Information systems for strategic advantage

ABSTRACT

Every organization has it strategic ways of managing the information of the company. The strategy used depends on the company’s vision and mission. This paper is based on a research on how information systems are used strategically as a source of competitive advantage. The case study is mainly on Emirate Airline as the primary industries being compared to British Airways. The research involves using the porter’s four generic strategies, SWOT analysis and basic business strategies and formulas based on the research methodology.

INTRODUCTION

RESEACH METHODOLOGY

COMPANIES BACKGROUND

Emirate Airline: The airline industry is a subsidiary of the Emirate Group, which was founded in 1959 by Sheikh Ahmed Bin Saeed Al-Maktoum. Emirate Group is a public international owned business operating as a travel and tourism company based in Dubai. In 1985 the Emirate Airline industry was established by the investment Corporation Department of the Dubai Government, covered by an agreement with the Pakistan International Airlines as the management company. Before the establishment of Emirate Airline, Gulf Air was the only airline industry that was providing travel services to the Dubai population. During the period Gulf Air begins to reduce and lower it quality of services to the UAE population, which motivate the government to introduce their own Airline. Today emirate airline is the largest, biggest and fastest growing international airline industry in the Middle East.

British Airways: British Airways is a public limited company operating as an international airline industry, based in London, United Kingdom. The company starting as a private airline industry, founded in 1935 operating mainly in Europe called Allied British Airways. The merger between imperial Airways and British Airways LTD formed the single name British Airways Corporation in 1939. Later in 1974 when the authority demands that the British Airways Corporation should merge with British European Airways, the name British Airways was returned. Also in 1987 the collaborative merger with British Caledonian made the company being privatized. British Airways is one of the largest and fast growing airline industry not only in United Kingdom but the world, till only these year.

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INFORMATION SYSTEM

Information System: A piece of information always starts with a data, where a data is only knowledgeable and meaningful when it has been processed and transform into information. Every organization has its unique information and each information has it value to the overall success of the organization, Making it vital and important to manage the information strategically. The data, procedure, hardware, software, or even humans that are used to accumulate, collect or assemble to evaluate and analyzed information, is being referred to as information system. Specifically in terms of organization like emirate airline or British airways they are computer-based systems of hardware and software that the companies’ employees, clients, and customers used to collect, filter, process, create, and distribute or manage information.[ Paul 2003]

“An information system is a work system whose business process is devoted to capturing, transmitting, storing, retrieving, manipulating, and displaying information, thereby supporting other work system”[Steven Alter 2002]

Emirates Airline information system: there are several tools, software and hardware used in the Airline industries, and they will be named and briefly discussed. The information systems are used strategically as a source of competitive advantage, how they are use strategically will discuss in dept in the strategy analysis column.

Emirates Airlines has a call center, it a centre where customers call and get information regarding the flights, the booking and the offers. The call center provides all the information about the company and employees. The call center also calls customers whenever there is a new product, service or sales as a marketing procedure. The caller’s information is saved on a database for strategic benefits in the future.

The company’s website is another information system that is used strategically to manage its customer and client needs. The web-site consists of different databases and content in order to provide its user with information such as the flights details and company’s basic details. Emirate Airline also uses the Customer Relationship Manager Information System (CRIS), which is a window-based web-site running as a client/server application. An oracle development tool was used in creating CRIS, requiring a separate development effort to upgrade. These leave the emirate Airline with unconnected application to manage, scale to support increment demand and cut management cost. But still the company doesn’t use CRIS as its main customer relationship software instead Mercator software development supplement provide CRIS for sale to other airlines industries. Also requires offering those customers with a scalable solution, with the aim to minimize the cost and time of customizing the solution for each deployment. [Article on mercator]

Media is another form of information system used by emirate airline as a source of competitive advantage. It is used in from of TV, Radio and billboard to advertise there product such as travel promotions, in order to attract customers. Those advertisements target new customers and help the company to keep old customers.

