Emirates Airlines PESTLE AND SWOT Analysis

Introduction A strategy is defined as a plan of action intended to accomplish a specific goal. Strategy encompasses attaining or at least attempting to attain to gain, a competitive advantage over rivals. According to Porter (1996), differentiation takes into account being different in the choice of a dissimilar mix of activities to provide a product or service. Furthermore, a strategy is a decision which will make a significant difference to the longstanding performance of an organization.

Emirates Airlines is one of the major airlines not only in the Middle East but also across the world and its center of operations is situated in Dubai, within the United Arab Emirates. Emirates Airlines is owned by the Investment Corporation of Dubai, which is an entity of the government of Dubai. However, the operations of the airline run on a commercial basis and the business does not obtain any kind of financial support or domestic protection from the government administration.

At the present moment, Emirates Airline is the biggest airline in the Middle East expanse, providing air transportation services to more than 150 cities in over 80 nations in the world and operating more than 3,600 flights every week. Remarkably, aside being ranked as the biggest airline in the Middle East region, the airline is the fourth biggest globally, with regard to revenue and also passenger traffic (Alshubaily, 2017).

The historical account of Emirates Airlines goes back to the 1980s decade, when the dominant airline in the region, Gulf Air, began cutting airline trips to Dubai. The response of the government was the introduction of Emirates Airlines in 1985. The starting capital for the start-up was $10 million for independent business operations devoid of any additional government subsidies. The organization would thereafter get on a passage of adopting strategic operations to attain growth and profitability.

Since then, the organization has substantially grown and developed to be one of the top leading airlines in the Middle East expanse and the world beyond (Alshubaily, 2017). Strategy plays a pivotal role in relation to Emirates Airlines. Strategies provide direction and action plans. This takes into account the everyday decisions and actions undertaken within the organization. Secondly, strategy is important to Emirates in that it aids in prioritizing and aligning activities.

The strategies within an organization aid in making of choices, instituting priorities, apportioning resources to initiative and coordinating to accomplish desired outcomes. Third, strategy aids in the delineation of accountabilities and timelines for accomplishing anticipated outcomes on the agreed strategic initiatives. Furthermore, strategy is also important for the organization in improving communication and dedication. In clarifying the visions and accountabilities, strategy aids in increasing the placement of all organizational activities and nurtures dedication at all levels.

Most of all, strategy is imperative for Emirates Airlines in the provision of a framework for prevailing decision making. Taking into consideration that all decisions ought to support the strategy, then the strategy and the strategic initiatives are the point of reference for decision-making (Tomlinson, Murdick and Moor, 2000). Macro environment The macro environment takes into account the key external and uncontainable factors that impact an organization’s decision making, and impact its performance and strategies.

These factors take into account legal, economic, demographic, political, social and technological changes and natural forces. Macro environment is significant and has a major impact on Emirates Airlines. This is in the sense that key changes or advances in the macro environment are more often than not outside the control of the business.

It is imperative for Emirates to have the ability to anticipate the influence of these changes on either the organization itself or on its market prior to actually take place, in order to have the ability to make adjustments on the product offerings and processes in view of that.

Furthermore, it is necessary for Emirates to make certain that the management of the business is cognizant of prospective changes in its macro environment owing to the reason that lack in doing so might give rise to the business losing any competitive edge that it may have and also hampering its very existence. PESTLE Analysis Political Factor There are different political factors that have impacted Emirates Airlines. 1. Brexit The decision by Britain to leave the European Union impacted travel across Europe.

The voting decision to leave the EU without a doubt had some economic disruption in addition to the effect of the political and economic volatility in the European nations. This political instability resulted in decreasing demand and the decline in demand implies less people consumers travelling on airplanes. Emirates Airlines were amongst those that largely profited from the EU arrangements to open airspace and free movement of persons.

Brexit will without a doubt give rise to a long-winded period of renegotiation between governments to occur to ascertain that their prevailing access to the skies was maintained (Reuters, 2016). The impact of this Brexit is that Emirates reported a decline in annual profit as the business ended up adding additional seats than it could fill in addition to stiff competition place pressure on ticket prices (Fortune, 2017). 2.

Trump’s travel ban Emirates proclaimed that its expansion plans in the United States were put on hold subsequent to making the announcement of flights to five United States cities would be cut as a result of the weakened level of demand. This is linked to the fact that President Donald Trump’s administration placed travel restrictions.

