Strategic Management For Fly Dubai

strategic Management For vanish DubaiThis paper explores the existing airwave telephoner flee Dubai in a manner that analyzes and evaluates their new operations and efforts in a manner relative to strategical management. hike up to this, the paper suggests that aviate Dubai is still relatively young in the food food merchandiseplace and requires a signifi guttertly much(prenominal) amount of carry aside before it domiciliate be labelled as competitory with other(a) companies in the industriousness- namely, Emirates habitualizelines, Etihad Airlines and Air Arabia, SAMA, NAS in Saudi Arabia.The commencement exercise piece of music of the paper comprehensively analyzes the air industry at the present, and this serves purpose to gain knowledge close to the competitor and the mart before a constructive and logical compendium gage be made about pilot Dubai. Therefore, every Coperni advise(predicate) pointors such(prenominal)(prenominal) as the externa l environment, internal environment and Porters Five Forces atomic pattern 18 discussed.The second begin of the paper is transportly relative to go away Dubai as well as their chief competitors in the industry. Here, certain Generic strategies argon analyzed and proposed to indefinitely dish the caller-out gain a competitive advantage. A nonher important framework we commit is the product Growth Matrix, which analyzes the situation that they atomic number 18 facing, and we fill proposed that they mathematical function Market Development.Ultimately, the paper ends with a conclusion and recommendations, which we believe would better(p), abet go away Dubai. dowry 1- Industry compendIntroductionThis paper is cerebrate on developing Strategic Management for a study common aviation company and their intricacy into the industry with a new outline to give them a competitive advantage against their competition. Unlike a production line plan, a strategic management foc i ntents on the two major factors that a notwithstanding scheme of descent nurture for the relate industry, and the company. Since the union judge of a telephone line is generating acceptable returns, this paper concentrates on the methods that they particularly went by means of in launch to achieve it.Although strategic management is increasingly important for the victor of products, it is as well important to pass on that the industry is swiftly ascending with clear ideas continu ally making a consumers life relatively easier and more than(prenominal) pleasurable. A service of process- basebornd business is extensively labour-intensive, and to cuckold the service requires an excellent business development team and thitherfore, it is to a fault necessary to productively market your utili distinguishes and their skills in order to gain more business.Therefore, in this paper, we result be studying the domain aviation business based in Dubai that only concentrates o n chartering passengers through the use of their diminished cost carriers. This company is known as Fly Dubai. Our Strategic Management analysis exit conclude theories and frameworks unremarkably apply in the corporate world today such as pestis Analysis, Competitor Analysis, SWOT Analysis, Porters Five Forces, Porters Generic Strategies and many more. Ultimately, we ordain establish a spell of results and based on it we will provide several(prenominal) recommendations and a conclusion.Industry TrendsThe line industry in the UAE developed in 1985 when Emirates Airlines was founded after Gulf Air reduced their flight function to Dubai. This is when gallant Ahmed bin Saeed Al Maktoum took action and started the company in order for citizens in the UAE to be able to travel more everydayly. In October 1985, the company flew their premiere routes from two leased skips. Nowadays, many other airlines have emerged in the UAE to remove out with Emirates including Etihad Airway s, Air Arabia and Fly Dubai. (AFP, 2009).Not with standing the increased success in commercial airlines appearing in the UAE, Fly Dubai differs widely due to the fact that it is a cost effective airline. According to Saif Mohammed Al Suwaidi, Director global of GCAA said Air operations in UAE so signifi jakest maturation in the first quarter of 2010 (n/a, 2010). The Middle due east Business air designer Association (MEBAA) has confirmed that the number of business jets in Middle East realm have bountiful to about 500 aircraft in the prehistorical few geezerhood showing a growth of approximately 30-40%. push to this report, the Aviation industry is expected to grow at 15-20% annually everyplace the neighboring four years to become a multi-billion dollar industry. It as well as assumes that from the year 2012-2018 the MENA region will receive 20-25% of the new business amounting to about 300 billion. (n/a, 2009).PEST AnalysisThe first general method, which is commonly use d in the analysis of the external environment, is through the PEST Analysis. It is increasingly important to understand the nature of external surroundings as they inevitably tackle a major role in effecting the companys operations. Fly Dubais PEST projections shadow be seen on the next page.FactorDescriptionImplications on the Aviation IndustryPolitical paltry government interventionSupports foreign direct investments which leads to political st talentIn regards to locally owned companies, the government does not intervene and actually substitutes their operationsInvestments help oneself increase the countrys gross domestic product which is well-disposed for the governmentEconomic flash over the past few years has led to more beStable interest rates and no taxesRise in GDP and disposable incomeGCC unemployment rate had decreased from 12.4% to 10.5% (McGinley, 2010)Inflation has led to gameyer labor and operating cost, notwithstanding also shows the expansion in the UAEThis has led the business being able to borrow more without the fret of taxation and increased costThe countrys growth in GDP and disposable income mean that consumers have more money to spend on Aviation serviceThis gives a positive sign to increase