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Name: Michael Beiser

Student-ID: w13034743

Degree: International Business Management (Hons)

Doing Business Globally and Internationally

SM0380

Module Tutor: Dr. Alison Pearce

Word Count: 3300

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TABLE OF CONTENTS GLOSSARY .......................................................................................................................... 3

List of Figures ....................................................................................................................... 4

List of Tables ........................................................................................................................ 4

1. Partner Selection .............................................................................................................. 5

1.1 PESTEL- Analysis ....................................................................................................... 5

1.2 Porter- Analysis ........................................................................................................... 5

1.3 Synergies .................................................................................................................... 6

1.4 Benefits ....................................................................................................................... 7

2. Risks ................................................................................................................................. 7

2.1 Choice of Strategy ....................................................................................................... 7

2.2 Why is it not a merger? ................................................................................................ 8

2.3 Relational Risk............................................................................................................. 8

2.4 Performance Risk ........................................................................................................ 9

3. Culture ............................................................................................................................ 10

3.1 National Culture ......................................................................................................... 10

3.1.1 Potential impact .................................................................................................. 10

3.2 Corporate Culture ...................................................................................................... 10

3.2.1 Emirates Airline ................................................................................................... 10

3.2.2 Qantas Airways ................................................................................................... 11

3.2.3 Potential Impact .................................................................................................. 11

3.3 Extent of impacts ....................................................................................................... 12

4. Exchange Rate Movements ............................................................................................ 12

4.1 Operational Exposure ................................................................................................ 13

4.2 Transaction Exposure ................................................................................................ 13

4.3 Translation Exposure ................................................................................................. 14

4.4 Conclusion ................................................................................................................. 14

5. Learning Outcome of the Module ................................................................................... 14

5.1 Knowledge about global business ............................................................................. 14

5.2 Expert Lectures ......................................................................................................... 15

5.3 International collaboration .......................................................................................... 15

6. Reference List ................................................................................................................. 16

7. Appendices ..................................................................................................................... 20

Appendix A ...................................................................................................................... 20

Appendix B ...................................................................................................................... 21

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GLOSSARY

UAE United Arabian Emirates

NC National Culture

CC Corporate Culture

IDV Individualism

UAI Uncertainty Avoidance

PDI Power Distance

XR Exchange Rate

SA Strategic Alliance

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LIST OF FIGURES

Figure 1.1: Ansoffs Model of Product Diversification

Figure 2.2: Classification of foreign market entries

Figure 3.1: National Culture of Australia compared with UAE

Figure 3.2: Trompenaars model of corporate culture

Figure 4.2: Currency Chart of USD AUD exchange rate movements

LIST OF TABLES

Table 1: PESTEL-analysis of Australia and the UAE

Table 2: Porter-analysis of the high-cost airlines Industry

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1. PARTNER SELECTION 1.1 PESTEL- ANALYSIS

With use of the PESTEL-framework (Appendix A) the reasons for Emirates are that the government of the UAE prepares the Gulf region for an elementary economic change towards an economic centre and a tourist region (Elbanna, 2010). In order to advance the strategy, the government aspires to provide a worldwide reachability (OConnel, 2011). Particularly, Dubais low labour costs, taxes (Sundaram & Al-Ali, 2011) and the proximity to oil production can lower operational costs (OConnel, 2011). Besides, the UAEs geographic location enables fast connections to six continents (Sundaram & Al-Ali, 2011). Otherwise, Australia and New Zealand have an isolated geopolitical position and the government supports opportunities to ameliorate connections to key markets as Europe (Kleymann & Seristoe, 2004).

