Strategic Management Qantas Airlines

Question: Discuss about theStrategic Management for Qantas Airlines. Answer: Introduction In the year 1920, Qantas Airlines was founded and is recognized as the third airline established in the world. There are five chief segments of the Qantas Group which includes Qantas Freight, Qantas Loyalty, Jetstar Group, Qantas International and Qantas Domestic. The Qantas group strategy is to provide the best and desirable returns to its shareholders and the first and primary priority of the Group is the safety. Due to the major GFC i.e. the global financial crisis taken place in the year 2008 has led the airline to have number of modifications in its external environment. And these modifications had led a huge impact over the internal operations of Qantas (Goyal and Negi, 2014). For sustaining these changes Qantas higher authorities just focus upon the chief and core business of the organization so that it can attain the competitive benefits and can have the maximum return possible (Qantas Airways Limited, 2016). The organization was under the great burden of huge capital commitments. Qantas outsourced a total of 7000 of its jobs to the overseas for reducing the overall costs and rationalized its various capabilities and resources (Rochfort, 2006). Qantas also offshores its primary work of maintenance and engineering to the various other third parties which possess great safety record. This modification was done so that the risk of ruining of the image of Qantas can be limited in terms safety and the airways can continue with its image of the safest airline all over the world. The report will examine the competitive environment of Qantas, its strategies at corporate and business level. There are also provided recommendations for achieving more sustainable competitive benefit and attaining huge returns (Qantas Airways Limited, 2016). Industrial Analysis Porter 5 Forces Analysis Industrial Rivalry Increased volume of the opponents in the airline industry has developed a striving competition among the airline companies and thus the rivalry is robust because of the crowded marketplace. There is manifestation of the prices because of number of reasons such as service improvements, great marketing campaigns, addition of new products, huge discounts and the price wars. But Qantas have been able to attain the huge competitive benefit with its diverse set of market and unique products and services (Razal, 2016). Buyers Bargaining Power The buyers are generally price sensitive. In the airline industry the buyers are generally the business professionals or the individuals who are middle class. There is significant and strong buying power as the customers can switch to other airways for more value at low prices. In present scenario it is difficult to hold the buyer for a longer term and attain loyalty of the customer. And in the aviation industry Qantas maintain its position through two major brands i.e. Jetstar and Qantas Airways. Suppliers Bargaining Power Among the suppliers there is a strong position of Qantas as it is a very trusted organization. Qantas used to work with number of suppliers for preserving the profit margins as well as for reducing the prices. The airline possesses bargaining power in context with the prices but the suppliers hold bargaining power in terms of various assets. These assets include construction, fuel etc. (Lacar, 2009). Threat of new Entrants There are strict and high entry barriers in the airline industry as the companies are required to have a huge amount of capital for initiating the business operations. There are present numbers of airlines from small to large i.e. from domestic to international. And the industry usually works on very low margins as to earn the competitive benefit. For the new entrants the industry is not so attractive due to various reasons such as huge investment, safety risk, threat of competition and volatility of the market (Kremer and Symmons, 2016). Threat of Substitutes There are two major substitutes of the industry i.e. the road and train travel and that too with very low prices. But the airline industry provides several benefits such as comfort, convenience and time saving. The differentiation strategy and the integrated cost leadership approach of Qantas help the organization to retain its customers and have a very minor threat of substitutes. Macro Environment Analysis PESTEL Analysis Political The aviation industry is highly pressurized because of the increased terrorism. There are continuous and increased number of cases of plane hijacks and blown ups. And this led negative effect over the aviation industry and political connections among the various nations. Economic The aviation industry is also impacted by the oil prices. Because of the various developments in the oil industries, the airlines are increasing the airline alliances and employing various other non-monetary methods so that they can increase the power of buying fuel. The one of the most recent economic impact was led because of the global financial crisis. It affects the airline industry in a broader manner and the airlines were forced to reduce the prices (Moore, 2009). Social Because of the continuous economic growth, there was rapid increase in the number of individuals using airlines. There was sudden increase in the market share of airline industry as increase in the tourism destinations. But with the various tragic events such as global financial crisis and other events there is sudden change in the number of people using airline services. Technological For the aviation industry there are both positive as well as negative outcomes of the huge technological development. With the innovative technology people can now book tickets online, make and cancel reservations etc. on the other hand, the developments in the communication and information technologies have enabled customers to have various other ways to make communications and reduced dependency over the airlines (Tapper, n.d.). Legal The aviation industry is been negatively impacted by the newly imposed carbon tax. As there rae already very high prices of the fuel (Schmidt, et al., 2015). And it ultimately increases the prices of the tickets as the companies have to maintain a balance anyways of this additional cost. There are few governments which provide the subsidies to the airline companies which give undue advantages to