Competitive Analysis Assignment for HRM Strategies
Question
Question: What are the most effecting competitive analysis strategies in business?
Answer
Introduction
The presentcompetitive analysis assignmentwill review the UAE HRM strategies and policies leading to adverse development and growth. The United Arab Emirates has been identified to develop several unique traits linked to an international business over the past 5 decades. While the region may be most famous for oil and gas production, it has also grown to become a top-ranked tourist destination in recent years. With tourist and investors flowing in from all corners of the globe looking to experience and invest in the UAE, the region’s had to develop accompanying facilities. Hotels, tourist resorts, and world-class air travel services are all service industries that have developed due to the UAE developing its tourism and real estate industries. As per the data collected in this competitive analysis assignment, it has been identified that air travel has been a fundamental factor linked to encouraging people visiting and working in the region. The UAE has set up two very different airlines catering for different clients but ranked as the best in the world.Today, the UAE is home to the Emirates Air Line, ranked No 1 globally, which caters to middle and upper-class travellers and Air Arabia, which is among the largest economy air travel companies globally. Both have registered exceptional growth and development over the past decade and target different clients, thus reducing competition between the companies located in the UAE(Bose, 2018).
Industry Indicatorscovered in this competitive analysis assignment.
The UAE has embarked on several mammoth projects to create iconic tourist attractions that would help the region generate foreign exchange in the future.Thecompetitive analysis assignmentis spear-headed in the wake of the region’s depleting oil reserves, which has triggered the region to investing heavily in tourist attractions. The region has seen several world-class structures like the Burj-Al Arab – Dubai, Palm Jumeirah, Palm Jebel Ali, Burj Khalifa and many other attractions being constructed in Dubai(Kucukaltan & Topcu, 2019). It has resulted in the region developing 2 unique airlines, namely Emirates based in Dubai and Air Saudi headquartered in Sharjah, which also falls within the UAE. This competitive analysis assignmentalso established that both carriers had been identified as the best in their class, each catering to a unique client.
Each airline has developed its unique clients, whereby the emirates target tourist and investor classes while Air Saudi serves as a low-cost airline. Both play a huge role in the region since they serve different clients, which will be explored in this competitive analysis assignment.
Tourisms and Investment Travel
2014 registered 13.2 million tourists visiting Dubai, which is a considerable number oftourists visiting the region. Therewas an 8.5% rise as compared to 2013, and the number is expected to continue rising in the future. The majority of the touristsvisitingDubaihad travelled to Dubai via Emirates due to the company offering special travel and holiday packages to Dubai. Thenumber was limited to tourists and did not take into consideration the investors and business travellers using the airline to travel to Dubai.
Construction Labourand Economy Class Travellers TheEmirates airline discussed in this competitive analysis assignment mainly catered to tourism, high profile investors and business people travel. Air Saudi was also busy catering to Dubai’s huge labourforce and economy travellers to the UAE and other destinations. The UAE has been identified to import 90% of their workforce from Asia and Africa, which keeps Air Arabia very busy transporting the economy class travellers from their home nations to the UAE. Dubai alone accounts for over 5 million workers from Asia and Africa, resulting in a satisfactory number of employees keeping Air Arabiabusy throughout the year. Many of the employees travel to visit their families twice or thrice a year, resulting in a low-cost carrier's requirement to transport them home and back to work.Thecompetitive analysis assignment also affirmed that the UAE is heavily dependent on immigrant labour. The Air Saudi airline has been dedicated to offering low-cost travel to ensure the labour and skilled workers can easily travel to and from the UAE. It thus serves Dubai high labour demand and promotes Air Arabiato be the largest economy class international air travel company.
Both companies offer different services to their customers, resulting in low profits per passenger, but both airlines depend on a large number of clients to generate large profits. With both airlines register record-breaking customer numbers and are capable of registering attractive profits at the end of each financial year.
What are the Industry Driving Forces?
The success registered by the Emirates and Air Saudi should not be mistaken to be coincidental since the airlines were both speciallydesigned to serve specific consumers in the market.Both airlines were created to target different client budgets, eliminating competition between the two companies and allowing each to target their own unique clients. The main drivers linked to the successful airline industry in the UAE identified in this competitive analysis assignmentare tourism and the flow of labour in and out of the UAE. Both areas attract considerable numbers oftravellers, and with both companies offering special offers linked to their categories, both companies are registering large client numbers travelling on the airlines.It’s also important to keep in mind that each of the airlines offers a unique proposal that attracts travellers to using those airlines(Cronrath, 2017).
