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Operations management is defined as the subset of the directorate that entails products and services being designed and controlled to achieve an optimum production. The main emphasis is laid on how the company redesigns its business operations with the target of realizing the optimum production. Operations management encourages the efficient usage of scarce resources to produce products of required standards that satisfy consumers’ tastes and preferences. It is also applied in the input-output process, where inputs, such as labor, raw materials, and capital, are efficiently controlled to produce the desired output such as goods and services (Hopwood, 2010). In this research paper, operations management of Etihad Airways shall be discussed in terms of various elements such as strategies, vision, mission, supply chain mechanisms, capacity planning and forecasting techniques among others.
Etihad Airways is the second largest airline company in the United Arab Emirates, where it is located in Abu Dhabi next to the main Airport, Abu Dhabi International Airport. It was founded in 2003 by the decree issued by Sheikh Al Nahyan. It began as an airline that carried passengers and goods to more than 86 destinations in the world. It is reported that it had the overall revenue of $ 8 billion in 2014, being just one year in operations. That shows how its strategies favored its increasing growth and profits in the market. Due to the growth experienced in profits and expansion, Etihad Airways has immensely expanded to making $ 14 million in 2011 in the net profits. Due to the signed agreement between Etihad and Air Serbia, the airline managed to increase the amount of passengers being carried to the tune of 10.3 million. That was an enlargement in carrying capacity by 23% in 2012. Subsequently, Etihad has had productive partnerships with other airlines that have led to the expansion of its operations and profits. In 2013, it acquired Darwin Air from the Swiss Government which was named Etihad Regional. It also purchased 49% shares in the Airline Alitalia in August, 2014. The current chief executive officer is Mr. James Hogan who has led the company successively to making a whopping $ 7.6 billion as the revenue in 2014 (Hopwood, 2010).
Vision, Mission and Core Values
Name: Etihad Airways
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Vision: To be a representative of the best Arabian hospitality in the world. It also endeavors to change and challenge the status quo in the airline hospitality.
Mission: Etihad Airways strives to be the leading airline in the world that reflects the Arabian hospitality in the market through partnerships and working with various stakeholders.
The Company plans to achieve its visions through treasuring its shareholders, strengthening its internal systems, acquiring a stable capital base and employing effective marketing strategies to enlarge its market share and brand in the airline market.
Core values: they are the integrity, responsibility, ethics and value. The company ensures that consumers can enjoy high-quality flights that meet their expectations and preferences. In running its operations, the company maintains its integrity by complying with all the quality standards required by the international airline standards bodies. It also ensures that consumers are given leading advertisements and information such as the exact costs and flight packages among others.
Strategies of the Organization
Due to the growth in business operations of Etihad Airways, the companys carrying capacity has increased to meet the accelerating flight demands of the clients. The company has also opened up branches in international markets, namely in Africa, Middle East, and other European countries. The company had to employ new and multiple marketing strategies to meet the competition in the international markets. The challenges that marketing teams have faced in the global markets include: diverse culture, different foreign policies for investments, dynamic preferences of consumers, high-quality standards and health consciousness of consumers among others (Hopwood, 2010).
The management of Etihad Airways employed various international strategies such as adaptation, standardization, segmentation, targeting, positioning, marketing mix strategies and branding among others. Prior to making the entry to the international markets, Etihad Airways carried out a market research in order to understand the market needs and fill the gap in the airline industries in the foreign markets. It analyzed the sales patterns of beverage, consumer needs, pricing strategies, cultural differences and the size of the markets among others. The other crucial factors considered were the local customs, taxes, incentives and investment policies (Hopwood, 2010).
Moreover, the company analyzed the markets and applied two leading international marketing theories and strategies to penetrate the new markets. It used standardization, where Etihad Airways met the needs of the international markets with its regular airline packages without any modification. The same flight packages that were sold in the UAE were directly opened to the international clients. This strategy of standardization was in line with its vision of reflecting the Arabian hospitality in the airline industry to the whole world (Hopwood, 2010).
In other markets, the adaptation strategy was employed, depending on their diverse cultures and customs . Adaptation entailed modifying the flight package to fit the needs of passengers, specifically in the international markets. It involved changing the menu to reflect the diversity, quality, prices and brands to suit the needs and culture of the new foreign markets. The application of various marketing strategies was essential to achieve the corporate goals of the company. The overall marketing strategies that have been applied are done in line with the company’s overall strategic plan that includes the vision, mission and core values of the enterprise. That ensures that the management stays on course in pursuit of the outlined goals (Nataraja, 2011).
Etihad Airways operates as shown in the diagram below:
In its headquarters in Abu Dhabi, it has the senior management that is composed of the chief executive officer, Mr. James Hogan, the board of directors and the departmental heads among others. The senior management operates together with all the other levels of management to achieve the organizational objectives. The second tier management is composed of the operations staff and the administrative staff. The operations team consists of the customer service and facilities management. The administrative staff comprises various departments such as accounting, sales marketing, and administrative sections. The organization predominantly employs a democratic leadership style so that the senior management does not impose decisions on the other management levels (Nataraja, 2011).
