1

CSEB3101 Strategic ManagementLecturer: Dr Tey Lian Seng

Presented by:1. Tan Wei Teng CEB1300562. Yeap Szu Hui CEB1300673. Chee Hui Min CEB1400164. Chuah Pui Ling CEB1400285. Lim Meng Sheng CEB1400636. Ng Kong Biau CEB140081

Case Presentation:

2

3

The Emirates Story• Launch on 25th October 1985

2 Aircraft 3 Destinations:i. Karachiii. Delhiiii. 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

The Emirates Story• 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

The Emirates Story140 destinations over 80 countries, 6 continents

6

What are the firm’s most important external opportunities and threats?

7

Opportunities

8

• Use the current technology to reduce the fuel costPurchasing aircraft like Boeing 787

• Technology in reducing the noise produce

1. Innovation in Technology

9

2. More international destinations to leverage

• Offer continual expansion opportunities for both leisure and business destinations

10

• In-Flight Internet Access– Fulfil customer needs– Increase revenue

3. Use of technology to improve the services

11

Threats

12

• Fluctuating fuel pricesAffect profit margin

• The price of the fuel increase, the price of the flight ticket will also increase.

1.Unstable Fuel Price in the market

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

14

• Eruption of ash could create a further hazard for the airline industry.

• Flight Cancelled. • Airport Closed.• Passengers will be rebooked.

3. Volcanic Eruptions

15

Apply Porter’s Five-Forces Model, discuss the attractiveness of the industry

in which the company competes.

16

Porter’s Five Forces Model

17

Competitive Rivalry within

a company

HIGH

Threat of New

EntrantsLOW

Bargaining Power of

BuyerMODERATE

Threat of Substitute

HIGH

Bargaining Power of Supplier

MODERATE

18

Threat of New Entrants (LOW)• Barriers to entry

large capital requirements • Customer loyalty to established brands• Complex regulatory procedures

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

20

Bargaining Power of Suppliers (High)

• The airline industry has limited suppliersI. Boeing II. Airbus

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.

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.

23

Overall AnalysisAttractive

Threat of New Entrants (LOW)Threat of Substitutes (Moderate)Rivalry Among Existing Firm ( High)Bargaining Power of Buyers(Moderate)Bargaining Power of Suppliers (High)

24

Who are the firm’s competitors and what are their strategies?

25

1. Dual Strategyi. differentiation through service excellence and innovation,

together with simultaneous cost leadership in its peer group.

2. Carry out rigorous service design and developmenti. 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 technologyi. enhancing customer service as well as increasing efficiency.

4. Developing staff holistically1. functional skills, soft skills of personal interaction, personal

poise, grooming and deportment, and emotional skills.

1.Singapore Airlines Group

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 strategyi. be the cost leader by reducing its operational costs.

3. Differentiation strategyi. offers affordable tickets.ii. lowers tickets to those who travel light.

4. Niche strategyi. focusing all the firms’ resources and capabilities to a special segment in

that market that has its needs unmet.

2. Qatar Airways

27

1. Long Term brand loyaltyi. 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 strategyi. Inflight entertainment system.ii. Wide range of menu to its customers.

3. Support energy sustainabilityi. Emphasize 3 “Rs” that is reducing, reusing and recycling as their

compliance principles.

4. Promotion strategyi. Brands its name by promoting sport festivalsii. Sales promotion

3. Etihad Airways

28

What are the firm’s major strengths and weaknesses?

29

Strengths

30

World’s most valuable airline brand- ranked 171st 2016 Brand Finance Global 500 Report

Brand value grew 17% to reach US$7.7billionBrand equity scores –customer factor ( Familiarity,

consideration, preference, satisfaction& recommendation are up

Offer superior luxury service

1. Strong Brand Name

31

Comprised of more than 50 specialist businessesUtilize 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

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 landingOnboard Wi-Fi service , Satellite phone

3. Advanced technology & innovative

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

34

Weaknesses

35

• Seek to grow based on own business plan without seeking permission from alliance partner

• Unable to enjoy jointly benefitsCode 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

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

37

How would you describe the firm’s financial condition?

Liquidity Ratio

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

1.06679 0.97768 1.09988 0.84353

0.80436

1.312361.09977 1.18679 1.26696

0.96957

Current RatioEmirates Singapore Airline

Debt Ratio

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

0.67888 0.72153 0.75705 0.74931 0.74500

0.18035 0.18735 0.20513 0.21141 0.22057

Debt RatioEmirates Singapore Airline

Debt Ratio

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

2.11406 2.59107

3.11614 2.98901 2.93700

0.22003 0.23054 0.25807 0.26809 0.28299

Debt To EquityEmirates Singapore Airline

Profitability Ratio

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

10.249%

2.946%3.990%

5.278%

6.795%7.252%

1.496% 1.518% 1.701%2.630%

Operating Profit MarginEmirates Singapore Airline

Profitability Ratio

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

10.121%

2.442%

3.208%4.031%

5.252%

7.909%

2.671%

2.925% 2.784%2.613%

Net Profit MarginEmirates Singapore Airline

Activity Ratio

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

0.81576 0.79791

0.75060 0.79443 0.77879

0.68071 0.76351

1.00465 0.99249 1.04774

Total Asset TurnoverEmirates Singapore Airline

2010-2011 2011-2012 2012-2103 2013-2014 2014-2015

48943

60474

70274

78376 82926

1088811890 12200 12224 12078

Operating Cost (million AED/$)Emirates Singapore Airline

45

What are the firm’s existing strategies and objectives?

46

Existing Strategies

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

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

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.”

50

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

52

Existing Objectives

53

Existing Objectives

“To become one of the top lifestyles brands in the world”M

ISSI

ON

To be a powerful international brand delivering a world class product as customer experience is the differentiator

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?

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?

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

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 beginningSOLUTION Increase the flight for two destination and at the

same time reduce flight for one destination

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

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.

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

61

THANK YOU

62

References1. A World Force in Travel and Tourism; The Emirates Group(2016) Retrieved from

http://www.theemiratesgroup.com/english/our-company/our-company.aspx2. 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_Airways_and_Competitors

5. Singapore Airline Annual Report 2010-2015 Retrieved fromhttps://www.singaporeair.com/jsp/cms/en_UK/global_header/annualreport.jsp

6. The Emirates Group Annual Report 2010-2015 Retrieved fromhttp://www.theemiratesgroup.com/english/facts-figures/annual-report.aspx