airline and is dealing with solitary establish company, the most suitable strategy was case study approach. 48
  49. 49. Figure 8 (Saunders et al. 2009) 3.3 Research Study on Etihad Only limited data is available about Etihad Airways because it is a private company. Furthermore, due to lack of experiential research formed condition anywhere comparisons of data with other establish airlines and most of this data were learned through internet. In addition, using survey method certain quantities of primary data are collected. Therefore research has used both primary and secondary data to develop structural details. Hence, it is appropriate with varied method of choice because background of this research methodology. Only short time period was allocated to the research. Such a limited period did not permit the researcher to investigate all information about Etihad Airlines and strategies they have followed during last 8 years period. Hence, the research was falling to type of cross-sectional considering time concern (Saunders et al., 2009). 3.3.1 Designing of Questionnaire Brace (2008) explained that if anybody choose questionnaire as primary data gathering method the questionnaire is the significant part in its accomplishment. Arrangements of questions and gather information through that will not present correct proof or information associated to the research question. Maybe it can deceive researcher through pointless and irrelevant data, so eventually it will be a valuable valueless approach that researcher has undertaken. Both paper based and electronically based questionnaire has developed in this research. Website was used to develop electronic questionnaire and similar set of questions transmitted to the papers. Nevertheless, if the kinds of questions are vague, then it would have formed the questionnaire too lengthy and hard to investigate. As a result and due to shortage of time availability, the total questions in the questionnaire are close-ended and it makes short and 49
  50. 50. comparatively correct analysis. Researcher has worked the subsequent questionnaire design procedure fallacies and modified from the work done. The simple illustrator of the questionnaire can be found in the below figure (Hague and Morgan, 2004). Figure 9 The literature point out that in airline industry, there are numerous aspects determine the achievements such as in-flight facility, cargo managing, cost management, destination, reservation management, risk management, pricing strategy, promotional strategy and many other common aspects. 17 questions contained in the questionnaire and each of these questions search the strategies practiced by the airlines to develop into a competitive airline comparatively minute period of time. In Appendix 1, a print of questionnaire can be found (Hague and Morgan, 2004). 3.3.2 Sample Selection Techniques For finding answers for research questions researchers require valid data. In such conditions there should be an appropriate sampling technique to assemble information which stands for entire population as much as close because in most of the time it is virtually unfeasible to 50
  51. 51. acquire data from complete population (Smith, 2011). Conversely, this research has selected a technique. It is virtually impossible to have statistical inferences in some research like case study and market survey when approaching sample selection. This set force on research to choose sample in several other method and in such chance researcher can apply non- probability sampling techniques. Non-probability sampling technique has selected for selecting sample in the above research. Further, convenient sampling method has adopted in the above case to accumulate data because the researcher going to check strategies pursued by Etihad Airways to become competitive airline. The sample selected for this research is the employees working in Etihad Airways offices. The researcher conducted the survey by distributing questionnaire to employees. 3.3.3 Data Collection Academic journals, scientific magazines, written material, electronic material, published books and survey are used to complete the needs of the study used data from different sources. Through Survey questionnaires primary data were collected for this study. Researcher collected primary data through survey questionnaires because most of the strategies followed by the organization were unpublished and there were restricted experiential study about the Etihad Airlines. The survey questionnaire was distributed to 15 employees of Etihad Airways office with a requesting letter which described the purposes of the survey and certifying that the responses they provided will be kept confidential and won’t be misused or used for other purposes. Every research require some secondary data for developing survey questionnaire (Davenport nd), in this research it was based on literature review and empirical research evidence as a foundation. This offered an opportunity for efficient and effective data collecting. With the use of all the above mentioned resources and technique researcher gathered the data in order to accomplish the demanded data of the dissertation. 3.3.4 Pilot Testing 51

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