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

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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

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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

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Types of Growth Strategies

• Diversification• Concentration• Vertical

Integration• Horizontal

Integration

12/17/2012

By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro

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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

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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

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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

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About the ChairmanMohamad Al Hout

12/17/2012

By: Meryan Sakr, Nadine Naji, Karim El Ahmad, and Tarek Amro

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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

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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

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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

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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

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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

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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

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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

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Sources Used

• Interview with Mr. Mohammad Hout and Mr. Kamal Accad

• http://oxforddictionaries.com/definition/english/strategy

• www.mea.com.lb

12/17/2012