liquid state in the market.Socio-culturalGrowing social trend in the Aviation industryYoung workforceLow cost appeal (n/a, 2010).Increased number of tourismMore people argon using chartered service which indicates an overall industry growthA younger workforce will reduce costs for pensionsBecause of the recession, people have decreased their spending by allocating cheaper airlinesTourism will increase by 40% in next 3 years. (n/a, 2008)TechnologicalNew plane models available in the marketBetter operational technology scienceOnline bookingThese models which companies have ordered make headway them more competitive as their service is more desirable by having modern technologyBusiness operations can point crease little as technology hel ps them reduce costs and mitigate quality of the serviceLCC dont focus on gross revenue offices for lowering their costs ,so they focus on their website and make it more efficient for them and clinets.Strategic Group MapAs we can see from the graph above, the two measurements we have chosen for our strategic group map is product quality and price. The graph above shows us that Emirates airlines and Ettihad airways have the biggest market shargon and they atomic number 18 competing against from each one other. As Emirates Airlines proclaimed in their website, that they aim to increase their market sh ar to 70% by 2010 without compromising their reputation for quality. (Emirates, 2010). Although they dont start from the same point, scarcely Ettihad Airlines are nerve-wracking their best to compete with Emirates by giving intermit digests and prices to same destinations, so people got attracted and didnt mind the 45 minutes drive to Abu Dhabi for the same assortment of qualit y and cheaper prices. Now these two companies are indirect competitors for Fly Dubai. The major competitor for Fly Dubai is Air Arabia, where they launched in Sharjah Int. Airport before Fly Dubai was established. So, people were aware of Air Arabia and tried the experience of flying on a low cost carrier. Thats their major competitor, and they have other competitors but from different countries such as, Al jazeera airlines where they are based in Kuwait, and Fly Nas and Sama airlines where they are based in Kingdom of Saudi Arabia.Five Forces AnalysisMichael Porter, the man scum bag the theory of specialisation states that a business ineluctably to spend more money on creating these values added products or go in order to make it relatively obvious that the product or service is different. (Cordle, 2008).Michael Porter developed the Five Forces Analysis, which primarily helps companies in transaction with internal and external competition from guests and suppliers as well as f rom other competitors. It also establishes the risk of the current product or service fractureed. This is all incorporated into a diagram, which is illustrated at a lower placeThreat of new entrants product differentiation Medium as the aviation industry has been quite innovative on product development and has used all the ideas available- however they have also proven to be strong competition and adapted similar features as well as their own unique features.Capital requirements advanced as the technology used is constantly changing, developing and growing which would justify the charter for high capital technological assets and new aircraft modelsCost advantages independent of size of it High as costs in general vary depending on how large the establishment is, how many stave members are employed, and the amount of customers that use the run or procure the productsAccess to distribution channels High as the airline companies can acquire customers through different means suc h as the internet, travel agencies, gross revenue calls and from their own officesAfter this analysis we can see that the little terror of new entrants is low because the industry is leaden to enter. talk terms tycoon of buyersConcentration of purchases High as the amount of purchases is decided by the buyer and ultimately determines sales revenueAlternatives and substitutes High as on that point are a large amount of carriers that consumers can choose from and all have door to expenditure or cost sensitivity High as consumers would generally select a business that offers a ordinary otherwise cheaper price for the same productsImportance of quality High as consumers have adapted to a certain taste and they constantly appraise product quality and customer service to determine their buy sum up of money saved by consumer High especially during the financial crisis where nest egg and survival is has grown to be extremely important. (n/a, 2009).Here the bargaining power of buyers is high.Threat of substitute products outlay limitations Medium as this affects the highest amount they are able to charge to consumers and ultimately demonstrates the amount of revenue they will makeAbility to upgrade High due to the rapid advancement of technology and the introduction to newer models of aircrafts from different companiesCosts in production Medium as technology can enable cheaper production but they still employ a large amount of staff in the regionPrice of substitute High as this can negatively affect each companies sales growth if another company gains customers due to cheaper prices- this ultimately seems to wellbeing Fly Dubai more due to their cheaper pricesPerformance and quality Low as Low cost carriers are new companies that only started up a few years ago and their scope in the business is low. That is, they do not fly to many destinations and they do not have a wide customer base at the moment. It is high for companies such as Emirates as they have expe rience, and their high quality brand name and work is difficult to matchHere the threat of substitute products is break.Bargaining power of suppliersLow cost carriers purchase their complete air expire from suppliers such as Boeing and Airbus. They then hand this to third party companies to input fun systems and furnish the interior for the different classes, which ultimately create value-added amenities by using this method.Here we can see that the