Strategic management of Etihad Airways
Strategic management process The strategic management process is a way for companies to build strategies for helping the company to respond quickly to new challenges. This dynamic process that helps companies find new and more efficient ways of doing business. The three main elements are situation analysis, strategy formulation and strategy implementation. 2. 1 Stages of strategic management process Figure 1: Three Stages of Strategic Management Process
Strategic Analysis is a process that can be used to identify the best way to achieve the outcome that desires you or your organization, choosing the path of weakness for change. By doing a strategic analysis, the team will create alternatives to achieve the desired result, stressing the engines, and the decrease in resistance. Strategic Analysis of the SWOT analysis, PEST analysis and value chain organizations using available resources to achieve desired goals and objectives in order to determine the best way is to use a tool like.
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(Akku, 2013) 3. 0 External Environment
Political factor Due to terrorist attack, many airlines have stopped flights to certain countries such as the main countries involved with the fear of their planes being attacked Etihad Airways, like other aviation firms, has to follow strict government regulations. Economical factor The Company also has some social responsibilities to follow. The reason is as Aviation co-exists with country’s hospitality industry, it has to make sure that hospitality industry does not get suffered.
From the Airports developing countries to achieve profits, such as the economy increase, decrease depends on oil revenues by moving into new sectors, growth in tourist numbers and so on. In addition, global alliances considered as a main feature of many successful businesses of airlines, as lowers operating cost. Social factor Also affect the airline industry. For example: increasing the world’s population, tourists and the number of educated people effect the airline industry. As a growing number of expatriates, the firm `s profits will also air more, because these people need to travel to their home country as well.
As the company’s staff and passengers both come from the society, there is a social obligation in the company to work for the welfare of the public. Technological factor Online and mobile booking and check-in services has been a common choice and increasingly used by many airline industry and also the employees who can deal with new technology are needed in every aspects of work. Environmental factor Etihad Airways has a comprehensive environmental strategy to ensure the commitments we have made in our environmental statement are put into action.
These include management of the potential environmental impacts, ensure the continuous improvement of environmental performance and explore the grief and results driven opportunities and partnerships to support a sustainable future. Legal factor Aviation laws, labor laws, governments rules form the legal periphery for Etihad Airways. Legislative changes and constraints like safety, health legislations, and restrictions on the merger and acquisition of companies (Ytudak, 2011) 3. 2 Porter`s Five Forces (Competitive Environment) Figure 3: Porter’s Five Forces Framework Threat of New Entrants
In recent years, the threat of the alternative competition was almost void. Etihad nowhere before they turned not Etihad to reduce storage and other substitutes in the market in terms of profit kept talking about improving the company. That was amazing fares Etihad lower rates compared to other companies cannot provide. Threat of the entry of new competitors There was a constant threat from new competitors. Every now and then with a lot of new businesses started with existing once. They all try to match the level of Etihad in the long run, but in the end could not keep. They met heavy losses and ultimately ended up in costs.
All of this competition is that tried to copy Etihad based on service it provides, but they are required on a periodic basis in accordance with the public satisfaction and failed to control them. Bargaining power of customers We offer a number of facilities and the lack of competition when compared with the case of Etihad Given the bargaining power is simple. Etihad is the most used of all the people because a lot of people are not in negotiations. However, several new competitors in times of strong competition by the appropriately received by the customer during the period were a kind of negotiation.
Bargaining power of suppliers Providers in this case refer to the shareholders of the company. They also provided a great discount on available stocks. It also significantly increased the amount of public stocks available. They also have a good amount of annual dividend. Due to the expansion is that its business to shareholders to obtain a huge profit. Intensity of competitive rivalry Etihad the recent years will continue to dominate the market, but it was not easy. It is always alert and keep itself has changed. Etihad enough to challenge new contenders, but this number is increasing day by day because of the competition.
Etihad general market conditions continued to investigate and made ?? the decision to keep safe. Corporate marketing aspect was important to maintain its market position. (Ytudak, 2011) 4 . 0 Internal Environment (SWOT analysis) Figure 4: SWOT analysis Strength Considering the case of Etihad, low cost rate plays a crucial part in obtaining the public interest. Low cost airlines are so effective that helped win Etihad Merit Award for CAPA Low Cost Airline of the Year 2006, and the World Airline Award for Best Low Cost Airline in the Middle East in 2007.
