Company Analysis of Etihad Marketing - Report Example

Company Analysis of Etihad Marketing No Lecturer) Executive summary Etihad Airlines came into being inthe year 2003. In 2012 the airline managed to carry 10.3 million passengers, from Abu Dhabi International Airport, it serves 94 freight destinations in the Middle East, Africa, Europe, Asia, Australia and the Americas, it has a fleet of 77 Air-bus and Boeing aircraft, and over 90 aircraft on firm order, including 41 Boeing 787-9 Dream-liners and 10 Air-bus A380s, the world’s largest passenger aircraft (Knudsen & Tsoukas 2005). Etihad Airways also holds equity investments in air-berlin, Air Seychelles, Virgin Australia, Aer Lingus and, subject to regulatory approval, will acquire 24 per cent of India’s Jet Airways (McIntyre 2005). This paper examines the strategies applied by Etihad in order to achieve the current position been in existence in the market for only 10years. The paper will identify the strategies applied by the small airline to effectively compe with huge companies in the industry. Defining the company Etihad Airline is the leading airways in U A E. The airline is the flag carrier of United Arabs Emirates, and operates across various destinations in the globe. The incorporation of the airline was in 2003 after a royal decree made in July the same year (Alon & McIntyre 2005). The company began operating in November 2003 after the royal decree. Etihad is used to refer to a unity. As such, the company represents a union of the Arab league through airline services and operations. For the past decade after the incorporation of the company, the airline grew significantly to become a major player in the Arab league, as well as, in the entire globe in general (Knudsen & Tsoukas 2005). Background Etihad Airways has its center located at Abu Dhabi International Airport in s UAE. As such, the airline has priority rights over the airport, which gives it strategic significance over the airline business. The airline has a fleet size of 91 and covers 96 destinations across the globe, both in the Arab world, as well as, in the other parts of the universe, as evident in Figure 1, and doing 1000 flights per week through these destinations. The figure shows the global route network for Etihad Airways including the new destinations that the company is covering since 2014. Figure 1: Map of Etihad Airways global route network, including new destinations in 2014 (Etihadcargo.com, 2013) The frequent flyer program of the airline is the Etihad Guest, which offers its customers the best and efficient services. The flying passengers wait for their flights at the Etihad Premium Lounge within the Abu Dhabi International Airport. On the other hand, the airline also has several subsidiaries aligned under the Etihad Subsidiaries division. The company makes over six billion dollars in revenue per year, guided by its company slogan “From Abu Dhabi to the World”, under the chairmanship of Hamed bin Zayed al Nahyan, and the executive management of James Hogan as the CEO (Airline Strategy Awards, 2008). Growth Strategy The company grew steadily over the decade since its inception owing to the successful growth strategy adopted by the company’s management. Analysts place the airline as among the fastest growing airlines in the world owing to its fast speed of growth. The airline began with just a few planes, and a single flight destination to Beirut. However, it made numerous orders for increased passenger and cargo planes and increased its passenger destinations (Bensoussan & Fleisher 2003). The company now has over ninety planes and destinations for its operations, with a minimum of 1000 flights per week across various destinations of the world. The company falls under the fast growth stages of businesses (Airline Strategy Awards, 2008). The growth of the company has steadily been on the rise as shown on the figure below. Source: CAPA – Centre for Aviation & Innovata. Brands The company managed to establish a positive reputation amongst across the world. It has developed these strategies through sponsorship and acquisition of various states and companies in the region. For instance, the Etihad Airways sponsors one of the leading football teams in the United Kingdom, and an active participant of the Barclays premier league. Manchester City football Club is a company under the Etihad umbrella, sponsors the teams’ stadium, the Etihad Stadium. The football team boosts the airlines image through adorning team uniforms branded with the company’s logo and name. Apart from the Manchester city brand, the company also sponsors other teams and corporate events that help in redefining its brand (ASC, 2010). This has helped greatly in creating awareness of the existence of the airways thus reduced advertisements. Main Areas of Expertise The company specializes in passenger flights, as well as, cargo flights across the world. With its hub at Abu Dhabi, the airline takes advantage of its fleet size of ninety-one to fly across various destinations in the world delivering cargo and taking people across ninety-six established destinations. For instance, in 2013, the airline managed to transport over ten million passengers across various destinations in their 1000 weekly flights of cargo and passengers (Bollingtoft et al. 2009). The active participation of the airline in cargo and passenger transportation enabled it to maximize its profits, and grow its revenues over the years to rival major airlines in the Arab league, such as