Air Arabia now flies to Afghanistan

“Air Arabia now flies to Afghanistan” is a title that drew my attention immediately. My first thought was: “who would want to do business there!!?” But then I am sure that Air Arabia completed their homework and recognized that they had potential to succeed by flying to Kabul. Moreover, I guess I am just stereotyping based on the historical facts of this country!

Air Arabia, which is the first low-fares airline in the Middle East and North Africa, announced that the new destination that is added to its list of destinations is Kabul, Afghanistan. Taking into consideration Afghanistan’s economy, I would imagine that the launch of the new line will benefit the country’s economy very much and it will give many people the opportunity to travel by air, for the first time in some cases.

Air Arabia is an interesting model for the region. I will analyze it by applying Hamel’s framework. Starting with the components of the core strategy, the business mission of this airline carrier is to provide flights at low rates. From a business concept innovation point of view, this is indeed considered innovative when you look at the scope of customers that Air Arabia serves. Moreover, with the introduction of the new destination, Kabul, the company tackled a new market scope that I classify as innovative. Basis for differentiation is the third component of the core strategy and Air Arabia’s mode of differentiation isn’t hard to figure out. They provide the lowest prices air travel in the region.
After reviewing the core strategy, we move on to the strategic resources where the first component is core competencies. Air Arabia knows how to lower their costs and offer low-prices air flights to its customers. Another component that could apply is that of core processes where employees in the firm are very much cost oriented that is transformed to low priced air flights offered to customers.
In customer interface, Air Arabia contributes to fulfillment and support through selecting channels that goes well with it business strategy. Their main tool of distribution is the Internet where this channel cuts down a lot of the costs. The pricing structure is the main component that drives Air Arabia. The company does that through charging below market rates for their flights.
In conclusion, I find Air Arabia an interesting company, and I find the new destination even more amusing. Although I am not sure that I will ever use it to visit Kabul, but I always like the fact that the option is there. And Air Arabia made that option happen!

Easier Work Culture Lures

When I graduated from AUS four years ago with a B.Sc. in Finance, I knew that I wanted to build the basis of my career in the private sector. I knew that this is the right place to be. I knew that if I needed excellent exposure and superior experience then it had to be in the private sector. Thus, the article “Easier work culture lures” attracted my attention because I always had discussions with my colleagues about how important it is, in my beliefs, that young people join multinational companies once they graduate, most of which of course are classified as private sector. In any case, I always knew that many nationals would always prefer the public sector for a number of reasons that are mentioned in the article.

In analyzing this article, I will consider the private sector a firm, and the public sector the competitive, both sectors are after the same customers, the UAE nationals. Each sector offers an employment package, but according to the article, the better package is that offered by the public sector! (This doesn’t mean that I support working for the public sector, I am an advocate of working in private sectors, and more specifically multinational companies.)

One way to analyze the situation is through Barney’s framework where the questions of VRIO are answered. When we start with the question of value, the public sector appears to have the resources that enable them to respond to environmental opportunities. In this case, the demand of UAE Nationals to the jobs offered in the public sector. The sector offers fewer working hours, reasonable salaries, longer annual leave, and other benefits that are accustomed to the culture of the UAE like the paid leave to accompany sick relatives for treatment abroad and the days to complete the pilgrimage to Makkah. So, in answer to the question of value, YES, the resources and capabilities depicted in the package that they offer the UAE nationals allows it to exploit the opportunities of appealing to these UAE nationals to come and work for them.

The question of Rareness is also answered positively since we have two main players, the public and the private. The only firm who has the valuable resources is the public sector, this makes the resources rare. Also, the private sector may find it very costly to match the same resources and make it available to UAE nationals.

Then moving to the question of Imitability, we can see that imitating the package is not rocket science, however, many private firms will find it extremely costly to match that one offered by public sectors especially that businesses are there to make profit. Thus, this sector may prefer to hire nationalities other than the UAE because they simply can’t afford matching the resources offered by the public sector.

The last question of Organization is also answered positively because the public sector is organized to exploit the full competitive potential that they have and offer.

In conclusion, the public sector fulfills a sustained competitive advantage. The only way that the private sector will gain a similar position will be either to match the package that is currently offered to the UAE nationals. This option will be very unlikely. The other way around would be as the article mentions, is for the public sector to start matching working hours, and maybe also reduce some of the benefits currently offered.

I don’t care what UAE nationals want or prefer, but I am sticking to the private sector for a while, I know that this is the place to be!