Introduction
The external environment plays an integral role in shaping the strategic plan that an organization adopts. The strategic plan adopted by a multinational corporation is usually dependent on various factors such as the economic factors, socio-cultural issues and political-legal considerations of the countries that the corporation is operating. In addition, the business model adopted by the corporation should be in line with its goals and objectives (Knorr & Eisenkopf, 2010).
The core factor contributing to the success of the Emirates Airlines is its business model that focuses on a lean labor force, leading it being one of the low cost airline carriers (Hanlon, 2007). A flat organizational structure is also another major component of the Emirates Airlines strategic plan that facilitates the running of the company using low operating costs.
However, it is important that the company streamline its strategic plan with the different cultural environments that the airline undertakes its operations (Hodgetts & Luthans, 2003). This section of the paper provides a detailed analysis of cultural environment of its home country, which is Dubai and a host country, which in this case is Germany. This section also examines how this cultural environment affects the strategic plan for the organization.
An overview of the Cultural Environment of the United Arab Emirates
The United Arab Emirates is the home country for the Emirates Airlines. Owing its Arabic origin, it us arguably evident that the UAE has a rich cultural heritage that influences attitudes of its citizens and ultimately shapes the manner in which business operations are conducted in the country. This implies that the Emirates Airlines and other companies operating in the country must tailor their strategic planning process in accordance with the cultural demands of the people of UAE.
The socio-cultural orientation of then UAE in itself is a perfect opportunity for the Emirates Airlines to undertake its business operations effectively; this is because of the increasing economic growth experienced in the country. As a result, the Emirates Airlines hub is its home country, facilitating the connection of flights from its hub (Knorr & Eisenkopf, 2010).
The United Arabs Emirates is a multicultural society, although its prime cultural orientation is related to Islam and traditional Arabic culture. As such, the UAE is more liberal and this helps in shaping the strategic plans that business organizations adopt in order to ensure an effect execution of business processes in the area. Ethics is an important aspect of the Islamic culture and the UAE is not an exception.
Therefore, the organizational strategic plan of the Emirates Airlines in the UAE should base on the staunch Islamic principles in order for it to be accepted to undertake its operations there. The basic implication of this is that the company should not underestimate the role that Islamic values plays in ensuring that the company operates effectively in the region. As such, Islamic ethics should be a core component of the organizational strategic planning of the Emirates Airlines.
Generally, the business context of the UAE favors the growth of the company as evident with low taxes resulting to the company subsidizing its flight costs (Knorr & Eisenkopf, 2010). In addition, the UAE immigration rules are not stringent, making its hub preferable, as passengers on transit do not need to be cleared before continuing with their flight. This helps in increasing the competitive advantage of the Emirates Airlines in the country.
The ability of the Emirates Airlines to adapt to the cultural background of the UAE is one of the significant contributors of the success of the company. The Emirates Airlines has managed to integrate its core business strategies with the culture of the people of UAE (Wheelen & Hunger, 2008).
Another aspect of the UAE cultural environment that has a significant impact on the organizational strategic planning of the Emirates Airlines is the high-end lifestyle of the people of UAE due to the increasing oil trade. This means that the Emirates Airlines has to tailor its services in order to meet the lifestyle demands of the people of UAE.
This has been achieved by the use of high quality service to its passengers of all classes as evident by the six hundred entertainment channels and the provision of limousine service, which is used to pick and drop passengers in the business and first class category. This business model is sustained by the fact the fact that the company is exploiting the low taxes resulting to low costs, which is an added advantage for operating in the region (Baum, 1996).
The multicultural context of the UAE is facilitated by the fact that there are several business communities of diverse origins, who have settled in the region to increase their presence in this region. This multicultural aspect of the UAE implies that the company has to make sure that it adopts a business level strategy that meets all the needs of the diverse people residing in the region. Increasing urbanization is also another socio-cultural aspect of the UAE that shapes the way the Emirates airlines implements its strategic plans in the region.
Urbanization has contributed significantly to a transformation of the lifestyles of the people of UAE and has transformed major cities of the UAE into global financial hubs, presenting a perfect opportunity for the Emirates Airlines to expand its operations.
Basing on this multicultural orientation of the UAE, the Emirates airlines can adopt strategic plans directed at exploiting the benefits associated with having a diverse community in the UAE. With this respect, the Emirates Airlines can expand its destinations to meet the flight requirements if the increasing foreign communities settling in the country (Hanlon, 2007).
Germany’s cultural environment and how it affects the Emirates Airlines Strategic Plan
Germany comprises of one of the significant market segments of the Emirates Airlines. Emirates Airlines has been operation in Germany since 1987. This implies that the socio-cultural orientation of Germany is an important aspect of the Emirates Airlines global strategic plan (Knorr & Eisenkopf, 2010).
Owing to the fact that Germany is not a host country for the Emirates Airlines, the company has to make sure that its strategic plan for operations undertaken in the country are in line with the cultural aspects of the country in order to facilitate successful operations. The following section is an overview of German culture (Wheelen & Hunger, 2008).
An overview of the Germany Cultural environment
The cultural environment of Germany is very exceptional and forms a distinctive part of the European region (Baum, 1996). Germany is characterized by high living standards and high amounts time spared for leisure, as evident by at least three weeks paid vacation that one must undertake. In addition, Germans also enjoy a wide range of social welfare advantages. It is arguably evident that the level of urbanization is Germany is high, and this contributes significantly to their way of life.
