FACULTY OF ECONOMICS AND MANAGEMENT

SEMESTER 2 2018/2019
EPPM 4014 STRATEGIC MANAGEMENT

CASE STUDY: THE EMIRATES GROUP 2014 (CASE 9)

PREPARED FOR: EN. ABDULLAH SANUSI BIN OTHMAN

PREPARED BY:
NAME MATRIC NUM.

HAMIDAH BT AZMI A153327

MARYAM BT ABDUL SHUKOR A153397

NAZATUL ASYILA BT ABU A153682

NAZZATUL AIN BT ABU HASSAN A152773

NURUL JANNAH BT MD TAUHID A156235

 TABLE OF CONTENT

1.0 EXECUTIVE SUMMARY

1.1 BACKGROUND OF COMPANY 2
1.2 ISSUES STATEMENT 3
2.0 INTERNAL ANALYSIS
2.1 FUNCTIONAL ANALYSIS 5
2.2 FINANCIAL ANALYSIS 9
2.3 INTERNAL FACTOR EVALUATION (IFE) MATRIX 16
3.0 EXTERNAL ANALYSIS
3.1 PORTER’S FIVE FORCES MODEL
19
3.2 COMPETITIVE PROFILE MATRIX (CPM) 22
3.3 EXTERNAL FACTOR EVALUATION (EFE) MATRIX 24
4.0 MATCHING STRATEGIES
4.1 SPACE MATRIX 27
4.2 BCG MATRIX 31
4.3 IE MATRIX 34
4.4 GRAND STRATEGY MATRIX 35
5.0 THE DECISION STAGE
5.1 QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM) 38
6.0 RECOMMENDATIONS 44
7.0 CONCLUSION 46

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1.0 INTRODUCTION

1.1 COMPANY BACKGROUND

Emirates Group started in 1959 as the Dubai National Air Transport Association (Dnata),
with Dnata airport operations, Dnata cargo, and Dnata agencies as segments. During the middle
1980s, Gulf Air began to cut back its services to Dubai. As a result, Emirates was conceived in
March 1985 with backing from Dubai’s royal family and was required to operate independent of
government subsidies. Started with just two aircraft: a leased Boeing 737 & an Airbus 300 B4,
Emirates now is a global airline. It is operating the world’s biggest of wide-bodied jets, flying the
largest fleets of Airbus A380 and Boeing 777 Aircraft.

Headquartered in Dubai in the United Arab Emirates, the Emirates Group is the parent of
Emirates, the largest airline in the Middle East, operating over 1,200 flights per week from its
hub at Dubai International Airport. Emirates flies to more than 130 destinations in 70 countries
on six continents and offers direct flights from Dubai to Washington, DS, San Francisco, Los
Angeles, and Seattle. With more than 67,000 employees and annual revenues of more than 73.1
billion Dirham, the Emirates Group is wholly owned by the government of Dubai and controlled
by the Investment Corporation of Dubai.

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1.2 ISSUES STATEMENT

Emirates aims becoming the world’s leading lifestyle brand. They are investing to build
strong brand image, and express their identity and personality in everything they do, includes
products, services, staff, marketing, sponsorship, etc.

As the Airline industry is in the maturity stage, there are some issues that Emirates should
address. Firstly, the operational cost is increasing due to huge investments of Emirates on
aircrafts and services and increase in fuel prices. Besides that, the challenges that faced by
Emirates is a strong competition between airline firms. Accordingly, many companies started to
focus in differentiating their services and products from their competitors by increasing their
customers’ brand loyalty. For instance many companies starts to concentrate on cutting the
operating cost, thus in this stage the profit margin decreases and the least efficient companies
leaves the market and only well-established companies are the ones that remain. Accordingly,
many companies’ use offensive strategies rather than defensive strategies through modifying
their market, product and marketing mix to survive and compete during this stage. For example,
the flydubai discount airline may pose the largest threat to the firm because the demand for low
price flights is growing rapidly globally. Flying with Emirates is high dollar, and competitors see
great potential to take market share from Emirates with lower prices.

Finally, Emirates is not a member of any airlines alliance. Alliances allow airlines to get
the benefits of a larger networks such as operational economies of scale and network benefits of
a larger route network while remaining independent companies. There are three major airline
alliances which are Star, OneWorld, and SkyTeam aim to an extended network through code
sharing agreements, where two or more airlines share the same flight these flights can reach over
a thousand destinations scattered across the globe. These alliances provides many other
advantages that is hard to achieve in Emirates group such as shared sales and marketing, shared
maintenance, shared airport lounge.

3
 Generally, there are various strategic management tools can be used by the management
of Emirates Group for analyzing the situation. In case of Emirates Group, it is important to
utilize various strategic marketing tools for developing new strategies for achieving sustainable
growth across the globe for long term. Therefore, the strategic models need to be applied as well
as the results will be used for designing, implementation as well as monitoring of the strategies.
This section will focus on discussing the implication of different strategic models that are
important for conducting strategic marketing activities in order to compete in the dynamic
business environment.

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2.0 INTERNAL ANALYSIS

2.1 FUNCTIONAL ANALYSIS

The Emirates Airlines is one of company of the United Arab Emirates Airline. Emirates
airline established in 25th may in 1985, their head office is in Dubai and it based on the
international airport. The Emirates Group is the parent company of the United Arab Emirates
airline. Emirates airline emirates government owns from Dubai. Emirates Airlines is one of the
fastest-developing airline

The Emirates A380 promises customers in all classes a whole new travel experience.
Designed to transport passengers on long-haul journeys in unmatched comfort, the Emirates
A380 boasts First Class Shower Spas, a spacious on-board Lounge, and our award-winning ice
in-flight entertainment system offering over 1,200 channels of movies, music and games
on-demand in all classes. Emirates Airlines is the well renowned company for its In-Flight
services. The airline serves various services to their customers at the time of their journey and
makes it pleasant one. It offers several services such as entertainment service, cabin crew
service, in-flight mobile service, food of different cuisine etc (Emirates Airlines Flight Services).
In airlines organizations, attendants are the mediator between customers and services provided
by airlines.

