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Strategic Management-Emirates Airline

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About how Emirates Airline perform in their management-SWOT,Porter Five-Force,Financial,Competitors,Strategics and recommendation

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Strategic Management-Emirates Airline

  1. 1. CSEB3101 Strategic Management Lecturer: Dr Tey Lian Seng Presented by: 1. Tan Wei Teng CEB130056 2. Yeap Szu Hui CEB130067 3. Chee Hui Min CEB140016 4. Chuah Pui Ling CEB140028 5. Lim Meng Sheng CEB140063 6. Ng Kong Biau CEB140081 Case Presentation: 1
  2. 2. 2
  3. 3. The Emirates Story 3 • Launch on 25th October 1985  2 Aircraft  3 Destinations: i. Karachi ii. Delhi iii. Mumbai • Headquartered in Dubai, United Arab Emirates • Subsidiary of The Emirates Group, which is wholly owned by the government of Dubai's Investment Corporation of Dubai • Emirates Airline was headed by Ahmed bin Saeed Al Maktoum, the airline's present chairman
  4. 4. The Emirates Story 4 • Largest airline in middle east • Fleet size>230 • Top 10 carriers worldwide in terms of revenue and passenger kilometres • World largest operator of Airbus380 and Boeing777 • Air Transport World gave Emirates Airlines the title of "Airline of the Year" for 2011
  5. 5. The Emirates Story 5 140 destinations over 80 countries, 6 continents
  6. 6. What are the firm’s most important external opportunities and threats? 6
  7. 7. Opportunities 7
  8. 8. • Use the current technology to reduce the fuel cost  Purchasing aircraft like Boeing 787 • Technology in reducing the noise produce 1. Innovation in Technology 8
  9. 9. 2. More international destinations to leverage • Offer continual expansion opportunities for both leisure and business destinations 9
  10. 10. • In-Flight Internet Access – Fulfil customer needs – Increase revenue 3. Use of technology to improve the services 10
  11. 11. Threats 11
  12. 12. • Fluctuating fuel prices  Affect profit margin • The price of the fuel increase, the price of the flight ticket will also increase. 1.Unstable Fuel Price in the market 12
  13. 13. • EBOLA virus • Severe Acute Respiratory Syndrome (SARS) • Influenza A virus subtype H1N1 • When these diseases start to spread among publics, the local government will issue warnings and advising their citizens not to travel to the affected countries. 2. Diseases 13
  14. 14. • Eruption of ash could create a further hazard for the airline industry. • Flight Cancelled. • Airport Closed. • Passengers will be rebooked. 3. Volcanic Eruptions 14
  15. 15. Apply Porter’s Five-Forces Model, discuss the attractiveness of the industry in which the company competes. 15
  16. 16. Porter’s Five Forces Model 16
  17. 17. Competitive Rivalry within a company HIGH Threat of New Entrants LOW Bargaining Power of Buyer MODERATE Threat of Substitute HIGH Bargaining Power of Supplier MODERATE 17
  18. 18. Threat of New Entrants (LOW) • Barriers to entry large capital requirements • Customer loyalty to established brands • Complex regulatory procedures 18
  19. 19. Threat of Substitutes (Moderate) • highly price-sensitive • There have many others substitutes that can reach the same destination such as people use theirs cars or use trains and buses within the same area or country. • Depend the situation  long distance flight 19
  20. 20. Bargaining Power of Suppliers (High) • The airline industry has limited suppliers I. Boeing II. Airbus 20
  21. 21. Bargaining Power of Buyers (Moderate) • Buyer switching cost relative to firm switching cost is easier to switch between airlines. • The new technology of e-ticketing/ e-booking gives people the chance and flexibility to search for many airlines companies offering better or cheaper costs and services. • But Emirates’s customers are not very price sensitive. 21
  22. 22. Rivalry Among Existing Firm (High) • Large number of airlines • Competitor will always offer the Promotion • The Emirates Group 2010-2011 Financial Report suggests that The International Air Transport Association (IATA) that the top 10 international Airlines have only about 30% of market share in a US$ 565 billion industry. 22
  23. 23. Overall Analysis Threat of New Entrants (LOW) Threat of Substitutes (Moderate) Rivalry Among Existing Firm ( High) Bargaining Power of Buyers(Moderate) Bargaining Power of Suppliers (High) 23
  24. 24. Who are the firm’s competitors and what are their strategies? 24
  25. 25. 1. Dual Strategy i. differentiation through service excellence and innovation, together with simultaneous cost leadership in its peer group. 2. Carry out rigorous service design and development i. hones and thoroughly tests any change before it is introduced. ii. customers’ high expectations as a fundamental resource for innovation ideas. 3. Use of information technology i. enhancing customer service as well as increasing efficiency. 4. Developing staff holistically 1. functional skills, soft skills of personal interaction, personal poise, grooming and deportment, and emotional skills. 1.Singapore Airlines Group 25
