Business Strategies for Qantas Airline - Example

Business Rероrt (саsе study of QАNТАS) Name Institution Executive summary; In Australia, airline industry is very essential whereby it serves both domestic and international customers. This is the same in the global market. This report contains different sections majorly being the external and internal analysis. The external analysis comprises of; threat of entrance, customers power, suppliers power, substituting services, and the opportunities and threats domestically and internationally. The internal analysis entails; tangible and intangible resources, core capability, the value chain analysis, weaknesses, and business action plan of Qantas airline group. Table of Contents Executive summary; 2 Table of Contents 3 Introduction 3 1.External analysis 4 2.General environment analysis 4 3.Industry environment; 6 4.Competitive environment 8 5.Opportunities and Threat analysis 9 6.Tangible and intangible resources 10 7.Capability identification; 10 8.Core Competency; 11 9.Value Chain analysis 11 10.Weaknesses 12 11.Success factors; 12 12.Current strategies; 13 13.Strategic action plan; 13 References 18 Introduction Qantas is an Australian’s major airline and second oldest globally. The airline was founded in 1920 and it serves both international and domestic airline in Australia. Qantas refer to Queensland and Northern Territory Aerial Services. The airline is among the known long-distance carriers worldwide whereby its services are diverse to Asia, Europe, and North America. The airline offers services to 44 countries and in 182 destinations having some cockpit innovations and leading in exploration and recording of flight data. Qantas has around 3,000 employees who are equipped with the current technology and quality training for effectiveness of their service. The operation in the airline is done through operation planning, catering, aviation services, engineering, flight functioning, and airports. This report analyses the business strategy of Qantas in the airline industry. The content is available from article published from 2010 to 2014. The report analysis internal and external business environment. 1. External analysis What industry is it? Qantas airline operates in the airline industry. It is the second largest airline globally and the largest airline in Australia in the airline industry. The aviation industry deals with cargo and human transport. The industry is faced with competition from emergence of many airlines. Tourism is one of the major contributions of growth of airline industry. This report explores the business of Qantas international carrier and Jestar the domestic flight carrier since they are the core businesses of Qantas airline. The airline deals majorly in transportation of passengers. The industry offers customer service, and ensures safety of clients. 2. General environment analysis Economics The economy in Australia influences the business of Qantas in that Qantas require to meet expenses such as fuel, and payment of workers. According to World Economic and Financial Surveys (2013), the flight business in Australia is likely to increase and lead to improved performance of Qantas. It is challenging for Qantas because fuel cost is high because of reduced availability of fuel in Australia. The OECD Report (2012) identify that the GDP of Europe and Asia might have some changes and this is likely to influence Qantas profitability operations. Qantas meet major expenses through operation costs. Qantas was also affected by 2008 financial crisis that occurred globally whereby the airline industry made high losses with Qantas being greatly affected. If the economy remains the same, Qantas expenses will continue being the same Physical Qantas introduced a brand new aircraft (A380) and this enhanced improved performance due to advanced technology Qantas Airways limited (2012). The airline owns airbus A380-800, which amounts to 10 in number, thus enhancing Qantas to land to 50 domestic destinations, thus increasing the airline flight. Social cultural; According to Hanson, D. (2012), the cultural different between the east and west culture of Qantas results to increased tourism, global immigration, and improved education in Australia, thus increased opportunities for operations of Qantas in the Asian market. Political and Legal; Around 55% of Qantas was owned by the Australian government and this was in 1993. The Australian government sold some part of the Qantas carrier department to private sector in 1992. The Australian government removed restrictions associated with entry and pricing to enhance increased investment. The airline should seek for landing rights from the foreign countries as the Federal government will allow it. Demographics Qantas serve customers of different age groups whereby it mostly serves people between 18 to 40 years, and people of different income status and in different countries from Europe, Asia, and Africa among other continents (World Economic, &Financial Surveys, 2013). The airline serves people as long as they meet the charges and requirements of passengers; hence, there is no specific percentage of household disposal income that is directed to flight. Global Qantas experience stability both in Asia, and USA where there is no war and political instability. There is less competition globally, thus enhanced opportunity for Qantas operation. Qantas also operate in Africa and there a good opportunity. Qantas have some linkage with Emirate and this enhances its operation. Globalisation enhanced Qantas to have access to many destinations globally. 