Abstract
The Emirates Group has invested in both the Dnata services and Emirates Airline. This company was established in 1985 at the United Arab Emirates (Al-Abed 2005, p. 9). In the year 2102, the company was rated among the biggest airline companies in the world. The company offers flight services across all the continents. Emirates provide cargo services in over 40 destinations under the management of the Emirate Skycargo department (Peng 2009, p. 337).
It works in cooperation with Dnata, a division of the Emirates Group, offering flight services. In this article, the competitive environment of the Emirates Airline is analysed using the Porter’s five forces model.
Similarly, the article focuses on the role of information system in the company with the aim of highlighting on its importance. Through this, the article illustrates how effective management of information systems has placed the company at an advantageous point against the competing airlines. As such, the use of IT has made the company unrivalled in the airline industry.
Emirates profile in the industry
The Dubai based Fly Emirates is considered one of the fastest growing global airlines. Recent statistics indicate that Emirates airline is a prolific profit earner.It employs over 50,000 workers worldwide and has a turnover of about $18.3 billion (Boermeester 2006, p. 106).
The company has a remarkable big number of sophisticated and luxury aircrafts, which includes about 180 large, A 380 Airbus, and Boeing. Year after year, the Emirates Company expands and gains international acceptance. The company strategic plans have made Emirates Airline to win over many passengers’ confidence becoming the largest carrier of passenger with approximately 125 destinations worldwide.
The company over time has won several excellence awards. These awards are about 500 in number indicating that the company has had a successful past. The company also ventures in tourism and travel related services boosting its international popularity. The workforce of the emirates is diverse as its employees come from about 160 countries across the six continents it operates.
The success of the company is attributed to the hiring of diverse and experience workers. In addition, the company has greatly motivated its employees by exempting tax on their salaries.The Company has gone an extra mile in promoting the employee’s skills and expertise.This is achieved through training seminars and allowing workers to further their education.
Another factor is the conducive and fascinating environment in the new cosmopolitan setup of Dubai. Notably, the success of any business greatly relies on the input from workers. The Dnata, one of its divisions, helps the Emirates Company in management of cargo, passenger travel, catering, and Information Technology needs.
The Dnata has a long experience dating back to its establishment in 1959. This department operates mainly in the Middle East, the Emirates base.
Role of information and technology
It is true that in the current world information technology is a necessity and not a luxury (Burgess 2002, p. 279). The use of advanced information technology can lead to a company’s success. The use of IT has become cheaper and easier with the arrival of internet. For instance, the use of fibre optic cable for internet distribution has made sharing of information easy and quick.
A customer can access numerous services through a click a button. Collection of business information such as opportunities, customer feedbacks, online selling, purchasing, advertising, and marketing of products has become easier with the adoption of information technology. Actually, information plays a major role in the success of an organization.
Without information technology, the company will face steep competition from rival businesses (Visscher 2001, p. 4). For this reason, the Emirates Group managers have embraced information technology with an aim of improving the company’s competitiveness and profitability. This is indicated from the award won by the Emirates’ vice president of IT, Mr. Naef on 17 February 2013 in Dubai city.
These awards were sponsored by Corporate Publishing International to acknowledge companies exemplifying the need for innovations and information technology to promote business advantage, raise company’s performance, and enhance their growth. These awards encouraged the company to enhance the use of IT in the workplace.
The Emirates Group has collaborated with the major Information and technology firms. These firms include Microsoft and the HP. Emirates has seen the recent development of a management system known as Knowledge In-flight Service abbreviated as KIS. The management system enhances communication between the company and the customers.
There is an efficient work output as the Emirates’ crews are able to have a personal customer service. The personalized quality customer services are a unique and distinct product for all its airline customers. The management systems place the Emirates Company at an advantageous point against all the competitor airlines. The information and technology systems have made Emirates unrivalled in the airline industry.
The information management system makes the work of the Emirates’ crew easy, since all the data and records of customers, staff and flight are available in a database. It is reckoned that Naef commenced Knowledge Flight Services when he first came to Emirates Company.
