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Company’s Mission and Vision Statement against Performance
The Emirates’ Airlines are a subsidiary company of the Emirates Group, which is a group of companies that engaged in the air transport, hotel, and cargo. Consequently, the vision and mission statement of the Emirates’ Airlines echoes with that of the Emirates Group, which is a parent company. The Emirates’ Airlines maintain an open air strategy, and it wants to be a leading airline in the aviation industry. The performance of the company considering the 2009/2010 report and the other reports for the past ten years indicates that the airlines have done well in the focusing on its vision and the attainment of its mission. The company has performed well in many areas.
The vision of the Emirates Group on the environment is to be a market leader in travel and aviation industries. The Emirates Group is also committed to the goal of making the eco-efficiency and sustainability of the foundation of the group’s operations, on the ground and in the air. Analyzing the environmental report of the group, it indicates clearly that the group is focused on its vision and the attainment of its mission (Calder, 2008). Despite the aviation industry being responsible for a small percentage of 2% of the worldwide greenhouse gas emissions, it is focused on the realization of sustainability and bringing down its contribution to global emissions. Regulators, customers, and the staff of the Emirates’ Airline are very conscious about greenhouse emissions and the entire environment.
The airline tries as much as possible to observe the United Nations’ environmental requirements agreed in Japan in the Climate Change convection in 1997, among the people it is known as the Kyoto Protocol. The environmental program of the Emirates’ Airlines is communicated externally and internally to all stakeholders, customers, and staff. The mission of the Emirates Group is being committed to the multibillion dollar investments that are eco-efficient through the use of eco-efficient, the most modern technology in engines, aircrafts, and ground equipment (Monks & Minow, 2008). The company strives to excel at being a leader in the region and the industry in its eco-efficiency. The company is also focused on being a market leader in the air transport. This has been achieved as shown by the performance of the company for the last ten years. The airline has expanded and grown rapidly to achieve its vision of being a market leader in the aviation industry.
The Company’s Mission and Vision Linkage to Organization’s Strategic Goals
The company’s strategic goals are linked well to the vision and mission of the Emirates Group. The group has a collective mission and vision, although some individual companies have their own missions and the vision statement. The strategic goals of the Emirates’ Airlines go hand in hand at focusing on the vision and mission of the company. The strategic goal of attaining sustainability and eco-efficiency has been demonstrated in the company’s effort towards achieving the maximum return revenue by using the means that are sustainable. The company has a goal of being an employer of choice in the aviation industry. The strategy of the cost containment was balanced out against the goal of safeguarding jobs and retaining the finest talent. Instead of being rendered redundant, the employees were given an option of taking the voluntary leave, and there appeared to be four thousand and nine hundred people taking the offer (Cooper, 2007). This strategy saved the company a lot of money as it grappled with bringing down the cost of the personnel maintenance. Initially, the company had commenced by freezing hiring of new workers, while at the same time not replacing those leaving the company. This strategy was applied during the time the global economy was experiencing a recession. Employees responded well to the company’s efforts of safeguarding their jobs by being committed to the goals and objectives of the company.
Company’s Financial Performance Analysis and its Link to Strategic Goals and Strategy
The financial performance of the company has posted very positive results indicating that strategies that are being implemented in the company are working. In the financial period of 2009/2010, the passenger number reached twenty seven point four million people, which was a growth for 20.1% from the previous financial year that recorded twenty two point seven million people. The cargo transported in 2009/2010 grew by 12.2% increase from the previous financial period. It was one million four hundred and eight thousand tones in 2008/2009, while in 2009/2010, it was one million five hundred and eighty million tones. The profit of the airline in 2009/2010 fiscal year went up by more than fourfold due to the result of cost cutting and the rise in passengers (Monks & Minow, 2008). The parent company realized a profit of 1.1 billion dollars, which was 248% increase in the comparison with the previously posted profit of 406 million dollars. The airline was the largest in terms of the scheduled international passenger per kilometer flown in the world. The graph below shows the growth trend of profits of the Emirates’ Airlines. The strategic goals of growth and increased profitability have been demonstrated to being achieved.
Retrieved from the source: emirates group.com
Competitive and Marketing Analysis (Determination of Opportunities and Strengths)
The competitive and marketing analysis of the Emirates’ Airlines is best shown in its entire SWOT analysis. The SWOT analysis of the company is as follows:
A majority of the Emirates’ Airlines strengths emanate from the right decision making at its foundation and from its unique and outstanding organizational structure. The central significance of aviation in Dubai strategy of development also guarantees the Emirates’ Airlines a favorable and stable political environment (Noack, 2007). The overall responsibilities of the central leadership for all aviation related activities in Dubai and the massive airport expansion and some new airport projects ensure that the airline will not be faced with bottlenecks in the infrastructure which stifles the growth of the major European competitors.
The Emirates’ Airlines benefit from the very minimal charges being levied at its home airport. Whereas landing fees are to a large extent identical to those at the major European airports, no airline making flights into the DXB has to part with any more charges that may have included some ATC charges, noise charges and security charges. This is attributed to the fact that the infrastructure at the airport and all other services relating to it are availed by the government of Dubai and are fully funded from the budget of the state. This has been viewed by critics as an indirect subsidy to the Emirates’ Airlines.
