1. Emirates Airlines Company profile.
2. Industry Analysis of Emirates Airlines.
1. Emirates is an airlines based in Dubai, United Arab Emirates. The airlines are a subsidiary of The Emirates Group that is a wholly owned government company. The company is the last organization in the Middle East working with 3600 flights every week from its hub of Dubai International Airport. The company is involved in more than 140 cities in total 81 countries and six continents as well. Further, the cargo activities are done by Emirates SkyCargo (Emirates UAE, 2018). The company was founded in the year 1985 and is now renowned as the fourth largest airline company in the world in terms of international passengers carried and the second largest in terms of freight tonne kilometers flown. The company has the longest commercial flight running from Dubai to Auckland. In the current era, the company flies world biggest fleet of Airbus A380s and Boeing 777s, and it provides a greater degree of satisfaction level to the customers by providing comfort services (Farouk, Cherian, & Shaaban, 2017).
The company was established in October 1985 in Dubai, United Arab Emirates. Emirates in now known as world largest airlines that provides fastest growing carrier services worldwide. The company is known for its luxury class services provided to its customers worldwide. The company i also growing its network aggressively so as to provide their efficient services to maximum customers worldwide. The airlines operate with a fleet of widebody equipment and as discussed above it is the largest operator of Airbus A380 aircraft type. The company maintains their hub at the Dubai International Airport; the airport provides an extension network of services in different areas like Middle East along with Asia, North America, Africa, South Pacific, Europe and lastly South America. The SkyCargo airfreight division of Emirates currently serves around 40 destinations (Beik, & Galbraith, 2016).
Further, the vision of the company is to become the leader in the aviation industry. They aim to initiate their activities innovatively that keeps environment as their first priority. Apart from that, the company aims to make a global coverage through their activities. They want to reach in every country and provide services to people. The vision statement of Emirates also includes that follows strict compliance to keep the customers feel safe while travelling. They have employed a responsible team that holds the responsibility to provide best, safe and reliable experience to customer during flight, and before and after that as well (Park, Lee, & Park, 2015).
The mission statement of the company Emirates states that they want to enact their activities in such a way that they successfully fulfill their vision statement. Their mission is to achive the following targets that are discussed below:
Deliver high value in their products and services. In addition, their products and services offered to customer should reflect the vision and objective of the company (Lohmann, & Spasojevic, 2018).
The company has a single goal that is to reach at the topmost position by doing what they do. Emirates Airlines has an extremely attractive business model that paves way for the faster growing international airlines. Quality control is the most important department that is the reason of fundamental success of Emirates. This department maintains and creates state of the art airline fleet. Quality of products and services are kept at the highest level (Merkert, & Hensher, 2011). The extensive aviation-training department of the company provides aviation education to the talented employees of the company. Resort, Hotel and Tourism Strategy helped them to successfully shift into resort and tourism sector as well. This strategy is a complete package that helps business to use innovation and technology and target the customer to increase their sales in the market (Sun, & Wandelt, 2018).
2. Threats of new entrants refer to the risk attained with the company with the entrance of new companies in the target market. Relating it to the analysis of the company Emirates, it should be noted that, the company faces low degree of threat in the market. Looking at the attributes of the airlines industry it is evaluated that the company requires huge capital investments. As is difficult for the organizations to purchase new airplanes, it is the requirement of the company to invest huge capital so as to earn optimum revenue in the market (Flouris, & Oswald, 2016). The company faces threat to some extent due to the low cost carrier service providing companies in market like Easyjet. The companies that enter in this market initially require two most important aspects that are capital requirement and goodwill in the market. Capital investment is requiring procuring raw material and initiating easy flow of internal activities of the company (Brueckner, Lee, & Singer, 2014).
Moreover, goodwill will help the company to attract customers in the market; a person will travel with the airline only when they have trust on the activities of the company. Many people face fear while traveling through air due to which they prefer flying with the company whose services they have experienced before. Apart from that, it is important for the company to provide on flight good experience to the customer that can be only attained if the customers have trust on the company. Good brand image in the market helps the company to attain customers. Therefore, it is next to impossible for a new organization to enter in this and attract customers. Thus, due to these following aspects les companies prefer entering in the aviation industry that result in benefits to the company already present in the industry (Assaf, & Josiassen, 2011).
The bargaining power of the buyers in this industry is medium. As the industry includes many companies in the market providing their services to the customers at similar prices which decreases the bargaining power of the buyer and they cannot negotiate with on organization about their prices because the other organization is also providing services at similar range. Further, as discussed above there are two sectors in the aviation industry, one is high class quality service provider and the other is low cost carrier service provider companies. Due to the presence of low cost carrier companies, the customers prefer their services as they are cheap and beneficial to them (Reggiani, Nijkamp, & Cento, 2010). However, if a person wants to travel in premium quality services then their power decreases because these companies provide good quality to customers at varied ranges. Further, it should also be noted that many times the customer are obliged to book their tickets are heavy prices when there is less availability of flights in that area. The customers who like travelling in peace and luxury travels in premium class and such premium class services are provided at high prices as well. The airlines companies also hold a brand image in the market so the customers cannot deny to the prices offered by them in the market. So, it should be noted that the buyers hold medium powers in their hand, as once they can change the face of the market by increasing the demand of certain services and on the other hand they are driven by the market changes made by the companies in the market (O’Connell, & Williams, 2016).