>Emirates Offers the Best Air Travel and Tour Packages
Dubai and the UAE have grown to be the most preferred travel destination during the past decade due to the region undertakingseveral mammoth tourist attraction projects and global unrest in many other markets. Traditionally, tourists made their way to Africa and Asia, but increasing insecurity in many of those nations has left few travel destinations, with Dubai being among the most stable and preferred destinations. Tourists and travellers are also changing their holiday themes from travelling to the wilderness to visiting luxurious travel destinations and attractions. Dubai has managed to capitalize on this market. The Emirates airline has capitalized thisbyoffering visitors the very best tour packages, including air travel, visas, and full board accommodation at the very best facilities. Many tourists prefer this option since they only need to deal with a single company which arranges all the required facilities and ensures the visitors have the very best experience. Dubai being the Emirates Airlines headquarters, also gives the airline another advantage of needing to pay fewer taxes, thus ensuring even more competitive package rates to visitors.
Air Saudi Offers the Lowest International Travel Rates Globally
A 30 minutes’ drive from Dubai is home to another major international airport and headquarters to another major airline, Sharjah. The international airport is the Arabian airline's headquarters, the most economical international airline and serving millions of travellers worldwide. As per the findings of this competitive analysis assignment, the airline was mainly set up to offer low-cost air travel to the large number of employees required in the UAE. 90% of the UAE workforce comes from India, Pakistan, Nepal, and African nations. It has given birth to a low-cost air travel solution to serve the travellers coming in and travelling out of the UAE. While the airline was mainly set up to cater to the labour forces, it has grown to be very popular amongeconomytravellers from across the globe, resulting in the global popularity of the airline. This is because economy travellers are capable of travelling across the globe at reasonable rates, with one condition that is they require stopping over at ShahJah for a connecting flight. Thestopover is also purposely been designed to last no less than 3 hours which results in the individual needing to spend some money shopping at Sharjah duty-free, which results in them spending additional funds while at the airport, which is another source of income.
PESTLE Analysis
It’s important to assess the Political, Economic, Social and Technological analysis linked to both the organizations, thus allowing the investor and public to identify important indicators linked to the industries development and growth(Zahari & Romli, 2019). Each industry’s development is governed by 4 main aspects identified in this competitive analysis assignment, namely:
Political
UAE has been identified as among the most liberal economies in the region, which has attracted many investors. It is demonstrated by the strict regulations linked to quality, cleanliness, and political security in the region, which attracts tourists, investors, and skilled employees to the region. Both the Emirates as well as Air Arabia, owe their success to the region’s stability which is the main ingredient linked to any economy, business or organizations achieving success. As per the competitive analysis assignment findings, political stability has been a very important aspect linked to the airlines’ success and must be maintained if the two airlines intend to continue achieving success.
Economic
The region also requires some important economic benefits for the investors since these are the aspects that attract the investors to the regions. The UAE has been noted to be the most aggressively constructing nation globally, and this is due to the region preparing for the future when old reserves may run low. To replace the income generated from Oil and Gas, the UAE has embarked on radical construction projects to create new sources of income before the oil and gas reserves are exhausted. Tourism and real estate have grown to become the main choice for the UAE where extravagant tourist attractions have been undertaken in recent years. The region’s ability to undertake such extravagant projects has also attracted the wealthiest tourist, travellers, and investors. In this competitive analysis assignment we confirm the rich and wealthy are prepared to invest in unique projects such as the Palm Islands.
Social
Unlike many Arab nations that have grown to lock out the western world, the UAE has been noted to embrace and target Western tourists and investors who get attracted to the region. Offeringfavourable and acceptable hospitality and social behaviour has resulted in many tourists from across the globe opting to visit Dubai and the UAE on their holiday and travel trips for business and as investors.It’s critical that the investors feel comfortable and happy while travelling to a region since this will provide them with the comfort they require to enjoy their visit. Offering a positive social attitude is also very important towards attracting investors to the region since investors too want their investments to remain safe gain value, thus making the region an attraction and beneficial to the investor.
Technological
As per research findings in this competitive analysis assignment, technology has grown to be a part of most people’s lives in the 21st century. This has resulted in making the airline industry deliver the same to its customers to remain connected. It meansthat the airline had to adapt to the latest technologies and offer modern communication techniques, which keeps them connected to the customer at all times. A simple example can be viewed as the ability to download boarding passes and use digital e-tickets while travelling, which reduces the requirement for an individual to carry paperwork and can simply use their smartphones and other mobile devices to transmit the information.
