Internal Analysis of Emirates Airlines: SWOT Analysis

SWOT stands for strength, weakness, threats and opportunities. It is a useful tool that is widely
used for strategic planning and management in many organizations. It is effectively used in
building strategies for the organization to maintain its competitiveness in the market. It is simple
yet powerful tool that help the organization in identifying its existing resources, capabilities,
deficiencies, the existing opportunities and threats prevailing in the market. It is a strategic
planning framework that is commonly used to evaluate the organization, a plan, business or any
other project. It helps in determine the organizational and environmental factors that could affect
the decision to be made. It is carried out to analyze the position of an organization in in the
market compare to its competitors and the major factors that are affecting the competitiveness
before crafting any business strategy.
SWOT analysis mainly have two dimensions internal and external dimensions. Internal
dimension includes all the factors that could affect the organization which is the strength and the
weakness while the external factor includes the environmental factors that is the opportunities
and the threats. In SWOT analysis the strong and weak aspect of an organization is determined
by evaluating the elements within the environment while the opportunities and threats of an
organization are determined by examining the element outside the environment. In this way
SWOT allows the comparison of organization’s resources and capabilities with the competitive
environment in which it is operating.

Strength
In this element of SWOT the abilities and the key properties of organization are discussed that
gives an organization an advantage over other organizations by making it more competitive. We
have identified several strengths for Emirates Airlines. These are given on the next:

Local Government Branding and

Customer Service Oil Rich Country
Support Sponsorship

Customer Service: Whether it’s entertainment lounges, in-flight entertainment, chauffeur drive,
or the cabin service. Emirates Airlines provides excellent customer service so that the customers
would have the best experience onboard.

Local Government Support: Wholly owned by the Government of Dubai and operating as an
independent business entity, EA grew in scale and stature through competition with a number
of international carriers.
Branding and Sponsorship: Sponsorships formed a vital aspect of the airline’s marketing
strategy. EA signed a sponsorship deal with Real Madrid (a well-known Spanish soccer team)
in addition to existing sponsorships with Arsenal Football Club in the United Kingdom, Paris
Saint Germain Football Club.
Oil Rich Country: Dubai is one world’s leading oil-rich countries, and Dubai’s royal family is the
owner of Emirates Airlines. It means that the company has excess to an unlimited supply of oil.
In other words, the company doesn’t have to worry about the fuel cost.

Weakness
Weakness refers to the situation in which the existing capabilities and the resources the company
holds are weaker or not sufficient compared to others organizations in the market. We have
identified several weakness for Emirates Airlines. These are given on the next:

High Cost: The airline industry has become very competitive in recent years. Therefore,
Emirates Airlines has to invest a lot of resources to maintain its market position.
International Traffic: Emirates Airlines depends heavily in international onwards moving
traffic.

High Cost
International Traffic

Opportunities
Opportunity is an advantage and the driving force for an organization. It is the convenient time
or situation that is present in the environment and will help the organization in achieving its
goals. It is a condition existing in the external environment that allow the organization to take an
advantage of the organizational strengths, and help in overcoming the weaknesses and to
neutralize the threats present in the environment. We have identified some opportunities for
Emirates Airlines. These are given on the next:

Alliance

More
Destinations

New Fleet
Alliance: Emirates Airlines should make alliances and partnerships with other international
airlines in different markets. It would help Emirates Airlines to expand its geographic market and
attract a lot of new passengers.
More Destinations: Emirates has more than 200 aircraft and flights to 140 destinations in more
than 70 countries on six continents.  The company should add more destinations to its route list.
It would increase airlines’ market reach and influence in the international market.
New Fleet: The current fleet of Emirates Airlines comprises Boeing777 and Airbus380. It’s no
doubt Airbus and Boeing both are the world’s top airline manufacturing companies. Now, the
company should buy aircraft from others airlines. It would diversify the risk and increase the
trust of customers.

Threats
Threats are the factors that prevent the organization from the actualization of an activity. It is an
unfavorable situation that exist in the environment making it difficult for the organization to
achieve its defined goals. It is a situation that arises as a result of the changes that took place in
the immediate or distant environment, preventing the organization from maintaining its existence
and superiority in the growing competition and are disadvantageous for the organization. We
have identified some threats for Emirates Airlines. These are given on the next:

Strong Competitors: Emergence of new airlines around the globe has increased the
competitions for the airlines tremendously. Strong competitors from the region such as Etihad
from neighboring emirate, Abu Dhabi and Doha based Qatar airways have put pressure on
Emirates airlines.