1.2 PORTER- ANALYSIS

With the usage of Porters five forces (Appendix B) the competitive environment (Lynch, 2012) of premium and high-cost airlines will be analysed. This cost intensive industry can be ranged in a level of stagnating demand with a defined number of premium airlines (Kleymann & Seristoe, 2004). Reasons for the stagnation are the impact of technological developments like video communication and financial crises (Fleisher & Bensoussan, 2007). In this competitive market, premium airlines are threatened of losing customers to low-cost carriers (Hunter, 2006) or competitors with similar standards and due to easier internet research, the buyers developed higher price sensitivity (Fleisher & Bensoussan, 2007). Thus, Qantas has lost market shares in its unprofitable international business (Qantas, 2012). In contrast, Emirates is supported by the government and throughout its strong hub dominance, the airline seeks to expand its network in order to enforce their role as a global connector (Kleymann & Seristoe, 2004; Nataranja & Al-Ali, 2011). Nowadays, most countries have mutual agreements and open sky policies, but especially governmental regulations of international air transportation in Australia complicate an independent market entry and effective operations (Duval, 2008). Otherwise, the Australian domestic market is predominated by Qantas, which makes an SA feasible (Sarina & Lansbury, 2013). Furthermore, expenses for fuel supply are rising (Doganis, 2005), because of the high demand for oil at booming emerging countries and political unrest in oil producing countries (Tagesschau, 2008). Cost of labour force can be a relevant disadvantage depending on the main operating location (Hanlon, 2007). Modern and fuel-efficient aircraft technologies mostly provided by Airbus and Boeing are important assets of premium airlines (Lufthansa, 2013). Currently, Emirates receives high price deduction as priority client (OConnell, p.340) and possesses one of the youngest and most modern fleets in the market (Nataranja & Al-Ali, 2011). In addition, both air carriers can provide a developed infrastructure.

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1.3 SYNERGIES Both companies agreed to adapt each others schedules and combine prices by sharing their flight codes to consolidate the complementary networks to achieve economies of scope in order to raise the companies value and to operate worldwide (Qantas, 2012; Kang & Sakai, 2000). This is demonstrated by a higher amount of destinations and flights in a certain interval without an input of additional labor force and fuel, which can be summarized in economies of density (Kleymann & Seristoe, 2004). According to Ansoff framework (Figure 1, 1987) the potential effects of these strategic decisions are a higher penetration in the current markets and the intention to develop new markets in order to achieve economic growth.

Though, the companies agreed to combine facilities and harmonize processes within their networks (Qantas, 2012) as well as they might conduct common procurement of basic material as fuel and catering to attain economies of scale by reducing labor force and increasing cost efficiency (Oum, Park & Zhang, 2000). In addition, the companies agreed to mutual crediting of frequent flyer points (Qantas, 2012). As a result, they can market these features in joint promotion activities (Kleymann & Seristoe, 2004). This performance aims to enforce the loyalty of customers (Forgas, Moliner, Snchez & Palau, 2010) and to attract new passengers in order to increase the worldwide market share and to gain competitive advantage (Oum, Park & Zhang, 2000).

Figure 1.1: Ansoffs modell of diversification (Ansoff et al., 1987)

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1.4 BENEFITS For Qantas, this cross-border SA enlarges the operating distance in Europe, Northern Africa or the Middle East (Qantas, 2012). Moreover, Qantas raises their offer of one-stop flights, which is reflected in considerable time savings (Qantas, 2013). Qantas cancels it loss making routes in Europe, which are now served by Emirates and profits by its restructured Asian network (Qantas, 2013). In this context, Qantas can reduce capacity in Europe without losing market presence (Kleymann & Seristoe, 2004). At the same time, they seek to enforce the home market dominance with more inbound travel (Kleymann & Seristoe, 2004).

Otherwise, Emirates can expand their network with more connections and direct flights to Australia and New Zealand (Emirates, 2013). Moreover, Emirates gains new costumers for the European destinations and expects a touristic upswing (Qantas, 2013). According to Preeces (1995) framework a motivation for the companies is to achieve economics of learning, but especially Qantas is in a position to benefits of the high standards and reputation of Emirates airlines.

In summary, these airlines seem to be feasible partners, because of the expectation of increasing sales revenue, the decreasing costs and risk for their operations and the savings of investments by common performance (Ansoff, McDonnell, & Harvey-Jones, 1987).

2. RISKS 2.1 CHOICE OF STRATEGY

Figure 2.1 shows 3 different kinds of market entry strategies. In this particular case Emirates and Qantas signed a long-term cooperative agreement without equity contribution (Qantas, 2012). Altogether, Kang and Sakai (2000) state that the collaboration can be seen as flexible, because the companies are able to react fast to changing external factors. However, collaboration without an equity involvement includes a moderate risk, but eases the possibility to dissolve the partnership (Kang & Sakai, 2000).

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2.2 WHY IS IT NOT A MERGER?

