Decision-Making And Problem Solving Issues - Example

Student: Tutor: Course title: Course code: Institutional affiliation: Date of submission: Table of Contents Report on factors advising Qantas’s decision making approaches 3 1 Introduction 3 2 Type of study 3 3 Qantas background 4 3.1 PESTLE Analysis of Qantas 4 3.1.1 Political 4 3.1.2 Economical 5 3.1.3 Sociological 6 3.1.4 Technology 6 3.1.5 Environmental 7 3.1.6 Legal 7 4 Competitive situation 8 4.1 Results of SWOT analysis on Qantas 9 4.2 Strengths 9 4.3 Weaknesses 10 4.4 Opportunities 10 4.5 Threats 11 5 Discussion 11 6 Conclusion and the recommended course of action 12 References 13 Report on factors advising Qantas’s decision making approaches 1 Introduction The brand in consideration in this report is Qantas airlines. Qantas was founded in 1920 and since then has grown to become a leading airline in long overhaul air travel in the world. This has been largely due to a reputation of excellence in safety, operational reliability, engineering and maintenance and customer service. The company operates under two brand names; Qantas, Jetstar (Qantas, 2013). The company also operates under subsidiary business and specialist markets such as holiday, travel and in-flight catering (Qantas, 2013). The company employs 35, 700 people 93% of them being in Australia only and flies over 140 destinations across the world. The company posted $ 95 million profit before tax from its operations. Within the same period the company had increased its revenues by 6% to $15.7 billion (Qantas, 2012). Considering the challenging environment of the air travel industry in the world characterized by increased fuel prices and poorly performing economies around the world, then it can be concluded the company strategy to make profit for its shareholders is yielding positive results (Qantas, 2013). 2 Type of study This report shall be the findings of a descriptive research on what practices by management at Qantas airline can be adopted to reduce the level of risk in decision making. It is worthy noting that Qantas airline is a large entity with a high number of employees and operations as covered earlier (Qantas, 2013). It follows then that, if poor decisions are made by the management, the results might be devastating in terms of profitability and growth of the company. The descriptive research was adopted since it will be the most appropriate in actualizing the main objective of the study which is to highlight the best approaches to decision-making at Qantas airlines which can reduce the risks involved. 3 Qantas background 3.1 PESTLE Analysis of Qantas 3.1.1 Political Politics shape the economy and business environment in every corner of the globe. The airline industry is so much of interests to political institutions and the regulatory bodies. This is particularly due to growing threat of terrorism and geopolitical agendas. The rise of terrorism has led to increased security measures especially for airlines operating direct flight to US and other European countries. The strict barriers in the airline industries around the world are easing and being replaced by regulatory frameworks that seek to open up the skies for airlines to operate freely (O'Connel & Williams, 2012). Geopolitics has also defined just how airlines should do their business and where they can do it too. It is common nowadays for global powerhouses like the US and UK to slap sanctions and issue travel advisories to their citizens against going to some destinations where the authorities feel they could be in danger. As a result airlines flying such routes record huge losses. Some countries restrict their airlines from flying certain routes indirectly of indirectly through regulation. This is often meant to serve some geopolitical agenda (Bartsch, 2013). However, crucial alliances like one-world which Qantas is a member are still vital in ensuring access to global markets. Prolonged EU politics regarding the future of the Euro Zone have had an effect on Qantas Airline long haul flights to the region. Australia being a stable democracy means Qantas is not in any way threatened by political instability from its main market. 3.1.2 Economical Airline business being a transnational business especially for the case of companies such as Qantas, recession in the global economy or economies of some important regions means air transport as businesses will experience low growth and due to low movement of people doing business (Delfmann, 2005). Qantas Airline long haul program has been hit hard by the Euro zone economic downturn as from the year 2009. Much of the company’s revenue is eaten up by the high cost of fuel followed by staff expenses. This has been the same story for major airlines in the world where the companies engage in cutthroat competition and thus can enjoy favorable profit margins to recover their expenses in staff and fuel costs (Aulenbach, 2007). Economically, it can be seen that Qantas as a company is struggling with high costs of operation and a competitive domestic market that are having a toll on its profitability. 3.1.3 Sociological Qantas can be regarded as the long haul airline of choice for travelers to and from the Australia. This is a position that the company has aggressively marketed and protected to ensure profitability and market a profitable market share in a market that is very competitive even for the big players (Aulenbach, 2007). The Asia-Pacific region is experiencing an economic boom resulting in people with high disposable incomes; and can thus provide a good clientele for the airline if it markets it brand effectively (Graham & Papatheodorou, 2012). The premium market can provide an alternative for the company to differentiate its services and at the same time incur less cost by flying less and generating higher revenues by serving the premium market that is willing to pay high prices for travel services. 