Emirates were the first airline to place an order for this ultra-efficient twin-deck,
four-aisle aircraft. ​Emirates is well known for providing excellent service for high-end
passengers in first class, but it also provides excellent service in business class and economy
class. Emirates Airline directly functions check- in services, service desks, lodging and lounge
services, and luggage. Moreover there’s also have Emirates hotels and resorts, Emirates sky
cargo, Emirates aviation college for pilot and staff training, Emirates engineering centre for
repair, maintenance and training, Emirates catering, incorporate business support are its special
services.

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 First-class passengers on Emirates flights enjoy their own private suites on Airbus 380,
Airbus 350, and Boeing 777 planes. The Emirates first-class experience starts with personal
chauffeur picking up passenger and driving him or her to the airport for seamless check in.
Customers are then able to enjoy the first-class lounge while they wait for plane arrive before
boarding process begins. They also have an allow up to 170 pounds total weight. ​There are 3
types of first class chairs which is the full suite with doors, horizontal bed 'Sky cruiser' seat
(without doors) and 'Sleeper' seats. ​Furthermore, on board, the customer can enjoys suites that
include a personal mini-bar, vanity table, mirror, wardrobe, 23-inch TV with more than 1400
channels including the latest movie, sliding door for extra privacy, SMS, Internet, and much
more. If desired, the flight crew can convert the seat to a fully flat bed with mattress. To
complement the bed, pajamas, slippers and toiletries with Bulgari lotion are provided. Also
reawaken senses in the on-board Shower Spa. First-class customers have exquisite free food and
drink options. For the customer in First-class, they’ll be pampered and experience a seamless
journey from start to finish.
Emirates business-class travel on Emirates also will taste their way around the world.
Which is possibly the best in the world and also will experience a seamless journey from start to
finish. Business-class passengers enjoy many amenities and extra comfort, such as seats turning
into a 79-inch flat bed at the push of a button, power supply for laptops, extra large table, large
screen TVs with more than 1,400 channel, SMS, Internet, mini-bar built into every seat, and
privacy dividers. These amenities are provided on A380 and most Boeing 777 aircraft.
Business-class passengers also enjoy delicious food and many drink option are provided.
Complimentary champagne and vintage wines are the norm, and all food and many drinks
option.
For the Emirates-economy class customers will experience their journey in a class of its
own. They will taste the flavors of their destination and window into new worlds. Emirates
Economy Class is designed to give more room, more comfort and better service, for an all-round
better flight. Thoughtfully designed cabins mean more space for each passenger. Complimentary
beverages and superb multi-user meals are provided, as well as personal seat-back monitors to
enjoy our outstanding in flight entertainment, such as TV and audio on TV & radio. Customer

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also will enjoy more than 1,400 channels on their personal TV, meals, and Internet, phone and
SMS capabilities at their seats. ​Economy passengers can stay in touch with SMS, phone and
email at their seats, and of course, every passenger will enjoy the same high standard of service
from our multilingual crew that is offered in all cabins.

Emirates also provide a Sky Cargo and Ground Handling which is t​he ​Emirates Group
comprises ​Dnata​, an aviation services company providing ground handling services at 78
airports, and ​Emirates Airline​, the largest airline in the Middle East. Emirates Airlines flies to
over 150 destinations across 6 continents, operating a fleet of over 250 ​wide-bodied aircraft​.
Dnata signed a 15-year joint venture agreement with China West Airport Group to provide
airport ground handling services in Xi'an ​Xianyang International Airport​. A cargo airline based
in Dubai, United Kingdom Emirates, it is the air freight division of Emirates, which started
operations in October 1985, the same year Emirates was formed. Since then, it has been the main
cargo division of Emirates, and the anchor cargo airline at Al Maktoum International Airport, its
main hub.Emirates. Sky Cargo operates dedicated cargo flight to 20 destinations in 15 countries
from Al Maktoum International Airport and through the Emirates network has access to
additional 79 destinations.

Travel Services which is include the Airport Services, passengers may check-in between
2 to 48 hours prior to flight departure. This may be done over the counter of at the lounge within
the airport. Self-service kiosks are also available at Dubai International Airport, as well as at
certain stations of the Dubai Metro. E​mirates Airport services comprises of check-in service,
boarding service and some other services. Emirates Airlines have staff of 2,200 people that
facilitates services to their customers from all outstations. It is serving various services such as
passenger services, baggage and ramp services, customer services, quality and resource planning
etc (Emirates SkyCargo Stimulating Growth in America’s International Trade).

7
 In early 2006, Emirates flight catering began operations at its new $120 million catering
facility dedicated to service the flights of ​Emirates Airline​. The facility had the capacity of
producing over 115,00 meals daily. Also, in 2006, Emirates flight catering opened its line-craft
laundering plant. Recently, Emirates started a new service called “Emirates Holiday”. It is a new
way to inspire holiday, fascinating destinations, unique hotels and all the little things that come
together to create unforgettable moments for a family. In 1999 Emirates enters the hotel property
market with the opening of the Al Maha Desert Resort & Spa. Emirates Group’s workforce totals
11,000. 2003. CAE and Emirates join forces to open the $100 million Emirates Aviation
Training Centre which boasts numerous full-flight simulators.

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2.2 FINANCIAL ANALYSIS

2.2.1 ​LIQUIDITY RATIO

A liquidity ratio is financial ratio that indicates whether a company’s current assets will be
sufficient to meet the company’s obligations when they become due. The ratio measures the
company’s ability to pay its short-term debts. A high ratio indicates a company with a low risk of
default.
i.
​ Current Ratio is a liquidity ratio that measures a company’s liability short-term
obligation those due within one year. It helps investor to analyst how a company can
maximize the current assets on its statement of financial position to satisfy its current
debt and other payables.