The recent actions undertaken by the American government in relation to the issuance of entry visas, fortified security vetting, and restrictions on electronic devices in aircraft cabins have had a significant direct influence on consumer interest and demand for air travel into the United States. This has given rise to weakened travel demand and therefore reduced tickets and revenues generated. This has affected Emirates’ decision-making by forcing the firm to cut flights to the United States (Zhang, 2017). 3.

Militant attacks in Europe and Turkey The militant attacks that took place in Europe and Turkey significantly impacted the operations of Emirates Airlines. According to Wills (2018), in the past year, Europe experienced 205 terror attacks. The number of jihadist terrorist attacks grew in the past year and this resulted in fears of a perceived Islamisation of society. The effect of these attacks led to a decline in individuals traveling to the Middle East owing to such negative perceptions and therefore a decline in the demand for air tickets.

It is recommended that Emirates Airlines should try and advance its brand name and image in a positive manner to ensure that consumers still use the airline for transportation means irrespective of the negative outlook of the Middle East. Economic Factor The economic factor investigates external economic issues that can play a role in the success of a company. 1.

GDP GDP in the United Arab Emirates is projected to be 390.00 USD Billion by the end of this financial quarter ending the 2018 financial year, according to Trading Economics global macro models and analysts’ expectations. In the longstanding period, the United Arab Emirates GDP is estimated to trend around 425.00 USD Billion in 2020, according to the econometric models. The recommendation given is that this presents a great opportunity for Emirates Airlines because of the healthy economic setting.

Therefore, the company should capitalize on the health economic setting to advance its business operation. 2. Economic development It is imperative to note that the economy of the United Arab Emirates has been largely supported by the oil industry. However, in recent times, the government together with the private sector has made significant investments into other industries and sectors in the UAE economy, for instance the trade and commerce sectors. This is an endeavor to facilitate the UAE to be an attractive and appealing business destination to world.

As a result, this has directly impacted Emirates Airlines in a positive manner in the sense that increased travel to the UAE implies increased ticket purchases and an increase in the revenue generated. It is recommended that Emirates Airlines should capitalize its brand image to be linked to the growth in Dubai to appeal to premium travelers and business travelers (Malek, 2016). 3. Oil The Middle East economic status is largely boosted by oil. However, in recent times, there has been a decline in the demand for oil.

This has been largely associated with the increase in the demand and use of alternative sources of energy. The key advantage of this is that the decline in the price of oil is beneficial to Emirates as it leads to a decline in its operational costs. However, the downside to it is that there is also a decline in premium travel in Dubai (Malek, 2016). The health of UAE’s economy is expected to grow and advance in the coming years.

Emirates Airlines should capitalize on these good economic conditions to increase its fleets, brand image and also the revenues generated. Socio-cultural Factor 1. Increasing global populaces The population is constantly increasing. The growing population in the Middle East and the world as a whole implies that there are a greater number of people seeking to make use of air transport. For instance, the population of the United Arab Emirates in 2000 was 3.033 million. Since then, the population has increased threefold to 9.4 million people.

This figure is in correlation with the rise in the number of consumers using air transport by more than 14 percent. This has impacted the decision making of Emirates Airlines by increasing the number of seats within its airplanes and also increasing the number of flights to different destinations across the globe (Alshubaily, 2017). 2. Need for faster movement In the contemporary, the society is progressively more conscious of time and craves for immediate satisfaction.

This has resulted in the inclination for the use of air transport over other means of transportation such as roads, railways and sea. The significance of air transport cannot be overlooked. It is the fastest and one of the most dependable transportation modes. It is especially suitable for the transportation of persons and goods, more so those that have urgent matters and need to move over long distances. This has significantly impacted Emirates Airlines’ business operations with increased demand for air tickets.

In the present day, the passenger numbers using the airline has increased to 49.2 million (Alshubaily, 2017). 3. Globalization The advancement of globalization has facilitated the increased interrelations of people and regions all over the world. Air transportation has been significantly impacted by globalization. Air transportation has become the most reliable means of transport for overcoming the distance obstacles. In this regard, Emirates has become a global airline, providing services to 155 airports in 83 different nations from its main hub in Dubai (Emirates, 2018). In the contemporary marketplace, progressively more consumers are utilizing air transport.