3. Industry environment; Threat of new entrants; As articulated by Porter (2008), there is entry barrier in the airline industry because of requirement of huge amount of capital. The entrance of a new competitor, leads to increased profit in the existing airline companies who fight the new airline through cost structure and the economies of scale. Tiger Airways tries to compete with Qantas, but due to challenges of fitting in the industry, thus becoming hard for it to advance. For new airways to make some profit, they require personal brands and increased effort, as well as requirements, such as security, and certification. Bargaining power of suppliers of There is increased bargaining power of suppliers as per the argument of porter Porter (2008), where the airbus and Boring bargaining in settlement of buying other aircrafts, such as A380. The fuel suppliers are less and this makes them to increase the price of fuel. There are providers of catering services who have bargaining power because customers have to served with meals. Moreover the employees in Qantas group have bargaining power since their skills are much needed in the industry, such as the engineers, pilots, the cabin crew, and the ground people since they have unions Bargaining power of buyers According to Porter (2008), Qantas is the major and largest airline in Australia, and there is competition in the market, buyers of the services have some bargaining power where they negotiate for discount. The passengers travelling for reduced distance pay less charge compared to passengers travelling longer distances. Due to online services, customers manage to check for lowest prices charged by different airlines. Passengers are also very keen on the time they travel whereby they target the time when the charges are low. However, the scheduling of the airline routes is done by the airline; hence, customers do not have power to make personal choices. The bargaining power of passenger increases when one purchases a ticket individually or in a group of less than twenty people. Threat of substitute service Travelling can be done in a number of options, such as train, ship, vehicle, or airline. Qantas is faces with the threat of substitute services from the railways, buses cars, ships especially in the domestic market. In the international journeys, there is reduced substitutes because flight is the fastest mode of transport and suits for passengers who travel in different places globally. It is apparent that, the Jestar does not face substitute threat from fast train within Perth, Brisbane, and Sydney because train is capable of taking more than ten hours while flight takes less than two hours to reach the same destination. The cost of flight is very high compared to other means of transport, thus making people prefer other transportation means for domestic travel. For remoteness of some places, flight is the best. Rivalry from the competitors; The Airline industry is characterised with increased rivalry among the airlines. Qantas compete with Tiger airways, Cathy pacific, and the Virgin Blue, but due to the focus of Qantas where it operates with Jestar, competition reduces. International competition is marked by; Emirates, and Singapore airlines. Due to provision of service in the same routes by several airline companies, competition tends to increase. Different airline companies improve their customer service, thus increased rivalry. 4. Competitive environment Domestic competitive environmental analysis Jester competes with Virgin Blue and Tiger in Australia for the domestic market, and Virgin Blue owns 35% to 40% of the Australian market (Qantas Airways Limited, 2014). The Qantas domestic competitors charged reduced prices and they have profitable strategies. This makes Qantas to reduce its prices and competition strength. Jester flights in different cities, such as Perth, Adelaide, Alicasprings, Darwin, Sydney, Brisbane, and Melbourne. However, Virgin Blue and Tiger flight only in the capital cities, but Jestar has main terminal in all metropolitan states. Virgin Blue competes strongly with Jester because of support from its parent company in UK, thus additional investments allowing purchase of new aircrafts for Virgin Blue. International competitive environmental analysis Internationally, competition is high whereby Qantas compete with Malaysia airlines, Virgin Australia, Elihud, British airways and Singapore Airlines. These airline companies have functional websites, skilled professionals, are loyal to customers, and known brands. There is price competition among the airline companies. The international competitors offer improved customer service, reduced price to the middle-east and Asian market. Access to landing rights is a challenge for Qantas except in the Singapore Bangkok. The routes in the UK and US reduce. However, most of the Asian airlines are sponsored by the government. Competitors are new, modern and with many customers. The flight becomes expensive for Qantas because of increased petrol price and high landing price especially in the Asian destinations, such as Bankok, Wuhan, Hongkong, Shanghai, Beijing, Chicago and Indonesia. 5. Opportunities and Threat analysis Domestic; Opportunities Threats Low cost operating mode of the airline Increased competition from Virgin Blue and Tiger Increased customers in Australia Reduced prices by competitors Australian development Virgin having good brand in the continent Implementation of the business strategy by Allan Joyce and the Board Customer bargaining power of reduced prices Good shape of the airline company Challenge to Allan Joyce and Board innovation in the emerging market Increased aircraft Revenue loss from reduced competition Service in different cities domestically Underperformance of some routes International; Opportunities Threats Overseas students Increased competition from Singapore airlines, Emirate, British Airlines and others Increased tourism Poor brand recognition Increased travellers in Asian and other markets due to growing population Increased oil prices Increase in population globally Denial of landing rights Second largest airline globally Increased airlines globally Serving highly populated markets, such as USA, India, China, as well as USSR. Underperformance of some routes Opening of new markets Financial crisis 6. Tangible and intangible resources Tangible resources These are assets that can be counted, such as physical, technological, financial, and organisational resources. Qantas has 146 aircrafts; there are some hubs in places, such as Melbourne, Kingsford, Sydney, Perth, Singapore, Edelaide, and Brisbane. The airline company owns a commercial power branch capable of supplying coolants, heat, and electricity in Sydney. It’s headquarter is in Sydney and has over three thousand employees. Intangible resources These are resources that cannot be counted, such as good reputation. Qantas wins customer trust both domestically and internationally. The airline group has a good reputation, and attracts customers globally and locally, as it is the flag carrier in Australia. There is usage of advanced technology by Qantas Company, it has good brand. Its employees are highly trained and experienced. There is consideration of customer loyalty in all places of operation of Qantas. 