SWOTanalysis
While it’s clear that the two companies do not compete with each other as they target totally different consumers, they still remain highly competitive against international competitors. Both airlines specialize in specific customer groups that are very important as they allow them to concentrate their efforts towards building their own market monopoly without interferingin each other’s work. While the Emirates airline has targeted luxury clientele, Air Saudi has turned its attention towardsoffering economy travellers the best travel experience at the lowest price. To understand both the organization's current statistics in this competitive analysis assignment, it’s important to perform a SWOT analysis that will help deliver clear information linked to the companies(Stopka et al., 2019).
trengths
Both companies are located in a major economic zone which has grown to become a major global tourist and real estate attraction. It has resulted in a huge amountofforeign exchange flowing into the UAE through the two airlines allowing them to capitalize on different social and economic groups. Thecompetitive analysis assignmentidentified that one airline targets the rich and the super rich. The other caters to the global economy traveller who constitutes a larger percentage of air travellers.It results in the company being able to tap into different economic markets resulting in bigger profits.
Weaknesses
Each of the companies has targeted an extreme client, which has left out the middle-class client without a proper air travel solution to the region. It has resulted in middle-class consumers seeking air travel from other air travel companies across the globe. While the UAE has recently turned its attention towards addressing this category of air traveller need by setting up the Etihad airline, many middle-class consumers still opt for other international careers to travel to the region. Another major weakness linked to both airlines is the requirement to visit their headquarters to get connecting flights which results in long delays.
Opportunities
As the international population becomes more stable in terms of finance, the ability of people to afford to travel on holiday and make investments in prime property is also increasing. It has resulted in the UAE offering very attractive opportunities to the traveller as well as the international investor who is capable of investing their extra finances in the UAE and expecting to secure huge returns from the investment. The UAE is offering high investment returns and stability in the ArabianPeninsula, so more investors will turn their attention towards the UAE simply due to the high returns they can expect from the region.
Threats
Thecompetitive analysis assignment will not be complete if the threats associated with the venture are not reviewed. The UAE has demonstrated global investor interest in real estate, which has led other nations to act in a similar manner and develop their projects. Nations like China are major competitors and are the leading developing nations; investors also want to invest in real estate. China can also create similar investment and tourism and travel solutions to attract investors to the region. Therefore, the two airlines must make sure to offer the very best services to retain the consumers and investor interest in the UAE, which will benefit all the stakeholders linked to the region(Kwoka & Batkeyev, 2019).
Porter’s Five Forces Model
With competitors attention being attracted towards the UAE and all affiliate stakeholders profiting from the region, it has become important to perform a Porter’s Five Forces Model analysis to determine the forces which could distract the regions success story and growth, leading to complications. It is especially important after the recent Middle East economic crisis, which also seemed to blow over as stakeholders come together to resolve the threats and get the UAE and all affiliate business back on track. Airlines like the Emirates and Air Arabia are also affiliated stakeholders to the success of the region; thus, the Porter's Five Forces Model will help analyse their performance(Adelakun, 2020).
Threats from new entrants
Every business faces a threat of new entrant to the market, but in the case of the Emirates and Air Arabia, this is neither a major concern nor threat due to the airlines’ already having their headquartersin the UAE, which results in them dictating the air control regulations. It also means that Dubai and Sharjah are the home base for the airlines resulting in every flight of theirs needing to connect to the headquarters before being forwarded to the next destination.In this competitive analysis assignment, it was identified that these are government-controlled industries, making it difficult for new players to enter the industry.
Threats from substitute products and services
As mentioned earlier, each of the airlines targets a specific group of individuals, with Emirates targeting the rich, while Air Arabia is targeting economy travellers. But the middle-class traveller is a group identified in this competitive analysis assignmentthat is expected to grow larger in future. As more people grow economically stable, there is an increasing demand for middle-class air travel facilities. EtihadAirline has taken over a large number of middle-class clients who would have opted for one of the two airlines. The inclusion of a third airline to cater to the middle class has negatively impacted the two airlines to a certain extent.
Bargaining power for customers/ suppliers
Both airlines have managed to deliver high-quality services to the consumer by targeting different social groups, thus securing different client markets. While one is not keen on bargaining, the other is the economy traveller and always looking for the best deals and lowest travel rates. For the consumer, ticket prices are determined by the duration their tickets are booked, with clients willing to book in advance being capable of securing better air travel deals. The airlines also offer different air travel packages and rates at different seasons, allowing the clients to opt for the cheaper fair in all seasons.