Etihad the reason why it is so popular among all regions of the world is its award-winning strategies. These awards add up to much in your marketing strategy that helps the bag future success. Etihad has been able to advertise your business in the following ways: Travel fees stopped Eliminating codeshare relationships between the lines The use of alternative secondary airports or city Weaknesses Most of the airline companies today are facing the biggest weakness was not able to meet their expectations. In many cases, Etihad agree to arrive at a certain destination, but did not practice it.
Despite the low cost, expected Etihad passengers to some of the important accessories are as follows: Amenity Kit Motion sickness bags Headset Flight socks Blanket Eye Shade Opportunities High GDP growth rate: petroleum extraction and refining operations in the UAE over the past few years was all time high. This helps to improve the UAE’s economy was Etihad to take advantage of this fact, and more prominent use of low-cost carriers can be made. Strong tourism: the Middle East’s energy and entrepreneurial spirit in it has been tourism and business traffic. Tours for tourists to be very low and so tour of all the advertising you can do.
Threats Etihad have the largest threat is competition. Why do the same by not advertising company dissatisfied customers to arrive after the end of the competition, will take the lead. Etihad is located in politically unstable regions increased terrorist activity in the Middle East. Aviation security costs and insurance, and because of the growth of fuel prices increase the cost of operating companies. (Ytudak, 2011) 5. 0 Strategic Formulation, Evaluation and Choice (Part 2) Strategy Formulation: in order to achieve the defined goals and the process of selecting the most appropriate course of action.
It will lead to the expected results provide a framework for action because this process is essential to the success of the organization. They are the organization’s goals, mission and objectives to recognize the strategic plan should be communicated to all employees. Strategies in a changing environment carefully reported and possible changes that may occur to force the organization to prepare for the Strategic Plan of the organization evaluate the budget to allocate to determine the most effective plan for maximize the return on investment (ROI).
Vision is a perspective or point of focus of the organization, in other words how the founder of the company sees in the future. Etihad Airways with its modern fleet carefully planned flight schedules targeted to passengers and their needs, with a professional staff and a program of continual service improvement, in the air and on the ground. Etihad Airways desires to offer something more than comfortable flights for passengers. Mission shows the meaning of existence statement of the company. It is at the level of other organizations to achieve strategic goals and direction and shows the instructions.
Etihad is actively safety, customer service, and a model of environmental responsibility and advocate for American Airlines, and our nation’s economy and global competitiveness as the core network to drive. 5. 1 Difference between corporate and business strategy Corporate strategy is on the direction of the entire organization, including decisions made. Corporate strategy, business portfolio of the same size and configuration as determining issues affecting the overall business are related. Business strategy is that a company is how to compete in a specific business sector. Corporate-level strategy, strategic decision made in fear of the price, marketing, and production efficiency is important.
Business strategy and competitive advantage in the market mainly are related. Corporate and business strategy, the strategy is the extent of the difference. Corporate strategy significantly affect the entire company is focused on the problem. Business strategy is narrowly focused on specific business sectors and types of problems are related. Business strategy can be formed by individual line managers, but in general the company’s strategy, the board of directors at the senior level is being developed.
In general, the more stable corporate strategy and should not be changed frequently. Business strategy, however, in orders to respond to changes in the market on a regular basis and is subject to change. (Smith, 2013) 5. 2 Difference between Market Positioning strategy and Resource-Based approach Strategy Market positioning strategy is that existing or to be issued for the location of the products placed on the market by customer shows the location. The position was created by the company itself directly competitive products and other products is the development of a product’s image.
Purpose of comparison with similar products, the product must not be in favor of the company to the attention of a particular product is the recipient management. (POSITIONING STRATEGY, 2013) Resource-based approach strategy provides a review of some of the strengths and capabilities are described. In the past few years the organization has developed a variety of resource-based approach seems deviation. The main success of this concept is ensure the firm with raw materials, equipment, technology, workforce and also financial and information resources.
Resource-based strategy, the existing core competencies and strategic capabilities built around a further development of the strategy emphasizes. (Grand, 2013) The airline Etihad began in 2004 or that began operating in 2004, but was established in early August 2003. The airline carried over 4. 5 million passengers, an increase of about 65. 7% over the figure for 2006 and in addition to this, Etihad also acquired 175,000 tons of cargo in 2007, an increase of more of 70% for 2006. In 2008, the airline placed a demand of more than 190 aircraft, which would be of value AED157. 9 million or approximately USD 40 billion.