Current Ratio = Current Assets/Current Liabilities

2013 2012 2011

Emirates 34,447 25,190 21,867

Group 31,319 25,765 21,290
= 1.10x = 0.98x = 1.03x

Interpretation current ratio: ​In 2011 and 2013, the current ratio are over 1.0x which
mean the current liabilities would covered by the current assets. However, in year 2012
the current ratio is lower which is Emirates Group only has enough current asset to pay
off 98% of company’s current liabilities.

ii.
​ Quick Ratio ​is a financial liquidity ratio that compares quick assets to current liabilities.
​

It measures the ability of a company to pay its current liabilities when they come due
with only quick assets. The quick ratio is often called the acid test ratio in reference to the
historical use of acid to test metals for gold by the early miners.

9
 Quick Ratio = (Current Assets – Inventory)/Current Liabilities

2013 2012 2011

Emirates Group 34,447-1,564 25,190-1,469 21,867-1,290

31,319 25,765 21,290
= 1.05x = 0.92x = 0.97x

Interpretation quick ratio: ​The quick ratio is increasing by year 2011 to 2013. Higher
quick ratio are more favourable for companies because it shows there are more quick
assets the current liabilities. In year 2013, with quick ratio 1.05 indicates that the
company could pay off its current liabilities without selling any long-term assets.

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2.2.2 ​LEVERAGE RATIOS

A leverage ratio is any one of several financial measurements that look at how much capital
comes in the form of debt or assesses the ability of a company to meet its financial obligations.
With leverage ratio, companies can rely on a mixture of equity and debt to finance their
operations and knowing the amount of debt held by a company is useful in evaluating whether it
can pay its debts off as they come due.

i.​
​ DEBT TO TOTAL ASSETS RATIO
​

The total debt to total assets ratio is an indicator of a company’s financial leverage. It shows
the percentage of a company’s total assets that were financed by creditors. In other words, it
is the total amount of company’s liabilities divided by the total amount of the company’s
assets.

Debt to Total Asset Ratio = Total Liabilities/Total Assets

2013 2012 2011

Emirates Group 71,771 55,620 44,277

94,803 77,086 65,090
= 0.757 = 0.722 = 0.680

Interpretation debt to total assets ratio: ​As shown from the calculation, the ratio of
debt to total assets are increasing from year 2011 to 2013. That’s mean, the higher the
debt to total assets ratio, the greater the financial leverage and the greater the risk.

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ii.​ D
​ ​ EBT TO EQUITY RATIO

The debt equity to equity ratio shows the percentage of company financing that comes from
creditors and investors. A higher debt to equity ratio indicates that more creditor financing
which is bank loans is used than investor financing which is shareholders.

Debt to Equity Ratio = Total Liabilities/Total Equity

2013 2012 2011

Emirates 71,771 55,620 44,277

Group 23,032 21,466 20,813
= 3.12 = 2.59 = 2.13

Interpretation debt to equity ratio: ​The ratio is increasing by year 2011 until 2013. It
consider risky to the creditors and investors because the equity unable to accommodate
the liabilities. In year 2013 shows that the creditors provide 3.12 AED for 1 AED
provided by stockholders.

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2.2.3 ​PROFITABILITY RATIO

Profitability ratio is used to evaluate the company’s ability to generate income as compared to its
expense and other cost associated with the generation of income during a particular period. This
ratio represents the final result of the company which is how profitable the company is. It also
represents how profitable owner’s funds have been utilized in the company.

​ eturn on Asset Ratio (ROA) ​measures the earning per dollar of assets invested in the
i. R
​

company. A high ratio represents better company is.

ROA = (Net Profit/Total Assets) x 100%

2013 2012 2011

Emirates (2,408/94,803)x100% (1,620/77,086)x100% (5,467/21,867)x100%

Group = 2.54 = 2.1 = 2.50

Interpretation ROA: ​ROA ratio in year 2013 is higher than 2012 and 2011. It shows
that in year 2013 2.54% profit is generated by 1 AED and the company is able to
efficiently generate earnings using its assets.

ii.
​ Return on Equity Ratio (ROE) measures profitability of equity fund invested the
​

company. It also measures how profitably owner’s funds have been utilized to generate
company’s revenues. A high ratio represents better the company is.

ROE = (Net profit/Total Equity) x 100%

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 2013 2012 2011

Emirates (2,408/23,032)x100% (1,620/21,466)x100% (5,467/20,813)x100%

Group = 10.46 = 7.55 = 26.27

Interpretation ROE: ​For every 1 AED, Emirates Group could generate profit 10.46% in
year 2013. From the analysis the ratio is decrease in year 2012 but increase in 2013.

iii.
​ Net Profit Margin ​is how much net income or profit is generated as a percentage of
​

revenue. It typically expressed by percentage but can also be represented in decimal

form. The net profit margin illustrates how much of each dollar in revenue collected by a
company translates into profit.

Net Profit Margin = (Net Profit/Revenue) x 100%

2013 2012 2011

Emirates (2,408/71,159)x100% (1,620/61,508)x100% (5,467/52,945)x100%

Group = 3.38 = 2.63 = 10.33

Interpretation of net profit margin: ​The ratio in year 2012 is decreasing but it is
increasing in year 2013 at ratio 3.38. The higher the ratio, the better the company
performs in terms of profitability. From the analysis in year 2013, Emirates Group has
0.038 AED of net income for every 1 AED of sales.

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2.2.4 ​OPERATING RATIO
The operating ratio shows the efficiency of a company’s management by comparing the total
operating costs to net sales. It also show the efficiency a company’s management is at keeping
costs low while generating revenue. The smaller the ratio, the more efficient the company is at
generating revenue versus total expenses.

Operating Ratio = Operating Cost/ Revenue

2013 2012 2011

Emirates 70,274/71,159 60,474/61,508 48788/52,945

Group = 0.988 = 0.983 = 0.921

Interpretation operating ratio: ​In year 2013, the operating profit ratio is 98.8%. It means
98.8% of the sales revenue would be used to cover cost of goods sold and other operating
expenses of Emirates Group. This ratio is increasing by year 2011 to 2013 and it means that they
low net profit ratio.