One of the most important tool used by the industry which has play a vital role as a competitive advantage is the skyward program, also known as the frequent flyer program. The skyward is in a form of a credit card looking card which can be applied by any passenger whom has travel over a certain amount of miles with emirate airline. It comes in three different categories of blue, silver and gold, where gold the highest and blue is the lowest. The program was established in May 2000 by the organization so as to improve and tighten their competitive advantage. Skywards operate as a reward obtaining card, where a passenger is given an amount of travel miles depending and according to the distance he or she has travelled. As the miles accumulate and increase with amount of travels, the card is upgraded accordingly. These Miles can then be exchanged for free flights, upgrades and other rewards, also a passenger can transfer his miles to another skyward holding passenger. “Using skywards program is free and customers just have to register online or by calling Emirates Airlines if they wish to become skywards members. It is used by over 5.72 million customers. Skyward is one of our most valuable source of information system tool that we use to attract client” [Strategic Manager]

Another program is skysurfers. It is a frequent flyer program for young children between the ages of 2-16years. It basically works same as skyward but in this case additional rewards are added to attract children. Exciting Rewards such as books, toys, free trips to Wild Wadi and Atlantis in Dubai or even a free ticket to anywhere in the world. Also children get the opportunity of choosing their travel seat.

The information, communication and entertainment (ICE) system is an in-flight entertainment facility that provides passengers with variety of channels to choose from. The system includes movies, video games and music channels. ICE can be accessed in different languages such as English, Spanish, Arabic, Korean, Japanese, French and German. Passengers have the option of pausing, forwarding or rewinding any selected item they are watching. In addition a passenger in business or first class cabin has the privilege of ordering and choosing what they want to watch that is not available in the media list booklet. [journal on ICE]

Electronic check in stand is a self check in machine available at the emirate terminal in Dubai airport. Passengers are able to check- in between 2 to 48 hours of their flight departure. Where a passenger get to do the all the processes of checking in his or her luggage by himself, saving the trouble of joining the long queue at the main manual check in counter. Staffs are also available at the Electronic check stand for assistance, for instance if a passenger is having difficulty in printing the boarding pass at the last final process of the procedure. [website link]

Emirates airline provides exquisite lounges for first and business class passengers as well as skywards silver and gold member, having about 21 lounges in 18 different cities and are even planning on opening more. In cities and countries where the airline doesn’t have a departure lounge, a lounge is provided for first and business class passengers. The lounge has comfortable chairs and television to entertain passengers before their departure. Some lounges have well equipped bathrooms with showers for passengers who want to take a shower after a long day. Food of different variety is also available to choose from. Breakfast, lunch and snacks are served to customer satisfaction. This is available because they have customers from different nationalities speaking different languages, so as to attract customers from every part of the country.[website link]

EMIRATE AIRLINE STRATEGY ANALYSIS

The strategies, structure and management of those strategies and structure is always a composite and complex process of every organization. Strategy can be defined as the direction, route, possibility or scope of a business over the long-term and short-time goals and vision, which achieves advantage for the organization from the begging to the end of its pattern, design, and management of resources within a challenging and competitive environment, by achieving market scope and to accomplish competitive strategy. [J. Thompson with F. Martin, 2005, p1]

For an organization to achieve its goals and vision it need to come up with distinctive and well organized strategies which will include critical and comprehensive study as well as investigations into various areas that will produce information that will be advantageous to the accomplishment of the industry. This is the reason why emirate airline gives consideration in focusing into the overall and general position status of their rivals such as British Airways, also involving in their interior and exterior activities. By knowing their competitor’s status the organization of the company will be able to analyze the status of the company’s approaches, capital, income, strategies and resources in general. Which will able the company to establish how they will be able to manage, and defeats British Airways in competitive advantage in future. This will also give the company the prospect to stature out their potency and how they will maximize their strength and eliminate their weaknesses.

