How business environment is considered in strategy formulation-Emirates Group Case study
Executive Summary
To determine the future of Emirates group, it is imperative to establish Emirates group business environment. A business environment is a powerful indicator that helps strategist to formulate a successful future based on current indices and facts. The commencing discussion will attempt prove how current business environment is chiefly instrumental in developing a coherent business model. The paper is structured into three main sections. Firstly, organizations audit mechanism. This section will provide statistical information regarding Emirates business background. The section will also provide organization mission and objectives and how to lucidly apply Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis tool. Also, in establishing the current situation of the firm, the document will be instrumental in elaborating how to apply Critical Success Factors and how this tool are substantial in generating sufficient results regarding the company success based on current situation. Secondly, the document will seek to carry out a strategy audit system based on Political, Economic, Social, Technological Environmental and Legal (PESTEL) tool and Porters 5 Forces theory. This section will examine the direct and indirect alters influencers, and triggers of the proposed strategy. Thirdly, the document will endeavor to look on the importance of Stakeholder analysis, as a tool to determine the various categories of stakeholders affected by Emirates group, and how each stakeholder is affected by the strategy.
Table of Contents
Emirates Group Organization Audit 5
Emirates Group mission & objectives for the planning period. 5
Emirates Group core competencies, critical success factors and limiting factors. 7
Emirates Group Corporate enviromental audit 8
Competitor’s analysis using Porters 5 forces theory. 10
The Significance of stakeholder analysis. 11
Emirates stakeholder’s mapping. 12
The interests of each stakeholder 12
Why Emirates should develop and maintain relationship with Stakeholder 13
Emirates Group Organization Audit
Introduction
The Emirates Group is based in Dubai, United Arab Emirates and is specialized in providing aviation services majoring in transport. Currently, the company operates 17 airports and it is the largest airline in Middle East, with a strong of 200 aircrafts and valued at US $ 58 billion. The emirates group has over 60,000 employees and has presence in 6 continents. The group is a partially owned by the Dubai government investment and Investment Corporation of Dubai (UAEinteract.com, 2008). The group internal organization structure is divided into five main sections, which are catering, engineering, hospitality services, manufacturing and tour operator. Conversely, the group has diversified it business to tour services, aircraft handling, and aviation engineering including schooling. The commencing paper will be essential in examining internal organizational structure and how this is vital in orienting a business strategy.
Emirates Group mission & objectives for the planning period
The commencing planning period will be intense to restructure Emirate Group as a leading Asian air traveler. Kaar (2009, 49) argues that airline industry has heavily depended on tourism as one of the main source of income. The problem with this service is its vulnerability to global recession since thousands of travelers become cost conscious due to unexpected financial constraints. As a result, in the year 2009, emirates group recorded 1,489 billion dirham loss in the year 2009 down from a profit of 5,325 billion dirham in the year 2008. In this light, the planning period will intend to develop mission and objectives, which will attempt to orient several strategies to reflect on the wider diversification goal. The central mission is improving Emirates global ranking from 8th to 3rd within the next ten years. Objectives will stretch from providing the most reliable airline to internal organization human capital development. Other examples of pragmatic objectives include, building pricing consensus amongst rival carriers, these are British Airways, Etihad Airways, Gulf Air, Malaysia Air or Qatar Airways. This will be vital in formulating region prices, during recessions. Secondly, mission goals and objectives will be vital in facilitating the development of environmental policies to ensure that Emirates has the best policies.
Completed SWOT analysis
Scholarly, the objectives stipulated above are based on the ability of the organization to achieve internal organization development to reflect on an external expansion and harmonistic strategy. The Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis will be essential since it will attempt to examine the health of the organization, corporate wise, market wise and financial background. The SWOT analysis will also be crucial in examining internal and external factors which grounds favorable or unfavorable objective development. To achieve this, the commencing section will attempt to fulfill the SWOT matrix table. Firstly, Emirates strength is based on its traditional market leadership in Middle East air transport. This is backed by the development of competent staff, a large fleet of aircrafts and realistic products. Secondly, Emirates opportunities stretch valiantly. Chiefly, the consideration that Dubai economy is leading in Purchasing Power Parity (PPP) signifies that the domestic market is proving suitable to hold the headquarters. Similarly, other Middle East economies, and emerging giant Asian economies courtesy of China, Japan, India and Singapore are proving it better for the solidification of opportunities. However, the list of challenges, which in this case forms the basis of this paper, often constrains the fruitful strongholds grounded by strengths and opportunities. Firstly, Emirates prime weaknesses are over reliance on tourism, which is subject to a plethora of vulnerabilities. Secondly, emerging global airlines; for instance, Qatar airways and Etihad which have 133 and 86 destinations respectively are proving an eminent challenge, not to mention dwindling fuel resources which form a vital economic good in the airline industry.