3.1.4 Technology In this era of a rapidly globalizing business environment, embracing of technology is no longer a choice but a mandatory inclusion if a business is going to cut its expenses and stay ahead of the completion or at least get into the competition (O'Connel & Williams, 2012). Qantas airline has taken advantage of information technology and internet growth around the world and in Australia to improve customers experience as customers can book online for flight, change flight plans to upgrade or get into other cheaper plans. One can also book hotel rooms in Australia and other selected regions through the airlines website. The airline also offers support for customers through the website (Qantas, 2013). 3.1.5 Environmental Environmental issues are of great concern to customers and stakeholders alike in the 21st century when the human race is more aware of the destructive nature of some of well intended human activities (Simerson, 2011). Some of the environment issues facing the airline industry is the amount of pollution the air transports impacts on the environment. According to the European aviation safety agency website (easa.europa.eu, 2013) global air traffic is growing at an average of 5%. This presents a challenge of reducing the environmental impact left by the air travel. The agency proposes technological and operational improvements to lower the level of impact on the environment by airline operators. Noise and carbon emission remain to be the greatest concern for environmentalists and the global community at large. If Qantas Airline is not compliant with measures to reduce climate change it can face difficulty attracting customers in the near future especially in Europe and North America. 3.1.6 Legal Regulations are present in virtually all industries with the view of maintaining a fair playing ground for everyone including the governments and the consumers and not just the businesses alone (Chell, 2001). Operating at international level means Qantas Airline will have to comply with various regulatory issues such as safety and security features for all oneworld members. Threat posed by terrorism means the company has had to have tighter policies to comply with international airlines requirements (Graham & Papatheodorou, 2012). Qantas Airline is not currently into any legal problems as regards its industry conduct. In fact the airline is considered the safest airline in the world today. However, the company must adhere to industry regulations on safety and security standards, air traffic regulations and treatment of disabled travelers. 4 Competitive situation Qantas is facing a stiff competition from global airline brands such as Emirates, Virgin airline and Malaysia airline. The Australian market attracts a lot of tourists mostly from Europe and North America. Many of the tourists are shared among the major airlines operating the route and thus reduce the market share for the airline (Aulenbach, 2007). The Gulf airlines have strong financial backing from their states and as such don’t incur a lot of fuel related expenses and thus pose great competition to Qantas since the market is very open to competition (Graham & Papatheodorou, 2012). It will be suicidal for any company to leverage on price differentiation as a competition strategy. Instead service differentiation may make the difference for any company wishing to dominate the Asia-Pacific route. Following the gloomy economic situation in many economies around the major travel markets, several Low cost carriers have made considerable gains offering their services to the price sensitive travelers. However the cost of sustaining such a plan is very high due to fuel prices and low travel traffic (Graham & Papatheodorou, 2012). Some airlines like Malaysia air have been toying with the idea of offering premium services a s result [of this new reality where maximizing on efficiency is quite difficult due to increased competition and high costs of fuel diminishing the already little profit realized from airline operations. This is a route that Qantas might consider moving into considering the challenges the airline is facing. 4.1 Results of SWOT analysis on Qantas From then research conducted, some of the following features were identified from the internal and external environment analysis of Qantas airline which will be of paramount importance to decision making at Qantas. 4.2 Strengths 1. Qantas is a member of oneworld alliance meaning the company has a wide market to source for travelers in the premium travelers segment. Oneworld has members in major travel destinations including most developed countries in Europe, North America and Asia-Pacific (Graham & Papatheodorou, 2012). This means Qantas has a wide market base all over the world from which it can source for clients to improve their current revenue collection. 2. A reputation of offering safe travels to its clients through flight operations and emphasis on quality servicing of the fleet. This means the clients some of whom we interviewed have a very high level of trust of their wellbeing while using Qantas services 3. A wide Australian market which considers the airline their choice to other world destinations. The company has operated in Australia for almost one century making it a part of the Australian history and heritage. Australians associate with it. It is their homegrown airline and Australians are likely to prefer it over others. This is what 60% of Australians in the research stated. 4.3 Weaknesses 1. Rising fuel costs that are reducing the profit margin being made by the company. Even though this is a common problem to airlines all over the world, the company ought to explore practices that will reduce the impact of fluctuating fuel prices on its profitability. 