The advancement of globalization has further increased the demand for air transport. It is recommended that Emirates Airlines should provide consumers with quality services that are guaranteed through the provision of convenient, comfortable, reliable, and secure and safe air services (Alshubaily, 2017). Technological Factor 1.

Technological affiliations The Emirates airline in recent times signed a mobile phone network coverage contract with a telecommunication company, so as to provide its customers who come on board for flights to have the capability to use their mobile phones while they are on the plane. 2.

Research and development The fast-paced rising investment in research and development amongst companies implies that there is intense competition amongst companies in the Airline industry as they endeavor to develop and retail airline packages that are more technologically advanced and meeting the needs of consumers. What is more, the speedy technological outmodedness threatens the companies in the industry by placing pressure on them to take more initiative into product development. Nevertheless, the advanced technology offers the companies the opportunity to assimilate cutting edge technologies in their product offerings.

It is recommended that Emirates Airlines should embrace and implement the advancing technologies in the market in order to ensure that it keeps up with consumer demand and also maintains a competitive advantage over other rivals in the industry. Environmental Factor 1. Sustainability In the contemporary business setting, companies are being forced to espouse and implement a sustainability approach, which places more pressure on these airline companies to partake in greater sustainability endeavors.

This is largely for the reason that airline transportation is a process that results in pollution of the environment. However, the expanding environmental regulation provides an opportunity for Emirates Airline to utilize environmental and sustainability programs to deal with climate change, which impacts not only the organizations’ supply chains but also the uprightness of the offerings rendered by the airline. 2.

Pollution Being amongst the fasted growing and developing nations regionally and globally, UAE is inexorably experiencing a weakening environmental circumstance, emanating from several reasons, a number of which comprise of weak and ineffective laws regarding environmental practices and also lack of environmental insight and awareness from the local communities. Pollution continues to be an unsettled issue for not only the citizens but also the government. Nonetheless, the UAE citizens are progressively more cognizant of their surrounding environment.

Therefore, any activities that are bound to negatively impact the ecology are protested against. It is recommended that Emirates Airlines should embrace ecological advancements and sustainability. This will not only ensure that its pollution levels are low and diminish the prospective tax amount to be levied, but also the present-day consumers who are protective of the environment will be comfortable in using the airline for traveling. Progressively more consumers want to be associated with socially and environmentally responsible organizations.

Legal Factor Legal factors are external factors which take into account the manner in which law impacts the way businesses operate and consumers behave. They comprise of current and prospective legislations that may impact the industry in different areas such as employment, competition, safety and health. The business environment in which Emirates Airlines operates is signified by various forms of laws and regulations put in place. 1. Government relations As aforementioned, Emirates obtains support from the Dubai government administration.

In recent times, Emirates Airline was successful in attaining additional landing rights in states of Europe an aspect that is perceived as a significant threat by the local airliners. Numerous carriers have said the Emirates airline due to getting fuel subsidies from its local government possesses a serious competitive advantage over their airlines. Therefore, should not be given license (Davahran, et.al, 2014). 2. Employment and corporate regulations Similar to any other industry, corporations operating in the airline industry are obligated to adhere to employment rules and regulations.

This is a significant aspect owing to the reason that it gives rise to increased labor expenses in expanses where the production facilities are situated. What is more, the corporations are expected to have to adhere to the national and international laws while undertaking their regional and internal flight operations. Nonetheless, at the same time, this external aspect also provides a prospect for the companies to implement higher standards.

There is also the prospect of enhancing company brand reputation through addressing safety regulations and health regulations in facilities and ensuring consumer satisfaction. It is recommended that Emirates Airlines should ensure that its operations are in adherence with both local and international rules and regulations. This will ensure that the organization does not tarnish its reputation or image and also at the same time avoid negative press through law suits.

Micro environment Micro environment is defined as the factors or components within an organization’s internal and close area of operations that impact its performance and decision-making. These factors comprise of consumers, competitors, employees, and suppliers. Micro environment is important for Emirates Airlines owing to the reason that all of the marketing plans, approaches, and objectives are implemented through these constituents. It is a key aspect of the business where practical execution of conceptions and thoughts are undertaken and centered on the responses of these constituents.