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2.3 INTERNAL FACTOR EVALUATION (IFE) MATRIC

Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing or evaluating
major strengths and weaknesses in functional areas of a business. IFE matrix also provides a
basis for identifying and evaluating relationships among those areas.
The following strengths and weaknesses are used as the key internal factors in the evaluation:

Strengths
1. The largest airline in the Middle East, Emirates flies to over 130 destinations in 70
countries on 6 continents.
2. Operates a fleet of over 170 aircraft and has another 230 aircraft on order worth about
$84 billion.
3. Offer luxurious experience for first-class passengers include spacious private suites,
provide a spa with showers and other special service.
4. Provide excellent service in Business Class, and Economy Class.
5. Emirates reported a profit for the 25th consecutive year in fiscal 2013 with revenues up
17.4% from the previous year, and the best year ever for Dnata, which had revenues of
$6.62 billion.
6. Company’s net profit for fiscal 2013 was $7.83 billion, up 57% from prior year.
7. History of acquiring firms such as Travel Republic Ltd. and Alpha Flight Group for fair
prices.
8. Cargo revenues account for 15% of all revenue from the Emirates segment.
9. In January 2013, Emirates and Quantas, two rival firms, partnered to allow Quantas
passengers to use the nicest terminal in Dubai in exchange for Quantas moving its hub for
European flights from Singapore to Dubai.
10. Emirates experienced a 17.42% increase in passenger revenue from 2012-2013.

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Weaknesses
1. No women are among the company’s top management team.
2. The Americas only accounted for 12% of Emirates segment total revenue in 2013.
3. Not a member of any strategic alliance that pools multiple aircraft companies together.
4. Heavy reliance on international revenues for the Dnata segment.
5. Dnata segment overall only accounts for around 9% of total revenues.
6. Emirates Airline does not offer a stand-alone bed, not a converted seat for higher end
customers like Singapore Air.

IFE Matrix

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 The internal factor evaluation matrix shows that Emirate’s internal position is above
average. IFE value is above 2.50 which means that Emirates is taking advantage of its strengths
and minimizing weaknesses. The IFE matrix lists the weights of each internal factor, both
strengths and weaknesses and assigns them ratings and then finds total weighted scores to assess
the internal position of Emirates. The weights are industry specific and assess the importance of
each factor in terms of surviving in the industry. Coming to the ratings, they indicate how
effectively the firm’s current strategies respond to the factor. The total weighted score is found
by multiplying the weights with the ratings to find the weighted score.
As conclusion, we can see that the total weighted score for internal factor of Emirates is 3.50
which is quite high and it is good for the firm. From the previous slide, we noted that the most
important factor in the industry is luxurious experience to the passenger which show weight of
0.2 and Emirates does excellent in provide the luxurious experience for first-class passengers
with spacious privates suites, provides spa with shower and other special services which is rating
of 4.

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3.0 ​EXTERNAL ANALYSIS

3.1 PORTER’S FIVE FORCES MODEL

Emirates Airline is a leading business in the global airline industry, managing its
operations in more than 80 regions. The porter’s five forces model would help in gaining an
understanding about the airline industry and Emirates’ position in market. So here are the five
models of porter:

Threat of New Entrance

Airline industry has high entry barriers, primarily associated with the huge start-up cost
involved. In addition, entering n the airline industry requires taking government’s approval as
well as fulfil the standards of aviation associations. The company also have to implement
Environmental Protection Agency (EFA) standards, adhering to the quality of airplanes and
keeping the emission under the specific limit. Starting anew airline by penetrating into the
competitive market would require capital resources, combined with an effective market entry
strategy that would help in establishing a strong position. The airlines already present in the
internal aviation industry make it difficult to get significant market share gain in the initial years.
Therefore, Emirates Airline is facing a low threat of new entrance. Well established companies
such as Emirates, which have been operating since many decades, have the capacity to handle
the pressure from new entrance.

Bargaining Power Buyers

The buyers in the airline industry can’t exert any significant control over the prices
charged for airfare. They have some influence on the prices, by opting for other airlines,
charging lower airfare, however the demand for quality is a central feature for customers of
Emirates. An effect of this lack of bargaining power of buyers that the airline companies such as
Emirates can increase their prices due to the seasonal influences, and the customers continue to
avail the service despite the price hike. Since Emirates has established its image as quality
service provider, customers are willing to pay a higher price than other no frills airline based on
this analysis, it can be concluded that the buyers of Emirates have low bargaining power.

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Bargaining Power Suppliers
The bargaining power of suppliers in the airline industry is determined by the number of
suppliers of planes and the demands of the airlines for these carriers. That are only 2 companies
that leading manufacturing the airplane for civil transport usage, namely Boeing and Airbus. The
lower numbers of suppliers present in the aviation industry leaves ample opportunity for the
suppliers to show limited flexibility in the price structure, while maintaining high bargaining
power. As a result, they are able to have a higher bargaining power when dealing with the airline
such as Emirates. The suppliers get the benefit of gaining agreement with this global airline. The
management has developed close ties with the suppliers, collaborating for the purpose of
developing airplane designs that are equipped with the needed technical mechanisms to enhance
customer experience.

Threat of Substitute Products

Emirates Airline faces moderate level of threat of substitute products in the airline
industry. There are other careers apart from Emirates that providing transportation services to the
people, which can be regarded as a substitute for the consumers. Another substitute that is
available for people to travelling to nearby regions is other modes of transportation such as
automobiles. However, when it comes to international travel, air travel is the main choice of
consumers. The other airlines offer tickets at the competitive price, creating moderate level of
threat for the company however, and Emirates remains focused on service quality, thus charging
premium price.

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Competitive Rivalry
The global airline industry has a high degree of competitive rivalry, putting pressure on
the company to develop a strategy to maintain financial supremacy despite the intense rivalry.
According to management, focus on enhancing the service quality and updating the aircrafts and
infrastructure helps in maintain an edge in the industry. Even though Emirates has the benefit of
being the national airline of Dubai, its competitors have global presence, necessitating the need
to strive for maintaining customer loyalty through brand loyalty programmes. Some of the
competitors are Qatar Airways, British Airways and Air France which have significant market
share, making quality as a key component of differentiation of Emirates.

