Situational Analysis of the Company Qantas Airways Limited at the Macro Level - Case Study Example

Name Date: Professor: Unit Tittle: Institution: Table of Contents Table of Contents 2 Introduction 4 Situational analysis of the company at the macro level 4 Conclusion 11 Executive summary Qantas Airways Limited is one of the world’s most competitive air carriers providing its clients with both passenger and cargo transport. The company is facing stiff competition from other flier companies such as the fly emirates and the Etihad companies. To overcome this competition in the Australian market, the company has chosen to invest heavily in high quality products and service to their clients. This involves introducing new premium lounges, 12 Airbus A380, increasing the points-earning opportunities and flier programs, introducing next generation Boeing 737-800, introducing smarter check-in technology and network improvements to enhance competitiveness in the Australian market. The scope of this report will entail providing an overview of the organization, company’s situational analysis and recommendations to be put in place to enhance the organization’s competitiveness. The above strategy objectives include ensuring that the organization doubles their consumer base by exploiting the underutilized markets and increasing their global penetration through the provision of consumer friendly premiums and mass brands. Secondly, the strategies aim at ensuring that the organization attains its objective of expanding the category quality of their products and services. Adopting the above strategies will enable it segment their brands maintaining their competitiveness. The above strategies will enable the organization meet its core objective of maintaining its sustainable development. Through these, the organization will be operating in accordance with the porter’s principles hence competitiveness. Introduction Qantas Airways is one of the Australian airways involved in the provision of both international and domestic air transport services. Additionally, it provides its clients with freight services. The organization’s headquarters is situated in the Mascot, Australia. The organization’s mission includes consumer and freight safety, service excellence, operational efficiency and the provision of high quality brands including the Jetstar and the Qantas. Despite the organization’s recent excellent performance, it has been facing mountain of challenges both internally and externally (Qantas Empire, 1999).  One of the challenges facing the organization is the stiff competition arising from its competitors. These competitor airlines include the Etihad Airways, Fly Emirates and air Canada among other competitive airlines. Additionally, technological advances in the airline industry contribute to some of the challenges experienced by the organization. Therefore, this report will analyze the organization basing on the principles of situational analysis to identify the organization’s strengths, weakness and threats. The situational analysis of the organization will facilitate in the coming up with new recommendations which can be adopted to provide the clients with high quality products and services. Situational analysis of the company at the macro level Situational analysis is one of the tools which have been largely used to evaluate the strengths, weaknesses and threats facing an organization. The analysis involves taking into consideration the organization’s objective, business venture and identifying the internal and external factors which are likely to influence the organization’s performance. Thus, the key purpose of carrying out Qantas situational analysis is to identify its internal and external factors that enable it to achieve the above stated objectives (Qantas Empire, 1999).  The macro level analysis of the organization will take into consideration ways in which the political, economic technical and social environments affect the attainment of the organization’s objectives. One of the economic impacts which might affect the attainment of the above organization’s objective is the increasing terrorism globally. This includes terrorism attack on airline industry such as the September attack (Qantas Airways, 1997).  Increasing risks of terrorism attacks leads to decline in performance of the airline companies. Additionally, the poor status of other countries such as the Japanese and the America is likely to impact negatively on the organization’s performance. The changing nature of the airline market is likely to impact on the attainment of the above objectives. This includes the domestic competition from the overseas companies. The companies include Virgin Blue, and Air Niz (Qantas Empire, 1999).  Political and legal environment will influence the realization of the above objectives. This includes the rules and regulation from the civil aviation and safety authority, law variations and the act of the Australian government allowing the foreign companies provide their services domestically. The Australian Competition and Consumer Commission overseas strictly the organization hence, regulating the nature of interventions to be adopted affecting the objectives to be achieved (Ferrell & Hartline, 2011).  