7. Capability identification; Highly skilled employees Increased terminals Strict staff training Jester cargo Good reputation and brand name 8. Core Competency; List 10 competencies here Rare set of competencies Hard and costly to imitate High impact high urgency core competencies Competencies sustain business competitive advantage of competitors Jester Skilled and experienced staff. No Yes Yes Yes Many landing rights and terminals in Australia No Yes Yes Yes Many aircrafts Yes Yes Yes Yes Improved safety and maintenance measures No yes Yes No Improved customer service No Yes Yes Yes Qantas; Flight destination Yes Yes Yes No Improved safety No Yes Yes Yes Destinations Yes No Yes Yes Landing rights Yes Yes Yes No Qualified staff No Yes Yes Yes 9. Value Chain analysis Provision of quality services to the customers, flight entertainment, sales and marketing activities, and earning of points after purchase of ticket. Access of online updates for time, booking fees, luggage status, and flight charges. There is increased technology and proper maintenance of the aircrafts. Primary activities Airline routes are set, use of travel agencies and online website for sale of tickets, and arrival of customers to the airport. Support activities Service to the passengers from the flight attendants with drinks and snacks, and luggage carrying services by the company 10. Weaknesses Students are required to undertake weaknesses analysis of both JetStar and QANTAS International Jetstar Qantas High fuel cost Increased fuel prices 51% government ownership limits the competition Poor quality brand Lack of proper planning Poor planning Increased costs High costs Poor management Poor performance 11. Success factors; Jetstar; Engage in more profitable destinations from July 2013. Improve the domestic terminal network Train the staff to gain more skills Establishing the brand locally Reduction of charged prices Minimising the domestic flights that are non-profitable Qantas: Improved safety techniques Good relationship and network with the competitors Focus at Asian market because of growing population Improved customer service Use of advanced technology Increased marketing and sales activities 12. Current strategies; Jestar; Outsourcing of services from agencies Lowering prices of the domestic flights Focusing at profitable terminals Differentiation of the target market Qantas Outsourcing some services from service providing agencies Change the management to a committed one Focusing on countries where there is population growth Improve the brand in the international market and joining hands with the competitors for support. Differentiation of the target market 13. Strategic action plan; JetStar Strategic Business Action Plan Template Business Objective Action to be taken By Whom By When Estimated Cost It is the objective of Jetstar airlines within Australia to offer steady and dependable customer service to its clients The workers in customer service department will be skilled to be welcoming and attractive to the airline’s clients Customer service officers Training $370 per staff The workers in the department and managers offer required assistance to the clients Managers and workers in the department Strict supervisor and improved customer service Staffs in the department should update customers of any report from the airline Managers and staff in the customer service department Always before departure and arrival time The staff in the customer service department notify travellers some minutes prior to the time that travellers should appear in the front counter to board Customer service officials Around ten or 5 minutes before the cut off time of clients boarding. Give an ear to the views and opinions of customers and taking actions for any complaints Managers and the department officials Any time when there is a comment or complaint from a customer The airline should set a customer service telephone line and employ a skilled person to take customers’ complaints and take a necessary action as fast as possible Managers and the customer service officer. Mostly every day of the week. QANTAs International Strategic Business Action Plan Template Business Objective Action to be taken By Whom By When Estimated Cost Qantas has an international objective of marketing its services to different countries and regions of operation The Qantas management should employ competent personnel in the sales and marketing department and send them to different regions. Qantas management team Recruitment $420 per worker The workers in the department plan for the regions to prioritise the project and the number of workers to be sent in every region Managers and workers in the marketing department Strategic planning Sales and marketing officials go around their respective regions for survey. Sales and marketing officials During the survey The staff in the marketing department to spread fliers, hold road shows and media advertisement in the target regions Marketing officials During the marketing process The staff should encourage public opinions and views regarding the operation of the airline in their regions Staffs in the marketing department After marketing and advertisement activities The airline should consider the public feedback and comments after receiving the advertisements and information about operation of the airline The airline management team After marketing and advertisement process. Conclusion In the airline industry, there is increased competition and due to hindrances in entry, there is low threat of entry in the industry. Qantas is a know airline industry in quality and valuable operations in Australia and in the global market. It is necessary for the company to set effective domestic and international strategies that enhances its competitiveness in the industry. References Hanson, D. (2012) Case Study 5: The Qantas Group in the Global and Domestic Airline Industries in Late 2012.University of Tasmania OECD Report (2012). Green Growth and the future of aviation. Retrieved from; http://www.oecd.org/sd-roundtable/papersandpublications/49482790.pdf Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40. Qantas Airways Limited. (2012). Qantas Annual Report 2012, Retrieved from; http://www.qantas.com.au/infodetail/about/investors/2012AnnualReport.pdf Qantas Airways Limited. (2014) Our Company, Retrieved from; http://www.qantas.com.au/travel/airlines/company/global/en Qantas Airways Limited. (2014) The Qantas History Retrieved from; http://www.qantas.com.au/travel/airlines/history/global/en World Economic and Financial Surveys (2013). Regional Economic Outlook: Asian and Pacific Regional Economic Outlook. Retrieved from; http://www.imf.org/external/pubs/ft/reo/2013/apd/eng/areo0413.pdf Read More