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3.2 COMPETITIVE PROFILE MATRIX (CPM)

The Competitive Profile Matrix (CPM) identifies firm’s major competitors and its
particular strengths and weakness in relation to a sample firm’s strategic position. The weights
and total weighted scores in both a CPM and an EFE have the same meaning. However, critical
success factors in a CPM include internal and external issues; therefore, the ratings refer to
strengths and weakness, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and
1 = major weakness.

Overall, Emirates Airlines is the strongest as indicated by the total weighted score of 3.66
and flydubai is weakest. From the table, it shows that the two most important factors to being
successful in the industry are price competition and services lines as indicated by weights of
0.12. The price competition has high weight because effective pricing is essential for a business.
That’s the only way company know at what price they should offer a product, while maintaining
a good profit margin and keeping up with the competition. Basically, a product is priced in
accordance with what the competition is charging, it’s known as price competition. From the
rating 3 for Emirate’s price competition it shows that Emirates is doing well in putting their
prices to compete with competitor.
Meanwhile, rating 4 is given in services line of Emirates because it beyond with other
airlines since the business-class travel on Emirates is the best in the world. Business-class
passengers enjoy many amenities, such as seats turning into 79-inch flat bed, mini-bar into every

22
seats, large screen TVs with more 1,400 channels and etc. First-class passengers are able to enjoy
the first-class lounge while they wait for the plane to arrive before the boarding process begins.
On board, they can enjoy suits that include a personal mini-bar, vanity bar, sliding door for extra
privacy, Internet and much more. First-class customer have exquisite free food and drink options
and have access to the first-class lounge to mingle with other first-class passengers.
The lowest weight which are market share and advertising. Both of it does not
contributed as much for the critical success factor. That’s mean, they can put less effort for the
market share and advertising and focusing toward to maintain the highest weight for critical
success factor.

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3.3 EXTERNAL FACTOR EVALUATION (EFE) MATRIX

Opportunities Weight Rating Weighted Score

1. The Dirhams is pegged to the US Dollar currency 0.03 3 0.09

fluctuations are not significant

2. The Government of Dubai treats Emirates as a wholly 0.08 4 0.32

independent business entity on its own, and attribute
this to the firm’s success.

3. Dubai International Airport is expected to be the 0.08 4 0.32

world’s busiest by 2016.

4. For fiscal 2012, Singapore Air profits were down 0.05 4 0.20
$756 million to $336 million or 69%

5. In 2013, profits in the airline industry are expected to 0.08 3 0.24

continue to rise to $8.4 billion. North American
carriers are expected to end 2012 with a collective net
profit of $2.4 billion, despite GDP growth only 20%
and oil at a high price $109.5/barrel.

6. Backed financially by the Dubai Government 0.05 4 0.24

7. British Airways, Delta, US Airways and other carriers 0.06 3 0.18

serving Europe and the USA do not offer near the
level of service as Emirates.

8. Growing middle class around the world. 0.06 3 0.18

9. Air traffic in forecasted to grow 5.3% annually 0.04 4 0.16

between 2012 and 2016.

10. Through 2016, the USA will remain the single largest 0.06 2 0.12
market for domestic passenger at 710 million
annually.

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 Threats Weight Rating Weighted Score

11. Singapore Air is considered the closest competitor 0.08 3 0.24

based on overall business model of top service at a
premium price and market served.

12. Women are traditionally not allowed the same access to 0.05 1 0.05
the upper level jobs in the Middle East as men.

13. Rising fuel prices hurt overall profit as fuel accounts for 0.04 3 0.12
over 40% of all cost for Emirates.

14. The Arab Spring and instability in Africa also hurt 0.04 3 0.12
profit, but the company’s net profit for fiscal 2012 was
$629 million, down 61% prior year.

15. Over 100 different airlines provide service to Dubai 0.03 3 0.09
International Airport.

16. Singapore Air markets they are the only airline to offer 0.02 3 0.06
a standalone bad, not a converted seat.

17. Delta, British Airways and the other airlines are well 0.04 2 0.08
entrenched in serving the USA.

18. Three of the largest alliances in the world are SkyTeam, 0.04 1 0.04
Start Alliance and Oneword. SkyTeam is based out of
Amsterdam and was created in 2000 by founding
members: Delta, Air France, Aeromexico and Korean
Air.

19. Volatile price of oil. 0.03 3 0.09

20. Ironically, for Emirates, the flydubai discount airline 0.04 3 0.12
may pose the largest threat to the firm, as demand for
low price flights is growing rapIdly globally.

TOTALS 1.00 3.06

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Emirates is doing an excellent job of addressing external issues as indicated by the score of ​3.06​.
Not being a member of a major alliance is problematic for Emirates, but the new alliance with
Quantas is a step in the right direction.

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4.0 MATCHING STRATEGIES

4.1 SPACE MATRIX

Space Matrix is known as Strategic Position & Action Evaluation (SPACE) Matrix is a
strategic management tool that focuses on strategy formulation especially as related to the
competitive position of an organization.

Space Matrix is broken down to four quadrants where each quadrant suggests a different
type or a nature of a strategy which are aggressive strategy, conservative strategy, defensive
strategy, or competitive strategy.

The SPACE Matrix analysis functions upon two internal and two external strategic
dimensions in order to determine the organization's strategic posture in the industry. The SPACE
matrix is based on four areas of analysis.

Internal strategic dimensions:

Financial Position (FP)
Competitive Position (CP)
External strategic dimensions:
​Stability Position (SP)
Industry Position (IP)

There are many SPACE matrix factors under the ​internal strategic dimension​. These
factors analyze a business internal strategic position. The financial strength factors often come
from company accounting. These SPACE matrix factors can include for example return on
investment, leverage, turnover, liquidity, working capital, cash flow, and others. Competitive
advantage factors include for example the speed of innovation by the company, market niche
position, customer loyalty, product quality, market share, product life cycle, and others.