  26. 26. 1. Launched its new global brand campaign “Going Places Together”. i. to reflect its core values as a contemporary and innovative company that is really going places and wants nothing more than to inspire its passengers to do the same. 2. Cost leadership strategy i. be the cost leader by reducing its operational costs. 3. Differentiation strategy i. offers affordable tickets. ii. lowers tickets to those who travel light. 4. Niche strategy i. focusing all the firms’ resources and capabilities to a special segment in that market that has its needs unmet. 2. Qatar Airways 26
  27. 27. 1. Long Term brand loyalty i. Pay attention to consumers need and want to perfect its services and products. ii. Pays back to consumers by accumulating their travelling mile points. 2. Physical evidence strategy i. Inflight entertainment system. ii. Wide range of menu to its customers. 3. Support energy sustainability i. Emphasize 3 “Rs” that is reducing, reusing and recycling as their compliance principles. 4. Promotion strategy i. Brands its name by promoting sport festivals ii. Sales promotion 3. Etihad Airways 27
  28. 28. What are the firm’s major strengths and weaknesses? 28
  29. 29. Strengths 29
  30. 30.  World’s most valuable airline brand- ranked 171st 2016 Brand Finance Global 500 Report  Brand value grew 17% to reach US$7.7billion  Brand equity scores –customer factor ( Familiarity, consideration, preference, satisfaction& recommendation are up  Offer superior luxury service 1. Strong Brand Name 30
  31. 31.  Comprised of more than 50 specialist businesses  Utilize the expertise derived from core aviation business  including airport service, engineering, hospitality, catering, tour operator, destination& leisure management Dnata- world’s 4th largest combined air services provider - ground handling, cargo, travel & catering services 2. Focus on diversified market 31
  32. 32.  World’s largest operator of Airbus A380&Boeing 777  trademark Onboard Lounge, Shower Spa, Industry-leading First Class private suite.  Most advancement in reducing fuel consumption& emission  Larger aircraft-fewer takeoffs and landing  Onboard Wi-Fi service , Satellite phone 3. Advanced technology & innovative 32
  33. 33.  Apps-Apple and Android  Search &book flight  check in online& download boarding pass  Manage passenger travel plan  Become the most followed travel brand in the world &Middle East  Milestones: 1st airline -1million followers (Instagram) -500,000 followers (Linkedln) 4. Enhancement in mobile Apps 5. Largest transportation on social media platform 33
  34. 34. Weaknesses 34
  35. 35. • Seek to grow based on own business plan without seeking permission from alliance partner • Unable to enjoy jointly benefits  Code sharing- market access to overcome restrictions over route access & airline ownership imposed by national government  Cost-reduction- sharing of office , operational staff &maintenance facilities 1. No global international airline alliances -Star Alliance, Skyteam, Oneworld 35
  36. 36. • Focus too much on First class clients • High fares as comparatively other airlines companies • Economic condition-Recession • Price conscious passengers 2. Do not cater to middle class and budget travelers 36
  37. 37. How would you describe the firm’s financial condition? 37
  38. 38. Liquidity Ratio 1.06679 0.97768 1.09988 0.84353 0.80436 1.31236 1.09977 1.18679 1.26696 0.96957 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Current Ratio Emirates Singapore Airline
  39. 39. Debt Ratio 0.67888 0.72153 0.75705 0.74931 0.74500 0.18035 0.18735 0.20513 0.21141 0.22057 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Debt Ratio Emirates Singapore Airline
  40. 40. Debt Ratio 2.11406 2.59107 3.11614 2.98901 2.93700 0.22003 0.23054 0.25807 0.26809 0.28299 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Debt To Equity Emirates Singapore Airline
  41. 41. Profitability Ratio 10.249% 2.946% 3.990% 5.278% 6.795% 7.252% 1.496% 1.518% 1.701% 2.630% 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Operating Profit Margin Emirates Singapore Airline
  42. 42. Profitability Ratio 10.121% 2.442% 3.208% 4.031% 5.252% 7.909% 2.671% 2.925% 2.784% 2.613% 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Net Profit Margin Emirates Singapore Airline
  43. 43. Activity Ratio 0.81576 0.79791 0.75060 0.79443 0.77879 0.68071 0.76351 1.00465 0.99249 1.04774 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Total Asset Turnover Emirates Singapore Airline
  44. 44. 48943 60474 70274 78376 82926 10888 11890 12200 12224 12078 2010-2011 2011-2012 2012-2103 2013-2014 2014-2015 Operating Cost (million AED/$) Emirates Singapore Airline
  45. 45. What are the firm’s existing strategies and objectives? 45
  46. 46. Existing Strategies 46