What is more, it provides guidance to future communication strategies of an organization. Bearing in mind such features, micro environment plays a fundamental role in apprehending the current potential and ascertaining the future of a business (Craig and Campbell, 2012). SWOT analysis tool can be delineated as a strategic tool that outlines the main strategic messages originating from within the organization and the business setting. Essentially, these are the organization’s strategic competences with regard to its distinctive and unrivaled mixture of resources and capabilities.

They are outlined in four groups including strengths and weaknesses, which have something to do with the internal features of the organization, and opportunities and threats, which connect to the business setting. The objective is to determine the magnitude to which prevailing strengths and weaknesses are relevant to and equipped to managing changes occurring in the business setting and also appraising the opportunities an organization ought to capitalize on and threats from which it ought to defend itself (Zanoni, 2011).

First, the strengths take into account the aspects where a firm has a competitive edge in comparison with rivals. Second, the weaknesses of a firm are those aspects where there are competitive disadvantages in comparison to rivals in the market. In actual fact, through the examination of the internal environment of a firm, it is conceivable to ascertain the strengths and weaknesses of the firm. The opportunities and threats of a firm comprise of external stimuli.

Third, opportunities are features of the external environment that have the potential to aid the firm to accomplish its strategic goals and objectives. Fourth, threats are the features of the external environment that might hinder the organization to realize its strategic goals and objectives. Through the examination of the external environment, it is conceivable to ascertain the opportunities and threats (Daft, 2003). Strengths 1. Dubai positioning A key strong suit for Emirates Airlines is that its central hub is situated in Dubai.

Notably, Dubai is one of the leading tourist destinations in the world and the hub of Emirates. The image of the city has been replicated in the airline bringing about in a highly positive brand image.

The key benefit of this is that the huge majority of the world’s population can be reached within a single flight, and this makes the expanse to be a remarkable transition point for long distant travelers, an aspect that has been a key contributing factor for Emirates Airlines impressive growth since its establishment (Parker, 2013). One of the key advantages is that the airline obtains support from the Dubai government administration owing to the fact that the government controls a great deal of the shares.

There is also the advantage that Emirates can leverage increased bargaining power in addition to financial flexibility with respect to the negotiation of flying rights on global routes. The disadvantage of this aspect is that Dubai is situated in the Middle East, which in recent times has had a negative reputation. Owing to the various incidences of terrorist attacks in Europe and Turkey by jihadists, it has resulted in the negative perspective of the Middle East region and these impacts Emirates with regard to diminished demand for airline transportation (Wills, 2018). 2.

Wide business network Emirates Airline has a wide-ranging route network that spans across six different continents, more than 80 nations and over 150 destinations. In addition, the airline operates more than 230 aircrafts with incessant pursuit of further growth and expansion. This continuously increasing fleet of contemporary aircrafts offers numerous international passengers with a high quality, reliable and convenient transportation solution. With more than 1,200 flights departing the central hub in Dubai on a weekly basis to different destinations, this demonstrates the expansive nature of the airline.

In fact, the flights for Emirates Airlines account for just about 40 percent of all of the flight movements coming in and going out of the Dubai international airport (Emirates, 2018). The key advantage of this is that the business is able to provide transportation services to consumers across the globe. Consequently, Emirates has become a renowned airline in the global scene for the provision of world-class services. It is recommended that Emirates should seek further expansion. Specifically, the airline can capitalize on the emerging economies and markets and establish business operations.

These markets include nations such as India, Iran and a greater number of nations in Africa. This will enable the company to increase its consumer base and also generate greater revenues (Diaa, 2018). 3. Brand name and Status One of the key strong suits of Emirates Airlines is its brand name. In particular, the airline has grown to become a renowned brand name not only in the United Arab Emirates but across the globe.

Aside from having a huge consumer base, the company is able to charge greater prices on its product offerings for the reason that consumers place extra value in its brand name. In addition, Emirates Airlines has a reputable status with respect to air transportation. Remarkable customer services and amenities have also had a fundamental role in the acknowledgment and the brand. Notably, Emirates was given the award for World’s Best Airline and received 12th consecutive award for best In-flight entertainment at Skytrax World Airline Awards 2016 (Emirates, 2018).