This is an application, which runs on the windows platform called classic. NET. The project mainly utilizes the tablet gadgets. Tablet gadgets proved attractive, fashionable and light.For these features, tablet was chosen to host the KIS application.
Coincidentally, Griffiths, the Emirates’ senior vice president of the cabin crew had embraced the similar idea of using KIS to create a competitive advantage against their rivals. The Griffiths’ management system used tablet running on windows 8 platform. The main objective of the IT management system was to increase customer satisfaction while guaranteeing maximum security of the Emirates Company.
The company has over 16, 000 cabin crew members spread over 130 destinations in six continents.The use of this IT management system has helped Emirates to efficiently manage its employees and airline customers. The system device puts customers and staff information under one platform. The application also includes merging of catering information and all the logistics involved in the Emirates airline industry.
This has made Emirates to stand out in the airline service industry. With time, KIS has been updated to accommodate a new user-friendly interface, emerging trends, demands, new tasks, and future services. Being a pioneer in airline based IT solutions, the company also has shifted to an iPad host gadget, which was supplied by the partnering HP Company. The company chose the Elite Pad 900.
The IT, KIS application has enabled the Emirates flights to be updated automatically as they land at any destination worldwide. This is possible due to the synchronization of the Elite Pad and the central database. All information is captured, sent, received, and recorded. The application has numerous advantages, which include the automatic updates of the customers’ information and tasks to be carried out.
These updates are real time as opposed to the non-real and manual updates, which the rival companies are using. The technology ensures that the events of the customers within the flight are captured and necessary actions can be taken appropriately. All these initiatives are aimed at giving a high level of service to Emirates customers.
Porter’s five forces model
Before analyzing the competitive environment of Emirates Company using the Porter’s model, facets of the model should be understood. Porter’s model is a vital mechanism tool used in determining strengths and powers of a given company.
The five forces model is very essential in that the company is able to know its current competitive environment as well as the new position a company may consider to engage (Ahlstrom & Bruton 2010, p. 131). It is a vital portion of the planning if the company understands its strengths and weakness; it will make the necessary improvements on weaknesses while protecting the strengths.
In this manner, the company is able to reap the competitive advantage of its position in the market. More importantly, the Porter’s Five Forces based model ensures that the company does not take misappropriate moves in the market (Hill & Jones 2010, p. 42).
To an extent, the tool is used to determine whether the company will make profit from the new products and services. This model employs five forces in determining the economic power of a given business. These forces have been detailed below.
Power of supplier is concerned with the effects of having few suppliers in the market. Fewer suppliers, means limited choices and therefore they have the power to raise prices. In addition, the cost needs to change from business to another. Similarly, the product unique aspects should be factored.
The power of the buyer details that it is important to know that buyers are able to drive down the prices of products and services. Therefore, the company needs to analyze the crucial issues of buyers, which include knowing the cost incurred by the buyer to change from using your products to of another company. Few buyers have the power to reduce the prices of products.
Competitors’ rivalry notes that in a situation where they are many competing companies dealing in the same line of products for instance same market aspects, quality, prices, and attractions leads to less power since both buyers and sellers have alternatives if the company is not dealing in an appropriate manner. If the company offers unique products and services, the company has powers can and face little or no rival.
Threat due to substitutes is involved with the ability of customers to get an alternative way of doing what you offer (Schermerhorn 2010, p. 146). Generally, the substitution product or service may be cheaper. When found, new mechanism can be adopted weakening the power of a company.
Threats from new market entry assert that if there are fewer factors restricting entry to market, competitors will jog in and weaken your power. Low cost of starting a business and less barriers encourages these threats. However, for stricter measures entry to the market is limited hence the company can enjoy its power.
Figure1: illustration of Porter’s Five Forces Model
Porter’s 5 forces Model analysis of Emirates Airline
After understanding the above five forces of the Porter’s model, Emirates company can be analyzed using Porter’s model.
