Emirates Airlines: Impact of External Factors on Its Success - Essay Sample

Introduction

Emirates Airlines is one of the most profitable airlines around the world. The consistent success of the airline is due to its business model and strategic management. Nonetheless, both the internal and external factors play a crucial role in making the airline's success a reality ((Grimme, 2011, 333). Emirates' strategy choice has been dramatically influenced by the external factors, which are critical forces in the industrial and general environment. Nevertheless, the general environment is not only challenging to control but also a problem to forecast.

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The external environment within the Emirates airline dramatically influences the performance of the airline. The external factors include economic, social, cultural, political, environmental, technological, and legal issues (Alshubaily, 2017, p.36). Emirates must take these factors into consideration before developing any strategy since the factors are numerous and unpredictable.

The global developments in politics have greatly influenced the Emirates operation strategies. For instance, the increased rate of terrorism around the globe and sanctions made by countries such as the United States on the Muslim nations has tremendously halted several flights by the Emirates to such countries leading to a severe threat to the existence of the airline (Min and Joo 2016, p.102). Currently, Emirates is operating across six continents in the universe. As such, the airline has to respond to the insecurity issues leading to low demand for air travel and the bans on the Muslim states rapidly.

Nonetheless, the airline should keenly adhere to the economic factors to satisfy the expectations of the clients. Emirates has its revenues emanating from all over the world in different currencies. Consequently, a slight drop in the exchange rates can adversely affect its performance and revenue hence tampering with the operations of the airline (Min and Joo 2016, p.110). However, the decreasing rates in the price of the oil significantly boost the operations of the airline since the cost is cut while the revenues are maximized.

The Emirates has to handle the cultural and social factors effectively; this will enable the airline to meet the need of virtually all its customers regardless of their race, nationality, or social status. Undoubtedly, the fast growth in the human population translates to increased demand in the air services, which is ideal in assisting the airline is expanding its territories of operations (Alshubaily, 2017, p.33). However, Emirates has to be warry of how to deal with the various cultural and social practices of the increasing population to enable them to remain relevant and more profitable. The variation in cultures and norms makes it difficult for Emirates to effectively layout its operation strategy.

Furthermore, technological factors dramatically influence the operation strategies of Emirates Airlines. In most cases, the airline is forced to integrate the rapidly developing technology to achieve the desired aircraft design and smooth procedures during operations (Grimme, 2011, 335). Nonetheless, the implementation of advance technology does not only aid Emirates realize more profit but also help the various service providers and clients within the airline save a lot of time. However, the advanced technology has equally caused dilemmas to the operation strategies of the airline as most potential clients now prefer to carry out teleconferencing to physically traveling. As a result, the Emirates’ revenues have dropped significantly.

Undoubtedly, the legal factors play a crucial role in determining the choice of operation strategy of Emirates Airlines. Every country in the world has its regulations and rules. For instance, while Emirates Airlines allows the clients to use electronic gadgets like phones during flights, the United States rules and regulations prohibit such acts within its air space (Grimme, 2011, 333). Also, the travel ban by the United States puts her on the list of the numerous countries whose laws and regulations greatly hinder the operations of the airline.

Nevertheless, the environmental factors are critical determinants in the choice of operation strategies of the Emirates airline. It is undebatable that Emirates Airlines contributes a substantial share of the total global carbon emission that has led to the increased rate of global warming (Alshubaily, 2017, p.36). Also, uncontrollable weather conditions like heavy rains, storms, and elevated temperatures above the normal standards significantly interfere with the flight schedules of the Emirates airline. However, the use of green technology and biofuels can lead to low degradation of the environment by the airline.

Emirates’ External and Internal Resources and Its Choice in Competition within the Airline Industry

Emirates Airlines has established itself as the airline giant in the competitive and dynamic industry of airlines. Emirates has managed to attain this current status by always observing specific corporate strategies. For instance, the Emirates' price scheme has provided it with impressive leverage over its competitors. In several instances, the Emirates airline prices for the long distances flights are flexible, and the facilities maintained at relatively high quality to ensure the customers get the best experience. The long haul flights effectively assist the Emirates airline in fuel-saving and cost reduction to the clients. Emirates flight rates are at $0.11 per kilometer, which is cheaper compared to other airlines like Flydubai, whose flight rates are at $0.19 (Min and Joo 2016, p.103). Also, through the fuel association strategy by various oil companies, Emirates Airlines can obtain its fuel at stable prices regardless of any hike at prices of the oil in the future.