Business organizations operating from the region usually tend to align their business level strategies in such a manner that the exploit the comprehensive lifestyle of the Germans to their benefits (Hanlon, 2007). The cultural environment of Germany emphasizes on leisure, recreation and aspects of physical fitness.
This kind of lifestyle that Germans offer is a perfect opportunity for business organizations operating in the region to adjust their strategies to meet the high living standards that the Germany culture is accustomed. Traditional roles in are no longer a part of the Germany cultural environment due to increased urbanization (Hanlon, 2007).
Germany does not exhibit a cultural disparity because there are lower crime levels and strict policies implemented such as gun control policy, which plays an important role in reducing the crime rates in the country. Irrespective of this, there are small instances of violence, a crime that has been propagated by the young Germans since 1960s. This is significantly due to disruptive behavior that has been accelerated by gang membership as evident by increased cases of vandalism and other forms of crime at the street level.
The Emirates Airline must take into consideration crime rates in Germany might disrupt their operations in the country (Hanlon, 2007). As part of its strategic plan, it is essential that the company formulate strategies of ensuring that there are adequate steps implemented towards ensuring that there is business continuity in German irrespective of these instances.
Despite the fact that there has been no instances of business disruption attributed to Germany’s cultural environment, it is important that foreign companies operating in the area not to underestimate the risks imposed by cultural differences between the Germans and the host country of the company (Hodgetts & Luthans, 2003).
Another aspect of German culture that the Emirates Airline must take into consideration is the facts the Germans are normally strict when conducting business. The Germans significantly put more emphasis on punctuality as an integral element of their business culture. Business relations are determined by time punctuality. Research studies report that a time difference of five to ten minutes is considered as late and could be detrimental to business relations undertaken in Germany.
Basing on this aspect of the German culture, it is arguably evident that the success of the strategic plan adopted by the Emirates Airlines should be efficient and implemented in a timely manner in accordance with the German’s expectations. The aspect of strict business culture in the German cultural environment should not be underestimated if the Emirates Airlines or any other business is to maintain a good business relationship with the Germans (Hodgetts & Luthans, 2003).
Another aspect of the German cultural environment that affects business operations of global companies is the aspect of German management. The concept of German management has been subject to evolution since the country established itself after the Second World War, and is characterized by a unique culture and style. The nature of business competition in Germany can be considered rigorous rather than ruinous.
Despite the fact that companies operating in the country normally target the same market, there is more emphasis on increasing market share compared to dominion of the market (Hodgetts & Luthans, 2003). This is evident by the fact that most companies operating in the country are competing for a particular niche market. It is also important to note that the business level strategies of German companies do note emphasize on the concept of price competition.
However, they focus on competition that is based on product and service excellence. This is an integral element of the Germany business culture that the Emirates Airlines has to take into account during the formulation of their business level strategies in the country.
Because Air Emirates focuses on low cost operations, implying that their market dominance is based on offering low cost carrier services, it is important that they do not compromise on the quality of airline services that they offer in Germany in order to leverage the aspect of competition that is based on product/service excellence rather than price competition.
Therefore, it is important for the Emirates Airlines to enhance their services in terms of quality in order to meet the business standards that matches the expectations of the German culture. This will position them in better place to establish a competitive advantage over other airline companies operating in the region, which will ultimately increase their market share (Hanlon, 2007).
The significant challenge imposed on the Emirates Airlines business strategic plans is increasing lobbying by its competitor airline companies located in host countries such as Germany and France, with the primary concern being a legal protection to keep checks the Emirates Airlines expansion to the host airline companies.
A typical example of this scenario in Germany is the increasing campaigns against Emirates by Lufthansa. Lufthansa has been against the expansion plans by Emirates Airlines to offer flight services to Berlin and other cities such as Stuttgart. This is a threat to the implementation of its strategic plan in host countries due to the resistance by local competitors (Wheelen & Hunger, 2008).
Impacts of the Germany cultural environment on the Emirates Airlines strategic plan
The cultural environment is usually a significant barrier to the process of strategic planning by global companies. Since culture cannot be changed, it is important that the company streamline its organizational strategic plan to meet the needs of the cultural environment of the host country. The first significant impact that the German culture has on the Emirates organizational strategic plan is on its market penetration services.
It is evident that Germans are not moved by price, instead, they focus on product and service excellence, with this respect the Emirates Airlines must tailor its services to meet the expectations of the German people by improving their service delivery. Low cost services are an added advantage after ensuring that their service delivery matches the expectations of the Germans (Hanlon, 2007).
Another way in which the Germany cultural environment influences the organizational strategic planning is that the planning must take into consideration the impact of cultural differences on business operations in a host country.
Aspects such as religious differences and the fact that there are local companies offering the same services at high quality standards should not be underestimated. Therefore, it is important that the Emirates Airlines exploit the unmet needs of its German customers in order to penetrate the niche markets that other global airline companies have ignored in the country (Hanlon, 2007).
References
Baum, J. (1996). Organizational Ecology. London: Sage Publications.
Hanlon, J. (2007). Global airlines: competition in a transnational industry. New York: Butterworth-Heinemann.
Hodgetts, R., & Luthans, F. (2003). International Management. New York: McGraw-Hill Higher Education.
Knorr, A., & Eisenkopf, A. (2010). How sustainable is Emirates Airlines business model. Aerlines magazine e-zine edition (39), 1-10.
Wheelen, T., & Hunger, D. (2008). Strategic Management and Business Policy: Concepts and Cases. New York: Pearson Prentice Hall.