Based on the Porter Five Forces Frame work, many sources of competitive advantage exist in the air line industry. It should also be mentioned that capital is not a competitive advantage in this case as all the major air lines have abundant supply of money. The sources of competitive advantage include: • Strategic Alliances can be built with the key suppliers for important inputs. By partnering with suppliers, efficiency is achieved and a key victory is scored over competitors.
• Experience and learning curve effects are one of the most important sources of competitive advantage in such a high technology industry. By investing in recruitment and training and development, new and existing workers are provided with the tools to exceed which translate into growth and profitability for the company. • Regulations play a significant role in providing competitive advantage to the Middle Eastern air lines over prospective foreign entrants. Etihad Airways has the additional benefit of being the official air line of the United Arab Emirates.
This provides them with greater protection over their rivals. • Brand Loyalty is also a huge source of competitive advantage. By building the brand, Etihad can retain its customer base and venture forth with aggressive marketing to build its customer base even further. • Niche marketing can provide a nice cushion to the air line. By finding small, untapped segments and serving them before the competitors do, it can reap huge margins and promote not just the brand, but the category. Analysis of the Strengths and Weaknesses of Etihad Airways
Etihad Airways has a number of strengths at its disposal that can be used to overcome most of the internal weaknesses, and external threats and utilize potential opportunities that are currently present or may arise in the course of time. Some of their key strengths are: • A very strong capital base. Etihad Airways has a significant amount of financial resources at its disposal which has been used effectively to generate growth in terms of size of fleet as well as markets. Recently, Etihad Airways used this advantage when they purchased 55 Air bus carriers in 2008 (Newser, 2008).
• The national air line. Etihad is the flag carrier for the United Arab Emirates and a source of pride for the people of the nation. Being the national air line, it is afforded with key benefits such as resources, networks, and a broad base of loyal customers. On top of it all, it gets protection from the government in the form of regulations as well and if times are bad and losses are reported, it is not as problematic an issue as it would have been for a non government backed air line.
• Capable Employees. With the training programs mentioned earlier and other such means, Etihad Air lines is developing a very skilled base of employees that provide the company with a very useful and important source of competitive advantage. • Large fleet and still growing. As mentioned earlier, Etihad Air line has been purchasing many carriers and growing at a fast rate. They have the staff and the resources to bear this growth. Etihad has very few weaknesses in my opinion.
They are listed below: • Lack of experience as compared to competitors. As it is a new company, it does not yet know the complete tricks of the trade. But this is a source of growth and improvement and more of an opportunity if utilized effectively. • Small customer base. Due to the fact that Etihad Air line is in its infancy, it has not yet developed a strong enough customer base. Many flights are barely occupied (Randhawa, 2009).