The Overall Supply Chain Mechanism
The overall supply chain partners of the organization should be included in the project. Hence, it is essential to identify the complete supply chain partners of the organization under the observation and explain how each plays a vital role in the organizations overall strategy.
A supply chain is defined as the system that entails the process, where the product is availed to the end user who is the consumer. It involves processes, where raw materials are converted into usable forms that customers require. The raw materials may be natural resources that are utilized to produce the finished products that satisfy the desires of the consumers. In some cases products that have been used may be recycled and made to enter the supply chain process at any level of entry (Nataraja, 2011).
According to the Council of Supply Chain Management Professionals (CSCMP), the supply chain is a comprehensive process that integrates the sourcing of the raw materials required for a robust procurement process, processing/conversion process, including all the plans involved in making the product available to the consumer. Many parties play crucial roles in the supply chain process such as the suppliers, wholesalers, other intermediaries and consumers, as well. The effective supply chain management involves coordination among many departments such as finance, sales, marketing, product management and the information computer technology departments (Nataraja, 2011).
Etihad Airways uses a comprehensive supply chain management process that enables it to make an efficient procurement and supplies to its clients. The airline uses extensive procedures to procure fuel, in-flights, contracts with other airlines and transportation in the hospitality industry among others. Etihad Airways have managed to transform its procurement process through the advanced technology. It has been able to install an e-procurement system, in terms of which the suppliers can be integrated and access all the relevant, accurate news. Consequently, it has allowed international suppliers to participate in its procurement processes. The advanced technology has also enabled streamlining of source-to-contract procedures. The system has ensured the real-time information on the activities of suppliers, thereby reducing time wastage in the manual suppliers analysis. The purchase orders of the clients are processed quickly to a considerable degree, since the process has been automated and paperless. The e-procurement process has decreased the errors in manual systems. The suppliers can log into the system and participate in the bidding process, depending on the available opportunities in Etihad Airways (Nataraja, 2011).
One of the main achievements of the incorporation of technology within the supply chain process of Etihad Airways is that it has strengthened global networking and business operations. The clients can book airline tickets through its digital platform from global locations. The digital platform has also enabled the airline to standardize its procurement process. As an airline company, the primary supply chain processes involved fall mainly within sourcing of the products required in terms of enabling the satisfaction of consumers and the actual flight packages to suit clients needs. Etihad Airways has received specific awards for its role in incorporating the state of the art technology in its supply chain process. Among the services that it has delivered as required include automotive logistics, freight forwarding, customs clearance, corporate transportation and international moving among others. In order to achieve a significant success in its supply chain process, Etihad Airways has been enjoying the advantages of partnerships (Nataraja, 2011).
Work Processes that create Value
Etihad Airways utilizes advanced technologies to create lucrative places such as the residence lounge, first class, and business class spaces. Moreover, the designers also employ technical processes to make special services room with hospitals for emergency cases. The raw material need for the work process includes fuel that the company gets from a partnering station in Abu Dhabi. Moreover, the skilled labor is vital for the operation of sophisticated features of the airway such as the safeguard and temperature sensitive facilities that transport hazardous commodities and live animals. Moreover, finances are necessary to pay the employees and purchase raw materials and other inputs needed in conducting the work processes. Additionally, the company earns the revenue, because it has the efficient work process such as automated operations and computerized monitor that customer can use to track goods. The outputs that the operators gain are profits, customer satisfaction and efficiency in regard to the service delivery (Lawson, 2015).
Product and Service Design
Etihad Airways has goods and services that are unique to the current markets, because they exploit the advanced transportation and technological techniques to offer best logistics in the cargo air. They have a sophisticated sky stable that the airway operators use to transport horses from Abu Dhabi terminal to specified nations across the globe. Another service is referred to as the safeguard, and it is vital in handling cargos that require a considerable amount of care, because they are hazardous, fragile or sensitive. The designs give Etihad Airways the ability to carry dangerous goods from one country to another. Moreover, it can airlift live animals that might be risky in less specialized companies that deal with air transportation. It also has a well-designed space to transport human remains and cool chains (Hopwood, 2010).
Regarding other significant services design, Etihad Airways has a special offer called the fast track that enables customers to monitor their goods as the craft travels from one airport to the defined destination. The service also provides a refund in case the customer is not satisfied with the conditions and regulations of the airway. Additionally, the airline operators designed the fast track service in such a way that the consumer can determine the time that is required for the goods to reach a certain terminal. The temperature-check equipment is also available in Etihad Airways to offer temperature sensitive services, for instance, the transportation of pharmaceuticals as well as cool commodities. The Kayaban box is specially designed for sending gifts and other person documents to places like the Philippines (Hopwood, 2010).
However, the operation department of the Etihad Company faces numerous challenges to penetrate the markets that may need the provided products and services designs. First, the operator must adhere to the rule and regulations governing the transportation of wild animals and indigenous species to ensure that they do not cause any disastrous environmental impact to another country. It requires a lot of finances and expertise, making the transportation of live animal unnecessarily expensive. Besides, most people do not transport dangerous substances through the air, because they can explode due to minimal technicalities; thus, the Etihad Company needs resources for the advertisement and marketing strategies (Lawson, 2015).