  47. 47. 1. Network Expanding • Flying to more destinations on more aircraft everyday • currently fly to over 140 destinations in more than 80 countries Year Announcement 2005 Announced the largest-ever order with 42 Boeing777 aircraft 2007 Signed contract for 120 Airbus A350s, 11 A380s, and 12 Boeing 777-300ERs 2010 Increase additional 32 Airbus A380s and 30 more Boeing 777-300ERs. 2011 Requested an additional 50 777-300ERs 47
  48. 48. 2. First to introduce new products • First airline in the world to introduce a personal entertainment system on a private first-class suites • First to introduce the use of mobile phones and free Wi-Fi on board • First airline to place huge aircraft orders • Won the award for best in-flight entertainment 48
  49. 49. 3. Sponsorship • F1 events included in their Emirates holiday packages. • Showcase of Emirates first class seats in US Open sponsorship • World’s richest horse racing event - the Dubai World Cup. “We believe sponsorship is one of the best ways to integrate with our passengers. It allows us to share and support their interests and to build a closer relationship with them.” 49
  50. 50. 50
  51. 51. 4. Loyalty Program A) Skywards Miles • Route, fare type, class and tier • Redeem rewards, promotions and partner offers B) Business Miles • USD 1= 1 Business Rewards Mile • Business/organization • Flights booking • Upgrades membership Earning Miles 51
  52. 52. Existing Objectives 52
  53. 53. Existing Objectives “To become one of the top lifestyles brands in the world” MISSION To be a powerful international brand delivering a world class product as customer experience is the differentiator 53
  54. 54. What objectives and strategies do you recommend for this firm? Explain your reasoning. How does what you recommend compare to what the firm plans? 54
  55. 55. How could the firm best implement what you recommend? What implementation problems do you envision? How could the firm avoid or solve those problems? 55
  56. 56. To increase the passenger seat factor to 90% in order to maximise the efficiency of generate fare revenue. Objectives To increase customer satisfaction level to the range of 90% and above all the time. To achieve a target of 70 millions passengers per year on over 300 aircrafts by year 2020. 1 3 2 56
  57. 57. STRATEGIES - Increase the flight service to unserved and poorly served routes on which high demand currently existing or can be developed - Meeting peak demands on certain key seasonal and other variable routes where very high load factors can be predicted - Reduce flight to those low demand destination PROBLEM - Our existing customers may switch to other airline company - Facing unprofitable income at the beginning SOLUTION Increase the flight for two destination and at the same time reduce flight for one destination 57
  58. 58. STRATEGIES Cooperate with the minister of tourism from other countries to increase their inbound tourists by promoting their local destination in Dubai airport and travel package PROBLEM Conflict in benefit will occur to reach the agreement between two parties SOLUTION Best negotiation to make sure that both parties satisfied the agreement benefits 58
  59. 59. STRATEGIES Purchase 4 types of aircraft model instead of 8 to reduce the training time for the pilot PROBLEM Facing difficulties in choosing which 4 types of aircraft model because certain aircrafts are specialized with fuel efficiency while the others are seat capacity SOLUTION Carry out statistical analysis and calculate the opportunity cost of the options. 59
  60. 60. STRATEGIES Register the license from related govern agencies to operate a casino in the flight of emirates. PROBLEM It is very hard to obtain the registered license and which country we need to register to because some countries are forbidden gamble act. SOLUTION Operate in certain aircraft and also direct flight to one destination only where the country approve our casino license 60
  61. 61. 61 THANK YOU
  62. 62. References 1. A World Force in Travel and Tourism; The Emirates Group(2016) Retrieved from http://www.theemiratesgroup.com/english/our-company/our-company.aspx 2. Our Company, Our Emirates, About Malaysia Retrieved from http://www.emirates.com/english/about/ 3. Economic Crisis Project On Emirates Airlines Tourism Essay Retrieved from http://www.ukessays.com/essays/tourism/economic-crisis-project-on-emirates- airlines-tourism-essay.php#ixzz42t0czKIS 4. Analysis of Luxury Airlines Emirates Airways and Competitors Retrieved from http://www.academia.edu/1354030/Analysis_of_Luxury_Airlines_Emirates_Airwa ys_and_Competitors 5. Singapore Airline Annual Report 2010-2015 Retrieved from https://www.singaporeair.com/jsp/cms/en_UK/global_header/annualreport.jsp 6. The Emirates Group Annual Report 2010-2015 Retrieved from http://www.theemiratesgroup.com/english/facts-figures/annual-report.aspx 62

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