Strategic Benchmarking on Emirates

It is impossible to talk about strategic management without thinking in globalization. The concept is getting more and more attention, especially in industries such as the airline one. Globalization’s advantages and opportunities are undeniable, but with global market comes global rivalry and global competitors. In this context, it is crucial to have an exceptional strategy, the best processes and strong competitive advantages in order to survive in such market.

This report focuses on a tool that definitely helps us to define a proper strategy: strategic benchmarking. In the first part, a theoretical background will be given. Then, Fly Emirates case will be analyzed in a strategic benchmarking context. The final part, will be provided some advantages and disadvantages of this tool, as well as conclusions and comments about the topic.

Larisa Dragolea defines benchmarking as the “continuous process of comparing a company’s strategy, products, processes with those of the world leaders and best-in-class organizations” . In other words, learning from existing situations or improve upon existing ideas. Many authors defend that Xerox Corporation was the pioneer of this strategy, by observing the competitors’ products. The main objectives of benchmarking are to define where and when improvements are needed, investigate which and how other organizations achieve their higher performance and, most importantly, to use that information to improve performance levels.

The literature repeatedly mentions three types of benchmarking: Process Benchmarking, Performance Benchmarking and Strategic Benchmarking. The first one, focuses on the processes performed on a daily basis, such as customer complaint process or the recruitment process. Secondly, Performance Benchmarking focuses on analyzing the company’s position by comparing the products and services of its competitors. By improving key characteristics, such as quality, speed or customer service, the organization can achieve higher levels of performance, becoming more competitive. The last type, and the object of study of this report, is Strategic Benchmarking. This type is centered on how companies compete, or in other words, what were the strategies used to achieve the current successful position of a company. Unlike the process and performance benchmarking, the strategic benchmarking deals with the long-term view of results.

Another way to classify the types of benchmarking is by its approaches. Firstly, within the same industry two approaches should be mentioned: internal approach – when the comparison is made within the company, between regions or even countries; competitive approach – when the comparison is made within the industry, but between the company and its competitors. When the analysis of the best practices extends to other industries the approach it is called external benchmarking. Through functional benchmarking the company makes comparisons between homogeneous departments, in order to know which processes need to be improved and how. Lastly, generic benchmarking focuses on the best standards in general, that could be unrelated with the industry.

To conclude the theoretical background it is important to briefly explain the benchmarking process. In the first step the organization has to determine which processes to benchmark and against which type of organizations. Secondly, the organization must gather information and analyze the gap between the sources of the two institutions, for the purpose of finding the best practices in evidence. Later on, organizations should share what they have learned so far and then adapt the best practices to the recipient company, in order to create a suitable strategy.

Emirates is the seventh largest airline in the world in terms of revenue and one of the two operating in the United Arab Emirates. Since the beginning, the main goal of Emirates was quality and not quantity. It is impossible to discuss Emirates’ history without mentioning Gulf Air. By refusing to increase the flights to and from Dubai, Gulf Air created a sort of blue ocean for Emirates to operate in.

From the very beginning, benchmarking played an important role in the creation of Emirates. The managers do not have to create everything from scratch. Especially for high-quality service companies such as Emirates. By benchmarking with other high-standards companies in the industry, Emirates learned most of the processes, industry know-how and how to guarantee an excellent experience to customers. The key idea is: companies do not have to make mistakes that the competitors did, to achieve what they achieved. Benchmarking is the “bridge” to avoid these mistakes.

In 1994, Emirates gain some attention by its fast growing and by winning the Executive Travel “Airline of the Year” award. Thereafter, Clive Reed – vice president of training and development – had lunch with Richard Branson in order to share some of their initiatives. “You must be doing something right and we want to share information with you”. I could not find an example of benchmarking as indisputable as this one. As a result, Emirates took cabin crew philosophy from Virgin, and provided ideas about communicating vision effectively to the front line staff. It was a win-win.

Another successful benchmarking example in Emirates was the hub-and-spoke strategy. In 1955 Delta Airlines pioneered this strategy in the United States. Emirates, by using this idea, and taking advantage of its geographical positioning as well as the competitive advantages of the hub (for instance, oil advantages), became one of the most successfully cases of hub-and-spoke.

Over the years, the airlines industry suffered several crisis such as the financial crisis and the 9/11 terrorist attack. Curiously, the Emirates was one of the few companies that kept growing, while many other airlines faced bankruptcy. The main responsible for this success was Al Maktoum and his strategy of reinventing the Dubai as a modern hub of tourism and commerce in the Middle East. The “we don’t have to do what others do” way of thinking was the key to find a profitable niche, that consequently save them from a handful of troubling situations. Benchmarking is not only about adapting or copying ideas. It is also about understanding and interpreting them. Considering