Accusation of subsidy benefits by rivals: Lufthansa chief executive officer Christoph Franz
was the most vocal opponent of Emirates, Etihad Airways and Qatar Airways, criticizing them
for being state-owned, government-subsidized and reliant on unfair advantages such as access to
export financing, low or no taxes and cheap labor.

Decline in Tourism: Any decline in tourism can be a threat for Emirates as Dubai is its hub. So
diplomatic, political or economic turmoil may slowdown the business of airlines.
 Strong Complains Decline is
Competitors from Rivals Tourism

PESTLE Analysis of Emirates Airlines:

PESTLE analysis is one the significant and widely used tool or framework mostly by
organizations with the intent of considering the market environment before commencing the
process of marketing. In fact, the analysis of the environment needs to feed all planning aspects
as well as it should be continuous. The internal environment of an organization includes internal
customers or staff, wages, office technology and finance etc. whereas the micro environment
includes the external customers of an organization, distributors or agents, competitors and
suppliers. Additionally, the macro environment includes legal and political factors, sociocultural
forces, economic forces and technological factors.
Political Factors
These are forces that tends to be altered by the influence of government on the infrastructure of
country. The political factors may involves environment regulations, employment laws, tariffs,
tax policy, trade restrictions, political stability and reforms. Emirates airlines is a state-owned
airline from UAE, which has operations spread all across the globe. Airline industry is very
prone to the political factors as government is always try to keep the passenger’s safety the
utmost priority. It is not only about the customers for which government can affect the Company
business but also if the country from where it is based has any rivalry with the country where it
wants to operate. It can create a lot of risk for the emirate airlines. Moreover, the airline is a
subsidiary of the Emirates Group which is owned by the government of Dubai’s Investment
Corporation of Dubai, so it is very natural that there is a lot of government influence on the
airline strategic decisions.

Economic Factors
It presents a great opportunity for the Emirates airlines to expand its market in north and South
America and venture into the Europe and Asian markets where airline market is growing at a
rapid pace. One of the most important components affecting the business of Emirates airlines is
oil, the fluctuations in oil prices make the condition very volatile for the company to work in.
moreover, the company is not being able to recover completely from the global slowdown
happened in the year 2008. The disappearance of the Malaysian airline has also created havoc in
the industry and people began to question whether the airline travel is as safe as the airlines
claims it to be.

Social Factors
The culture or social influence on certain businesses vary from country to country. It is
significant to consider these factors. The social factors includes safety and health consciousness,
various demographics, population growth rates and cultural aspects. Most of the people wants to
travel in the airplane but earlier the high prices made it impossible for the middle class family to
travel in planes but the heavy competition in the airline markets led to a huge cut in the prices of
the airline tickets and thus make it possible for the middle class people to travel in planes.

Technological Factors
Notably, technology is one of the most important way of being competitive in the highly
competitive market arena. Emirates, like any other airline, is dependent on good technological
advancements. Technology in today’s world is changing so rapidly that any breakthrough
innovation has now first mover advantage for only 2-3 years, means in 2-3 years the new
technology can make the breakthrough technology obsolete. However, In line with its strategy of
heavy investments into infrastructure, Dubai built International Airport Terminal 3 exclusively
for the use of EA at a cost of $4.5 billion — the largest building in the world by floor space, with
over 1.7 million square meters (18.4 million square feet) of space. Dubai developed heralded
hotels, world-class entertainment and major sporting events to become a major tourism
destination. By 2013, Dubai also became a hub for information technology (IT), media and
finance, with industry-specific free zones Dubai Internet City (with IT firms such as Oracle,
Microsoft and IBM) and Dubai Media City (with media organizations such as CNN, BBC and
Reuters.

Legal Factors
Legal factors involves the certain laws and regulations which might effect on the business
operations of an organization. It also includes impending and current legislation that tends to
impact on the industry in areas including competition, employment, safety and health. The
Emirates actions and various operations are legal and arranged to allow the customers to arrange
safe and secure flights. The exceptional trip has made the highest standards and is concern about
the different policies regarding competitions, law, and health and safety concerns.