2. Qantas airline does not cater for the premium travel segment that is quite lucrative due to the minimal costs it incurs and the high revenues it can generate. The airline focuses on long haul travelers who generate income to the business by a model of ferrying as many passengers as can be achieved. 4.4 Opportunities 1. The company can take advantage of the strategic position it has to serve the Asia-Pacific region which is currently enjoying an upward growth trajectory in terms of economic productivity. This region has a wide premium travelers segment from the region and also from around the world with business or travel interests (Graham & Papatheodorou, 2012). If the company takes advantage of this market, then it can realize high profitability from its operations. 2. The company may use its Oneworld alliance and globalization to position itself as a global brand through advertising and promotional activities to increase brand awareness and as a result high travelers’ numbers. 4.5 Threats 1. There is stiff competition in the market as airlines seek to extend their market share in the region. This is threatening to reduce the company’s market share and result in low profitability which will stifle growth of the company. 2. Terrorism and flight accidents is a major threat to profitability in the airline industry, Qantas is not excluded meaning there exists the threat of losing market share if any terrorism incident occurs in one of the airline’s flights. 5 Discussion From the results of the analysis of the secondary data and primary data collected, it is evident that Qantas airline s faced by a rather challenging environment both internally and externally. Such an environment calls for prudent decision making ability on the side of the management in order to ensure profitability and growth of the firm and also to ensure risky situations are averted in an ever challenging aviation industry. The vision of Qantas is to be one of Australia’s great businesses and among the world’s greatest airlines (Qantas, 2013). This means the company will have to employ a great deal of commitment towards developing strategy that will serve to ensure its stakeholders are pleased with the performance of the company. Essentially the company has to continue posting healthy profits for the sake of its shareholders and also offer quality services and products to its customers through innovation and service development. Decisions have to be made within the context of a rapidly changing global environment where challenges such as security, environmental conservation and economic efficiency are particularly important for the airline business (Bohm, 2009). It is not enough to improve on technology through acquiring of more fuel efficient large capacity planes, it is also vital that a company such a as Qantas adopts a highly tactical strategy to deal with competition in the industry. The long haul segment is particularly a very competitive market segment that cannot be relied on for long term sustainability of the airline. The company needs to think about how it can diversify the product offering to counter the competition received from more efficient and well leveraged airlines such as emirates which receive quite huge state backing to compete internationally. The levels of risks in the global level also pose a great challenge to the profitability and survival of Qantas. It is worthy noting that terrorism is a major threat to airlines and as such a single mistake on safety could cost the airline greatly of clients. The management should then guard against faulty decisions when it comes to safety such as low budgetary allocation for security acquisition and activities. 6 Conclusion and the recommended course of action From the discussion above, it is clear that Qantas as an airline operating at the global level is presented with several opportunities and threats in equal measure. The management should then take caution to ensure the threats do not materialize into some negative implication for the company in form of lost revenue or ceded market share. The management should as well put structures in place to take advantage of opportunities that present themselves in the industry. Such actions as setting up a R&D unit with an exemplary entrepreneurial focus will go a long way in developing and introducing new products in the market to ensure the sustainability of growth in revenue and market share for Qantas airline. All the same, Qantas has made impressive strides over the past few years to post $95 million profit before tax from its operations in the year 2012. References Aulenbach, S. 2007. Business Deconstructed - QANTAS AIRWAYS LIMITED. GRIN Verlag. Bartsch, R. 2013. International Aviation Law a Practical Guide. Ashgate Publishing. Bohm, A. 2009. The Swot Analysis. GRIN Verlag. Chell, E. 2001. Entrepreneurship: Globalization, Innovation and Development. Cengage Learning EMEA. Delfmann, W. 2005. Strategic Management in the Aviation Industry. Ashgate Publishing. European Aviation and Safety Agency. (2013, April 2). Aviation's environment challenges. Retrieved May 9, 2013, from European Aviation and Safety Agency: Graham, A., & Papatheodorou, A. 2012. Aviation and Tourism: Implications for leisure and travel. Ashgate Publishing. O'Connel, J., & Williams, G. 2012. Air Transport in the 21st Century: Key Strategic Developments. Ashgate Publishing. Qantas. 2013. About Qantas. Retrieved May 9, 2013, from Qantas: http://www.qantas.com.au/travel/airlines/about-qantas/global/en Qantas. (2012, june 1). Investors full year results - 2012. Retrieved April 9, 2013, from Qantas: http://www.qantas.com.au/travel/airlines/investors-full-year-results-2012/global/en Simerson, K. 2011. Strategic Planning: A Practical Guide to Strategy Formulation and Execution: A Practical Guide to Strategy Formulation and Execution. ABC-CLIO. Read More