Competitor rivalry
While both airlines serve the UAE, this competitive analysis assignment identifies a threat coming in as the third airline that targets the middle classes. At present, there are few international flights entering the UAE simply because Emirates and Air Arabia both offer unbeatable packages for travellers and all visitors to the region. But the entry ofEtihad has been noted to disrupt the two airlines previous smooth flow as business travellers turn to this airline which offers competitive rates and shorter waiting periods during transit.
Industry Attractiveness
The air travel industry has remained very attractive since its establishment as it is the only mode of fast intercontinental transport. Thecompetitive analysis assignmenthas confirmed that the UAE is a major tourist attraction and has attractive investment opportunitiesfor international investors; the region’s air travel demand has skyrocketed. Air travel demand in the UAE has constantly risen since the UAE began developing its tourist attractions and real estate. With the region offering a huge collection of luxury tourist attractions and real estate which is doubling its price every 5 years; airlines in the region are also experiencing huge turn over and profits due to the constant flow of tourists, skilled workers and investors to the region(Hermina & Saudi, 2020).
It has resulted in the region continuing to register a huge growth in the different industries even after the recent economic slump due to the well-planned and arranged development plan, which resulted in all stakeholders contributing to the industry to ensure it remains functional successful. The combined effort towards development and the achievement of success have led the stakeholders to make sacrifices to ensure the industry's long-term prosperity. The combined effort has had a serious effect on the management of the financial crisis experienced in the UAE in the recent past. As quickly as the skirmish started, it also ended since each stakeholder made the required adjustments to ensure the economy remains functional and continued experiencing growth and development.It also included the airlines and travellers in the region where it was recorded by the two airlines that rather than there being a scare, the tourists and investors scattering from the region, the news actually attracted more tourist and investors. The fresh influx of capital and foreign exchange plotted on this competitive analysis assignment has resulted in stabilizing the financial crisis.
The action also demonstrated to the international community and investors the unity of stakeholders linked to all UAE's development projects. It is quite clear since the region sees the richest real estate investors and wealthy tourists visiting the region resulting in the region having a very wealthy wallet to turn to during times of financial crisis. With real estate in the UAE mainly being invested in by the wealthiest people from across the globe, many are also willing to make small contributions to the market to ensure the economy remains stable and their real estate value continues to increase. It results in a long term benefit for all stakeholders, which have ensured the region's airline will continue experiencing huge success as long as the UAE remains stable.
Current Position of the Selected Companies in the Industry
Due to both the Emirates and Air Arabia specializing in different customers,both companies have shown positive growth since the real estate boom began in the UAE a decade back. They continue to dominate the field despite there being a third entrant to the industry. The recent entry of the Etihad airline can be viewed as a threat, but it’s truly part of the team and has also been well-planned before being included. With the rising demand for air travel to the UAE, an additional airlinethat would serve the third major city and the international airport, "Abu Dhabi", was bound to happen. As per the research finding in this competitive analysis assignment, it aimed to prevent any external airline from attempting to set up its headquarters at the airport, which would attract an additional external competitor to the region(Moser et al., 2018).
All the stakeholders are prepared to chip in and ensure their investments and tourist attractions remain functional and appreciate future value. Thecompetitive analysis assignment also identified that Air travel to the regions is expected to continue increasing.Both the Emirates airline as well as Air Arabia have been noted to register huge profits year on year simply due to the consistent flow offoreign tourists and continued investor interest in the region.
Emirates registered an 8.5% increase in the number of travellers in 2014 as compared to 2013, and the number is expected to continue rising. It is due to many tourist destinations worldwide experiencing serious security concerns that are leading many travellers to seek new tour destinations. Travelling is destined to continue, and as more visitors and investors travel to the UAE, more infrastructures will be required to accommodate the holiday goers, investors and workforce. As more people flow to the UAE, the two airlines will continue tapping into this attractive market simply due to air travel demand in the UAE.
The Future Outlook of the competitive analysis assignment
As more investors turn to the UAE's attractive returns, the future continues to look very promising for the region and its investors. As more investors turn to the UAE, skilled employees' demand will increaseautomatically, reflecting on the region’s economy and growth. Each market’s economic growth is greatly influenced by the way the stakeholders react to the different situations being experienced in the economy.As per this competitive analysis assignment, maintaining peace and stability is vital to ensure a stable economy even during times of hardship. Stakeholders should contribute and help the economy to be back on its heels to prevent further economic pressure.