The order consists of about 95 + Boeing 100 and Airbus. Additionally, in the Etihad business, hospitality and tour operations gave been developed successfully. In March 2009, company had more than 25,000 employees; from these employees were 11,540 cabin crew and 1550 engineering staff. (Study On Etihad Airlines Aviation Essay, 2013) 6. 0 Lifecycle of Etihad Airline The airline industry is in the maturity level, because of this there is strong competition in the market and the rate of sales ` grows rapidly and begins by time. The promotion of marketing, advertising and sales can be obviously due to the high impact of competition.
However, most competitors raise their research and development budgets to find best services to attract customers. Moreover, many organizations started to focus in differentiating their products and services from their competitors by increasing brand loyalty ‘ customers. For example, some organizations begin to focus on reducing operating costs, therefore, at this level, low profit margins and less efficient firms out of the market and only organizations in good standing are those who remain. In addition, some organizations ‘ use abusive strategies rather than defensive strategies by modifying their market, product and service.
For example , Qatar Airways developed the strategy to modify the marketing mix making low-cost airline due to increasing number of customers , sales is regarded as a competitive advantage among competitors. 7. 0 The best strategy for Emirates Airline Based on the results of the strategic analysis and portfolio analysis, I chose a marketing strategy to ensure growth. However, the benefits of competition in the airline industry requires a high speed, the market share is also high. In addition, the airline industry depends on economic threats, environmental policies that reduce the rate of passengers.
There are many reasons why they should be threats to the aviation industry in a competitive, from a number of airlines have improved their organization, strategies to be more successful in order to lead the market. Improved marketing strategy with special promotions can also increase the number of passengers. For example: For an airline, Etihad Airways UAE does not like wasting time. They were the first to land in India when the government opened its market to foreigners this year. And now they are about two weeks of taking a 24% stake in regional Jet Airways, one of the three national companies of India, said on Thursday the government regulators.
The $ 379 million agreement is called more than a “strategic partnership” Etihad. Australian airline managed from Abu Dhabi has taken a decidedly different course in the airline industry and goes on a binge of the acquisition, purchase of shares in airlines Virgin Australia air berlin. Etihad agreement could last green lit by the Cabinet Committee on Economic Affairs within the next two weeks, but the end result of the transaction will be decided by the Securities and Exchange Board of India (Semi).
Indian officials have expressed some concern that the original agreement, signed in April, will result in effective control Etihad Jet Airways management. Shares of Indian airlines have been hit all year. Jet has dropped over 36 % since the deal was announced Etihad and down 36. 7 % year – to – date. The shares have rebounded in recent months by 15%. Etihad is a private company. “India is one of the fastest growing destinations in the world and an important growth market strategy Etihad Airways,” said CEO James Hogan said in a statement. “We now have the ability to add significant capacity between the two countries.
” Later this year, Etihad will operate two daily flights from its hub in Abu Dhabi, and addressing both Mumbai and New Delhi instead of just daily departures today. It also plans to upgrade Abu Dhabi to Chennai. Etihad was awarded the Best Airline in the Middle East by World Travel Awards last month. (Rapoza, 2013) 8. 0 Strategy Implementation (Part 3) 8. 1 Organizational Culture of Etihad Airlines Organizational Culture contributes to the social and psychological environment of an organization unique.
Organizational culture includes the expectations of the organization, experience, philosophy and values that hold it together, and expressed in own image, interior work and interaction with the outside world, and hopes for the future. It is based on attitudes, beliefs, customs, and the written and unwritten rules that have evolved over time and considered valid. Also referred to as corporate culture , is shown in the ways in which the organization operates , treats its employees , clients and society as a whole, the extent to which it gives freedom in decision-making , the development of new ideas and personal expression ,how power and information flows through the hierarchy, and , as committed by the collective goals.
Etihad Airlines organizational culture is well known for its stripped-down, non-traditional business model. Focus on the punctual arrival, departure, and without frills. Etihad Airlines has been able to show a positive culture initially in terms of their cultural differences; also the management of the organization can promote the sharing of objectives and success among his Staff. As they work together as a family, we are able to concentrate on the needs of the entire organization to support its competitive advantage. In addition, its operations are coordinated.
Etihad has a workforce of approximately 8,000 employees in more than 120 countries, regardless of this great diversity, Etihad managed to create a strong organizational skills culture and employees through special training programs to provide new employees with all the necessary skills to carry after a manner that satisfies the clients and maintaining brand. In addition, organizational culture contributes to the sense of `personnel costs and self-esteem. Thus, organizational culture has a positive effect on organizational behavior, which makes the work of the team and work more efficiently.