Environmental Factors
Emirates is concerned about the various environmental factors. Airlines services must need to
encounter or consider the environmental change. The climate or immediate weather condition
affects or may influence the credibility of airlines service. The new services launched by
Emirates are recyclable cutlery which has enabled the passengers to get attracted to it. People
are now demanding that companies purchase those aircraft which consume very less fuel and if
possible, run on a greener fuel. It is pleasure to say that Emirates is ensuring to purchase the
world’s most fuel-efficient aircraft and it has the world’s youngest fleet on its arsenal. It has
purchased the Airbus A380 aircrafts which are among the quietest aircrafts in the world.
Emirates also ensure that their economy class blankets are made from 100% recycled plastic
bottles.
Porter’s Five Forces Model of Emirates Airlines:
Porter five forces reflects the competitive environment of an industry. It is a strategic tool that is
used to avoid or minimize the risk of losing the competitive edge that the organization has and to
ensure the profitability of the products in the long run. The company holds its vision closely as it
allows them to orientate its innovation in terms of choices regarding the investment and
strategies. Within the industry the businesses profitability is dependent upon the following
forces:
 Competitive rivalry
 Threats of new entrants
 Threats of substitute
 Bargaining power of suppliers
 Bargaining power of customers
These forces determine an industry structure and the level of competition in that industry. The
stronger competitive forces in the industry are the less profitable it is. An industry with low
barriers to enter, having few buyers and suppliers but many substitute products and competitors
will be seen as very competitive and thus, not so attractive due to its low profitability. The
outcome of Porter’s 5 Forces model of Emirates is given below:
 Threats if New
Entrants
(Low)

Power of Suppliers Industry Rivalry Power of Buyers

(High) (High) (Low)

Threat of Substitute
(Moderate)

Threat of new Entrants

It is in the favor of the companies that exist in the market to create barriers for the new entrants
to prevent them from entering into the industry. The organizations could be the new companies
or the companies that are planning to diversify itself in the market. The barriers can be both
industrial and legal. Airlines industry has high entry barriers as the start-up cost is substantial. In
addition, entering the industry requires taking government’s approval as well as fulfilling the
requirements of aviation association. Therefore, Emirates airlines is facing low threats of new
entrance.

Bargaining Power of Buyers

The buyers having strong bargaining power can highly influence the profitability of the suppliers
operating in the market by imposing condition that are not much favorable for the suppliers in
terms of price, quality or service. Therefore choosing clients often become crucial for the
organizations as to avoid the situation of being highly depended on the buyers. The level of
interest and concentration of buyers toward the product gives them more or less power. Buyers in
the airlines industry can’t exert any significant control over the charges imposed for airfare.
They have influences in the prices, by opting for other airlines, charging lower airfare, however,
the demand for quality is the central part for customers of Emirates. Since Emirates has
established its images as a quality service provider, the customers are willing to pay higher price
that other no frills airlines.

Bargaining Power of Suppliers

Powerful suppliers possess more power to capture significant value for themselves by demanding
high prices while limiting the quality and the quantity of the product or services or by
transferring the cost on the participant of the industry. Many condition imposed by the suppliers
generally include the increase in price while compromising the quality and quantity.
A bargaining power of a supplier in the market is strong if:
 It is more concentrated than the industry it is selling to.
 It is not heavily relying on the industry for its profits
 If the participants in the industry have to incur high cost for switching suppliers or the
firms are located adjacent to the suppliers manufacturing facilities.
 The product being offered by the suppliers are highly differentiated.
There are only two leading companies that are manufacturing airplanes for civil transport usages,
namely Boeing and Airbus. The low number of suppliers exist in the aviation industry leaves
ample opportunity for the suppliers to show limited flexibility in the price structure, while
maintaining high bargaining power.

Threat of Substitute Product

Substitute products are an alternatives that are available in the market at comparatively better
prices. Such products prevail due to the technological and innovative advancement. Due to
which the products being produced by the companies that are already existing in the market and
is using the same technology are than replaced by the other company’s products that are
comparatively better in terms of price and quality and are being produced from sectors with
significant profits. The substitute products are dangerous as the companies are under constant
threat of being replaced. Emirates airlines faces moderate level of threat to substitute product.
There are other carriers apart from emirates that are providing transportation services to the
people, which can be regarded as a substitute for the customers.
Industry Rivalry
The competition among the firms help in identifying the lucrativeness of an industry where
companies are competing hard in order to maintain their power within the industry . The Emirates
Airline’s competition is moreover on basis of diversity, the development within the sector and
the barriers related to entrance in the market. The competitive rivalry is the analysis of the brands
and the product, its strengths and weakness along with the strategies, competitors and the share
in the market. Even though emirates has the benefits of being the national airlines of Dubai, its
competitors have global presence, necessitating the need to strive for maintaining customer
loyalty through brand loyalty program. Some of the competitors are Qatar Airways, British
Airways, Turkish Airways, and Lufthansa etc.