The advantage of this is that transport passengers are inclined to seek air transport services from the Emirates Airlines. In the same manner, experts and different players in the airline industry are inclined to work within and in tandem with such a renowned and reputable airline. The disadvantage of this is that a slight mistake can significantly hamper the reputation of the business. This can result in the tarnishing of the sponsorships and affiliations that Emirates has been able to amass owing to its brand image.

The recommendation for the airline is to advance further its affiliations with different companies and players in the airline industry. This is bound to improve its status and recognition. Furthermore, it is imperative for the airline to augment its cutting-edge airline services both on and off the plane in order to ensure that it maintains its consumer base and positive brand image and reputation (Porter, 1980). It is recommended that Emirates Airlines should continue to work together with different players and take up sponsorships with different entities.

For instance, continued sponsorship deals with renowned football clubs such as Paris Saint German in France, Arsenal in the United Kingdom and AC Milan in Italy will improve the visibility of the airline across the globe. In addition, this will lead to Emirates being associated with a positive brand image. Weaknesses 1. High operating costs Emirates Airlines faces significantly high operating costs as a result of huge investment in procuring an aircraft. Airplanes are costly procurements that can go as high as $600 million dollars.

As a result, this increases the total operating costs. Furthermore, according to Emirates (2018), in the preceding financial year, the total operating costs of Emirates airlines increase by 7 percent. This was associated to an increase in the capacity levels and the fuel bill of the organization. 2. Intense rivalry Facing intense rivalry in the regional and international market from its competitors, the share of the international market possessed by Emirates is limited.

This is largely owing to the fact that there is increased consumer preference for other airlines such as Etihad or Turkish airlines. The key advantage of this is that it pushes Emirates to differentiate itself in the market in order to sustain its revenues and at the same time improve on its consumer base. However, the disadvantage is that an increase in the level of competition implies a restriction to increased market share and also a decline in market revenues.

The recommendation for Emirates is to differentiate itself significantly and provide consumers with exceptional services and affordable prices that will ensure that they do not shift to other rivals. 3. Sustenance of benchmarks As a result of the evolving innovation and upgrading of skills to be transformed into services, there is a standard set among the top airlines and the inference of this is that it necessitates high maintenance and investment into newer, bigger aircrafts or trainings given to the personnel to ensure high performance. Opportunities 1.

Improvement of infrastructure The UAE government is making plans to place significant investments in developing and growing airports in Dubai as well as Abu Dhabi in the forthcoming decades. In accordance to Lawrence (2018), the UAE is making an investment of more than $23.16 billion within the airline industry that is purposed to aid its four national carriers with a collective fleet size of 502 aircraft to provide service to over 75 million passengers every year.

Furthermore, total capacity is anticipated to increase to over 300 million passengers annually thereby buttressing the UAE’s status as the biggest investor in airlines and aviation industry in the Middle East and Northern Africa region. It is recommended that Emirates Airlines should capitalize on this opportunity and expand its business operations to increase not only its consumer base but also the revenue generated. 2.

New and emerging markets Emirates Airlines has the opportunity to seek out new and emerging markets to earn progressively more revenue by operating flights on the global routes. Specifically, in the present day, budget travelers are a fitting example of a target market that numerous airlines are aiming at to take into consideration and provide cost-effective prices at the same time and rendering package deals. This is a target market that Emirates can consider and try to expand their consumer reach.

In addition, there are numerous other destinations within emerging economies where Emirates can launch their flight offerings and also increase the number of flights. 3. Advanced airline and aviation services The introduction of new airplanes into Emirates Airline’s fleet will boost the awareness consumers have of the business and its brand. Moreover, of the airplanes are convenient and reliable and also advanced, it will have value added towards consumer belief and confidence in the organization and therefore increase the demand levels and revenue generated by Emirates.

However, in spite of the fact that there is the advantage of increased brand awareness, the key disadvantage is that this move will increase the cost incurred by the organization. It is recommended that Emirates Airlines should consider procuring airplanes that are suitable for its operations and that will continue to be in operation for a long period of time. Threats 1. Change in governmental policies The different policies introduced and implemented by the government administration can significantly hamper the operations of Emirates Airlines.

One of the key policies is fiscal policy. Bearing in mind that there has been a substantial push by the global leaders to fight global warning and carbon emissions, the United Arab Emirates government might make the decision to carry out a carbon emission tax on all corporations in the nation. This incentive has been perceived in Australia where the government implemented such a.