Case Study Description of Emirates Airline: A Billion-dollar Sukuk-Bond Issue
Emirates Airline (EA) needs to fund the purchase of 30 new A380 aircraft. On March 11, 2013, EA announced plans to issue US$1 billion of Islamic bonds (sukuk) and $750 million of regular bonds. These bonds arguably share similar risks and seniority even though the sukuk bonds sold with a lower implied yield. This difference in pricing for securities with similar default risks seems at odds with conventional finance thinking. Against this backdrop, the EA treasury department must decide on the appropriate funding for this next batch of A380 airplanes. Authors Emir Hrnjic and David Reeb are affiliated with the National University of Singapore.
Authors :: Emir Hrnjic, Harun Kapetanovic, David Reeb
Swot Analysis of "Emirates Airline: A Billion-dollar Sukuk-Bond Issue" written by Emir Hrnjic, Harun Kapetanovic, David Reeb includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sukuk Ea facing as an external strategic factors. Some of the topics covered in Emirates Airline: A Billion-dollar Sukuk-Bond Issue case study are - Strategic Management Strategies, Financial markets, International business and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Emirates Airline: A Billion-dollar Sukuk-Bond Issue casestudy better are - – cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, technology disruption, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization,
talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Emirates Airline: A Billion-dollar Sukuk-Bond Issue
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Emirates Airline: A Billion-dollar Sukuk-Bond Issue case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sukuk Ea, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sukuk Ea operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Emirates Airline: A Billion-dollar Sukuk-Bond Issue can be done for the following purposes –
1. Strategic planning using facts provided in Emirates Airline: A Billion-dollar Sukuk-Bond Issue case study
2. Improving business portfolio management of Sukuk Ea
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sukuk Ea
Strengths Emirates Airline: A Billion-dollar Sukuk-Bond Issue | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sukuk Ea in Emirates Airline: A Billion-dollar Sukuk-Bond Issue Harvard Business Review case study are -
Strong track record of project management
– Sukuk Ea is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Sukuk Ea has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Emirates Airline: A Billion-dollar Sukuk-Bond Issue Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Diverse revenue streams
– Sukuk Ea is present in almost all the verticals within the industry. This has provided firm in Emirates Airline: A Billion-dollar Sukuk-Bond Issue case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High brand equity
– Sukuk Ea has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sukuk Ea to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Sukuk Ea in the sector have low bargaining power. Emirates Airline: A Billion-dollar Sukuk-Bond Issue has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sukuk Ea to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Finance & Accounting field
– Sukuk Ea is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Sukuk Ea in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Sukuk Ea has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Sukuk Ea
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sukuk Ea does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Sukuk Ea is one of the most innovative firm in sector. Manager in Emirates Airline: A Billion-dollar Sukuk-Bond Issue Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Sukuk Ea has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sukuk Ea has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Sukuk Ea digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sukuk Ea has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to recruit top talent
– Sukuk Ea is one of the leading recruiters in the industry. Managers in the Emirates Airline: A Billion-dollar Sukuk-Bond Issue are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Emirates Airline: A Billion-dollar Sukuk-Bond Issue | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Emirates Airline: A Billion-dollar Sukuk-Bond Issue are -
Low market penetration in new markets
– Outside its home market of Sukuk Ea, firm in the HBR case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Sukuk Ea has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue, is just above the industry average. Sukuk Ea needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue, it seems that the employees of Sukuk Ea don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Emir Hrnjic, Harun Kapetanovic, David Reeb suggests that, Sukuk Ea is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Increasing silos among functional specialists
– The organizational structure of Sukuk Ea is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Sukuk Ea needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sukuk Ea to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Sukuk Ea has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Sukuk Ea even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High operating costs
– Compare to the competitors, firm in the HBR case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Sukuk Ea 's lucrative customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Sukuk Ea supply chain. Even after few cautionary changes mentioned in the HBR case study - Emirates Airline: A Billion-dollar Sukuk-Bond Issue, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sukuk Ea vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Sukuk Ea has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Emirates Airline: A Billion-dollar Sukuk-Bond Issue can leverage the sales team experience to cultivate customer relationships as Sukuk Ea is planning to shift buying processes online.
Opportunities Emirates Airline: A Billion-dollar Sukuk-Bond Issue | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sukuk Ea to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Sukuk Ea to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Sukuk Ea in the consumer business. Now Sukuk Ea can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Sukuk Ea has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Sukuk Ea can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Sukuk Ea has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sukuk Ea to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Sukuk Ea can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Emirates Airline: A Billion-dollar Sukuk-Bond Issue suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sukuk Ea can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Emirates Airline: A Billion-dollar Sukuk-Bond Issue, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Sukuk Ea can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Better consumer reach
– The expansion of the 5G network will help Sukuk Ea to increase its market reach. Sukuk Ea will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sukuk Ea can use these opportunities to build new business models that can help the communities that Sukuk Ea operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Creating value in data economy
– The success of analytics program of Sukuk Ea has opened avenues for new revenue streams for the organization in the industry. This can help Sukuk Ea to build a more holistic ecosystem as suggested in the Emirates Airline: A Billion-dollar Sukuk-Bond Issue case study. Sukuk Ea can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Sukuk Ea can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sukuk Ea can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Emirates Airline: A Billion-dollar Sukuk-Bond Issue External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sukuk Ea in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Sukuk Ea demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Sukuk Ea needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sukuk Ea with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Sukuk Ea.
Environmental challenges
– Sukuk Ea needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Sukuk Ea can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High dependence on third party suppliers
– Sukuk Ea high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sukuk Ea can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue .
Increasing wage structure of Sukuk Ea
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Sukuk Ea.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sukuk Ea can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Sukuk Ea business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Emirates Airline: A Billion-dollar Sukuk-Bond Issue Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Emirates Airline: A Billion-dollar Sukuk-Bond Issue is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Emirates Airline: A Billion-dollar Sukuk-Bond Issue is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Sukuk Ea needs to make to build a sustainable competitive advantage.