Emirates Group core competencies, critical success factors and limiting factors
Nonetheless, this document will tend to concur that there are a list of competencies, Critical Success Factors and Limiting factors associated with the group. Ronald Daniel 1960 intended to use Critical Success Factor as a technical laboratory for examining and improving the organization corporate health promptly. The core operand behind CSFs is their ability to identify a viable opportunities with the concept to implement organization strategies and projects. While looking on the Emirates case, one will notice the paramount competence is based on a streamlined management and staff orientation. This is reflected by its commitment to safety, service trendsetters and operational excellence, making the organization to be ranked 8th in global airline listings, and also being voted the best airline in the year 2013 (Airlinequality.com, 2013).
CSFs will attempt to achieve corporate threshold not experienced before. Satellite plans include; gain market locally by a magnitude of over 16 percent annually. Retain customer satisfaction to a magnitude of 98 percent. Expand product range with intent to attract new customers, and finally expand the capital base to cater for the ever increasing demand. However, the limiting factor is the inability of the group to develop a symbiotic relationship to affect all departments within the giving period. Taking to account this diverse branches have a develop market scheme.
Emirates Group environmental audit for the organization
Introduction
While constructing a lucid corporate environmental audit based on Political, Economic, Social, Technological Environmental and Legal (PESTEL) analysis, it is common to acknowledge the purpose of strategic management. This model looks beyond the productivity factors to the wider scope of ethics and demographics. PESTEL system is entirely based on democratization of technology, finance and information technology to move beyond previously established organization borders (Lorat, 2009, 7)
PESTEL Analysis
Firstly, it is a fact that Emirates Group is partially owned by the Dubai government which presents a heavy political backing. This will be essential to observe in our coming plan, because of factors that directly affect our output. These are environmental law, labor law, tariffs, tax, and trade restrictions. This is a greater consideration that local and foreign governments have a heavy influence on the nature of education, health and infrastructure of any jurisdiction that happens to be fly emirates destiny. Secondly, the economic well being of Emirates is affected by the macroeconomic behavior of both local and foreign economies. Economic instigators in this case include, economic growth, exchange rate, deflation rates, inflation rates and interest rates, which do on several accounts affects several categories of fiscal policy. In this case, developing a working business plan, the Research and Development department will endeavor to look on how these instigators affects the organization.
Thirdly, social factors still form a solid musing regarding the nature of plan to be executed. Primarily, Fly Emirates have been involved in the hospitality business, which happen to be affecting several categories of social determinants. Instigators include area demographics, career attitudes and development, health consciousness and safety concerns. In particular, population changes will often affect the level of economic activity, thus on category Emirates group influence this determinants significantly. Fourthly, Emirates group is involved in an aviation business industry, thus the product transport service, is being executed by use of an Airplane, a machine alongside support machines, close examples being computers and stationery, vehicles and off loaders among others. To this effect, Emirates group is keen on apparent technology changes, and in this case instigators here-above include; barriers to entry, technological shifts, quality, after sale service and resourcing
Fifthly, environmental factors form a wide consideration while executing a plan. Emirates group possess Airports in different/diverse geographical locations, and airplanes which travel in challenging conditions. Therefore, while formulating a plan, close consideration will endeavor to use the Research and Development department to outsource hardware which can withstand challenging climatic conditions. Finally, the legal factor is very important, taking to bank that Emirates group is legally compelled by one international law and hundreds of local jurisdictions which have diverse laws affecting the airline business. The commencing plan will attempt to compel the company lawyers to present an elaboration deeming international, foreign and local antitrust law, consumer law, discrimination law, employment law, health law and safety law.
Competitor’s analysis using Porters 5 Forces theory
Hill, & Jones (2009, 42) argues that industry boundaries are subject to change depending on change in taste and preferences of the consumer. Therefore, there is an eminent intention to orient a lucrative business strategy which will attempt reduce cost and comply with demands of competition. Based on this, Porter five forces analysis provide an Industrial Organization (IO) economics. Scholarly, Porter theory is based on the micro-environment of the firm, thus core concern of this theory looks on cohesive internal adjustments and improvements with the goal to ensure that the business market place outside is adjusted positively. Conversely, one will take heed on the principle of attractiveness, which circumscribe on the overall concept of quality on aggregate. In the Airline industry, the concept of diversification is substantial in boosting sales. Diversification will be vital in fulfilling the demands of horizontal competition based on porter five forces.
Forces
Firstly, power number one, bargaining of customers is a close consideration on ground price changes in an oligopolistic market does affect customer choices. The risk involved here is loosing of customers by consideration that either Emirates prices are exaggerated or cheaper implying to low quality services.
