According to this model any business has 4 stages during its life circuit. These levels are: Introduction, Development, Maturity, and Decrease. In the intro phase an organization just starts offering its new product or services on the market. At this time the business might the only one in the market or its services or products might be completely new. In the stage of growth the company must make huge investment funds for the marketing and research and development of the merchandise so that the product can expand competitive in the market. The level of maturity the curve of the industry life routine becomes flatter and the pace of growth decreases. There are very few businesses in this level where in fact the business giant has a little competition from the new comers in the industry. Finally the decline period of the life cycle is almost inescapable if there are no regular advancements are done in the merchandise or service. Within this stage the sales decline at a very pace. Every company, industry or business undergoes all these stages in their life routine but there are incredibly few companies that have seen the maturity stage. Air Arabia is one particular companies of the UAE which is in the stage of maturity. The business is known as to be in the level of maturity as it fulfils all the requirements to maintain the stage. Air Arabia is the major aviation company that offers the lowest traveling cost. The strategy of cost minimizing and branding by increasing the amount of flights is to get sustainable competitive gain in the industry and competitive advantage in the new entrant competitors. Being in the period of maturity of the industry life cycle the business Air Arabia must stick to its low cost carrier services and centered on the current business model. Air Arabia has captured the majority of the business enterprise hubs of the Middle East and North Africa region that includes a potential growing market and possible growth for the aviation industry and LCCs. The business enterprise strategy of the company should not be only striving for reducing the functional cost to provide good deal carrier but to provide service which is more slated, convenient, more places it includes, and performs in time.
Analysis of the environment Arabia predicated on Michael Porter's five "Competitive Causes":
Threat of New Entrants
The admittance of new company in the industry influences the competition scenario on the market. The aviation industry has a high potential of income so it may attract competition on the market. These new entrants might be threat for the environment Arabia aviation company which is the first choice in the LCCs. These threats might be in conditions of better services, lower cost of product and services. Air Arabia is a well established, profitable & most successful company in the industry so it would be problematic for the new accessibility to sustain on the market. The hurdle of entry on the market is also very high due to huge cost of establishing the business. The business needs millions of millions us dollars to be invested to establish a company. The expense of an aircraft is just about $ 2 billions and also to compete with the environment Arabia the competition must run the airline at low priced and offering better customer services. Air Arabia has a brand and customer loyalty in the business gives it competitive benefit above the new entrants in the industry.
Bargaining Vitality of Suppliers
Every industry and business needs uncooked material to produce their final product or service and this uncooked material is manufactured available by the suppliers. These suppliers can affect the profit involved in the industry by varying the price or quality of the organic materials. Thus the relations with between the manufacturer and suppliers become important for the industry. The airline industry has very specific suppliers for the business. Some may be the aircraft manufacturing companies like Boeing and Airbus and gas suppliers. Due to scarcity of the suppliers of aircrafts and limited development of devices the suppliers can control the costs and bargaining electricity will be higher with them. The energy suppliers also control the expense of the tickets of airlines. This push is a threat for the environment India as the suppliers has more vitality then the company.
Bargaining Electricity of Buyers
This drive is more robust in the air travel industry in the centre East and North Africa region. The customers have higher electric power of bargaining for low priced, and better services. The problem is because of the large numbers of options available to the people and the number of passengers travelling in the LCCs is high which will affect the business enterprise on a very large scale. Due to the availability of several options of low cost airlines and the facility of internet booking of air tickets the customers have many flexible options available. To weaken this force of buyers the company ha to keep up the grade of services and the price tag on the services should be maintained minimum on the market. Otherwise this pressure will also become a hazard for the business.
Threat of a Substitute Products or Services
Substitutes for the air travel industry are trains or traveling cars but supply and feasibility of these substitutes varies from region to region. Automobiles and trains might be substitute for the local and local flights but they cannot replace international low priced flights. Therefore the power of the force also varies in regions like in Europe where venturing with trains is simpler and cheaper the hazard will be higher however in UAE where the train center is bad and because of the hot and dried out climate traveling with autos is also extremely hard flights will be the best option as it is far more convenient and time keeping. So the vitality of power will be fragile there and opportunities of business will be higher.
Rivalry among existing firms
In the aviation the competition level is very high between various airline companies. In the centre East and North Africa region there are numerous international airlines on the market. All these companies are getting customers by giving best customer services, best aircrafts and minimum price in the industry. But the Air Arabia has been set up in your community for the past a long time and holding the positioning of leader in the LCC airlines.
