Case Analysis: United Airlines Inc.

Introduction

Emirates Airlines is one of the major multinational companies that have been dominant in the industry from time immemorial. The line of operation for the company is the provision of the airline services where it has a global network of airline destinations to every continent and probably to numerous countries across the world.  The company’s headquarters is Dubai. According to the recent statistics, the airline company is deemed to be the largest in the Middle East regarding the aviation industry.  This notion has been strengthened by the fact that the firm has the highest number of airline destinations than any other airline in the industry (Schmidt, 2008, p.89). The main competitors of this airline company are the Etihad Airlines, the Air China, and the Qatar Airlines.  These competitors have come up very strongly in this industry which has made the company to be very proficient and very smart to maintain this top position.  As it stands now, the company is deemed to have a high standard of reputation regarding the long-serving company concerning the provision of the airline services, and this has made to gain a larger clientele base for which it enjoys up to now (Schmidt, 2008, p.192).

Currently, Emirates Airlines Company operates in various stratified hubs which help it to management its traveling routes in and outside the Dubai. One of these hubs is the Dubai international Airport.  On the account of the financial statistics, the company is seen to have a high fleet size of 234 (Mainline only).  It has 164 airline destinations. The company recorded high revenue of $ 18.901 Billion and an operating income of $ 1.737 Billion.  The net income for the company stood at $ 1.132 Billion which was a 16% increase from the previous year. Regarding the net worth of the airline King, the company assets amounted to $ 27.353 Billion in the year 2014 while the total equity in the same year stood at $ 1.396 Billion. The company as at now has over 56,725 employees who are working day-in-day-out to maintain the high level of profits and revenues for the enterprise.

External Analysis

PESTEL Analysis

Political

 The key political concerns that influence the operations of the company globally include: the government regulations that the business has to comply with while accessing the various destinations in the different countries across the board. As it stands now, the company is seen to have a high level strict political ambiance in the various countries that it goes. Various travel advisories that the governments always pose in many occasions makes it tough for the company to penetrate the different markets, especially from the emerging markets (Mayer, 2003, p.97).  This notion has been strengthened by the fact that the political instability that could in various countries where the airline has postulated to be their airline destinations makes it very volatile for this company to gain access and even earn some revenue from the same

Economic

 Emirates Airlines Company has been facing economic growth in all its countries of operation since 2010. This has been observed in its mother country too, with the result that the company has diversified its range of airline services which entails economy, the VIP class, and the standard class. Additionally, the company has tried to increase its advent of air destinations to reach as broad clientele base as possible. It is projected that with the relatively constant inflation rates in recent times, the company is set to grow even further regarding profitability (Cento, 2009, p.113). The diversification has also continued to boost the company economically since each customer’s needs are well addressed.

Social

With regards to airline services, the key social concerns faced by the corporation in globally are age distribution and safety concerns. To address the age distribution issue, the company offers services for use across all ages due to its diverse services range. While the business women and men are capable of getting economy airline seats for traveling which they may be interested in, the high-class persons are not left out since they can enjoy the VIP seats that fit them well (Cento, 2009, p.33). Moreover, the primary concern about safety would be the possibility of causing injuries during traveling in these airplanes. This issue has been addressed through the inception of the state of art safety gears in the planes in such a way that their security is guaranteed at each and every point in time.

Technological

 To address the need for technological advancement, research, and development team has been instituted at the company to investigate the needs of potential customers as well as to carry out customer feedback activities with the aim of addressing any issues that may be raised by clients. This team addresses all the technological advancement needs related to the company (Walsh, 2011, p.111).

Environmental

The environmental challenges faced by the firm globally are the need for sustainable service provision, which is also environmentally conscious. Emirates Airlines has been moving towards environmental sustainability through modification of services provision procedures towards more environment-friendly processes. The substitution of PVC raw materials with more biodegradable composites was a critical milestone towards environmental sustainability in this airline company (Mayer, 2003, p.157).

Legal issues

The only legal problems that have been of interest to Emirates Airlines are to do with the size of airports and country business regulations. In some countries, there has been concern that Emirates Airlines airports were significantly large. This issue has affected the operations of the company since they have to pay a lot regarding the rental fees and this notion brings on board the advent of high costs in the company operations (Pahl, & Richter, 2007, p.127).