In every business there are times and periods of strength, weakness, success and failure. All of these periods apply to both British airways and Emirate airline. The corporate strategy used by emirate airline which involves examining the existing and anticipated factors related with passengers and competitors external situation and the organizations (emirate airline) internal environment itself. Envisioning a successful role for the organization, by creating strategy and aligning policies and resources, such as the use of Media to achieve the airlines goals and vision. Emirate airline is committed with the diversity of their clients; the diversification management approach of the applied by the company enables the firm to guarantee that passengers are given outstanding service provided by zealous and committed staffs and employees, unlike British Airways staff that recently undergo a three day strike against their management. The approach is carried out by adding new product and resources to an existing product, an example is the new and improved business class cabin introduce about a month ago by Emirate airline and the mile accelerator services added to the skyward facility. [Paul Finlay, 2000, page 473][]

“We the Staffs of Emirate Airline are always ready to assist and welcome ideas from passengers, either by Electronic survey or any form of technology that will get us a feedback from our client” [strategic Manager]

Another competitive strategy used by Emirate Airline is the focus-leadership strategy, which play a vital role in attributing to the success of the company, which is derived from the Generic strategy formula. The organizations business goals is to provide its customers with brilliant, reliable and most of all welcoming services to their esteemed clients, by dedicating to make each journey unforgettable and special. The wellbeing, comfort and convenience are important concerns as they provide value service for their passengers and client through dependable, extremely update technologies and the use of information system. The generic strategy will be illustrated in detail through the Porters Four Generic Business Strategy. The organization expands their industry to attain more customers which enable them to be more advantageous and profitable. Making it possible even with the global economic crisis and the financial status of Dubai, Emirate Airlines are still making profits. While their rivals British Airways report a quite amount of loss in the market share price early this year, even though the organization is manage and maintained by a reasonable steady financial country. But both airline industries are strategically introducing new technologies to enhance and achieve both there long and short term goals and vision. So still with the financial crisis of British Airways they still have competitive advantage over Emirate Airline when it comes to handle crisis as they are much older in the aviation industry and have manage crisis in the past. [journal on profit]

“We are a much longer aviation industry than emirate airline and we have strategies we alone use in managing our crisis which we have implemented in previous crisis in the past.” [BA, strategic manager]

The Marketing strategy approach of Emirate airline industry I said to be a customer-oriented strategy method. The strategy focus on various different types of customers, by catering the needs of clients individually and uniquely. This is done through the use of technologies such as the skyward customer account and card, where details and specification of the account holder are saved. The industry has been able to apply routes to a variety of destination all over the world. Emirate Airline industry’s strategy can be categorized as a powerful strategy and it enables the business to offer entire loyalty and commitment and maintain organizational operations so as achieve full competitive advantage. Through this strategy, Emirates Airlines surpass most of their competitors in the airline industry, and also gaining market share and enhanced the overall demand of their service.

Being (Emirate) an international airline industry gives the management an opportunity to expand and develop their industry and services all over the world with no compromise to the importance and value, and level of services they give for their customers in every country. The company has office with customer service help desk and a call centre facility in mostly every constituency they operate to provide for their passengers and customers needs at all time needed. This is carried out through the diversification management strategy mentioned earlier, where by the need and demand of their passenger and client and handled globally. Nevertheless, the threat and fear of the industry upon British Airways is the survival and existence possess by their rival in the past for handle crisis and picking up to provide affordable and quality services just as the Emirate Airlines. Their weak point can also be drawn from their diversified markets. However, with the 24-hour customer service call centre of the company, an immediate feedback is given to query of their client. The business model of the airline industry has led to their commercial success in the aviation and airline industry. They are able to have a lean workforce that can be compared to low-cost carriers rather than conventional flag-carriers. In addition, the company has also a simple organizational structure which permits the airline to maintain low overhead costs and enables them to pay no income taxes on wages. The organizations strategy model of emirate Airline is what has lead to their business success in the airline industry, giving them a successful business Model. This business model gives them a supportive workforce, making their services low-cost at the same time the successful and most profitable organization. Also the organization has a plain organizational composition which permits the company to sustain small overhead costs and enables them to pay no revenue duty on income and wages.[]

Ethical decisions can be made and taken at managerial level in emirate airline industry, which makes the corporation expand capable and successful organizational behavior. The management of emirate airline believes that principles offer the primary basic for deciding whether a specific action or behavior is ethically or morally right or wrong, the organization are able to develop ethical, moral, perspectives, standards and principles. Where as in British Airways only basic ethical aspect are given consideration, for example a BA female cabin crew most not cover her hair while in Emirate she has to cover her hair. The human resources management approach strategy is used by the organization in recruiting and employing the best and required staffs that will suit their passenger and client needs. Generally Emirate airline strategy is a powerful strategy will be very difficult to be beaten.

