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Emirates Airline Connecting the Unconnected Case Solution
The case, Emirates Connecting the Unconnected traces the story of emirates the airline, from its year of inception in 1085 in Dubai, to 2013, and identifies why emirates had become one of the three leading commercial airlines globally. The focus of the case remains on the strategic decisions and advantages that emirates benefited from for its growth expansion – more specifically its key geographical location of a small city that was able to reach three-fourth of the world population in relatively short flights. Moreover, emirates business model focusing on building a mega hub off the Dubai airport also remains at the crux of emirates’ success. The case also highlights the close strategic synergy between emirates and the local government which helped the brand establish itself strongly, and grow exponentially. The focus of the case has been on identifying and highlighting how the airline selected new destinations and markets. However, with changes in the global macro environment, as well as pressure from anticompetitive policies and claims along with political and technical challenges, the case questions whether emirates strategy will be sustainable in the future and seeks recommendations for flying forward.
Following questions are answered in this case study solution
In an industry where profitable firms are scarce, Emirates Airline has delivered solid growth and solid financial performance for years. Why? What is behind Emirates’ success? (Think in terms of their resources/capabilities as well as their strategic decisions)
Who should Emirates be afraid of the most in terms of competitors? Why?
Is Emirates’ strategy sustainable? Why? Imagine that you were the replacement for Tim Clark. What would you change?
In an industry where profitable companies are scarce, Emirates Airline has provided solid growth and profitability for years? Why? What is behind their success? Describe their global strategy.
What is the role of Dubai in Emirates' success?
Is Emirates strategy sustainable?
Make recommendations for future growth, include any control or implementation considerations
Case Analysis for Emirates Airline Connecting the Unconnected
1. In an industry where profitable firms are scarce, Emirates Airline has delivered solid growth and solid financial performance for years. Why? What is behind Emirates’ success? (Think in terms of their resources/capabilities as well as their strategic decisions)
Emirate's success is rooted in a combination of its strategic geographical location, government support, and strategic synergies with the government as well as intelligent leadership and management. In addition, controlled international expansion for including new routes and markets with respect to its current resources has also allowed emirates to enjoy sustainable growth without incurring high debts. Combined with these is emirate’s meticulously-planned fleet expansion strategy which has allowed the airlines to incorporate safety regulations as well as allowed it to carry a larger number of passengers with every passing year.
Operating out of Dubai, emirates had initially only focused on regional expansion. This allowed the company to understand the dynamics of international flights, and gradually, the company pushed to include more distant destinations to feed into its single global mega-hub at the Dubai airport (DXB). The close support that the airlines received from the local government is also an important driver for its growth and success – as it allowed the government and emirates to work together for entering new markets through bilateral aviation agreements as well as develop new terminals to support the airlines' expansion. With government support, the airline was also able to capitalize on Dubai's marketing campaigns. At the same time, Emirate's strategic expansion to include a focus on, and investment in the BRICs economies allowed it to benefit from the rapidly growing markets exponentially. The strategic and planned expansion through first exploring and adding regional routes, and then accommodating more distant markets allowed emirates to capitalize on the new global flows of passenger demand. The company's decision to serve underserved and developing markets like Africa and Egypt allowed it to gain a first-mover advantage across different global markets. Lastly, the company's strategic fleet expansion and personally designed and modified aircraft through leveraging buying power allowed emirates to enjoy significant market growth.
2. Who should Emirates be afraid of the most in terms of competitors? Why?
The most formidable competitor for emirates, according to the case is Turkish airlines. Turkish airline has become an important regional player in the Middle East, and an important long haul carrier as well. Like emirates, Turkish airlines also operated through a hub model, with its hub being in Istanbul. As a result, the airline benefitted from its strategic location between Asia and Europe. The airline enjoyed non-stop flights serving from its single hub – more than any other airline globally. The company was also a close competitor of emirates with having 12 more crafts and having a 0.4 more fleet age than the emirates. In addition, the Turkish airlines also enjoyed government support- though not as much as emirates.
Emirates should be intimidated by Turkish airlines because of its growing presence, and strong growth. In addition, with a home population of 75million compared to 8 million of Dubai, Turkish airlines signaled high futuristic growth and rapid expansion as well. This could become a serious threat for emirates. More recently, turkey and Istanbul had also invested in country branding, and in projecting Istanbul as a hot tourist destination. As a result, Turkish airlines had capitalized on the marketing campaigns as well, offering transit benefits to travelers. This could threaten the emirate's position globally with a shift in the global passenger flow. The airlines had a business model that was close to that of emirates – with an increased global focus on Istanbul as an attractive tourist destination and market. In addition, Turkish airlines were also at an advantage with the higher home base population – allowing the airline to ensure high passenger flow from its home market alone to support its expansionary plans and global operations. The company’s focus on lean management had allowed it to realize healthy profits and revenue rates, and as a result, allowed Turkish airlines to enjoy growth and margins that were above the industry average.
3. Is Emirates’ strategy sustainable? Why? Imagine that you were the replacement for Tim Clark. What would you change?
Emirates strategy, which had allowed it high growth, and strong financial performance has proved to be sustainable over the years. However, the strategy appears to be in danger in future –especially from anti-competitive claims. With increased pressure on emirates to change its ownership structure which gave it unfair competitive advantages, the company had faced increased restrictions on some airports for access and operational management. While emirates have increasingly refuted claims of unfair competitive advantage, the growing pressure may prove its long strategy to become unsustainable in the future. moreover, with an increased number of flights and airlines operating from Dubai, emirates is also under pressure to shift its operations to the new Dubai airport – leading to a change in its historic use of Dubai as a hub for its long-haul flights. Consequently, owing to these changes, the company's strategy also appears to be under pressure, and shows signs of unsustainability in the future.
As a new leader for Emirates, I would focus on the ownership structure for mostly to allow the company to maintain its competitive edge. The company is 100% owned by the government right now, which has allowed claims of anti-competitiveness by other players. I would change this and include private ownership in the structure as well – similar to that of Turkish airlines. While the government will be able to retain the major share in the ownership of 55%, the remaining 45% would be owned privately, or publicly. This would allow emirates to enjoy higher transparency, as well as increase their credibility. For changing the ownership structure, IPLs would probably be offered to the public for gaining access to the company's ownership. This would allow emirates to become more competitive and less dependent on government resources. The government ownership could still be used for support in gaining access to foreign markets, as well as obtaining full at subsidized rates- which would help the company retain its unique competitive operational advantage.
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