bargaining power of suppliers is ModerateRivalry among competing firmsNumerous competitors High rivalry as each company is trying to capture the same fanny market and whence use their advertizing, marketing and promotion techniquesIndustry growth High-the market has shown that this industry has grown significantly over the years and more people are gaining access to travelling specialism Medium as there is only a limit to the innovation that can be done on an airplane. However, Low cost carriers have incorporated many other compone nts on their plane such as entertainment, shopping and many more.Amount of fixed costs This can be determined by factors such as rent, earnings and capital expenditure. From this, we can say that it is high.Height of exit barriers Low for Low cost carriers as they control a relatively microscopical market share, but it is high for Emirates and Etihad who have a vast number of customers which they run to.Here we can see that the Rivalry among competing firms is Moderate/high.In conclusion, we see after analyzing the five forces, we can say that the market is moderate to high, which is lowering to get in because of the difficulties, high starting cost and the experience indispensable to enter to airline industry.Core Competencies/Key Success FactorsA core ability is defined as a companys basic business and sweep of greatest expertise that provides consumer benefits, not easy for competitors to imitate and can be leveraged widely too many products and markets. (Campbell Luchs, 1997) Essentially, a core competency should strain three thingsConcrete on the popular destinations to expanded their market.Significantly improve the bonding attributes.Availability / SchedulingTerminal / Ground workPriceReputationProve to be challenging for competitors to imitate their cost leadership strategy.Based on this, airlines would have three major competencies to gain a competitive advantage over each other in the region.The first core competency that low cost carriers will have is related to their prices, which is significantly cheaper compared to other airlines in the region. To accomplish this, they will extremity to give away and analyze their operations and costs thoroughly to see where they can minimise their costs so that their low fares will not disrupt their ability to generate profit. This will give them a competitive advantage, as customers would privilege low cost airlines, and retain their subjection to the brand.The second core competency they will pass additional operate to customers. Generally, people associate a low-cost airline with no service- but Low cost carriers will differentiate them here and offer a special service by adding additional costs for the service.The last core competency will be the vast variety of destinations they travel to. Although the companies are still relatively small now- they will eventually expand and fly to a large number of countries in the different regions which will attract more people to use their service for less cheaper price from the other airlines.Industry Environmental gazeExternal Opportunities and ThreatsOpportunitiesLack of price competition in the UAE market Since closely of the airline carriers are relatively high in costs compared to others in the world, local air carriers do not engage as actively in price competition. Fly Dubai however has started with this.Potential to attract clients from the accurate region Since the other airline companies in the GCC do not ofttimes fly internationally to popular destinations, the local air carriers in the UAE can attract them as they do fly to these areas.Expansion into international markets out-of-pocket to their value added services and state of the art planes, they appeal more to customers and consequently if airline companies in the UAE situate themselves more internationally, they can gain more customers.Contract to corporations and exe contendives The airline companies can further increase the amount of frequent flyers and gain more revenue by targeting companies that are situated near the GCC. In particular, multinational companies are ones that have executives that need to constantly travel, and thence they can take advantage of this situation.ThreatsIncreasing costs in the aviation industry Due to the increase in technology and the value added services they provide, costs have become increasingly dear(predicate) for the aviation industry. Furthermore, the costs of labor are also quite high which adds to their total expenses. dearth of skilled labor In some areas, the aviation companies here inadequacy skilled labor to perform certain tasks such as aircraft engineering and maintenance, marketing and other activities. Emirates is the only company who has skilled employees in these departments whereas others are not as efficient.Damaging impacts on the environment The e direction of ascorbic acid and greenhouse gases from the aircraft fuel has proven to be detrimental to the environment and because companies need to be aware of this and somehow prevent it.Falling prices In certain industries such as real estate, prices have fallen drastically, and this leaves corporations with less money to spend on services. As a result, companies have cut back their traveling costs.Competitors increasing Due to the increasing amount of set-apart zones in the UAE, multinational companies have found it convenient to start their developments in the region as it is low in cost. As a result, there is an increase in competition from other airlines internationally.Industry Internal recordInternal Strengths and WeaknessesStrengthsSupport and patronage from government The UAE government owns and controls all of their airlines and therefore they all gain financial support.Diversified and state of the art planes The planes, which they own, are newer and significantly better than many other airline companies around the world. pop and growing companies The aviation industry consists of the few primary companies offering flights and since their services are relatively good, this improves their brand frame to the population. cherish added services provided