Geographical influences such as the remoteness of the country’s landscape and location makes penetration a difficult process. Technological innovations impact on the organization’s operations. These include video conferencing, high tech flight entertainment systems and the need for great capacities may influence the implementation of the above strategies. Social influences such as changing consumer tastes might influence the implementation process. This includes tastes variation on the fashion, legal and cultural aspects which affect organization performance (Taylor, & Chartered, 2002). Qantas organization analysis using the Porter’s Five Forces and Product Life Cycle The Porter’s 5 Forces and product cycle analysis can be used to identify factors outside the organization that are likely to influence organization’s competitiveness, profitability and its rate of achieving its objectives. The model enables the mangers to identify various factors such as rivalry among the existing suppliers in the market, power created by the consumers in the market, impact the suppliers have on the sellers, potential threats in the market and potential substitutes in the market place (Pahl et al. 2007). The degree of rivalry existing between the company and its competitors will influence the realization of the organization’s goals. The rivalry arises from factors such as difference in the prices, warranties and product introductions among other factors. Additionally, the presence of multiple organizations providing airline services, slow rate of organization growth and diversity in the competitors’ strategies. The presence of substitute products to the interventions which should be introduced may influence the attaining of the objectives. The competitors can provide substitutes to the Qantas products and services innovation placing the costs high hence limiting profits realized from adopting the changes (Ferrell & Hartline, 2011).  The bargaining power of the buyers to adopt the changes in the company might impact on the realization of the company’s objectives. The buyers can create a greater impact as they can bid down the prices of the products and services, demand higher quality products and services than the ones adopted, and determine the rate of using the adopted implementations. Additionally, other suppliers bargaining power can influence the organization’s performance. Suppliers providing similar products as the Qantas airways can raise products prices or lower the goods quality altering the organization’s objectives (Qantas Empire, 1999).  Entry of new suppliers of similar products to those provided by the Qantas airways will influence the realization and implementation of the above changes. New entrants can bid down the prices associated with the products which the organization plans to provide to their consumers. Additionally, they can inflate costs thereby reducing organization’s profitability and alteration of organization’s goals. The life cycle model will enable the organization’s management understand the factors related to organization’s growth and its level of maturity. Therefore, Qantas airline will be able to make the necessary decisions regarding the new changes’ production, pricing, investments and future product development (Pahl et al. 2007). Qantas Competitors Situational Analysis with its Current and Future Strategies Qantas airways face stiff competition from other companies involved in the provision of airline services. Some of the Qantas competitors include the Cathay Pacific, Singapore Airlines, the Fly Emirates and Air Canada among other global competitors. Domestically, the company faces stiff competition from airline organizations which include Tiger and Virgin Blue airlines. Government regulations contribute to the competitive advantage gained by the other foreign airline companies. This includes regulations on taxes, new implementations and other legal requirements (Ferrell & Hartline, 2011).  In respond to the rising competitions, Qantas airways have employed other means such as operating in alliance with the Fly Emirates. The alliance will benefit the organization by increasing the profits realized from their new flier programs and the increased airline to destinations previously operated by the fly Emirates airways. Additionally, the organization has opted to introduce other interventions such as investing heavily in high quality products and service to their clients. This involves introducing new premium lounges, 12 Airbus A380, increasing the points-earning opportunities and flier programs, introducing next generation Boeing 737-800, introducing smarter check-in technology and network improvements. These interventions enhance the organization’s performance reducing the effects of the competition (Pahl et al. 2007). Some of the future strategies which the organization plans to embrace to minimize the effects of the stiff competition include improving clients’ incentive programs, adopting the new technologies in their systems, penetrating new markets and introducing first class airlines within the country and outside Australia. However, it should be recognized that the organization will face stiffer competition in further than the current competition state (Holloway, 1998).  Qantas’ Consumer Segmentation and target market, Forecast future sales next 3 years The large size of the airline market necessitates the need for market segmentation of the target market. This involves identifying individuals with same characteristics, and potentiality to utilize the organization’s products. Therefore, Qantas has segmented their market into three different bases. These include demographic segmentation, quality wise segmentation and demographic segmentation. The segmentation involves groping the consumers basing on airline users, fashion seekers, technology interests and those who like social life (Qantas Airways, 1997).  