There is a development towards an oligopolistic market with a high concentration of premium airlines (Hanlon, 2007) and an equity investment could increase the potential synergies with a higher level of integration, but both companies stayed independent. In this case, the high costs of a merger could be a barrier for both parties, because Emirates has cost intense aircraft orders and Qantas needs to restructure the unprofitable international business. Besides, both airlines can be seen as national flag carriers with national interests (Kang & Sakai, 2000, p.29). Emirates might stay a governmental owned company, because of the beforehand mentioned national strategy and the Qantas Sales act forbids a majoritarian foreign ownership (Qantas, n.d.). Furthermore, the new entity could lose certain traffic rights and international aviation agreements could expire, because these agreements were concluded between states (Kleymann & Seristoe, 2004). Another point can be the awareness of different cultures (Thomas, 2008).

2.3 RELATIONAL RISK

Das and Teng (2001) state, that manager in a strategic cooperation need to be aware of the special relational risk, because each independent company unavoidably has their private goals. If the companies act opportunistic or exploit the partnership with a hidden agenda, conflicts can arise and the SA is threatened to lose its effectiveness (Das & Teng, 2001). Furthermore, for this SA without a mutual equity involvement, but with the intention of retaining flexible, a lack of focus in the commitment can accrue and increase the possibility of opportunistic behaviour (Das & Teng, 2001). Especially in a SA with competitors involves the risk of losing unique resources like knowledge, which makes it difficult for managers to balance the degree of cooperation (Das & Teng, 2001). In this case, Emirates as one of the leading airlines in service and technology (OConnel, 2011) faces the challenge of

Figure 2.1: Classification of foreign market entries

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protecting the own know-how and simultaneously contributing it to create synergies (Das & Teng, 2001). A conflict between the two partners can arise, if one party benefits more than the other (Das & Teng, 2001). According to Ansoff et al. (1987) the airlines follow a market development strategy, but the combined market and product knowledge reduces the risk of failure.

Regarding the antidromic financial situations in 2012, there is the risk of choosing the wrong partner. According to Das and Teng (2001) a SA between a strong with a weaker company tends more to fail as with an equal partner. One reason can be a missing fit of resources, which disables the creation of value (Das & Teng, 2001). Thus, Emirates risks of displeasing costumers, who want to utilize an Emirates flight, but will be referred to a code-shared Qantas flight, which might cannot offer an accordingly high standards. That can arise because of a missing fit of strategy as Emirates might expect to keep the standards high or even ameliorate them, but Qantas pursues the aim to reconstruct their international business and to achieve savings (Qantas, 2013).

In this case, parts of the Qantas staff could resist the collaboration, because of the unequal power structure between the companies, if the Emirates airline forces many changes (Ansoff et al., 1987). In summary, the choice of a SA is combined with heightened risk because of the restricted ability of implementation control and increased coordination for joint decisions (Das & Teng, 2001).

2.4 PERFORMANCE RISK

Even if the partners manifest high commitment in the SA, there are general external environmental risks of performance, which can affect its success like new governmental policies, recession and internal frictions between the companies (Das & Teng, 2001).

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3. CULTURE 3.1 NATIONAL CULTURE

Before partners commit to a SA, it is crucial to be aware of the particular culture (Hofstede and Hofstede, 2005). The NC of an individual is deep-rooted and influences the values and basic assumptions of each CC (Gancel, Raynaud & Rodgers, 2002). According to Hofstedes (n.d.) framework to analyze NC, the main differences of the UAE and Australia are reflected in their attitude towards PDI, IDV and UAI. Therefore, the IDV differences can have high impact on the SA.

3.1.1 POTENTIAL IMPACT

Both countries have different approaches of solving problems and finding decisions (Buda & Elsayed-Elkhouly, 1998). Australian managers are more direct and dominant, whereas Arabian executives tend to avoid direct interpersonal conflicts (Buda & Elsayed-Elkhouly, 1998), which might lead to tensions and communication problems. The differences in PDI can be reflected in different conflict producing leadership styles. The strong national IDV and high short-term orientation of Australia (Hofstede, n.d.) might reinforce Qantas concentration to achieve more individual objectives.

