Emirates Airlines PESTLE AND SWOT Analysis Essay

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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.

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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......

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References

Arabian Business. (2011). Emirates faces $1bn bill over EU carbon tax. Retrieved from: https://www.arabianbusiness.com/emirates-faces-1bn-bill-over-eu-carbon-tax-414760.html

Craig, T., & Campbell, D. (2012). Organizations and the business environment. New York: Routledge.

Diaa, S. (2018). Emirates Airline eyes expansion in Iran, India. Gulf News. Retrieved from: https://gulfnews.com/business/aviation/emirates-airline-eyes-expansion-in-iran-india-1.2210492

Emirates. (2018). Annual Report. Retrieved from: https://cdn.ek.aero/downloads/ek/pdfs/report/annual_report_2018.pdf

Fahim, K. (2015). Airlines Suspend Flights to Iraq’s Baghdad Airport After Jet Is Hit by Gunfire. New York Times. Retrieved from: https://www.nytimes.com/2015/01/28/world/middleeast/flydubai-jet-hit-by-gunfire-as-it-lands-at-baghdad-airport.html

Fortune. (2017). Trump's Travel Ban and Brexit Crushed Profits at Emirates. Retrieved from:
http://fortune.com/2017/05/11/trump-travel-ban-brexit-profits-emirates/

IAPA. (2015). Airspace over Afghanistan could become a no-fly zone. Retrieved from: https://www.iapa.com/index.cfm/travel/blog.article/blog/community/art/Airspace-over-Afghanistan-could-become-a-nofly-zone?C=1

Lawrence, J. (2018). UAE investing $23.16bn in airports infrastructure. Arabian Business. Retrieved from: https://www.arabianbusiness.com/transport/400247-uae-investing-2316bn-in-airports-infrastructure

Parker, A. (2013). Emirates: In a sweet spot. FT.com. Retrieved from: https://www.ft.com/content/c274e63e-580c-11e3-82fc-00144feabdc

Phys Org. (2018). Resources giants ramp up calls for Australia carbon tax. Retrieved from: https://phys.org/news/2018-11-resources-giants-ramp-australia-carbon.html

Porter, M. E. (1996). What is strategy? Harvard Business Review.

Rambhai, J. (2017). WhatsApp news: Users warned of airline SCAM promising free Emirates flights. Express. Retrieved from: https://www.express.co.uk/travel/articles/733922/Emirates-airline-ticket-scam-free-flights

Reuters. (2016). Emirates airline chief worried about Brexit impact on EU economy. Retrieved from: https://uk.reuters.com/article/uk-britain-eu-emirates/emirates-airline-chief-worried-about-brexit-impact-on-eu-economy-idUKKCN0YP0NZ

Tomlinson, W. H., Murdick, R. G., & Moor, R. C. (2000). Business policy and strategy: an action guide. New York: CRC Press.

Wills, E. (2018). Revealed: Europe faced 205 terror attacks last year... and more than half were reported in the UK. Evening Standard. Retrieved from: https://www.standard.co.uk/news/world/revealed-europe-faced-205-terror-attacks-last-year-and-more-than-half-were-reported-in-the-uk-a3867996.html

Zanoni, A. B. (2011). Strategic analysis: Processes and tools (Vol. 1). New York: Routledge.

Zhang, B. (2017). Emirates is cutting flights to the US because of Trump's travel policies. Business Insider. Retrieved from: https://www.pulselive.co.ke/bi/finance/finance-emirates-is-cutting-flights-to-the-us-because-of-trumps-travel-policies-id6551710.html

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