Threats due to competitor entry to market
The Emirates Company has its rights and patents as a national passenger carrier in the U.A.E. Therefore, it reaps maximum powers. This is due to fewer competitors. Emirates airline is very accessible since it has its own terminals and aircrafts. The company also enjoys low cost of fuel and meals therefore giving Emirates an advantage over its rivals.
However, the low switching cost of suppliers and very flexible policies of the U.A.E government have increased the rivalry and thus decreased the powers of the company. Competing international companies include Air France, Deutsche Lufthansa AG and Etihad Airways.
The Competitor’s rivalry
There are about 37 airlines, which fly fro and to Dubai. These flights are diverse since they are both local and international flights. There is also increased advertisement for rival airlines, for instance Jazeera spends up to 10% on adverts. This weakens the powers of the Emirates.
However, its new management systems, information, and technology based KIS headed by the Mercator and services of Dnata, introduction entertainment TVs, and a new set of seats, offer a competitive advantage in the airline industry.
The power of buyers
Buyers have freedom of bargaining for prices of tickets for both budget and luxury flights. They do this from rival companies for the same destination. This reduces the profit portion of the Emirates since the company offers mostly luxury flights. In addition, the customers are now shifting destinations in Nepal and India thus reducing revenue for Emirates.
Presence of alternative airlines with relative cheaper and better services and lower switching cost are reducing on the company’s profits. Therefore, buyers going for an alternative airline weaken the position of the Emirates. However, the Emirates has an integrated kitchen with the flight to gather for meals within the flight thus giving it an advantage in the market.
Threats due to availability of substitutes
The Emirates have a competitive advantage in that it is the only provider of direct flights to certain destinations. For instance, Emirates is the only airline offering direct flights from Dubai to San Francisco. This makes it powerful in the industry. Emirates also offer price affordable world-class services and food. It takes care of the standards of customers, whether elite or middle class.
It also blends this with entertainment and much comfort to its customers. This definitely puts Emirates at a competitive advantage. Moreover, Emirates enjoy power in the industry due to its unique product and services like its longer unstoppable direct flights to some destinations around the globe. As such, no other airline company ventures in these flights.
The large A380 Airbuses facilitates this unique product. The use of KIS application management by Emirates has enabled them to personalize customer services and this makes them unique. The wide variety of meals, new aircrafts, and polite cabin crew attract business and private classes. Therefore, customers choose what suits them. This places Emirates at a competitive advantage.
However, there are only two-flight player category, the budget, and luxury and this encourages large price difference. Obviously, passengers opt for the cheaper budget tickets for especially when they are travelling over short distances. This leaves Emirates with low demand, thus weakening its position in the airline industry.
Power of supplier
Currently, the U.A.E is served with over 100 airlines. This leaves the few suppliers with many alternatives to choose. That is suppliers can price down as they wish and this lower the Emirates position in the industry. It may lead to lower profits of the company.
The UAE also experiences very high firm to supplier ratio that is few suppliers and many airlines. There is high switching cost since there are only two suppliers but the firms are numerous. This gives the supplier powers to increase the cost of the Emirates airline and this has an impact on reducing its profitability.
Concluding analysis
Depending on the size of the company and the geographical-extend of operation, information technology (IT) matters (Taylor 2004, p. 152). I believe that large multi-national companies must embrace the use of information management systems if they want to prosper. These companies have a lot of activities and staff to monitor, hence the need for the use of information management systems.
For instance, the use of KIS by the Emirates airline enables it to put customer, flight, and staff information on one platform. Through this, it is easy and quick to monitor and analyze the information. In my opinion, all managers should consider investing substantially in new and advanced information technology based systems.
For small firms, the use of information system does not contribute much to the success of the business (Warner 2010, p. 56). Since a lot of work could be done manually or even outsourcing it to specialized firms. Hence, small businesses do not necessarily need to invest a lot of money in information management systems.
References
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Al-Abed, I. A 2005, United Arab Emirates yearbook 2005, Trident Press, London.
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