Introduction

Etihad Airways is the leading national carrier in UAE and Abu Dhabi region. The company offers both cargo and passenger flights indifferent destinations all over the world. The company commenced its operations in 2003 after its establishment by Royal (Amiri) Decree of Abu Dhabi. The company is known to operate over a 1000 flights per week of passenger and cargo in different destinations in most parts of the world which include; middle east, Africa and Europe. Etihad airways have a fleet of 85 airbus and Boeing aircraft which have been very instrumental in the company’s operations(Armstrong &Kotler, 2011). Over the years the company has registered a steady growth both in terms of profitability and expansion. This has made the company the fourth largest airline in Middle East and second in the domestic market of UAE after Emirates airlines.

Etihad Airways Porters 5 Analysis

Porter’s five forces is a critical business analysis tool which was named after its founder Michael E. Porter. This model analyzes five competitive forces that determine the attractiveness or profitability of an organization (Baaghil, 2013). The analysis helps determine the company’s external and internal factors that determine the strengths and weaknesses of an organization. This paper will analyze the five factors one after the other in relation to Etihad airways.

1 Competition in the industry

The level of competition in the industry is a critical determinant of a success of an entity. For instance, if the industry has very competitive firms, both directly and indirectly, then the organization has little power and has to define new ways and means. In this case, Etihad airways have direct competition with Emirates Airlines at the domestic level (Etihad airway 2013). The company is also in competition with other airline service providers such as Air Arabia and Qatar Airways. The number of fleets among the UAE aviation sector increases rapidly. This will force Etihad airways to do the same to remain competitive.

2 threat of new entrants

The aviation sector in UAE is an attractive business venture which has attracted new entrants every year. The dynamics in this sector may end up encouraging more airline service providers that may limit the growth of Etihad airlines(Etihad airway 2013).

3 Threats of substitutes

Recent global recession has had negative effects in the aviation sector. For instance, the many customers may opt to use relatively cheaper flight services due to hard economic terms. Existence of airline companies such as Oman Air and Jet Airways provides cheaper services which is detrimental to the growth of Etihad Airways.

4 bargaining power of customers

If the customers have an upper hand in bargaining, then the company’s profits will decrease significantly. However, it is important to note that the bargaining power of consumers in this industry is low. This is because the passengers always adhere to the prices that the company offers.  Etihad always offers the price for all the flights it offers.

5 the bargaining power of suppliers

Bargaining power of suppliers is also critical in the success of an organization.  The aviation industry has two main players of aircrafts Boeing and Airbus. As a result of this dominance, the suppliers seem to have an upper hand as compared to Etihad. However, the company may opt to buy in bulk which will reduce the bargaining power of suppliers.

Pestle analysis

This is another critical tool in business analysis. It involves analyzing macro environmental factors that determines the success of an entity. These factors include; political, economic, social and technological analysis.

Political: the Abu Dhabi government has always strived to be one of the best five governments in the world. It has therefore provided a political goodwill that has significantly improved the operations oflocal companies which Etihad airways is a member. Etihad Company has also complied with the local and foreign policy makers (Etihad airway 2013).

Economic: the country launched its Economic Vision 2030 which resulted to diversifying the UAE economy from being oil dependent to other services. This has provided a good platform for the Etihad Airways to thrive.

Social: the operations of Etihad Airways have been in compliance with social willingness of the people. The major example of the social responsibility of the company is the partnership of the company with Masdar which was signed in 2009.

Technology:Etihad Airways has embraced technology in most of its operations. This has been critical in ensuring that the company’s services are swift and efficient. Most of the major areas where technology is embraced are the booking process which has been made easier. The company has also adhered with other legal and environmental factors which has made the company a success.

Resource Based View

This is another important business analysis tool. This involves analysis o0f the company’s tangible and intangible resources at the forms disposal. This is important in ensuring the sustainability of the competitive advantage of the company as a result of its resources. The process involves identifying the firm’s potential key resources in an organization(Baaghil, 2013).

Etihad Airways has over several years strived to increasing and creating value for the company. The company enjoys a huge resource base which has increased the company’s sustainability in competitiveness. It is also known that the company has also embraced outsourcing some services from other companies which has increased the company’s competitiveness in the industry. As a result of the vast resources at the company’s disposal, the company’s profits and market share has increased significantly over the years.

References

Armstrong, G., &Kotler, P., 2011. Marketing: an introduction (10th ed., global ed.). Boston, Mass.: Pearson.

Baaghil, S. A., 2013. Power of belonging: a marketing strategy for branding..S.l.: Iuniverse Com.

Doganis, R., 2009. Flying Off Course IV Airline Economics and Marketing.. Hoboken: Taylor & Francis.

Etihad Airways – Marketing Plan.(n.d.).Scribd. Retrieved December 23, 2013, from http://www.scribd.com/doc/42673475/Etihad-Airways-Marketing-Plan

Etihad airways., 2013. S.l.: Book On Demand Ltd.

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