One of the benefits which the organization will realize from segmenting it target market during the adoption process of the above changes is enabling it retain its large number of consumers in the airline market. The limited will also provide services which meet consumer needs due to it being able to understand their consumers’ needs. Segmenting the target market will contribute to the increase in the organization’s profits enhancing its market sustainability. The organization will recognize the market changes and needs enabling it make the necessary adjustments. Segmentation is expected to increase the organization’s profit to 9.25% in the coming three years from the current 7.28% (Qantas Empire, 1999).  Recommendations and Justification of Strategy in accordance with Porter’s generic strategies Different airline companies have different methods of achieving their competitive advantage over their competitors. Therefore, Qantas airways should adopt effectively implement the adoption of various interventions to enhance its competitiveness. One of the strategies which should be adopted by the organization is cutting its travelling costs to a lower rate than that of its competitors. This will benefit the consumers due to the lowered prices increasing the organization’s profits. The company will grab the market share ensuring that most of their airplanes are full reducing the costs associated with the air travel. Organization’s luxury airlines should improve their services by ensuring that they provide high quality and comfortable services to their clients. The higher the quality of the services provided, the higher the prices the consumers will command (Ferrell & Hartline, 2011).  Qantas airways should also come up with unique products and services which are different and more attractive than those of its competitors. This includes modifying the features, customer care support, and durability, comfort and brand image of their products. To achieve these, the organization should conduct a comprehensive market research, developing high quality products as stated in the executive summary, and coming up with effective and efficient sales and marketing strategies to heighten the organization’s image and productivity (Taylor, & Chartered, 2002). The company should adopt the focus strategy so as to gain competitive advantage over its competitors. This includes concentrating on specific market niche, adopting effective marketing strategies and understanding consumer needs and market dynamics. Focus strategy will enable the organization benefit from a high degree of consumer loyalty discouraging direct competition from other competitors. The organization’s bargaining power with their consumers due to the decreased volumes associated with the strategy (Pahl et al. 2007). Adopting the focus marketing strategy will benefit the organization by lowering the costs associated with resources investments. Prolonged use of the technique will benefit the organization through employee market segment specialization. The system will provide the organization with wider scope for that specific market segment and its needs. Customer loyalty increases the number of clients utilizing the airway services hence, increasing the organization’s profit and productivity (Holloway, 1998).  The organization should provide its clients with varied range consumer friendly incentives. This includes increasing the rewards associated with frequent flier programs, recognizing clients who use the airline frequently and increasing the costs associated with redeeming of the points accrued from the air travels. By doing so, the organization will be able to increase the number of clients utilizing their services hence, improved performance. The company should come up with organizational structure which stimulates employee motivation and creativity. This will reduce overdependence on a particular ways of carrying out organization’s operations (Ferrell & Hartline, 2011).  Conclusion From the above report, it is evidently clear that the success of any organization largely depends on the adoption of effective intervention to promote change. Careful organization’s situational analysis should be carried out to identify organization’s strengths, weakness and impending threats. However, the success is only realized when the most successful marketing strategy is adopted. Therefore, organization’s senior management should practice effective leadership styles, SWOT analysis and regular monitoring of interventions to ensure organizations’ success. References Ferrell, O. C., & Hartline, M. D. (2011). Marketing strategy. Australia: South-Western Cengage Learning. Fyall, A., & Garrod, B. (2005). Tourism marketing: A collaborative approach. Buffalo: Channel View Publications. Holloway, S. (1998). Situation analysis. Aldershot [u.a.: Ashgate. Pahl, N., Richter, A., & University of Applied Science Berlin. (2007). SWOT analysis: Idea, methodology and a practical approach. Munchen: GRIN Verlag. Taylor, S & Chartered Institute of Personnel and Development. (2002).People resourcing. London: Chartered Institute of Personnel and Development. Qantas Airways. (1967). Qantas menu. S.l: Qantas Airways. Qantas Empire Airways. (1999). Qantas Empire Airways: A gazette published monthly by Qantas Empire Airways Limited. Sydney: Qantas Empire Airways. Read More