3.2 CORPORATE CULTURE

3.2.1 EMIRATES AIRLINE

First of all, it is necessary to highlight the UAEs share of 85 percent of foreign residents, which might influences, the validity of the national analysis and affects the CC (Federal Foreign Office, 2013). As an example Emirates takes more risks with its innovative and offensive strategy than other competitors (OConnel, 2011), which contradicts the high UAI ranking. According to Trompenaars (1997) framework, Emirates seems to be based on a family culture with a strong hierarchical thinking. Thus, the company pursues the goal to be a global connector with staff out of more than ninety countries and an international management board, but the company is finally controlled by Sheikh al Maktoum (Emirates, 2013). Tim Clark states in an interview with Bloomberg (2012) that the UAE executed a one-time payment with the premise to establish an innovative world class airline without state intervention. Nowadays, the board of Emirates takes decision rather in a more personal and fluid

Figure 3.1: National Culture Australia in comparison with the UAE (Hofstede, n.d.)

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strategy approach, than in a bureaucratic process, which increases the flexibility (Sull, Goshal and Monteiro, 2005). The statement of Abdulaziz Al Ali, confirms Emirates culture of a high context communication with high amount of personal relationship and face-to-face business (Sull, et al., 2005).

3.2.2 QANTAS AIRWAYS

In contrast, Qantas could be associated with the Eiffel-Tower culture, which features a bureaucratic and job-orientated structure with defined processes (Trompenaars & Hampden-Turner, 1997). This cultural approach can reduce the ability to react for environmental changes, because of time-intense modification procedures (Trompenaars & Hampden-Turner, 1997). A deep assumption according to Schein (2004) is Qantas presentation as a national airline with a main part of Australian employees (Qantas, 2013). According to official reports Qantas espoused values seem to represent a more defensive strategy, which might focuses on safety, risk management and international alliances and the vision to prepare the company for a profitable future (Qantas, 2012).

3.2.3 POTENTIAL IMPACT

According to Trompenaars and Hampden-Turners (1997) model both companies seem to have a strong CC wherefore conflicts can arise. One impact of the CC could be the fact that it is Emirates first SA. The Arabian airline highlighted in an article its former independence (Ulijn, Duysters and Fevre, 2010), which nowadays could result in a dominant behaviour or missing ability to accept different approaches. In contrast to Australias short-term orientation, the UAE seems to follow a long-term strategy towards an economic center as well as Emirates with high investments for future growth (OConnel, 2011). However, cultural diversity can also ameliorate the skills of both companies in order to learn about the preferences

Figure 3.2: Trompenaars Model of Corporate Culture (Trompenaars & Hampden-Turner, 1997)

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of each others developed markets, to increase the creativity and problem solving process because of new perspectives and to enhance the ability to react on changing needs and environmental factors (Schneider & Barsoux, 2003).

3.3 EXTENT OF IMPACTS

Both the national and CC differ in certain categories and conflicts can arise. However, the moderate intensity of this specific SA in comparison to Joint-Venture and mergers is (Ansoff, et al., 1987) a supporting argument, that differences can be accepted as long as the companies are capable to imply the common and different cultural positions (Ulijn, Duysters and Fevre, 2010). An important base is the mutual awareness of cultural differences in order to manage these features successful (Schein, 1999).

4. EXCHANGE RATE MOVEMENTS The airline industry is highly affected by international trade, because airlines deal with competitors worldwide and earn revenues in foreign currencies (Forsyth & Dwyer, 2010). An analysis and comparison of the Qantas and Emirates home currencies is important to measure potential benefits and disadvantages, because a large part of the financial transactions were realized with the home currency (Forsyth & Dwyer, 2010). In this context the Graph shows a relevant depreciation of the USD in comparison to the AUD, which are the relevant currencies in this SA as the Dirham is linked to the $-rate (Forsyth & Dwyer, 2010).

Figure 4.1: Currency Chart of USD AUD exchange rate movements (XE, 2013)

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Moffett, Stonehill and Eiteman (2012) distinguish between transaction, translation and operating exposure of international currency fluctuations. Though, operating exposure has the highest significance in relation to long-term effects of XR movements (Dhanani, 2003). In this context, the effects of XR fluctuations alter depending if the home currency enhances or depreciates (Madura & Fox, 2011) and if the focus lies on the home or international market (Forsyth & Dwyer, 2010).