Every business is also affected by the environment in which it operates. SPACE matrix
factors related to business ​external strategic dimension are for example overall economic
condition, GDP growth, inflation, price elasticity, technology, barriers to entry, competitive

27
pressures, industry growth potential, and others. These factors can be well analyzed using the
Michael Porter’s Five Forces model.

The SPACE matrix calculates the importance of each of these dimensions and places them on a
Cartesian graph with X and Y coordinates.

The following are a few model technical assumptions:

- By definition, the CA and IS values in the SPACE matrix are plotted on the ​X axis​.
- CA values can range from -1 to -7.
- IS values can take +1 to +7.
- The FS and ES dimensions of the model are plotted on the ​Y axis​.
- ES values can be between -1 and -7.
- FS values range from +1 to +7.

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Internal Analysis External Analysis
Financial Position (FP) Stability Position (SP)
Passenger Revenues 6 Rate of Inflation -3
Cargo Revenues 5 Rising Oil Prices -3
Excess Baggage Revenues 2 Governmental Regulations -3
Total Revenues 6 Competitive Pressure -6
Company Worth 6 Barriers to Entry into Market -3
Financial Position (FP) Average 5.0 Stability Position (SP) Average -3.6

Internal Analysis External Analysis

Competitive Position (CP) Industry Position (IP)
Market share -3 Growth potential 6
Service Quality -1 Financial stability 3
Customer loyalty -1 Ease of entry into market 2
Number of flights -3 Transportation alternatives 4
Control over Suppliers and Distributors -2 Profit potential 4
Competitive Position (CP) Average -2.0 Industry Position (IP) Average 3.8

Space Matrix of Emirates Airline

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 The strategic position and action evaluation of Emirates placed in the Aggressive
Quadrant. Emirates can take the advantages of external opportunities, overcome internal
weakness and should avoid external threats. In our opinion, Emirates should add more routes for
their operation especially in USA. Other than that, Emirates should increase the size of fleets for
aircraft to provide better service.

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4.2 BCG MATRIX

BCG Matrix by Geographic Segmentation

(​Source: Singapore Airline 2013 Annual Report)

*Relative Market Share = Emirates’ Revenue / Singapore’s Revenue

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BCG Matrix Diagram

32
 The Boston Consulting Group (BCG) Matrix is designed specifically to enhance a
multidivisional firm’s effort to formulate strategies. The BCG Matrix graphically portrays
difference among divisions based on two dimensions: (1) relative market share position on
the x-axis and (2) industry growth rate on the y-axis.
As shown above in BCG Matrix diagram, each circle represents a separate division. The
size of the circle corresponds to the proportion of corporate revenue generated by that
business unit, and the pie slice indicates the proportion of corporate profits generated by that
division.
BCG Matrix for Emirates shows that the division located in Quadrant II are called and
also located in between Quadrant I and Quadrant IV. Divisions in Quadrant II which is
division West Asia, Africa and Others represent the organizations’ best long-run
opportunities for growth and profitability. Divisions with a high relative market share and a
high industry growth rate should receive substantial investment to maintain or strengthen
their dominant position. Backward, forward or horizontal integration, market penetration,
market development and product development are appropriate strategies for these divisions
to consider.
Then for division in Quadrant I which is division East Asia, Australasia and Europe
have a low relative market share position, yet they compete in a high growth industry.
Generally these firm's’ cash needs are high and their cash generation is low. The appropriate
strategies are market penetration, market development, product development and divestiture.

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4.3 IE MATRIX

IE Matrix

The IE matrix can be divided into three major regions that have different strategy implications.
Cells I, II, and III suggest the growth and build strategy. This means intensive and aggressive
tactical strategies. The strategies should focus on market penetration, market development, and
product development. From the operational perspective, a backward integration, forward
integration, and horizontal integration should also be considered. In this case, Emirates should
focus on their growth and need to build more strategy to expand their business worldwide.

Cells IV, V, and VI suggest the hold and maintain strategy. ​Cells VII, VIII, and IX are
characterized with the harvest or exit strategy. If costs for rejuvenating the business are low, then
it should be attempted to revitalize the business. In other cases, aggressive cost management is a
way to play the end game.

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4.4 GRAND STRATEGY MATRIX

Grand strategy matrix is very useful instrument for creating different and alternative
strategies for an organization. Grand matrix has four quadrants; each quadrant contains different
sets of strategies and the entire firms along with their respective divisions must fall in one of the
quadrant. This matrix has two dimensions which are competitive position and market growth.

According to our analysis, the airline total revenue increased 13.56%, classifying it as a
moderately rapid market growth industry and holds a strong competitive advantage, especially
with respect to providing service for higher end passengers. Emirates Group fell into Quadrant I
of the Grand Strategy Matrix.

Grand Strategy Matrix

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Recommended strategies for companies in Quadrant I include :
1. Market Development
Emirates has made plans to increase fleet size. This growth will allow the firm to
introduce services into new markets and expand operations in underserved markets that
are already operating profitability. There is potential for serious market development due
to the firm’s assets and extensive amounts of available capital.

2. Market Penetration
Although many of the firm’s competitors engage in strategy alliances, Emirates
has yet to adopt this practice. In January 2013, Emirates and Quantas, two rival firms,
formally entered into a partnership allowing Quantas Airbus 380 customers to depart
from Concourse A at Dubai Airport. This will allow Emirates to increase market share in
markets the airline currently serves.

3. Product Development
Developing a cargo segment offers new services that meet consumer demands and
have the potential to increase Emirates’s revenues.

4. Forward Integration
Forward integration is not an ideal strategy for Emirates to pursue. The firm is
forward integrated in the sense that it utilizes an extensive third-party distribution
network to aid in reservation booking.

5. Backward Integration
In the airline industry, forward integration is an expensive and difficult strategy to
pursue due to the capital-intensive nature of the distributors’ product. Emirates’ largest
suppliers is fuel companies. Emirates does not have capacity nor the capital to purchase
and maintain these operations.

