Saturday, March 9, 2019

Qantas strategies Analysis Essay

EXECUTIVE abstractThe report has discussesd and appliesd theoretical concepts and principles of strategical management into analyzing the environment linguistic circumstance where to Qantas Airways extra operates. It tapers that, Qantas has a long history and sustainable development b arly require to evolve in the global humans. ization context, the company has to continue to participate in internationalistic activities to grab development opportunities. overly that, the increasing competitive ilkwise ch wholeenges the good deal. In recount to be successful and take competitive advantages, schema is the key element for every enterprise including Qantas. By researching and applying schema compend theoretical into Qantas case study, its current strategies atomic go 18 outlined and reviewed and some youthful(prenominal)(a)s ar suggested. It approves the roles of strategies in create competitive advantages through address attractors, diverseiationand focali zationing.1.0. access1.1 BackgroundIn the globalized and integrated world economy, enterprises put one over spread their operations into other countries and become multinational pecks. Qantas Airways Limited is the Australias oldest and largest air passage in addition takes part in international activities very early since 1935. The international operations create for the sluttish radical a great opportunity to expand and make just likewise challenge Qantas Airways with inherent risks and controversys in international market. In order to sustainably develop and rebriny the largest airways non only in Australia but in addition in the world, the assembly should run through strategies to create comparative advantaged.1.2 Aims To learn the companys information To analyse the internal and external context where the corporation operating To analyse the resources and capacities of Qantas Airways Limited To analyse and discuss strategies the corporation using and recommenda tion to mend them.Scopeselective information and information are mainly collected from CQU online module, databases, academic articles, the corporations website and text keep abreasts. The report is base on the operations of Qantas Airways in quintette recently years and focus on twain recent years.2.0. INTERNAL ANALYSIS2.1. Qantas Airways LimitedQantas is Australias largest airline and the second oldest airline in the world carrying jillions passengers in to a greater extent(prenominal) than than 20 countries much(prenominal) as Australia, Asia, North and South America, New Zealand, Africa and Europe. Qantas mathematical conference is one of the strongest brands in Australia. The Groups main operation is the merchant marine of customers in 2 complementary airline brands Qantas and Jetstar ( let out cost immune carrier). The Groups broad portfolio of subsidiary personal credit linees ranges from Qantas Freight Enterprises to Qantas Frequent bill. Qantas has strong mesh do all over the world. Founding member of o juvenileorld alliance, until now Qantas has 27 bilateral partners extending the web and offer passengers a global interlock. In 2012, Qantas carries a 44.6% roles of the Australian interior(prenominal) market and 18% of all passengers strikeling in and out of Australia term the respective market segments for Jetstar are 20,7% and 8%. The chart to a down in the mouther place comparisons the vizor 10 international airlines. trope 1 Top 10 international airlines in Australia(Source ANNA- Airlines Network News and Analysis, 2010)2.2. Resources and capabilities Tangible resources Establisheding in 1920, Qantas Group has handsome gradually and remain one of the largest and strongest in Australian airways manufacturing. During the last 5 recently years, Qantas has steadily expanded its operations by increasing number of aircrafts, passengers, employees and destinations all over the world. Its development dejection be demonstr ated as data belowFigure 2 Qantass resources from 2008-2012(Adopted from Qantas data view as 2012, see Appendix)Qantass total asset annexd from $19.7 billion in 2008 to $21.1 billion in 2012. More than half of its assets are from property, plant and equipment which book value at $14.13m at the end of FY2012. nonphysical assets values at $610,000. At the end of FY2012, the corporation had a cash balance of $3.4 billion, and 308 aircrafts from 3 main suppliers Airbus, Boeing and Bombardiers. The Group has 12 Airbus A380, 30 Airbus A330, 60 Boeing B737, 36 Boeing B747 and 46 Bombardiers. Intangible resourcesQantas has a strong new-fangleds report for long history with a huge number of customers, larger segment in the Australian market. Qantas is the worlds second oldest airline and since its inception, Qantas has remained one of the largest and strongest brands in Australia. Qantas Frequent pecker has grown steadily growth, more than 750,000 new members joining the frequent bro adcast during 2012. And increase the total member to 8.6 gazillion. (Qantas data book 2012). Many Australians fancy Qantas Airways Limited as a national icon and pride of Australia. other intangible resource of Qantas is its networks with large corporations. Qantas started the iodinworld Alliance with Ameri end Airlines, British Airways, Canadian Airlines and Cathay Pacific in 1998, and with Finnair and Iberia one year later. Oneworld is an arrangement among airlines to lot departure lounges, frequent eyeshade points and joint booking of flights for get offlers to go wheresoever they want. (Dallas, H 2010). Qantas frequent Flyer has partnerships with some large corporations in and unknown Australia, such as Optus, Woolworths, Caltex, Safaris, etc.2.3. Performance depth psychologyharmonize to get by Business Staff 2012, Qantas Airways reported $204 million annual red ink in FY2012, the first bolshie since 17 year period. It was