4.1 OPERATIONAL EXPOSURE

In an international view, the appreciation of a currency can be accompanied with less inbound costumers and the negative effect of losing market share to foreign competitors in the long-term (Dhanani, 2003, p.42). With this in mind, a strong Australian dollar can reduce the share of European costumers travelling to Australia, whereas Qantas domestic outgoing flights are expected to increase (Forsyth & Dwyer, 2010). A potential decline of sales figures, because of XR caused price adaptions of one partner would lead to relative higher prices. This affects the portion of profit participation of the other partner due to the code-share agreement between Emirates and Qantas, as well as it can reduce the attractiveness to book the combined product. Especially, a strong appreciation of the USD connected with a lower demand (Forsyth & Dwyer, 2010) could result in relevant disadvantage for the SA, because of Dubais role as a hub. Otherwise, depreciation might ameliorate the cost competitiveness and enables the companies to attract customers with cheaper prices, but can weaken efficiency in the long-run (Oum & Yu, 1998).

Furthermore, fuel supply became one of the main portions of costs for airlines. Since the price of fuel is connected with the USD (Kaiser, 2007) and the AUD gained value towards the American currency, Qantas can purchase fuel relatively cheaper. A permanently strong AUD might make Qantas a better strategic partner for Emirates in a long-term view, because of potential cost reductions by joint fuel procurement.

4.2 TRANSACTION EXPOSURE

A currency appreciation in the home market of an airline has the effect that national input supply prices increase relatively in comparison to competitors with another currency (Forsyth & Dwyer, 2010). Even if in this term international transactions become relatively cheaper, the airline overall costs will rise and the international competitiveness decreases (Forsyth & Dwyer, 2010). An appreciation of the Dirham would generate relative higher national input costs (Forsyth & Dwyer, 2010) for Emirates and the need to recalculate the offsetting of long-term contract as fuel supply, infrastructure usage fees and code-sharing flights to avoid transaction exposure caused losses (Dhanani, 2003). A strategic tool can be hedged XR agreements to reduce the influence of such movements (Forsyth & Dwyer, 2010).

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4.3 TRANSLATION EXPOSURE

XR movements affect the value of assets bought or credits received in a different currency as soon as they are settled in the financial report in the own currency. Because of the missing equity involvement, less importance can be assigned to translational exposure.

4.4 CONCLUSION

These fluctuations can have positive effects (Forsyth & Dwyer, 2010), but unexpected occurrences as financial crises can have extensive impact in relation to XR movements (Fratzscher, 2009). Qantas and Emirates recognized the need to enhance efficiency (Oum & Yu, 1998) by developing potential benefits and synergies in a cross-border SA, which can work against negative effects of XR movements in order to strengthen their international competitiveness.

5. LEARNING OUTCOME OF THE MODULE

Prior to my time at Northumbria University, I was already studying Business Administration and Leadership. During this time, I could get a first insight of the various kinds companies operate international. While my internship at the logistics division for Audi, it became clear that large firms cooperate with international suppliers and serve the needs of customers worldwide as well as these companies have subsidiaries themselves in many countries. Having these impressions in mind, I was sure that studying International Business Management at Northumbria Business School would prepare me with the knowledge to be successful in a globalized world.

5.1 KNOWLEDGE ABOUT GLOBAL BUSINESS

I especially remember the lecture about governmental intervention, which imparted a deeper understanding of the different reasons and forms of intervention in international trade. Through the examples how countries can affect the economic activities of companies, I realized the need of being aware in which extent governments can influence business decisions. The lecture transmitted important knowledge in order to cope with governmental intervention and even to benefit of favourable policies by developing the right strategy. Another lecture I found highly useful was based on internationalisation strategies and the importance of selecting an appropriate partner to be successful. I am certain that this knowledge helped me to develop myself further on a professional level in order to transfer it into my future job.

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5.2 EXPERT LECTURES

These lectures gave me a valuable insight into the opportunities and challenges of emerging markets. In this context, I was especially impressed by Dr. Shokris lecture about Iran. The countrys young population with a high affinity for technology could arouse the interest of companies for more investments in this viable market. Emerging markets are less saturated and offer various potential opportunities and ways for economic growth. Maybe, my professional future will be in self-employment and with this in mind these lectures equipped me with the relevant business conditions of many countries as well as the knowledge about key capabilities of a successful company in order to be provided for future elementary decisions.