5 Forces Analysis

Force	ITC	Strength
Threat of Industry Rivalry	The company faces rivalry from many companies due to its diversification into other sectors.	High
Threat of substitutes	There are presently no substitutes for the company products due to brand strength. This can be used to optimize on brand market shares.	Low
Potential New Entrants	This is especially applicable to the inception of small aircrafts.	Medium
Buyers	Many potential and existing clientele base hence the high market shares.	High
Suppliers	Suppliers are not very many due to the high demand for raw materials by the company for making the aircrafts and airplanes.	Medium

From the external analysis, the company faces a mixed industry outlook. This implies that while the company has sufficient strengths and opportunities to remain the leading airline Company with regards to fast and efficient airline transport, they must capitalize on the strong features and the opportunities presented. However, the key threats faced i.e. industry rivalry and potential new entrants may not favor smooth economic growth. Minimizing weaknesses and optimizing on strengths is thus an advisable approach to sustainable growth (Cento, 2009, p.213).

Internal analysis

Every dynamic business needs a sustainable competitive advantage. This is, however, difficult to achieve without achieving service uniqueness. Emirates Airline has managed to develop unique service features which have made the brand stand out among competitors. The resource analysis developed based on the VRIN model brings out an image of a strong brand that is capable of achieving sustainable growth (Pahl, & Richter, 2007, p.197).

VRIN Model

Valuable

The airline services provided by the company to its esteemed customers are tailor made to meet the various clients in every segment.  The parts create the advent of customer experience to be differentiated by the tastes and preferences of the client. By targeting a needful resource of its services, the company has managed to create value which gives it a competitive advantage. Product values have been established to reduce organizational weaknesses (Barney 2006, p.49).

Rare

According to (Pahl, & Richter, 2007, p.187), the price of any resource is indicative of the rarity of that resource. While Emirates Airline services cannot be said to be exactly rare, their quality and brand alliance makes them unique and thus rare. Their prices are similarly indicative of this rarity in their qualities.

Inimitable

The services produced by the company are difficult to reproduce exactly and are inimitable. Crook et al. (2008) suggest that this is a necessary quality for services differentiation.

Non-substitutable

There is a small possibility of substituting the unique services associated with United Airline. This is because of the niche that the company has carved for itself within the airline services category. Services that are easily substituted do not develop sustainable competitive advantage.

 

SWOT Analysis

	Strengths	Weakness
	The company has multinational presenceLarge Market shares are already possessed by the company United Airline was the first market entrantFocus on needful resourcesGreater brand equity in the brand nameEffective advertising through the use of the annual company catalogue.	The service range is too diverse hence marketing cannot target single serviceThe company has been accused of stereotyping during marketing.The company has been accused of biased branding in the past.
	Opportunities	Threats
	The company has not fully exploited the various airline destinations for example most parts of Europe and America	The company faces high levels of rivalryThere are potential entrants to the industry who will offer greater competition.Negative media representations due to various past accusations

Strategic implications

From the analysis of internal and external issues affecting the company’s business, a key area of concern that needs to be addressed adequately is the media representations. Although the media can be used as an influential advertisement tool, it is also possible to be destroyed by the same media. The company should, therefore, find ways of addressing this concern in a way that will lead to a continued sustainable competitive advantage (Hannan, 2014, p.154).

Negative media representations form an important subject to be discussed due to two main reasons. First, the issue has been recurrent due to various accusations that have been leveraged against the company over the years. From ill-treatment of workers, spying on employees to the production of stereotypical adverts, the company has faced several accusations which may be detrimental to their economic growth. It is, therefore, important that this fundamental issue is addressed in a way that not only realizes customer satisfaction but also results in company profitability. Adverse media reports can lead to the reduction of company shares due to their negative influence on the potential clients (BöHm, 2009, p.90). Various strategies can be used to eliminate the harmful effects of the negative media representations. For instance, the company may choose to be silent on those accusations, or they may respond only when necessary. Besides these strategies, they may also decide to address the underlying issues of concern. Eventually, addressing the underlying issues has to give greater value compared to other available options.

Strategic Options

To address the concern of negative media representations, Emirates Airlines Company has various strategies that can be applied.