to all customers The service incorporated in the UAE airline companies are significantly better than others around the worldMemberships They all have memberships in prominent establishments such as Middle East Business Aviation Association which improves their trustworthinessWeaknessesBased mostly in UAE which limits their in take of customers from abroad and around the region Most of the aircraft companies focus solely on chartering customers in the UAE which limits the potential business they could be makingHigh employee turnover due to low morale Labor laws are constantly being refined in the UAE, as it is still a developing country. Further to this, they require more experience human resources staff in order to motivate employees to enjoy their origin and stay at the company as well as perform highlyBusiness opportunities such as cargo transporting are not always taken advantage of and are expensive The UAE is a business hub and many companies around the world are establishing themselves. However, most of these companies have restrictions so they cannot produce many products and local companies only produce products for the UAE- the rest is imported. This greatly increases the amount of costs as exported goods are expensive, and they do not refer in exporting their own products, which could poten tially earn them more revenue.Part 2- Company scheme AnalysisMission StatementA tutelage statement may be identified as the purpose behind a companys existence. The aim is to create an internal image towards employees and an external image towards the public indicating their intentions of operating the business, as well as what they wish to accomplish. Fly Dubai does not have a mission statement on their websites, but from the words of the chairman (Sheikh Ahmed bin Saeed Al Maktoum), he mentioned the followingOur mission is to bring some two billion regional inhabitants affordable, efficient and pliable travel options to and from Dubai.Nine Essential Components of a Mission StatementCustomersServicesMarketsTechnologyConcern for Survival, Growth and ProfitabilityPhilosophySelf-ConceptConcern for open ImageConcern for EmployeesJudging by the various essential components of a mission statement, it is clear that Fly Dubai still needs to work on developing theirs more. (FARNBOROUGH, 2008).Fly Dubai Generic StrategyEssentially, a company that excels in the industry with exceptional performance that yield significantly larger acquire than their rivals, they are said to possess a competitive advantage. There are two common strategies that allow a company to reach this goal, and this can be identified asCost StrategyNiche Differentiation Strategy (CAPA, 2009).Cost StrategyIn order for a company such as Fly Dubai to implement a Cost Strategy, they need to be able to deliver the same benefits as competing airlines, but should live on under a lower cost. In the research studies on Strategic Management, the resource-based view is a well-established principal that helps a business gain competitive advantage by working on their Value Chain and implementing value-added principals. In the next section, I will describe Fly Dubais value chain, which will allow us to see how they gain a competitive advantage.The Value ChainThe value chain comprises of a number of activitie s that are commonly found in business operations, and is identified as important in gaining a competitive advantage and developing and sustaining shareholder value. The diagram below best represents the value chain and the significant inputs that are analyzed basal ActivitiesInbound Logistics This refers to how Fly Dubai receives their aviation products and services before distributing it.Operations This refers to how Fly Dubai uses their resources and change it into a service. Their resources are primarily their fleet of planes, which are docked at several international terminals, and in this method they pick up and have off passengers.Outbound Logistics This refers to the channels of distribution Fly Dubai uses to effectively sell their flights to customers. They mostly use online booking, travel agencies, and affair customers directly, or customers can contact them via their office.Marketing and Sales This refers to the identification of target markets, which bring Fly Dubai sa les revenue. Fly Dubai carries out extensive market research to reach their customers who are interested in low fairs. Also, they have to create brand consciousness among their customers since they just launched. This step is important to expand their market share. Also, through out their marketing research, they can develop new attractive packages as part of their promotions. It will be difficult to develop large marketing endeavor because most of their money will be as operational expenses. Moreover, sales are more cost effective when they make it through Internet. However, consumers in Middle East region are not used to buy from Internet.Service This refers to the post-purchase activities that ensure customer satisfaction. Fly Dubai issues a questionnaire, which they can follow up with customers on the quality of their products and customer service. Also, they added additional services to their customers such choosing seats when purchasing tickets. Those extra services will add more value to Fly Dubai image. In addition, those services will generate a good publicity for the company through word of mouth.Support Activities star sign infrastructure Fly Dubais firm infrastructure ensures that certain policies and procedures are followed to support the primary activities. Fly Dubai operates from Dubai International Airport, Terminal 2. Dubai Government developed high infrastructure for Dubai Airport to provide excellent services to passengers. Since Fly Dubai full owned by Dubai Government, they have all the necessary facilities under their control. mankind resource management Fly Dubai uses extensive human resources practices to recruit the best employees, and effectively trains them, develops them in certain company positions and finally gives them compensation for their hard work through salaries, benefits, bonuses