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6. Horizontal Integration
Emirates could reap benefits from horizontal integration. In the airline industry,
horizontal integration is when one airline acquires or mergers with another. Emirates is
not limited in human resources nor financial capacity, therefore horizontal integration is a
considerable strategy.

7. Related Diversification
Passenger airlines are a service industry that serves the needs of leisure and
business travelers. However, many passenger airlines have diversified operations by
developing a cargo shipping segment. Emirates have been offer cargo services.

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5.0 THE DECISION STAGE

5.1 QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)

An analytical technique designed to determine the relative attractiveness of feasible

alternative actions. This technique comprises Stage 3 of the strategy-formulation analytical
framework; it objectively indicates which alternative strategies are best. QSPM requires
assignment of ratings (called attractiveness scores), but making “small” rating decisions enables
strategies to make effective “big” decisions, such as which country to spend a billion dollars to
sell a product.

For The Emirates case, alternative strategy that accommodate the IFE and EFE Matrix
are, firstly by ordering 70 additional aircraft and secondly increase flights to the USA by 200%
by 2015.

External Opportunities and Threats – EFE Matrix

Order 70 Increase flights
additional to the USA by
aircraft 200% by 2015

Opportunities Weight AS TAS AS TAS

1. The Dirhams is pegged to the US Dollar 0.03 2 0.06 4 0.12

currency fluctuations are not significant

2. The Government of Dubai treats 0.08 0 0.00 0 0.00

Emirates as a wholly independent
business entity on its own, and attribute
this to the firm’s success.

3. Dubai International Airport is expected 0.08 4 0.32 2 0.16

to be the world’s busiest by 2016.

4. For fiscal 2012, Singapore Air profits 0.05 0 0.00 0 0.00

were down $756 million to $336 million
or 69%

38
5. In 2013, profits in the airline industry 0.08 3 0.24 4 0.32
are expected to continue to rise to $8.4
billion. North American carriers are
expected to end 2012 with a collective
net profit of $2.4 billion, despite GDP
growth only 2.0% and oil at a high price
$109.5/barrel.

6. Backed financially by the Dubai 0.05 0 0.00 0 0.00

Government

7. British Airways, Delta, US Airways and 0.06 2 0.12 4 0.24

other carriers serving Europe and the
USA do not offer near the level of
service as Emirates.

8. Growing middle class around the world. 0.06 3 0.18 2 0.12

9. Air traffic in forecasted to grow 5.3% 0.04 3 0.12 2 0.08

annually between 2012 and 2016.

10. Through 2016, the USA will remain the 0.06 3 0.18 4 0.24
single largest market for domestic
passenger at 710 million annually.

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 Order 70 Increase
additional flights to the
aircraft USA by
200% by
2015

Threats Weight AS TAS AS TAS

11. Singapore Air is considered the 0.08 0 0.00 0 0.00

closest competitor based on overall
business model of top service at a
premium price and market served.

12. Women are traditionally not 0.05 0 0.00 0 0.00

allowed the same access to the
upper level jobs in the Middle East
as men.

13. Rising fuel prices hurt overall profit 0.04 0 0.00 0 0.00
as fuel accounts for over 40% of all
cost for Emirates.

14. The Arab Spring and instability in 0.04 2 0.08 3 0.12

Africa also hurt profit, but the
company’s net profit for fiscal 2012
was $629 million, down 61% prior
year.

15. Over 100 different airlines provide 0.03 0 0.00 0 0.00

service to Dubai International
Airport.

16. Singapore Air markets they are the 0.02 3 0.06 1 0.02
only airline to offer a standalone
bad, not a converted seat.

17. Delta, British Airways and the other 0.04 2 0.08 4 0.16
airlines are well entrenched in
serving the USA.

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 18. Three of the largest alliances in the 0.04 0 0.00 0 0.00
world are SkyTeam, Start Alliance
and Oneword. SkyTeam is based
out of Amsterdam and was created
in 2000 by founding members:
Delta, Air France, Aeromexico and
Korean Air.

19. Volatile price of oil. 0.03 0 0.00 0 0.00

20. Ironically, for Emirates, the 0.04 0 0.00 0 0.00

flydubai discount airline may pose
the largest threat to the firm, as
demand for low price flights is
growing rapidly globally.

Internal Strengths and Weakness – IFE Matrix

Order 70 Increase flights to
additional the USA by
aircraft 200% by 2015

Strengths Weight AS TAS AS TAS

1 The largest airline in the Middle East, 0.10

Emirates flies to over 130 destinations 3 0.30 2 0.20
in 70 countries on 6 continents.

2 Operates a fleet of over 170 aircraft and 0.10

has another 230 aircraft on order worth 4 0.40 2 0.20
about $84 billion.

3 Most of the company’s planes include 0.05

spacious private suites, and some planes 3 0.15 2 0.10
provide a spa with showers.

4 Provide excellent service in Business 0.05 3 0.25 2 0.10

Class, and Economy Class.

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5 Emirates reported a profit for the 25th 0.10
consecutive year in fiscal 2013 with 0 0.00 0 0.00
revenues up 17.4% from the previous
year, and the best year ever for Dnata,
which had revenues of $6.62 billion.

6 Company’s net profit for fiscal 2013 0.05 0 0.00 0 0.00

was $7.83 billion, up 57% from prior
year.

7 History of acquiring firms such as 0.04

Travel Republic Ltd. and Alpha Flight 0 0.00 0 0.00
Group for fair prices.

8 Cargo revenues account for 15% of all 0.04 0 0.00 0 0.00

revenue from the Emirates segment.

9 In fiscal 2012 alone, Emirates started 0.06

long haul flights to Seattle, Dallas/Fort
Worth, Rio de Janeiro, Buenos Aires, 3 0.18 4 0.24
Washington DC, Geneva, Baghdad, and
St. Petersburg, Russia, among others.

10 In January 2013, Emirates and Quantas, 0.06

two rival firms, partnered to allow
Quantas passengers to use the nicest 0 0.00 0 0.00
terminal in Dubai in exchange for
Quantas moving its hub for European
flights from Singapore to Dubai.