Emirates, just like other companies conducting their business in Dubai, or most Gulf States, profit from the low tax regime in Dubai which only subjects subsidiaries of energy companies and foreign banks to the corporate tax. This is helpful as long as the company is profitable. The Emirates’ Airlines is an attractive and competitive employer providing the above average net wages although its gross wages fall below those offered in Western countries.
The immigration laws in Dubai are quite generous by the international standards. This is very good for foreign experts who are easily recruited by local firms and for the passengers on transit who do not have to seek for the clearance with immigration at the DBX while changing planes. This practice has enhanced the competitive position of the Emirates’ Airlines. The airline award winning service in all the classes is also its strong point which is matched by few carriers in the world such as the Singapore Airline (Calder, 2008). Clever marketing is also a strength for the airline. For instance, the Emirates’ Airlines were officially named as the 2006 FIFA World Cup carrier in Germany; this resulted to the creation of the very strong brand awareness in the entire world. The devaluated-related cost advantage has benefited the Emirates’ Airline since the currency in the UAE is firmly dependant on the US dollar.
It is not very easy for the outsiders to make out any weaknesses that are relevant within the airline. Nevertheless, although habitually unreliable as a source, some reporting in internet travel-related blogs are lamenting about the serving standards that are allegedly plummeting and the absence of consistence in the quality of service (Blanke & Chiesa, 2007). In the real sense, the Emirates’ Airline was less successful in the recent past in winning the Skytrax and other awards reserved for the outstanding service quality. Not all the approaches and diversifications have been successful, and this is also another weakness.
The Emirates’ Airline success and a big opportunity for its future growth and expansion is the favorable location in Dubai. Close to 3.5 billion people reside within eight hour flight. Dubai is situated strategically at the crossroads of some major cargo and passenger flows such as Europe, Southeast Asia, Asia-Africa, India-North America, Europe-Australia; the economic significance of it is expected to grow simultaneously with the rise of the emerging economies that are nearby. The DXB also is a major and frequently time saving connection point for the passengers coming from secondary cities especially those in Western Europe en route to Africa or Australia. The government of the UAE has been every effective in the negotiation of some free-trade agreements with the major economies in the world like the USA and the European Union. The Gulf region has been among the world’s fastest growing regions economically (Davidson, 2008). Most of the countries in this region are embracing liberalization of the air transport, and this provides more opportunities for the growth. The decision by the Emirates’ Airline to operate a huge fleet of A380 aircraft will make it continue growing at all slot-constrained airports it is operating in.
The political instability of the Middle East region poses by a bid degree the greatest threat to the growth and expansion of the Emirates’ Airline. The political crisis in the region such as the Gulf war, the war in Iraq and Afghanistan, and the outbreak of the SARS has always posed a threat to the airline. The increasing lobbying by the Western competitors like Germany, France, Australia and the legal protection against the Emirates’ Airline expansion into Canada is a threat facing the airline. The growth plans of some Gulf-based carriers that are aggressive pose the greatest threat to the airline. The Qatar Airways and Abu Dhabi-based Etihadi Airways are expanding rapidly and will be the serious competitors of the Emirates’ Airline (Schwab, Blanke & Chiesa, 2005). The respective governments of the rival Gulf carriers have allocated their massive budgets to the expansion of the airport facilities.
Appropriate Strategy for Maximization of Organization’s Returns to Shareholders
The appropriate strategy for maximization of the organization’s return to shareholders is the low cost. Cost cutting has worked well for the Emirates’ Airline for the last year making it to realize the enormous profits. In the aviation industry it is not easy to find a niche that is not exploited. There are many airlines present in the whole world, and trying to find a market niche that has not been discovered is not an easy task. If such niche can be found, then it would be appropriate for the company to use the niche strategy. Meanwhile, differentiation is already exploited by the company considering the range of products that it provides. It deals with hotel and catering, cargo transport, and other variety of products that are provided by the company (Monks & Minow, 2008). There are different classes, which are served by the airline, such as business class, economy class, and others. Therefore, differentiation has been applied appropriately by the Emirates’ Airline and may not be an appropriate strategy for the profit maximization.
The Emirates’ Airline remains with low cost or cost cutting as being the most appropriate strategy to be used if maximum returns to shareholders are to be achieved. Reducing of hiring the employees is good for a while as the company looks for the other long term strategy. The freeze on hiring as previously used should not be applied for a long term since the company may run short of labour. The offer of leave to workers was used well to cut down on cost of maintaining workers at their work places. Many employees took the leave which made the company to reduce its costs enormously. The Emirates’ Airline should focus on buying gasoline or fuel at the lowest cost and in bulk in order to reduce the fuel expenses. The proximity of the airline headquarters to oil producing countries makes the prices of fuel to be low as compared to other countries that are far away. The transportation cost of crude oil is cheaper, for the United Arab Emirates uses less on transportation than the countries located in Europe or Asia. Concerning workers, the airline can also train its own employees to take up the positions in the company, as opposed to hiring someone new, who will take a very long time adapting in the organization. As a new person tries to adjust, the airline loses money. Low cost will help the company to maximize its profits while realizing growth (Schwab, Blanke & Chiesa, 2005).