Option 1: To engage customers about issues of concern

One of the strategic options that the company has is through avoiding engagement of clients on the subjects in which they are being accused. Although sometimes it is essential to offer self-defense, it is important to know that engaging consumers, notably through the use of social media platforms may be more detrimental than constructive. It is possible for other accusations to arise during the process, leading to an even more tainted image. At the same time, the customers may take efforts to reach out to them in times of accusation as lame excuses to be pardoned (Fine, 2009, P.442). It is, therefore, important that the company considers the kind of engagements it is willing to go into and the opportunity costs of such engagements. In addition to this, engaging customers may also reveal company weaknesses to potential competitors hence resulting in an increase of challenges.

This strategy will help the company to address negative media representation through quenching in that without exacerbations in the stories told; the adverse reports eventually die off out of their volition. While this strategy is essential since it leads to the company losing market shares, especially when the negative reports advance past the expected levels. The strategy is, therefore, most applicable where the potential harm caused to the company is minimal or none. This brings out the need to practice this option with caution.

Option 2: To respond to issues only when considered necessary

Another strategic option would be to respond to accusations only when extremely necessary to do so. This is a practice of the first choice but with a lot of cautiousness. The company keeps mom on subjects of accusation and only responds when there is the need to do so. The situations that may warrant responses include when the allegations are made based on misstated facts when the company recognizes that it truly needs to amend its practice and when there is a need to advance customer reviews. Each of these situations requires responses due to their possibility of resulting in adverse impacts to the company (Mayer, 2003, p.167). When facts are misstated, the company can lose market shares and can achieve losses instead of profits. It is, therefore, necessary to counter such misstated facts so as customers’ trust is not misplaced as this influences their loyalty. On the other hand, responding when there is a need to make amends makes the customers aware that the company desires the services of many and is thus willing to change when there is the need to do so (Roy, 2009, p.12).

The impact of applying this strategic option is that it will result in improved company outlook. Emirates Airlines will be able to convince customers that not only does it care about profitability; it is also concerned about the well-being of the employees and the community as a whole. Moreover, this can act as a public relations activity, which can create awareness of the company’s products and thus improve its market shares.

Option 3: To address the issues of concern at the source

The best strategic choice among the available ones is for the company to address issues at the source. For instance, when accused of spying on their employees, the company should carefully consider communicating with the employees to determine the nature of their grievances and thus address their concerns. The objective of doing this is that by addressing the root concerns of the media, the company gets to prevent future recurrence of the same complaints (Rothkopf, 2009, p.198).

Any business that addresses issues is considered bound for sustainable economic growth. United Airlines should, therefore, seek to address the root causes of the company’s negative media reports. The effective action would be to pull off stereotypical adverts and biased company brands (Yu, 2008, p.332). Those who complain about them would then have no further arguments against the enterprise. While this strategy is useful due to its capability of preventing future damage on the same issues, its main limitation is that it does not address the harm already caused in public relations, neither does it inform the customers that the company is taking action on the issue of concern. This makes it possible to lose market shares while practicing this strategy due to its lack of openness (Palepu, 2007, p.213).

Recommended Strategy

After a review of the available strategic options, Emirates Airline is advised to practice selective response in combination with addressing the root causes of the fundamental implications. This combination strategy is the most potentially fruitful in dealing with the issue of negative media representations since it addresses both the cause and the effect. The objective of the responses is to prevent escalation of negative reviews and influence through negative comments. On the other hand, addressing the critical issue ensures that there is no future recurrence of the same complaint (Friedman, 2003, P.31). The chosen strategy is, therefore, beneficial for profitability as well as to maintain high market share levels through customer engagement. It is important for the company not only to work on the root causes of concerns but also to let customers know that they are working on the causes and that there is a promise of improvement. It is only in this way that the company can maintain sustainable competitive advantage (Magretta, 2012, p.312).

Conclusion

Emirates Airline Company has a strong market presence both in the Asian Continent and in the world as a whole. The company receives high industry rivalry even though the threat of substitutes is still minimal. Moreover, the clientele base is deemed to be large hence great potential for economic growth. Despite the company’s strengths such as high brand equity and international presence; and the opportunities available for growth, there is still a challenge when it comes to negative media reports. The company, however, has managed to continue growing even though the adverse reports keep coming. It is thus recommended that the firm should continue engaging customers when necessary while also making sure that issues are addressed at the roots of the causes (Mayer, 2003, p.117). An effective advertisement is just a milestone in the quest for sustainable competitive advantage. The company needs to do more in the media reports sector.

 

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