the Emirates Airline (McShane & Glinow 2010). Current Position in the Market Source: Etihad Airways presentation at CAPA Australia Pacific Aviation Summit The airline currently holds a competitive position in the market with its wide range of services, class and taste for its passengers, the company is currently controlling 12.71% of the market share against is competitors in the region. The efficiency and systemization of the company’s services enables it to create market efficiencies that bring about both cost efficiencies, as well as, quality service delivery systems (ASC, 2010). The airline is currently the flag carrier of the United Arabs Emirates, which gives it a lucrative position in the airline industry as the market leader. However, it still has rivaled competition from other established airlines operating in the country such as the Emirates Airlines or the fly Emirates, as well as, other international airlines such as the Delta Airlines. The company that provides it with the stiffest competition is the Fly Emirates Airlines, which also has its hub in the United Arab Airlines, at the Dubai International Airport (Bruton & White 2007). Strategy Statements (Vision, Mission, Objectives, Scope) The company began as a flag carrier of the UAE with the sole goal of expanding across the world and become a leading airline. The company’s mission statement, ‘From Abu Dhabi to the World’ says it all by expounding on the airlines chief objective to go global through mergers and acquisitions (Airline Strategy Awards, 2008). So far, the company acquired various controlling stakes in a number of leading airlines across the world to enhance and expand its global operations. These regional and global expansions of the airline, termed Etihad Equity Alliance incorporates other leading airline providers such as Ai Serbia at 49% stakes, Air Seychelles at 40% stakes, Air Berlin at 29.2 stakes, jet airways at 24% stakes, Virgin Australia at 19.9% stakes, Aer Lingus at 2.987% stake, and Darwin airline at 33.3% stake (Miner 2011). The Corporate, Business and Operational Strategy The corporate strategy of the airline is to establish a global presence through expansion activities. On its own, the company makes over 1400 flights per week, through ninety-six destinations in the world. However, this is just a tip of the iceberg, as many destinations remain unexplored by the airline. As such, the move to take on the Etihad Equity Alliance program was a strategic move that enabled the company to have presence in numerous different parts of the world without necessarily setting shop in these places. The business strategy of the company is to increase its flight presence in many parts of the world by expanding its flight destinations, as well as, the number of flights in a given operational period, such as weekly, monthly or annually (Williamson 2013). The company has recently bought 200 hens and three beehives this is to win customers in bid to increase its flights. The eggs and honey produced will be served to exclusively to its passengers, (Kotler 2009). The company is also offering high luxurious airlines to competitively advantage themselves against its competitor Etihad has bought to the market the EAD.PAA380 jumbo jets. The Abu Dhabi-based carrier may not fit to confront its competitors such as Qatar Airways and Emirates who have been in existence for a much longer time in the market in terms of capacity, but its collaborations are building the fastest growing carrier in airline history. An alliance model is appropriate for todays aviation environment. Leadership Style The airline has robust leadership, which operates under the Islam law. The management of the company uses a direct approach leadership, which entails free interaction of all members of the organization. As such, there are no limits or restrictions on employees in expressing their opinions to the management. In addition, there are no bureaucracies that an employee or member of staff need to follow in order to get attention from the management team (Frisendal 2012). Such an open leadership style provides room for cooperation and team building within the company, which is essential in the growth and development of the airline (Thomassen 2006). Organizational Structure The organization structure of the airline comprises of a board of directors, followed by the executive team of management, then the employees or workers of the organization. The board is the chief governing structure of the airline, under the leadership of a chairperson, with his vice, and two sub committees. It has seven members who are not part of the management, and are sovereign from the operations of the airline, and sub-committees, which are audit and executive committee. The executive team implements the policies set up by the board in drawing up the goals and objectives of the company (ASC 2010). One External Analysis (PESTLE) In order to thrive, in a corporate company, it is fundamental to consider all the components of the PESTEL analysis. These components are political, economic, social, technological, legal, and environmental factors that might affect the productivity of the company. They give the rules within which the company must abide buy. As you can see in Table 1, it shows PESTLE analysis of Etihad Airways. Table 1: PESTLE analysis of Etihad Airways Political On political ideologies in foreign countries differ; it thus becomes difficult to carry out smooth operations within those countries. Etihad therefore is not