The ability of the community to come together and address different problems has been experienced in several markets globally where united economies have managed to overcome even the 2008 global recession. In 2008 severalairlines and economies experienced serious losses due to their investors and stakeholders panicking and withdrawing their financial investment leaving companies and economies at a major loss. Certain companies and economies, especially in Asia, were noted to overcome the economic crisis without realising, there was a global problem. Countries like China, India and the UAE all passed the 2008 economic crisis without experiencing any major complications simply due to the investors in those markets remaining faithful to the economy despite there being an impending economic crisis(Yang et al., 2018).
The same was experienced by Emirates and Air Arabia, which both had a specific clientele that they targeted and were less reliant on middle classes. Due to Dubai being reliant more on the richer classes who have an abundance of wealth and finances, the economic downturn did not affect Dubai's tourism and investments. In turn, this economic downturn opened up more opportunities as more investors pumped in their investments into projects which offered lower investment during the 2008 recession. It resulted in the UAE continuing to experience stability in tourism and real estate while other nations were struggling to cope with the crisis. With a constant flow of wealthy tourist and luxury real estate investors to the UAE, the demand for skilled workers also remains high, allowing the two airlines to continue operation.
While the UAE did not experience the severity of the economic crisis, the airlines did experience a downturn during the initial period when the crisis was announced, but investors also viewed this crisis as an opportunity to invest in the region. Before long, the investors were visiting the area, which restarted the real estate boom, and the economy began returning to normal. The UAE also offers luxury tourism, which results in the tourist visiting the region, not experiencing major complications linked to finances. They continue visiting the region despite there being an economic crisis.
Both Emirates and Arabian airlines were saved due to the attitude and form of investment made in the UAE. Dubai attracted the wealthiest members ofsociety who come to travel and invest in the very best facilities, luxury and real estate. These individuals also don’t feel economic downturns as they already have considerable amounts of income which they can turn to and continue enjoying lifeas usual.
Conclusion
The UAE air travel industry has experienced a considerable amount of success due to well-calculated investment and distribution of responsibilities. It’s clear that the airline industry has been well planned to cater to the different sections ofsociety visiting the region, thus helping reduce competition between the companies but also intensifying the pressure on competitors. With the two airlinestargeting different social and economic groups, they have both been able to grow to be leaders in their own specialization. Today, Emirates is classified as the most prestigious air-travel company serving the rich and famous, while Air Saudi has been classified as the best and most economical low-cost career. Each of these aspects is very important towards the overall industry's growth, and it has only been possible due to proper planning. The well-planned distribution network identified in this competitive analysis assignment is expected to continue as the UAE continues to expand its tourism and real estate industries.
Bibliography
Adelakun, A., 2020. Should Porters Five Forces have value in Businesses today. Computing for Business (BSC) Aston University Birmingham.
Bose, I., 2018. The strategic environment of the aviation industry in UAE: A case study on Etihad Airways. IIUM Journal of Case Studies in Management, 9(1), pp.21-27.
Cronrath, E.M., 2017. The airline profit cycle: A system analysis of airline industry dynamics. Taylor & Francis.
Hermina, N. & Saudi, M.H., 2020. Industry Attractiveness, Competitive Strategy and Company Performance in the Internet Service Provider in Indonesia. International Journal of Psychosocial Rehabilitation, 24(2).
Kucukaltan, B. & Topcu, Y.I., 2019. Assessment of key airline selection indicators in a strategic decision model: passengers’ perspective. Journal of Enterprise Information Management.
Kwoka, J. & Batkeyev, B., 2019. Strategic responses to competitive threats: airlines in action. Review of Industrial Organization, 54(1), pp.83-109.
Moser, S. et al., 2018. The effect of a service provider’s competitive market position on churn among flat-rate customers. Journal of Service Research, 21(3), pp.319-35.
Stopka, O., Bartuska, L., Caban, J. & Kapustina, L.M., 2019. Proposal of the functional system for the airline companies financial situation assessment. Communications-Scientific letters of the University of Zilina, 21(1), pp.3-8.
Yang, S., Ishtiaq, M. & Anwar, M., 2018. Enterprise risk management practices and firm performance, the mediating role of competitive advantage and the moderating role of financial literacy. Journal of Risk and Financial Management, 11(3), p.35.
Zahari, A.R. & Romli, F.I., 2019. Analysis of suborbital flight operation using PESTLE. Journal of Atmospheric and Solar-Terrestrial Physics, 192, p.104901.