Business-Level Strategy
The differentiation strategy requires the development and improvement in the quality of product or services. The products can be found to customers with better and unique characteristics that are completely different and advanced from the rivals. The uniqueness in the assistance will put in a value to them which value may be recharged as reduced price of the service by the business. Air Arabia has been the leader f the LCCs for days gone by three years. Now the business may use is brand value to cover up the extra cost of the exclusive services by the customers. The unique capabilities of the assistance provided by Air Arabia will be able to charge a little extra dollars from the clients if the suppliers increase the cost of their products. The current business strategy of Air Arabia is cost focused; it offers services anyway cost possible in the industry and is leading the LCC industry for the past 3 years. The company should now then add value to its services. These value added services may be better customer service, rapid creativity and advanced technology. But if the company will practice this home based business strategy along using its brand image then the hazards and weaknesses can be overcome.
To be successful with the differentiation strategy of business a business may have certain advantages:
Use of best and advanced scientific and technological concepts.
Expert and competent employees for growing value added products or services.
Sales team should be skilled enough to propagate the advanced features and usability of the merchandise.
Brand image and reputation to boost quality and improvements.
Value in the service and product can be created by employing following steps in the business:
Lowering Clients' Costs - Better quality will reduce the probability of problems in the services and thus the price tag on buyer will also get reduced.
Raising Clients' Performance - The main aim of increasing the grade of services is to entertain the customers with better services and let them enjoy the service.
Sustainability - The uniqueness and reputation of the products will generate barriers and high turning cost.
Risks of Utilizing a Differentiation Strategy - Dangers involved with using differentiation strategy in the air travel industry are high. Rivals of Air Arabia can begin imitating its business design or preferences and requirements of customers might change very frequently which can loose the value the service therefore the service will require changes appropriately.
Functional-Level Strategies
Internal analysis
Business Model
Mission, Vision, Ideals, and Goal
Air Arabia is the leading company in the field of low cost service providers with the objective of revolutionizing the flights in the Middle East and North African region. The methodology of the company will be novel and ground breaking that may offer services satisfying to the full value of money of customers.
To achieve the objective of the company it will use low fare functions to grow the profitability of the business. The clubs of the environment Arabia will be highly determined for customer satisfaction that will showcase the highest standards of procedures and will control the operational cost of the company.
The vision of Air Arabia is "For being one of the world's leading Budget Airlines" with respect to:
Profitability and Margin
Innovation
Reputation
Operational Excellence
Air Arabia shows its devotion to its passengers by offering them the minimum amount rates and best combination of rates and services that will attract them to travel with Air Arabia more often. The organization commits to its shareholders the best and most secure return on their money. The company with its value "Pay Less, Take flight More" offers safe, reliable and comfortable flights throughout its network more regularly. The business always appears forward to meet up with the requirements and objectives of its respected customers by offering various value added services and offers. The company always invites the recommendations and feedbacks from the customers in order to improve its services and offerings. The voyage with Air Arabia should be considered a wonderful experience is the main point of devotion of the company.
Conclusion
The Air Arabia must take up universal business strategy of differentiation in addition to its current cost focused strategy. This mixture of business strategies will gain competitive advantage over its competition to the company. The better quality of services can make it the best company in the flight business. Air Arabia's AcelAero was the multifunctional booking system. It has offered and software solution enterprise: flight for better operational services. The business offers plane tickets to more than 65 places about the world. Air Arabia knows the value of money of the customers and services that are appropriate to the price customers have paid. Each one of these will be the uniqueness and benefits of the company in comparison to other airlines. Air Arabia will gain competitive advantages by concentrating on other market sections. Like providing cargo services to Aramex, partnering with Dubai bank or investment company and Dubai Islamic Bank for the web payment service, offering various gifts and vouchers on the annual celebrations of the company. Each one of these steps of the company are targeted to enhance the brand name and corporate and business image of the business, regionally or internationally. These value added services of the company will help in increasing the number of customers and quantity of repeat customers who were once satisfied with the services of Air Arabia.
The Air Arabia airlines company is in the maturity stage of the business enterprise life cycle so it will have to face strong competition with the contending airlines companies. To get competitive edge over its opponents each company will be using unpleasant business strategies alternatively than defensive one to remain competitive in the market. The study and evaluation of inside and external factors affecting the position of company in the airlines industry proposes following recommendations:
The cost of operations of Air Arabia is increasing because of increasing fuel prices and giant investment funds in aircrafts and its own services. The business must lessen the operational costs by increasing operations in the business, specifically improvement in maintenance process, aeroplanes usage, and effective scheduling of plane tickets. Labor cost can even be reduced by using technology in a variety of distribution techniques. Although Air Arabia has dangers of the high class airlines which gives higher level of services to the passengers, the business is a head in the reduced cost airlines. So cost of seat tickets can be increased up to a certain extent to be able to improve the quality of services and then add value to those services. Air Arabia can continue to be competitive on the market since it is the first choice of the LCCs and charges of other top quality airlines are too much for a normal non business class customer. By extending the origins of the business in such a manner the business can develop its market talk about in the business class customers too. Air Arabia has routes in more than65 destination across the world but as the UAE is a main appeal of global tourism therefore the routes of the airlines should be increased. The business should join some global alliances in order to widen the number of price and service proposed by the airlines.
