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Middle East Airline’sGrowth Strategy
By: Meryan Sakr, Nadeen Al Naji, Karim El Ahmad, and Tarek Amro
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
2
Definition of Growth Strategy
• Strategy: “a plan of action designed to achieve a long-term or overall aim,” (Oxford Dictionaries)
• Growth Strategy: “an organization expands the number of markets served or products offered through its current business or in terms of new businesses,” (Robins)
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
3
Possible Outcomes of a Growth Strategy
• Increase in Company Size
• Increase in Profit• Increase Market Share• Introduce New
Technologies
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
4
Types of Growth Strategies
• Diversification• Concentration• Vertical
Integration• Horizontal
Integration
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
5
HOW THE THEORETICAL GROWTH STRATEGY APPLIES TO MIDDLE EAST
AIRLINES IN PRACTICE12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
6
Overview of the Company• One of the most modern fleets in
the world with an average of 3.9 years old planes
• Highly ranked the best technological aircraft in the area
• More technological advanced, More fuel-efficient and less noisy aircrafts
• They have a unified aircraft system • Flies to 31 destinations in the
Middle East, Europe and West Africa
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
7
History of the Company
• Only Lebanese Airline (Monopoly)
• Founded in 1945 by Prime Minister Saeb Salam
• Company’s first flight was from Beirut to neighboring countries
• Extended flights to the gulf countries followed by Europe and Africa
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
8
About the ChairmanMohamad Al Hout
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
9
Middle East Airline’s Situation Before Restructuring
• Net Loss Margin of 35% (approximately $87 million) in 1998
• Old Fleet and Equipment• No Cash• Excess Staff and Low Productivity• Low Utilization of Resources
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
10
Restructuring of Middle East Airlines
• Picked Most Promising Routes based on economic factors and increased their flight frequencies
• Closed down non-profitable stations• Downsizing and modifying the working
conditions for staff and crew to increase productivity
• Adopting cost reduction plan across all units
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
11
Results of the Corporate Strategy
Financial Position of Middle East Airlines over the years
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
12
Further Improvements
• Alliance with the Sky Team in 2011• Sky Team is a leading alliance in
the global airline industry• Offering 13000 daily flights
between 169 countries.• Wider market• Members can benefit from 420
lounges worldwide • Can earn cedar miles • Customer based• Increase in frequency of flights
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
13
Possibilities for Future Research
• How will the competition of Low Cost Carriers (LCC) in the region affect MEA’s growth in the future?
• Will the Rennee Maawad Airport in Qolaiaat open in the future and affect the company’s strategy?
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
14
Lessons Learnt From the Case Study
• Should be able to control unit cost• Find highlights that may lead the company to
prosper• Quality is more important than Quantity
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
15
Recommendations for Other Companies
• Be realistic about the company’s position in the market
• Define the company’s specific competitors (study the market)
• Due to Globalization, one can’t live alone thus companies should form alliances to expand their markets
12/17/2012
By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro
16
Sources Used
• Interview with Mr. Mohammad Hout and Mr. Kamal Accad
• http://oxforddictionaries.com/definition/english/strategy
• www.mea.com.lb
12/17/2012