Secondly, on procurement, the bargaining power of suppliers, for instance, Boeing or Airbus proves to be a source of power when the number of substitutes are more than one, this applies to any other outsourced product. Thirdly, the intensity of oligopolistic competition should be taken into close consideration. This includes; sustainable competition between neighboring companies; for instance, Qatar Airways and Etihad, or far companies, a close example being British Airways. Other considerations will include the rival firm concentration on traditional Emirates markets, as well as, Degree of transparency.
Fourthly, the threat of new entrants is proving a significant power. Potential entrants include KLM who not only are interested in becoming a significant Middle East player, but have also established dedicated flights to Middle East. Fifthly, the threat of substitute products cannot be ignored. For instance, China is actively building fast speed rail from China to Europe. This means that quite a significant number of travelers initially using Air will begin using trains as a better alternative.
The significance of stakeholder analysis
This document has attempted to propose a plan strategy in success of the emirates group; however, it is imperative to ensure stakeholders are integrated as senior members of the organization. Stakeholder analysis will be vital in ensuring several thresholds affecting business administration, conflict resolutions, and project management is examined. Stakeholder analysis attempts to look on potential changes which track stakeholder attitudes on the business. In this case, Emirates stakeholders’ panel is divided into three main sections. Key Stakeholders, this are a group of stakeholders who have significant influence on the organization. Others include; Primary stakeholder and Secondary stakeholders. The top five stakeholders include; our customers, who happen to be Emirate’s group prime employers. Emirate group of employees who are directly involved in the trade of services, amongst the Dubai government, creditors, suppliers, owners, investors, community and trade unions.
Emirates stakeholder’s mapping
Cullen, & Parboteeah (2013, 86) argues that start holder mapping will be essential in determining the extent of claims, expectation, and rights of each stakeholder. In case of disastrous results, the organization will be in a position to respond to queries of the affected stakeholder. Primarily, stakeholder mapping works in a hierarchical system, one of high power interested people this are segments who are directly engaged with to Emirates group economic and political proceedings. Secondly, low interested groups, this segments forms individual who are rarely informed about rising issues. To conduct a mapping, critical determinants will attempt to establish motives of each stakeholder, prevailing financial and emotional interest either positive or negative. The nature of how information is conveyed. What influences critical organizations concerns. How to respond to their diverse opinions, and finally, can the stakeholders be replaced.
State the interest of each stakeholder
Each stakeholder has unique needs and interests in the overall Emirates group presentation. Firstly; there are customers who need to be served with customized services, services which are cost effective and comprehensive to meet various demands. Secondly, Emirates group employees will provide expertise and inversely substantial compensation for their services. Thirdly, the Dubai government which is interested to see the realization of a better Dubai economy, and Emirates group should be doing a wonderful Job in servicing the economy with transport. Fourthly, Emirate group owner and investors, who are interested to ensure the organization does not make looses. Finally, the general community is interested to ensure an expanding Emirates Group does not constrain the economy or the environment.
Why Emirates should develop and maintain relationships with Stakeholders
Sharma, & Starik (2004, 133) argues that executive body should consider the stakeholders responsibility as an invitation for constructive collaboration to sustainable development. In this case, the concept of collaboration is applied to explain on the effective use of communication for the goal of continuous improvement of stakeholder involvement on various levels of decision making. Emirates group should endeavor to develop and maintain relationships with the goal of understanding changing stakeholder interests. Stakeholder mapping works inform of a web, therefore the intrinsic goal should be associated with ability and understanding of what each stakeholder requires or is required, and how to responsive stakeholder should facilitate the web. Sharma, et al, (2004, 133) refers to it as stakeholder motivation.
Conclusion
This document has been instrumental in presenting Emirate group business model. The discussion has been structured to formulate a business model, one which will be essential in improving Emirates group global ranking from 8th to top 3 leading flights. The paper has requested the application of strategic analysis, as a substantial tool in illuminating to the required business model to achieve the mission and goals in this document. To respond to this, the document has requested the usage of corporate auditing, a tool oriented to determine, the past, present thus the future of Emirates Group. In encapsulation, the document has requested application of stakeholder analysis, a tool which is vital in distinguish, the interests and obligations of each stakeholder.
Bibliography
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Cullen, John., & Parboteeah, Praveen. 2013. Business Ethics. London: Routledge,
Hill, Charles., & Jones, Gareth, 2009. Strategic Management Theory: An Integrated Approach.
New York: Cengage Learning, 42-44.
Kaar, Manuel, 2009. A critical analysis of the 2007 – 2009 global financial and economic crisis
and its implications for the travel industry and associated businesses. GRIN Verlag, 12(2) 49-50.
Lorat, Nicole, 2009. Market Audit and Analysis. GRIN Verlag, 12(4) 6-9.
Sharma, Sanjay., & Starik, Mark., 2004. Stakeholders, the Environment and Society. New York:
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