Furthermore, Emirates Airlines has extensively invested in the infrastructure and other crucial facilities within its airports. For instance, in 2014, Emirates injected $32 billion to the renovation and expansion project of its airports to meet the required standards due to the rapid growth of the airline (Min and Joo 2016, p.99). Also, the airline has facilitated its taxi services that ensure customers are safely dropped to their desired destinations. As a result, the Emirates airline has attained a considerable degree of class beating its rivals like Qatar Airways, which have no taxi services available to its customers. Moreover, Emirates has relatively improved security features in its airports, particularly at the inspection points, to avoid any instance of kidnapping terrorism.

Emirates Airlines has significantly invested in staff training programs; this is to ensure that the staff is capable of delivering exemplary and quality services to Emirates’ client. Nonetheless, the airline emphasizes on the specialization of the staff during the training programs. As a result, the employees are very competent and offer services that employees from other airlines find relatively hard to offer professionally hence attracting more clients to the Emirates airline (Alshubaily, 2017, p.37). Also, the strategy has effectively cut the cost that could have been used by the Emirates airline to hire new employees, a procedure that is time-consuming and costly. In August 2019, the airline was awarded the international airline of the month, the clients' satisfaction was also as high as 86 percent compared to other airlines like Malaysia Airlines whose customers' satisfaction was at 69 percent.

Nonetheless, the Emirates' application of the global strategy concept has enabled it to increase its flights to countries like the United States substantially. Thus, the airline has been able to move passengers all over the globe. Nevertheless, the open skies scheme enables the Emirates airline to fly in various airspaces of countries without penalty risks or consent. Consequently, the scheme has led to the attraction of a large base of clients making Emirates compete fiercely with other airlines.

In addition to the several strategies, the Emirates airline has numerous resources and assets that put it in a good position of outclassing its rivals. Based on the airline's human and technological resources records, the airline has a count of 113 modern airplanes. It has the ability to transport its client to over 100 airports present in 62 countries. It also has about 12 800 highly qualified employees drawn from over 100 different countries within the world ((Grimme, 2011, 335). The assets play a major role in maintaining the competing advantage of the country hence its success. The airline's close affiliation to the UAE means that it is both economically and financially stable since the country has a strong economy and a profitable airline market. As such, Emirates' growth in the Middle East is linked to the high demand for the airline's services by wealthy business people. Furthermore, the Emirates airline has continuously enjoyed numerous benefits by the UAE's relatively low labor costs and nontaxable airbases. At the same time, most of its rivals struggle with paying taxes and catering for high labor costs due to a lack of adequate finance.

Emirates Business Levels Strategies and Challenges

Emirates business model is elaborately developed, and carters for both its strategies and the customer needs. Furthermore, the strategy has always allowed them to plan ahead of their rivals (Alshubaily, 2017, p.34). For instance, the quality control strategy enables the company to grow continuously; under no circumstance does the Emirates airline compromise on the quality of its services, particularly to the clients. The adaption of the extensive aviation program enables Emirates Airlines to thoroughly train its employees and attract numerous individuals to seek employment from them.

The informational airline information technology strategy has enabled the Emirates airline to expand its operational territories within the world extensively. For instance, the CRM application facilitates the quick sharing of the clients’ data with the crew. As a result, the customers’ demands are met fast hence enhancing the rate of convenience (Alshubaily, 2017, p.30). Also, the extensive well-equipped cloud infrastructure by the Emirates airline enables them to forecast future schedules of flights efficiently. In an attempt to ensure their cloud infrastructure is well updated, emirates invested $85m with the tech giant IBM to facilitate upgrading of their cloud programs.

Emirates Airlines faces numerous challenges while in the course of delivering quality services to their clients. The significant challenges include adverse political factors and stiff competition by its rivals. Currently, the largest market share of the airline industry is held by Emirates, to maintain the level of competition the airline should introduce cheap flight strategies (Grimme, 2011, 334). Nonetheless, criticism for not properly paying the employees has been a significant challenge to Emirates Airlines as the reputation of the airline has been immensely tinted. Also, negative political factors have grossly inhibited the growth of the airline. Notable political challenges include the sanctions placed on the Muslim states by the United States of America's government led by President Donald Trump. The political factors might also lead to the airline losing a significant proportion of their clients base as they can no longer travel to their desired destinations hence leading to a loss in revenue.

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