those airlines and there is price war among the various airlines. Environmental The emissions led by the airlines impose a severe impact over the environment and its safety. The atmosphere is getting highly damaged with these emissions. The noise pollution is another major factor which gives rise to environmental concern (Schmidt, et al., 2015). Qantas Strategies Corporate and Business Level Strategy of Qantas The primary corporate or business level strategy of Qantas is diversification. The value of the business strategy of Qantas is mainly recognized by the extent to which the Qantas business management is of greater value in comparison of its opponents. The powerful corporate strategy of Qantas helps the airlines in generating huge returns as well as gives greater competitive advantage over its competitors. The airlines adopted diversification and outsourcing strategy to attain additional competitive benefits and to save the increasing operational costs. With these strategies there is sudden increase in the percentage of customers loyalty associated with the airways (Qantas, 2016). The organization also implemented the corporate level strategy of acquisitions and mergers. This helps in increasing the value of the stakeholders. There are number of benefits associated with the corporate strategy of merger and acquisitions such as diversification, operational synergy, elimination of the competitive risks, market expansion and growth. In the year 2008, Qantas adopted this strategy by having a string merger with JetSet Travelworld Limited and with this merger the company gained vertical expansion. There was recognized great profits and growth in the company with this merger (Chen and Muzi, n.d.). The strategic leadership evidence can also been easily recognized in the strategies adopted by Qantas. Alan Joyce has made the airline recognized globally with the international strategy. Alan Joyce has taken use of global expansion strategy for further developing its business. The airline started its expansion through expanding its roots in Asia. There were less entry barriers and greater competitive advantages in the Asian market which provides an opportunity to the airline to have its business operations overseas. There were also less competitive transportation facilities and high domestic population for taking use of the airlines. All these associated elements help the corporate strategy of global expansion of Qantas to be successful (Lucarelli, 2014). The strategy of outsourcing was also very much successful as the labors are available at cheap rates in the overseas countries and with increased knowledge and skills. This helps Qantas to reduce its prices and to have competitive benefit. Outsourcing is a very successful strategy and mainly in the developing nations as there is huge amount of labor and they are in search of work. This gives lower costs to the companies to perform their business operations (Qantasnewsroom, 2014). Current Position of Qantas Currently Qantas is recognized as one of the best airline in the aviation industry with best safety measures and great comfort. The products and services offered by Qantas airlines are renowned worldwide and are recognized as value for price. Presently the airline has made total revenue of $ 5825 in the domestic operations and $ 5467 in the international operations. There is continuous increase in the number of passengers and the revenues attained by the airlines. The airline is competing with its strategy of diversification and providing valued services to its customers (Qantas, 2015). Conclusion Qantas have been able to perform efficiently in its journey of approximately 100 years. The strong and robust strategic management approaches as well as business and corporate level strategies have supported the airlines to maintain greater revenues and increased customer base. The various strategies such as international expansion strategy, acquisitions and mergers and the diversification strategy help the airlines to develop a renowned position in the aviation market. The competitive landscape and globalization will keep on continuing in building environmental and competitive forces, both internal and external which will force Qantas to have strategies which can help in addressing the various changes. The strategies are linked with the mission and vision of the airlines which gives advantages to achieve the long term goals of safety and increasing customer base. The corporate strategy of the airline has helped the airlines in achieving higher revenues as well as value creation. The airlines have experienced both horizontal and vertical expansion through its various business strategies. The appropriate strategic managements are the major reason for the growth and success of the airlines. Recommendation There are few recommendations which can be provided to Qantas airways for competing in the global market and to face the various crisis and competitive business environment. Qantas is required to continue with its international strategy so that there can be development of the various regional business units. There can also be taken use of a transitional approach while expanding its business in the overseas countries. There are opportunities with Qantas to capture the market of China and India with the regionalization strategy as there required a local and regional responsiveness (Ho, 2014). There is great propensity in the individuals for travelling abroad. This can ultimately give business and growth to the airline industry if they have successfully encountered the needs and demands of the local and regional individuals (Bhattacharyya and Salim 2015). There is also required that Qantas must focus on developing the fuel efficient aircrafts so that they can have lowered cost of operat ions. The cost of the fuel is a major part in the overall costs of the airlines and it is required to be managed with various strategies so that the airlines can attain competitive benefits over its competitors. References Bhattacharyya, U. and Salim, D.D.R., 2015. Modelling the Dynamic Air Transport Aviation Fuel Demand in India.International Journal of Supply Chain Management,4(2). Chen, Z.H. and Muzi, H.E. (n.d.). A Case-based Analytical Study on the Strategic Evaluation of Common Equity Performance of SIA in a Global Organic Environment. Goyal, R., and Negi, D., 2014. 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