5.3 INTERNATIONAL COLLABORATION

After my first lectures I was overwhelmed of the international diversity in this course. It gave me the chance to cooperate with people from all over the world and to learn about different approaches of finding solutions in business issues. Especially, during the seminars I appreciated the possibility to work in small, international groups. Within these groups, we could collaborate and discuss challenging exercises, which was a good a simulation of international business meetings in order to find a joint solution. The seminars improved my capability to cooperate respectful with other cultures as a consolidation of theoretical and practical experiences. As a result, I am sure that applying this new knowledge will be a significant benefit for my future career.

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6. REFERENCE LIST

Ansoff, H. I., McDonnell, E. J., & Harvey-Jones, J. (1987). Corporate strategy (Rev. ed.). London: Penguin.

Australian Government DFAT. (n.d.). About Australia. Retrieved December 01, 2013 from https://www.dfat.gov.au/facts/democratic_rights_freedoms.html

Bloomberg TV. (2011). Emirates' Clark Interview on Airline's Outlook. Retrieved December 4, 2013 from http://www.bloomberg.com/video/65549000-emirates-clark-interview-on-airline-s-outlook.html

Dhanani, A. (2003). Foreign exchange risk management: a case in the mining industry. The British Accounting Review, 35(1), 35-63. doi: http://dx.doi.org/10.1016/S0890-8389(03)00002-7

Doganis, R. (2005). The airline business (Enl. 2nd ed.). New York: Routledge.

Elbanna, S. (2010). Strategic planning in the United Arab Emirates. International Journal of Commerce & Management, 20(1), 26-40. doi: http://dx.doi.org/10.1108/10569211011025934

Emirates Group. (2013). 2013 Emirates annual report. Retrieved from http://www.theemiratesgroup.com/english/facts-figures/annual-report.aspx

Fleisher, C. S., & Bensoussan, B. E. (2007). Business and competitive analysis: effective application of new and classic methods. Upper Saddle River, NJ: Financial Times Press.

Forgas, S., Moliner, M. A., Snchez, J., & Palau, R. (2010). Antecedents of airline passenger loyalty: Low-cost versus traditional airlines. Journal of Air Transport Management, 16(4), 229-233. doi: http://dx.doi.org/10.1016/j.jairtraman.2010.01.001

Forsyth, P., & Dwyer, L. (2010). Exchange rate changes and the cost competitiveness of international airlines: The Aviation Trade Weighted Index. Research in Transportation Economics, 26(1), 12-17. doi: http://dx.doi.org/10.1016/j.retrec.2009.10.003

Fratzscher, M. (2009). What explains global exchange rate movements during the financial crisis? Journal of International Money and Finance, 28(8), 1390-1407. doi: http://dx.doi.org/10.1016/j.jimonfin.2009.08.008

Gancel, C., Raynaud, M., & Rodgers, I. (2002). Successful mergers, acquisitions and strategic alliances: how to bridge corporate cultures. London: McGraw-Hill.

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Hanlon, J. P. (2007). Global airlines: competition in a transnational industry (3rd ed.). Oxford: Butterworth-Heinemann.

Hofstede, G., & Hofstede, G. J. (2005). Cultures and organizations: software of the mind (2nd ed., rev. & expanded. ed.). New York London: McGraw-Hill.

Hofstede, G. (n.d.). Australia. Retrieved November 10, 2013 from National Culture: http://geert-hofstede.com/australia.html

Hofstede, G. (n.d.). Arab Emirates. Retrieved November 10, 2013 from National Culture: http://geert-hofstede.com/arab-emirates.html

Hunter, L. (2006). Low Cost Airlines: Business Model and Employment Relations. European Management Journal, 24(5), 315-321. doi: http://dx.doi.org/10.1016/j.emj.2006.08.001

Kaiser, A. (2007) Oelmarkt: Die Dollar-Daemmerung. Retrieved from http://www.spiegel.de/wirtschaft/oelmarkt-die-dollar-daemmerung-a-518636.html

Kang, N., & Sakai, K. (2000). International Strategic Alliances: Their Role in Industrial Globalisation. (OECD Science, Technology and Industry Working Papers). Retrieved from OECD publishing website: http://dx.doi.org/10.1787/61372320401

Kleymann, B., & Seristoe, H. (2004). Managing strategic airline alliances. Aldershot: Ashgate.