able to exploit potential destinations due to the political policies established in those countries. Economic The economic crises have strongly hit the industry with a huge drop in the number of passengers using the airways due to high ticket prices thus reduced fright and hence reduced profits for the firm. Social The company has received a major boost through their engagement in social activities in the region. The sponsorship of Manchester City football club has greatly impacted on customer’s perception about the company. Technological With the technological change, The company has relatively worked on use of new technology in the management of its fight and thus the result of the tremendous growth of Etihad Airways against is competitors. The company is facing major challenges in acquiring the expensive and luxurious machinery. Environmental Maintaining of a healthy environment for the people of Emirates is a major challenge facing the airways This means that none of their operations violates any of the environmental rules concerning airlines (Pederson, 2008) Legal The Etihad management faces major challenges in adhering to different policies put in place on the may destinations of their fight all over the word. One Internal Analysis (SWOT) The SWOT analysis includes the strength, weakness, opportunities, and threats to the company in its operations Table 2: SWOT Analysis of Etihad Airways Strength The quality of the services offered by Etihad is unique and thus the company is not faced with great competition. The world-class services have very few competitors hence thi high growth rate. Strong backing of Abu Dhabi government High number of airlines per week, over 1400 Good branding and visibility and many sponsorship events. Weakness The major weakness lies in the cargo division (Marios, 2008), This is mainly because some revenue operations come from the cargo division sector. Over reliance on international onward moving traffic Restricted market share growth due to intense competition in the industry Opportunities Increased global destinations Tie-ups with airports to give premium facilities to passengers Threats Increased competition in the middle east (ASC 2010) Increased cost of fuel Changing government policies and international aviation rules and regurations Recommendations, based on analysis Etihad Airways has potential room for growth and improvement as evident in Table 3. Table 3: Half-year 2012 results of Etihaad airlines (Bi-me.com, 2014) This shows the half-year results of the airline in 2012. Some of the key indicators used in this analysis show exemplary performance of the airline both now, and in the future, such as a 20% positive variance in the growth from passenger revenue between 2011 and 2012 of the same period. Its strategic growth towards equity alliance is a bold move that will enable it to have presence across various destination of the world (Kotler 2009).The best way forward for the airline is to increase its fleet capacity to facilitate a significant increase in the number of its flight destinations, as well as, the frequency of flights in a given period. Corporate branding, mergers and acquisition, and quality customer service delivery is another way to ensure the airlines growth and development (Kotler 2009). Conclusion The steady progression engaged by Etihad in offering services by getting new aircrafts, guarantees that their planes will spend much time on air than on ground for maintenance purposes. Etihad has been able to achieve this within a span of less than ten years, this is a tremendous achievement as compared to other firms in the industry that began operating many years ago. (Business traveler, 2010,) The engagement in help partnership, such as that with V Australia will enable the airline controlling huge share of the local market share as well international market. Etihad continuous provision of luxurious fight at an affordable price, it will ensure a repeated success due to customer satisfaction. Etihad currently has a smaller number of destinations as compared to its competitors this becomes easy to manage, it has hence facilitated the airline to better their services and build on their brand. Etihad applies the concept of quality over quantity in the airline industry in order to fully satisfy its customers’ needs. The perception of customers towards quality has drastically risen over the years and many wouldn’t mind paying the extra money if they are convinced they are getting what they paid for. Etihad has invested much on advertising this is due to the competitive nature of the industry. It is consequently extremely crucial for its continued existence. This is the reason the company emphasizes on customer relation to make sure that they feel satisfied and make it a point to come back after being on one of their flights. References List Kotler, P, Keller, K, and Burton, S 2009, Marketing Management, 1st adaptation edition, Pearson Education Australia. Online Resources: Airline Strategy Awards, 2008, accessed on March 8, 2011 http://www.conferenceeventsadmin.com/uploads/assets/strategyawards2009/2008pdfs/15Marketing.pdf  ASC 2010, Etihad confident of reaching its financial goals, Arabian Supply Chain, accessed on Feb27, 2011 http://www.arabiansupplychain.com/article-5261-etihad-confident-of-reaching-its-financial-goals/ Business traveler, 2010, Etihad launches i-Phone loyalty app, accessed on March 6, 2011 http://www.businesstraveller.com/news/etihad-launched-iphone-loyalty-app Read More