and motivation. However, lack of experience is major issue in this new company. So, they supported by Emirates Group to overcome this weakness. According to Arabian Business that Fly Dubai has received more than 11,500 applications from flight and cabin crew. (Sambidge, 2009). This shows the Brobdingnagian amount of applicants who want to work with this company because they believe that it has bright next because of the reputation gained from its mother company Emirates Group.Technology development Fly Dubai uses technology to lower their cost by selling tickets through their website www.FlyDubai.com. Adding more features to help customers to print their boarding pass and to choose their seat location by extra fees. Analyzing customer surveys to help with the general support of the company. Their technology is also developed to monitor sales and create functional reports.Differentiation StrategyThe differentiation strategy is when a company can successfully attain in the market while charging premium prices to their consumers for products or services. Essentially, leveraging either a better standard of service quality t owards consumers, or having a better product performance does this. Fly Dubai can be distinguish from other competitors by adding flights to popular destinations that have great demand from their target market. Since their market is fragmented, differentiation is important to attract more customers and to expand their market share.There are several different ways in which Fly Dubai gain a competitive advantage in this way. It is renowned that they offer a great airline service along with the most state of the art amenities and technology for all classes, and people gather such instruction when a company expresses their differentiation. The company does this in a number of ways, and this includes grass AwarenessFly Dubai can use extensive advertising techniques in order to penetrate the aviation market and create a higher(prenominal) demand for their services. Firstly, it is important to note that Dubai is one of the fastest growing tourist destinations in the world. Their rapid ex pansion in major industries has led them to overlook the tourism market.Business OperationsAnother method, which Fly Dubai can use to gain a competitive advantage through differentiation, is by offering cargo services, freight and logistics, engineering services, and plenty of other subsidiaries which associate these services with the company. Therefore, this reflects positively on the brand name.Service QualityFly Dubai has won recognition for their high service quality. They spend extensive amounts of their budget on the development of human resources, which ultimately leads to a better service quality, and this improves customer satisfaction.Value Added FeaturesFly Dubai has a number of value added features, which basically offers them more for the money they spend when flying with them. Firstly, they have a service staff, which is guaranteed to channelize every customer they serve. These features contribute to customer satisfaction and improve loyalty in the long run.Marketing MixOne of the prime theories of analysis for a business includes analyzing the market in several terms that would help them identify ways in which they can improve, but more importantly creates a structure in which a company can base their product lines on. This is known as the marketing mix or the 4 Ps as it generally covers the following four factors- products, price, promotion and place.Product The product entails analyzing the services that Fly Dubai currently offers to their customers and how it meets their demands. They are a public aviation charter service that flies a target market of consumers to a number of countries.Price The type of services that Fly Dubai offers generally have a high cost margin as they are using modern technology along with the most knowledgeable staff to carry out their operations. Therefore, we can establish that Fly Dubai uses a cost-plus pricing approach where they charge the cost of the operation plus a mark-up for their services.Promotion Curre ntly, Fly Dubai uses many major forms of promotion, and they generally rely on loyal customers and repeat business to make their profits. They consider various forms of advertising through media sources such as television, radio, newspaper, magazines, cinemas, and Internet.Place Their operations are run from their primary location, which is in Dubai, UAE. Although they are currently quite profitable and the industry has witnessed a large amount of growth, they have room for expansion in the UAE and other GCC countries as a start. Dubai is quickly being recognized as a business hub and Fly Dubai can exploit that market to be competitive and increase their overall profitability.Competitor AnalysisWhen developing a Strategic Marketing strategy, it is always important to identify the main competitors and beat out information about their services and how much of a threat they are to your company in the market. The most efficient way to do this is to compare their marketing mix with Fly Dubai, which is seen belowEmirates Airlines (Indirect)Etihad Airlines (indirect)Air Arabia (direct)ProductThey offer a range of flights to various different destinations and have a luxurious brand to speak of. They also have cargo point that is widely used by corporations.This company offers similar services to Emirates but they do not focus on luxury and are limited to flights. Etihad has cargo services but the division is relatively smallThey offer similar services to Fly Dubai in terms that it is cheaper- but they are still more expensive. Furthermore, Fly Dubai has better planes.PriceEmirates has the most expensive prices in the region but they justify it due to the high value services that are offeredThey offer slightly lower prices than Emirates but their aircraft fleet is very limited and their services are less desirableTheir prices are comparable to Fly Dubai, but their services are not as goodPromotionEmirates advertises extensively and has many marketing promotions whic h is seen throughout the mediaThey