Lufthansa Group. (2013). Modern, quiet and environmentally efficient: Lufthansa Group orders 59 ultra-modern wide-body Boeing 777-9X and Airbus A350-900 aircraft [Press release]. Retrieved from http://www.lufthansagroup.com/en/press/news-releases/singleview/archive/2013/september/19/article/2599.html

Lynch, R. (2012). Strategic Management (6 ed.). Harlow: Pearson Education Limited.

Moffett, M. H., Stonehill, A. I., & Eiteman, D. K. (2012). Fundamentals of multinational finance (4th ed.). Boston, MA: Prentice Hall.

OConnell, J. F. (2011). The rise of the Arabian Gulf carriers: An insight into the business model of Emirates Airline. Journal of Air Transport Management, 17(6), 339-346. doi: http://dx.doi.org/10.1016/j.jairtraman.2011.02.003

Oum, T. H., Park, J.-H., & Zhang, A. (2000). Globalization and strategic alliances: the case of the airline industry. Oxford: Pergamon.

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Oum, T. H., & Yu, C. (1998). Cost competitiveness of major airlines: an international comparison. Transportation Research Part A: Policy and Practice, 32(6), 407-422. doi: http://dx.doi.org/10.1016/S0965-8564(98)00007-X

Emirates Group. (n.d.). Our Vision & Values. Retrieved November 25, 2013, from http://www.theemiratesgroup.com/english/our-vision-values/our-vision-values.aspx

Preece, S. B. (1995). Incorporating international strategic alliances into overall firm strategy: A typology of six managerial objectives. The International Executive, 37(3), 261-277. doi: 10.1002/tie.5060370306

Qantas Airways. (2012). 2012 Qantas annual report. Retrieved from http://www.qantas.com.au/infodetail/about/investors/2012AnnualReport.pdf

Qantas Airways. (2012). The worlds leading airline partnership Alan Joyce [Press release]. Retrieved from http://www.qantasnewsroom.com.au/speeches/the-worlds-leading-airline-partnership-alan-joyce-qantas-group-ceo

Qantas Airways. (2012). Working Toward Our Vision - An Overview of Qantas Group Business Practices [Media release]. Retrieved from http://www.qantas.com.au/infodetail/about/corporateGovernance/BusinessPracticesDocument.pdf

Qantas Airways. (2013). Qantas 2012/2013 Full Year Financial Results [Press release]. Retrieved from http://www.qantas.com.au/infodetail/about/investors/mediaReleaseResults13.pdf

Qantas Airways. (2013). Qantas and Emirates inaugural Flight Alan Joyce [Press release]. Retrieved from http://www.qantasnewsroom.com.au/speeches/qantas-and-emirates-inaugural-flight-press-conference-alan-joyce

Root, F. R. (1998). Entry strategies for international markets (Rev. and expanded ed.). San Francisco: Jossey-Bass.

Sarina, T., & Lansbury, R. D. (2013). Flying high and low? Strategic choice and employment relations in Qantas and Jetstar. Asia Pacific Journal of Human Resources, 51(4), 437-453. doi: 10.1111/1744-7941.12006

Schein, E. H. (1999). The corporate culture survival guide: sense and nonsense about culture change. San Francisco, Hempstead: Jossey-Bass

Schein, E. H. (2004). Organizational culture and leadership (3rd ed.). San Francisco: Jossey-Bass.

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Schneider, S. C., & Barsoux, J.-L. (2003). Managing across cultures (2nd ed.). Harlow: Financial Times Prentice Hall.

Sull, D., N, Goshal, S., Monteiro, F. (2005). The Hub of the World. Retrieved from http://www.donsull.com/downloads/hub_of_the_world.pdf#

Sundaram, N., & Al-Aali, A. (2011). The exceptional performance strategies of Emirate Airlines. Competitiveness Review, 21(5), 471-486. doi: http://dx.doi.org/10.1108/10595421111171966

Tagesschau. (2008). Die Welt im dritten lpreis-Schock. Retrieved December 12, 2013, from http://www.tagesschau.de/wirtschaft/oelpreishintergrund6.html

Thomas, D. C. (2008). Cross-cultural management: essential concepts (2nd ed.). Los Angeles: Sage Publications.

Trompenaars, A., & Hampden-Turner, C. (1997). Riding the waves of culture: understanding cultural diversity in business (2nd ed.). London: Nicholas Brealey.