Quality Management Issues
The area reflects on the way the Etihad operator employs management ideologies to achieve customers needs and expectations, while maintaining the outstanding quality of products and services. It also tackles the image of the company in terms of the hospitality, culture, acceptability and philanthropic services that lure most individuals to use the airway. Moreover, the management quality concerns include the way the Etihad Company responds to defects, errors, and instances of dissatisfaction that might occur during the transportation of cargo. First, the company has values feedback that enables customers to make inquiries and air the views concerning the qualities of the services and expectations that Etihad Airways should achieve. The company has implemented the Interleks practices in its aircrafts that aim at testing the quality of fuel to enhance the efficiency in the utilizations of resources (Hopwood, 2010).
Secondly, the company has specific services and product designs, for instance, temperature checks, kayaban boxes, and safeguards that enhance the quality of sensitive and dangerous goods transportation by monitoring the temperature and protecting any explosive product. Moreover, the fast track ensures that time is efficiently managed, while transporting perishable commodities from Abu Dhabi to other parts of the globe, for example, Europe, Africa, America, and Asia (Hopwood, 2010).
Etihad Airways has a very lucrative method and plans in ensuring the satisfaction of customers, while still making profits in the highly competitive airline operations. The company plans to increase its financial capacity by more than eleven billion U.S. dollars through different fiscal portfolios such as the engagement in partnership with diverse stakeholders. By 2004, the Etihad Company has collaborated with at least 80 financing institutions that are located across the globe with the majority of organizations based in the United States. Precisely, twenty-six of all the financial partners are the U.S. companies, though it does benefit from the foreign assurance. Besides, the airway plans to partner with more than forty international organizations that have a reliable expertise on the fuel price assessment and other economic aspects of the instability of foreign exchange and the rates of interest. As a practical strategy for penetrating the competitive market, Etihad Airways plans to have more than fifty code share partners operating in a minimum of four hundred terminals. As from 2005, it has obtained 49 code shares collaborators, encompassing approximately four hundred and fifty destinations (Lawson, 2015).
With the purpose of guaranteeing effective resource management, its fuel resources are linked with Interlex that provides a cheap bio-fuel for its daily operations in the numerous terminals, even though the fuel company is based in Abu Dhabi. Etihad Airways also offers employees specific trainings, making all the workers conscience of the economic utilization of resources and efficient methods of operating that enables the airway to meet its capacity. Mohamed, who is the human resource manager, asserted that the employees are trained in terms of the work planning, performance management system and automated machine operations that conserve raw materials (Hopwood, 2010).
There is an increased level of efficiency in the way Etihad takes advantage of the capacity planning to compete with other airline operators. First, they already have automated trackers; therefore, customers can follow up the progress of goods and services delivery at any time. Secondly, Etihad is in the process of developing the world class training center that focuses on desktop simulations (DTS), fuel tank safety and competency training system (Hopwood, 2010).
The first technique is forecasting the aviation demand, where the Etihad Company has specified factors to be investigated in order to ensure a proper understanding of the recurrent activities. The areas of forecast entail the cargo trend that requires regional markets and trends in the cargo shipment strategies. The next strategy is the investigation of the catchment area of the social and economic data that is referred to as the point, where the airline attracts customers by offering unique services. Lastly, the Etihad Company utilizes the competing air services strategies to forecast the possible challenges and opportunities such as capacity congestions and accommodation demands respectively (Hopwood, 2010).
Layout and Facilities Planning
The business class has studios in the A380 and A787 aircrafts to offer places for work, play, storage and personal activities, making it advantageous in terms of the overall convenience. Other layouts in a particular aircraft owned by the Etihad Company include the economy, first, and residence lounges, that have a capacity of one hundred and six passengers. However, the B777-300ER aircraft can transport four hundred and twelve persons, while having numerous assets for safety and luxurious initiatives (Lawson, 2015).
The advantages of the layouts and planning are that they provide vital facilities for customers with different needs like cargo transportation, business discussions, private meetings and special requirements such as the medical attention. However, the challenge is that many lounges in the aircraft demand for the increased number of employees, thus reducing the profit margin of the Etihad Company (Hopwood, 2010).
The location choice of the Etihad Company is Abu Dhabi as the main center of operation, with other airlines flying predominantly to the United States. The site is fundamental, because the US has a lot of financial institutions that assists the airway. Moreover, the airports in the United States have the capacity to carry a lot of aircrafts; thus, the Etihad Company will operate smoothly and efficiently (Hopwood, 2010).
Other Information about the Organization
The legal name of the company is Etihad Airways, and it is located in Adu Dhabi. The website is www.etihadairway.com, and it has the manpower of a total of the 2000 employees. The chief executive officer is Mr. James Hogan. The senior management operates together with all the other levels of management in order to achieve the organizational objectives. The second tier management is composed of the operations staff and the administrative staff. The operations team consists of the customer service and facilities management (Hopwood, 2010).