Organizational structure of Etihad Airlines Etihad Airlines Organizational structure is known to be very functional. There are three levels of management. The values ?? are considered as the core of the organization, including quality, reliability, action, informal communication and feedback. The main objective of this company is to be national airlines offering direct flights on short-haul routes with high frequency, and reasonable prices. The main business strategy is based on limited passengers; reliable outputs frequent short trips, ticket prices low, a country very productive and door equipment, and aircraft utilization.
The airline is huge company, because of this it is divided into several sections, which are also divided into subgroups. CEO and Chairman is the highest position in the company with a person who keeps posting. Acting included in the ratings. From there, the company split into three departments, such as engineering and operations, sales, cargo and property acquisition and logistics. The departments are divided into other smaller department in the implementation of specialization. Etihad Airline’s main goal is to provide quality services.
This is used at all levels of their actions to encourage their fleets and customer service. But it helped the company to increase market share. Organization strategies have allowed it to achieve this goal over the years. (etihad. com, 2013) 8. 3 Organizational Process “Organizational Processes” activity streams are to be connected to your success. In order to support whole systems thinking and help level processes see all the time, The Grove created a template that shows the three processes frontline people, public image and performance planning juxtaposed against results, prioritization and production processes.
In each area, companies can choose to be more inward or outward, controlled and environmentally friendly. As groups characterize the complete set of processes needed to support their value proposition, created to strengthen the initiative and action teams to implement strategic vision. 4 New changes on Etihad Airline The airline industry is the state of maturity, there is strong competition between rivals. Every organization has to use unusual strategies, as well as an analysis of internal and external factors that can affect their position.
Research and analysis shows Etihad Airlines, operating costs are better because of the high investment for Etihad in aircraft and services and increasing fuel prices. The company will reduce the cost of operating performance, such as the development of maintenance processes that support high utilization successful airplane and making flight. In addition, investment in technology distribution channels to reduce labor costs reduces operating costs. For example, Etihad Airline installed a place that customers can take rest and their kids can play at the airport in UEA, now must try to establish more newsstands in airports around.
By threat of low-cost airlines, the company should not lower the prices after years of intensive services, rather than the company has to provide new discount chain as a subsidiary of Etihad Group operating budget passengers are now customers of new low-cost, increased market share. 8. 5 Importance of Stakeholders within organization A stakeholder is a group, an organization or a person who influences and is influenced by action organizations. A stakeholder can be consuming, customers, suppliers, shareholders and governments.
The importance of stakeholders in an organization or a company is controlling the efforts of organizations to ensure that the organization or company serves their interests. All interested parties are not substantially equal and are entitled to different considerations. The first is to determine who exactly your stakeholders are. This is where stakeholders Management comes in. “stakeholder management is the process of identifying key stakeholders and win their support. Stakeholder analysis is the first stage of this where you identify and begin to understand your key stakeholders.
” Proper implementation of this process determines the success or failure of the project involved. Stakeholder analysis uses the technique to identify the key people who need to be won over. Next step involves stakeholder planning process to build your support. Many companies assume that you understand the stakeholders aware of the mistake. But in fact they do not. Some helpful ideas Cinema satisfy other stakeholders are more important than you can. Cano’s performance and power consumption of their product or service is the difference. (Pyamda, 2013) 9. 0 Conclusion
Etihad Airways is considered one of the world’s most modern airlines, yet it managed to take a leadership position in aviation. Airways serves 94 destinations of passengers and cargo in the Middle East, Africa , Europe , Asia , Australia and America, with a fleet of 77 Airbus and Boeing aircraft , and more than 90 aircraft on firm order , including 41 Boeing 787-9 Dreamliner and 10 Airbus A380, the largest passenger plane . Etihad Airways also has a stake in air berlin, the Air Seychelles, Virgin Australia, and Are Lingus and, subject to regulatory approval, to acquire the 24 percent of
India’s Jet Airways. Etihad Airways received 2008 Marketing Award of the “Airline Strategy Award ” , a prize misrecognized in the industry, only five years after the start commercial operations followed by many international awards . This initial success can be attributed marketing strategy employed by Etihad, which resulted in the creation Strong brand associated with high quality. Etihad strategy focused marketing to create innovative new services in each point of contact with customers.
This report will focus on marketing strategy that allowed Etihad airlines to achieve what other operators obtained in a much longer time. In addition, an attractive marketing strategy for the Etihad and can make a big competitive advantage. For example, the string and the aviation industry to take place as a leader in the latest technology for their services in the market by developing customer loyalty the brand has created. Effectively to attract the consumer to differentiate strategy to improve the market position to focus a good salary that can help the company to growth faster than faster.