Ulijn, J. M., Meijer, E., & Duysters, G. (2010). Strategic alliances, mergers and acquisitions: the influence of culture on successful cooperation. Cheltenham, UK Northampton, MA: Edward Elgar.

Westminster System. (n.d.). Retrieved December 01, 2013 from http://australianpolitics.com/democracy-and-politics/key-terms/westminster-system

XE Currency Charts (USD/AUD). (2013). Retrieved November 22, 2013 from http://www.xe.com/de/currencycharts/?from=USD&to=AUD&view=10Y

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7. APPENDICES APPENDIX A

UAE Emirates governmental owned + supported (Int. criticism) UAE change to economic + touristic centre (low fees, labour costs), aim to develop network

UAE close to oil production Political crises in Arabian countries

Australia Australian government prohibits foreign majority ownership + regulates international traffic

British Westminster system of government Strong democracy

Deregulated aviation market, open sky agreements Role of national carriers very political High security policies since 9/11

Political

UAE Dubai high economic growth + capita per person government seeks to generate new business connections Good reachability of 6 continents; important for MNE Emirates Airline as a symbol of UAE's growth UAE: current wealth from oil

Australia remote geopolitical location as a national disadvantage

Economic

UAE high percentage of foreign inhabitants + Emirates very international staff + cheap workers for work intense job's, labour law forbid's strikes and trade unions

UAE: generous immigration law Australia high percentage of Australian staff, high wage level, strike's nearly leaded to bankruptcy

Australia very popular for travellers Both airlines national flag carrier

Social

many ways to travel for short journeys, long-distance journeys just flying effective way

Online era: chat, phone, video instead of travelling Fast technical developement, but any real alternative to oil

Technological

Increasing oil price Companies need for environmental engagement Airbus + Boeing new and more fuel-efficient planes UAE Desert state

Environmental

Table 1.1: PESTEL analysis of Australia and the UAE (Elbanna, 2010; OConnel, 2011; Sundaram & Al-Ali, 2011; Kleymann & Seristoe, 2004; Fleisher & Bensoussan, 2007; Sarina & Lansbury, 2013; Duval, 2008; Doganis, 2005; Qantas, 2012; Kang & Sakai, 2000; Oum, Park & Zhang, 2000; Emirates, 2013; Qantas, 2013; Hanlon, 2007; Qantas, n.d., Qantas 2012; Australian politics, n.d; Australian Government, n.d.)

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very cost intensive (infrastructure, aircrafts etc.) Existing airlines very experienced Brand awareness of costumers

Threat of new high-cost entrants:

low

Aircraft: Boeing + Airbus quasi duopoly, need for sales figuers, lot of cancellations , technical differences not very big, high competitions between both manufacturers

Emirates priority costumer, more A380 orders than whole industry, high discounts for bulk orders

Gasoline supply: Fuel price increases (war, political unrest, oil consumption emerging countries

Labor cost: high country differences, UAE: low/ employer friendly labour law; Australia: expensive/ unions

Bargain power of suplliers: high

Undifferentiated product: need to specialize in premium industry

private buyers + travel agencies most important buyers

Costumer with high price sensitivity because of high availability of online information

Bargain power of buyers: high

Flying only efficient way of traveling Video conferencing + online communication

Threat of substitutes in other industry: moderate

Very competitive market --> deregulation, open sky, one world agreement, many Alliances

Pricing competition with low cost carriers Industry stagnation --> less travellig on premium fares

In own industry many carriers with similar standards Qantas dominates domestic market Regional competitors for Emirates with similar standards (Etihad, Qatar)

International competitors: Lufthansa, Air France, British Airways, Singapore Airlines, Turkish Airlines

Differentiation by service, quality and reputation

Extent of competitive

rivalary: very high

Table 1.2: Porter- analysis of the high-cost airline industry (Lufthansa, 2013; OConnel, 2011; Sundaram & Al-Ali, 2011; Kleymann & Seristoe, 2004; Fleisher & Bensoussan, 2007; Hunter, 2006; Sarina & Lansbury, 2013; Duval, 2008; Doganis, 2005; Tagesschau, 2008; Qantas, 2012; Kang & Sakai, 2000; Oum, Park & Zhang, 2000; Emirates, 2013; Qantas, 2013; Qantas 2012; Hanlon, 2007; Qantas, n.d.).