COMPETATITIVE ADVANTAGE

Competitive advantage is the ability and manner by which companies, industries and organization manages to maintain its long and short term goals, mission, and vision also keep up its position against its rival or competitors. It is the state which enables a company to perform in a more effective and competent manner, leading the organization to act and operate in a higher-quality approach than its competitors. Competitive advantage could be a long-term or short-term condition and can be managed through various competitive strategies, such as:

• The Porters Four Generic Business Strategies
• SWOT Analysis
• PEST Analysis

These strategies will be discussed and analyzed separately, using British Airways as a comparison and competitors against Emirate Airlines.

SWOT ANALYSIS

The tactical procedure implemented to evaluate an organizations strength, weaknesses, opportunities, and threat is strategically known as SWOT analysis. The analysis method involves enumerating the goal and objective of the organization by determining the internal and external factors that are prosperous and non-amicable to achieving that goals and objective. The analysis can be integrated into the strategic business model of the company. Every organization has it strength, weaknesses, opportunities and threats, same applies to Emirate Airline. The strength weaknesses, opportunities and threats of the industry will be discussed individually using the SWOT analysis.

STRENGTH

Emirates Airline grew from successful effectiveness strength resulting from the accurate decisions, planning and the strategy set to its employees by the organization. The determined efforts and excellent services provided by its members of the staff to the passengers and client gave strength to the Airline. The Airline starting the operation with two leased aircrafts from the Pakistan International Airlines, and was able to strengthen its fleet of aircrafts by purchasing long haul aircrafts from the manufacturers of the Boeing & Airbus aircrafts. The A380 and B777 were specifically purchased to provide contented and satisfying air travel for its valuable customers. Emirate Airline strength expanded more from when the Airline was selected as the best Airline for the in-flight services for number of years from leading organizations, such as British Airways.

The successes and strength of the Emirate Airline leads to an increase in the growth and population the passengers using the Airline, also expands the income, profit and revenue of the organization in whole. On Achieving and winning the award the Airline was mainly recognized globally in the travel industry, where by Inaugurating the “Skyward Club” memberships for frequent fliers also strengthen the Airline. Its ability to incessantly modify and improve the services in the aviation sectors gave an advantage to the Airline to meet up the targets set by the Management, promoting the industry as the leader in the aviation industry.[paul, 2000]

WEAKNESS

In every successful strategy there are always weakness, the main weakness of Emirate Airline are Some of the strategies and information system technologies implemented, in order to expand the business approaches have not yet been victorious, which can be considered as weakness. The Airline has been accused for focusing on high-end achievement and diversification, even after knowing such decisions have uncertain and difficult effects on the Airline, making their flight quite unsafe. While British Airways has a History and full safety records established ages ago.

OPPORTUNITIES

Emirates Airline industry has a wide ranges of opportunities contributing to the competitiveness of the organization. These opportunities are derived from the strategic use of their information system technologies and services, allowing the industry to infiltrate into an untouched new market with no strong competitors like British Airways. The revenue generating profitable income for the organization is from their operating flights to various destination where no un-touched by their rivals, such as available flights from Middle East to India, South East Asia to Africa. Also being able to travel around the prospect to manage code sharing destinations where there are no local flag carriers.

THREATS

The external environment of the organization is said to be the main source of threat facing the industry. Nevertheless an internal environment issues such as the recent budget formed by the company contribute as a threat to the organization in whole. The fair of the budget increase from the logistic and cost of information system, being introduced and implement so as to achieve the goals and objectives of the company. Examples of these systems are cost management of strategies and technologies like the customer relation manager information system (CRIS). Strong competitive rivals from the European countries like BA leads to an amount of threat jeopardy for the industry in general. The global economic down fall of the Dubai Financial status lead to industry suffering from travel setbacks, making the fairs of Emirate Airline increase from their normal price. The airlines inability to keep up with the innovations or recognized its demand creates a threat for the airline and reduces the load of the passengers. All this is because the political and economical environment in the countries where the airlines operates could potentially affect the business negatively. Where by compliances could be use by their competitors to their advantage and take the industry by surprise and by the time they realize it will be too late that they are not the leaders of the airline industry anymore.