The airline also can reduce any purchase of airplanes and use the ones available exhaustively. The airline has bought several airbuses in the recent years. Low cost is a unique strategy that is not easy to be duplicated by other airlines due to the fact that they operate in different circumstances. The backing that the Emirates’ Airline gets from the United Arab Emirates government enables it to control a large share of the aviation industry in the country with competitors only left with a small portion. Therefore, the Emirates’ Airline can apply cost cutting or the low cost strategy in the maximization of returns to shareholders due to the reduced logistics involved even in its procurement procedures. Many barriers to its operation in the United Arab Emirates have been removed making it to cut down the costs that accompany legal procedures.
A Merger or Acquisition
Most airlines in the world prefer mergers and acquisitions. It is a common trend globally for companies to come up with alliances. The Emirates management and shareholders have the belief that alliances are not the best strategy for the airline. The airline opts to remain independent and strong in its culture. Mergers will obstruct such a strategy. Flexibility is a main principle of the Emirates’ Airline. Mergers will interfere with this principle of flexibility (Cooper, 2007). The management believes in the capacity to change approaches when necessary depending on internal or external circumstances. Alliances or mergers, therefore, will not be appropriate for the Emirates’ Airline. Considering the circumstances in which the Emirates’ Airline exists and the grip of shareholders on the important decision making, an acquisition will be a more appropriate strategy.
Whatever Emirates need is to expand its operations around the globe, consequently acquiring another airline in a strategic point line Europe and making it its subsidiary is the best thing. If the company acquires a small but growing airline at a vantage point on the globe, it will help to penetrate other markets that have other well established airlines like the Singapore Airline. An acquisition is a good entry strategy that will not make the company losing its identity and independence; instead the company will assimilate the acquisition into its own subsidiaries. An acquisition will help the company’s operations to grow and, at the same time, to maintain the stability within the current workforce (Blanke & Chiesa, 2007). Some of the workers in the company’s headquarter will just be transferred to transmit the culture of the company to the new acquisition. The company will not be swallowed and will be made to lose its brand of the Fly Emirates. This is the brand that has taken a lot of hard work to build, and the company cannot afford to lose it. A merger will force a new logo, slogan, and name to be designed to incorporate the other partners. The possibility of current clients getting confused due to merging will not be there. An acquisition will be the appropriate strategy for the company in case it wants to expand.
Appropriate Rewards to Best Motivate Employees
In every organization, employees should be motivated to work hard and be committed to goals and objectives of the company. To build up the morale of employees and to make them working with more dedication and determination, there is a need of rewarding good performers to ensure that perfection is encouraged. Financial rewards are important for a start. Giving employees a salary rise and increasing benefits is very important (Monks & Minow, 2008). Giving employees the financial support to acquire property like vehicles and houses is necessary. When wives of male employees deliver, it is vital that the company gives them paternal leaves to support their spouses. Apart from the tangible, financial rewards, the airline can also reward employees through recognition.
Employees who have done well can have a party organized for them and a special trophy given to them. The recognized efforts of employees give them morale to work harder and be committed to the mission and vision of the company (Noack, 2007). Promotions and grading of work groups of employees are very important. Responsible employees who demonstrate a high degree of accountability should be given more responsibility through promotion and increasing their rank in the organization. The end of year parties should be organized, and the exemplary performance should be acknowledged in the presence of all employees. This opportunity will make other employees who have been sluggish and irresponsible to pull up their socks. Rewards also could be in the form of further training. If an employee shows an exemplary behavior and the commitment to goals and objectives of the company, he can be taken for further training to make him more competent and give him an additional responsibility. Other employees will work hard in an effort to acquire such accolades.
How the Current Company’s
Strategy Discourages or Support Ethical Business Behavior
According to Cooper (2007), the company’s current strategy encourages ethical behavior since the needs of employees are considered in the key decision making. The strategy to cost cut did not foresee any employee losing his job. Some of the employees were encouraged to go on leave, and they resumed working later. Ethical behavior has not been interfered by the current strategy that is being applied. Environmentally, the company has tried as much as possible to persuade its employees on the importance of the environmental conservation and the role they have to play to achieve this. The Emirates’ Airline has not used any unethical ways to undermine its clients or its employees. The company has targeted at improving its functions by the use of means that are just and ethical. Cost cutting has not involved any dubious means to reduce the operational costs.
The Emirates’ Airlines commenced its operations in 1985. Over the period of close to three decades, the company has grown tremendously to reach the level where it is being currently. It is recognized as the best airline in the region of Asia Pacific, and it has received the numerous awards for being innovative in its systems of the inflight entertainment. The open skies strategy has enabled the airline to grow rapidly over the years. The vision and mission of the company are the driving force, which the employees and management has to focus on. Having a stable leadership and choosing the best strategy has enabled the company to remain profitable and be a force to reckon with in the aviation industry.