Boeing and Airbus are two major suppliers present in the industry. Based on their activities whole market fluctuates that show that there is high degree of power present in the hands of suppliers in the market. As there are only two suppliers present in the industry, so if one of them also cancels the contract then the company can face high degree of risk for their existence in the market as well. The companies struggle between these two organizations only, although both the companies shows an impression that they want to sustain their business terms with all the orgaizations present in the aviation industry, but change in any terms of the contract make the airlines company liable to agree. Because, if they will not agree on the terms then there are chances that the suppliers might cancel the contract (Grant, 2016).
Also, the power is in hand of suppliers because they are countable in numbers whereas the airlines industry includes many companies so if contract gets cancel then get the chance to initiate contract with other competitors on better terms. Further, the probability of a provider that integrates vertically is remote. The negotiation position, which is also called market outcomes, is very difficult in this industry. The suppliers have a choice to contract with the companies with whom they wish but the airlines companies do not have the choice to choose the suppliers. They are obliged to agree on the term presented by the company even if it is decreasing their amount of profits (Belobaba, Odoni, & Barnhart, 2015). This acts as major issue for the companies as well, as the market is ruled by their activities, they can turn the face of market any time they want to. If the suppliers increase the prices of the products and services then the companies have to automatically increase their prices of bear losses. The suppliers have domination in the aviation industry. In addition, it depends upon their discretion to provide products and services to the companies according to their interest. They can charge high prices from one organization and on the other hand provide similar services to another company at comparatively lower rates due to their good term with that organization. Thus, it should be noted the suppliers hold high degree of power in this industry (Holloway, 2017).
Just like low degree of entrants, the threat of substitutes is also low. As the companies cannot enter in aviation market which reduces the opportunities of the customers to shift to another company. Further, another aspect should be noted that the customers prefer showing loyalty towards the companies present in market. It should be noted that the aviation industry is risky anytime crashes can happen with the airplane, so the customers prefers flying with the companies whom they trust the most. Resulting to which there is low risk for substitutes in the market (Vogel, 2016).
Looking at another aspect of low cost carriers and premium service provider companies in the market, it should be noted that the company that prefer premium services will not shift to LCC at any condition that reduces the risk. The buyers are segmented in the market according to their income levels, high class customers prefer companies like Emirates, Qantas etc. where are low or medium class people prefer LCC services provider companies like Easyjet, British Airways etc. Further, the customers prefer companies with whom they have fled before without any issue as they trust those companies and show their loyalty towards them as well (Lee, Seo, & Sharma, 2013). A normal company that sells retail usually faces the problem of substitutes present in the market because all companies provide similar services and common products. However, in case of aviation industry, all organizations have their differential ways to welcome the clients and deal with them due to which the threat of substitution reduces to some extent. Nevertheless, threat can occur to the company if the competitor organization reduce the prices of their products and services and provides additional services to customers as well. However, chances of such happening are low therefore there is low degree of risk present with the companies in aviation industry in case of substation (Williams, 2017).
The airlines industry is generally very competitive that shows the high degree of industry rivalry. As there are large number of organizations are already present in the industry that gives a choice to the customers to opt for the company with which they want to fly. Further, it should be noted that many organizations want to increase the price of their products and services offered but they cannot do so because with this effect, their customers will directly shift to other companies providing similar services. All customers want the companies to provide safe and secure services at lower prices in the market (Shaban, 2015). Therefore, the organization that provides premium services at low prices wins the race. In addition, it is difficult for the companies to maintain their competitive edge in the market as well.
Analyzing the features of the industry, it should be noted that the customers prefers the companies whom they trust the most and customer loyalty is very important in this industry, as with the help off this aspect only the company can conquer industry rivalry. Once, the company in the market attains loyalty, and then it becomes easy for them to deal with the competition present in the environment. Etihad and Qatar Airways are the two major competitors of the company Emirates in the market. All three companies provide premium services to the customers present in the market but Emirates is ranked best among them. Thus, it should be noted that there is high degree of competition in this industry (Borenstein, & Rose, 2014).
Furthermore, talking about the favorableness of the industry on the company Emirates it should be noted this organization is successfully running the target market. The attributes of the industry supports the activities of company that increases the output from the services rendered. The company Emirates is known for their services in the market as they provide best high class services to their customers. Therefore, segmenting the target market, it should be noted that there are two types of customers present in the market that are high income level people and lower income level. The company target high income level people by providing premium quality services in the market, no other competitor can match to their services provided in the market. Resulting to which, the company earned competitiveness in the market (Shaban, 2015). Emirates earned goodwill in the market that helped them to reduce the competition and the threat of supplies as well.
The company has huge capital investments that helped them to procure the resources and raw material with which they can easily manage their activities. Further, the company also recruited the employees that can fulfill the vision of the organization that is to provide high class services in the market. The best features present in the industry that helped the company to grow are the demand of high quality products and customer loyalty feature present in the market. These features increased the sales of Emirates repeatedly, which recalled them as fastest growing aviation company in the industry.
Thus, in the limelight of above-mentioned events it should be noted that the above figure successfully explains the favorableness of the industry due to which the company succeed in the aviation market.
References
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