11 Emirates experienced a 17.42% 0.10 0 0.00 0 0.00

increase in passenger revenue from
2012-2013.

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 Order 70 Increase flights to
additional the USA by 200%
aircraft by 2015

Weaknesses Weight AS TAS AS TAS

1 No women are among the company’s 0.05 0 0.00 0 0.00

top management team.

2 The Americas only accounted for 12% 0.07 2 0.14 4 0.28

of Emirates segment total revenue in
2013.

3 Not a member of any strategic alliance 0.04 0 0.00 0 0.00

that pools multiple aircraft companies
together.

4 Heavy reliance on international 0.03 1 0.03 4 0.12

revenues for the Dnata segment.

5 Dnata segment overall only accounts 0.03 0 0.00 0 0.00

for around 9% of total revenues.

6 Emirates Airline does not offer a 0.03 2 0.06 2 0.06

stand-alone bed, not a converted seat
for higher end customers like
Singapore Air.

TOTAL 1.00 2.95 2.88

For the first alternative strategy, it score 2.95 which is higher that second alternative strategy
which is 2.88. Both options have approximately the same weighted scores, and with Emirates
capital position, both should be implemented. In addition, based on the analysis internal and
external factor Emirates qualify itself to implement both strategy especially considering the extra
planes will help facilitate moving into the USA market more aggressively.

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6.0 RECOMMENDATIONS

Strategy is the long term planning to achieve business objectives through arrangement of
resources of organization within a difficult environment, to fulfill the market needs and also
satisfaction of stakeholders expectations”.(Dibb.S, Simkin. L, 2008) C News). Emirates Airlines
also has a good and effective business model which is very helpful to gain company objectives
and help to company become leader in the airline Industry. Strategic capabilities means the skills
are abilities to accomplish the stage for the surveillance in the market. It may be in two forms;
(1). Resources and (2). Competences. Emirate has its threshold resources which include its
flights, office equipment, headquarter, finance resources and employees. Emirate also has core
resources in the form of management team, Ahmed Bin Saeed Makhtoum
(CEO/Chairman).Same as resources Emirate has threshold competences which includes online
booking, operations of on time delivery and point to point routing. While in its core
competencies includes IT development, no frill strategy and route policy strategy.

One of the suggestion for The Emirates Group was, u​sing a facial recognition solution
integrated with the UAE Wallet of Biometric Technology. UAE Wallet is ​Emirates Digital
Wallet is a revolutionary solution created to replace physical cash. Supporting the UAE's smart
government initiative, the Wallet enables payments and money transfers using smartphones and
other handheld devices. The travellers will be able to register and store their biometric data
through multiple means including by taking a selfie on their mobile phones, as well as using
biometric registration kiosks placed at check-in areas and Emirates Lounges. They can then
utilise this biometric data to ease their journey through immigration at T3 Departures, and later,
other touch-points throughout DXB airport, including automated access to Emirates’ First and
Business Class lounges.

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 One Gate which is new generation smart immigration gates will be installed at T3
Departures, supplementing the existing e-gates, and manned immigration counters. These new
smart gates offer an automated border control system that utilizes travel biometric s. It will also
enable traveller to forgo the additional step of getting their passports and boarding passes
manually checked by a security officer before they go through immigration, as these checks will
be automatically integrated within the biometric validation as traveller s pass through the new
smart gates. Launched in May 2017, the “Together” initiative, is run collaboratively by Emirates
airline, Dubai Customs, Dubai General Directorate of Residency and Foreigners Affairs
(GDRFA), Dubai Police and Dubai Airports. It aims to improve traveller experience at
Emirates’ Dubai International airport hub, focusing on innovative and practical solutions that
will be based on the “6s” – smart, speed, saving, service, safety, and security.

Representatives from each partner organization jointly review field data and evaluate
recommendations for implementation in the short to medium term. In parallel, the working
group will also look at goal posts further into the future, in line with Dubai 10X programme to
generate innovations that will put the city 10 years ahead of other global cities.

Emirates should reduce the costs by making operational improvements, namely improving
maintenance processes, maintaining high aircraft utilization and making effective flight
scheduling. It could also be reduced by investing technology in distribution channels to reduce
labor costs. For instance , it is recommended to install more self service kiosks in airports of the
destinations of Emirates airline since it has already install ones in Dubai airport. In response to
the threat of low cost airlines, Emirates shouldn't lower its fares after years of offering advanced
services, instead it has to offer new low cost brand as a subsidiary of Emirates group serving
economic travelers who are now customers of new low cost airlines, thus expanding the market
share.

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7.0 CONCLUSION

As conclusion, we can see that Emirates’ issue is regarding lack of corporation with other
airlines industries. From that issue we can propose some strategies so that Emirates can consider
about the strategies. External environmental analyses give an idea regarding opportunities and
threats for Emirates. The external factors that we highlight are politics, economics, social,
environment and competitor. Then, we can calculate for EFE Matrix which the weighted score
shows a good sign. After that, we also calculate for EFE Matrix by geographic segmentation
which the weighted score also shows a good sign. Next is competitive profile matrix giving an
indicator that Singapore Airlines is the leading competitor to Emirates which Emirates has to
give more attention towards that. Lastly for external environmental analyses is five forces model.
This model shows that they have mostly high level of competition in the five forces model which
are the rivalry among competing firms, potential development of substitute products, bargaining
power of suppliers and consumers. Emirates have low level of competition for the new entrants
in the industries.

Next is conclusion regarding analyses regarding internal environmental. We have

recommended mission and vision statement after we make an analysis for mission and vision of
Emirates. Internal environmental analyses also give an idea regarding strength and weakness of
Emirates. Then financial ratios provide an overview regarding quantitative analysis of
information contained in Emirates’ financial statement. IFE Matrix and IFE Matrix by
geographic segmentation show a good weighted score. Lastly, we give a few suggestions
towards analysis that we already analyzed. We can conclude that our alternatives strategies are
first to make a partner with other airlines and second is make more promotions.

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