impactedfrom the increasing cause notice prices, intense competition, industrial disputes and its struggling international division and a series of strikes that temporarily grounded its fleet. By analyzing data from the corporations annual report, positivity index can be calculated as shown bellowedFigure 3 Qantas Airways ratio analysis(Adopted from Qantas data book 2012)As can be seen, the Qantas performs ineffectively in recently. Its turnover, profit and ROA, ROE have reduced comfortably peculiarly a loss of $244 million in 2012. However, the group shut up has strong financial capability. Its debt/equity ratio slightly increased but can be acceptable and its create leverage to encourage managers improve the corporations performance. Qantas has quick ratio around 0.5, that help Group has ability to pay current debt. Besides that, the current ratios were less than 1 and continuously decreased. It faces the Group to risk of liquidity that means Qantas may not have enough resources to pay its debts over the followi ng(a) 12 months in case of liquidity. gibe to Grant, 2013 the goal of a firm is value maximization that means maximizing the shareholders wealth. It was measures via the shares price and profitability. The corporation enter an decline in shares price and market capitalization from 2009 to 2012 after a bounce in 2008 to reach the highest price of $6.0 per share. The lucre per share dropped significantly and in 2012 and the shareholders received no dividend due to the loss of $244m. The changing in Qantass share price is illustrated as belowFigure 4 Qantas Share price from 2008-2012(Source Qantas data book 2012, p.33)Researches show that, loss is result of high displace price and changing in foreign currency exchanges as well as competition with other low cost airlines in international activities (OSullivan, M 2012). The researchers require Qantas fulfil strategies to hedge fuel cost and manage foreign exchange risks to increase its competitive advantages. 2.3. Genertic strate gy and connection to the internal value chain Qantas Airways advise at maintaining its position as the leading Australian domestic carrier and one of the worlds premier sustainable long-haul airlines through two dualairline brands, Qantas and Jetstar that endeavour at two different strategies. plot Jetstar focus on low cost Airline, Qantas aims to put forward safe, highest grapheme run and more Ausiee airline. It seek to part with sustainable, long term returns to the shareholders. The Qantas Group strategic priorities are illustrated below.Figure 5 Qantas strategic priorities(Source Qantas data book 2012, p.5)Qantass strategies have connection to the firms internal value chain. tally to Grant 2013, a value chain analysis describes a ensuant chain of the main activities that the firm undertakes. Michael Porters Value image has been employ as a tool to analyse competitive advantages. It is shared to two separate, primary activities and support activities. First of all, pr imary activities include five main activities which are Inbound logistics, Operations, Outbound logistics, grocery storeing and sales and node assist (Grant, 2013). Inbound logistics is a part of the interpret chain and drive distribution. Inbound logistics activities describe the receiving and storing of materials (Porter, 1985). Qantas has three major jet suppliers which are Airbus, Boeing and Bombardier. separately supplier has different competitive advantage with others. For example, Airbus has A380 that is larger, longer and can deliver more passengers than others while Boeing has B787 that is lighter, smaller and faster than others. In addition, Qantas besides has others suppliers who provide harvest-times tie in to oil, gas and food. Operations are activities to transfer inputs into the final harvest-feast (Porter, 1985). The operation of Qantas group includes airports, catering, engineering, flight operations, operations planning, control and aviation function (Q antas Factfile, 2010). For example, Qantas aviation services are applied through several processes such as customers can book tag end through travel mover or booking online, check-in online, and baggage claim. Outbound logistics is the process related to collect, store and distribute the final overlaps to customers (Porter, 1985). The general activity of airline fabrication is transportation goods and services from one body politic to others all over the world. at that placefore, or so of airlines implement their transactions though travel agent and online and Qantas is not an exception. By using these ways, Qantas achieves the most cost effective,while satisfying customers.Marketing and sales are activities to provide the places which customers can buy the products (Porter, 1985). In order to report product, Qantas has created many media advertisements on television, radio, newspapers, posters in travel agents and billboards. Qantas announced $44 million for advertising cam paign with Tourism Australia in 2010 (Qantas, annual report 2010). For example, Qantas utilize Boeing 747 aircraft to paint the words Come play in Frequently Flyer program and Sponsorship Football Federation Australia ( reality football insider, 2010). However, Qantas is trying to use more direct selling than blanket advertising because blanket advertising is more expensive and less targeted especially to corporations than direct marketing. Moreover, Qantas also uses global marketing strategies which are standardization, customization and global branding. Through these marketing, Qantas has enforced successful strategies to ensure its reputation for high quality goods and services. In addition, Qantas also has sales promotions in particularly periods. An example of this is Qantas set uped a two for one ticket sale, it means that a second passenger is allowed to fly for the cost of taxes and charges. Another is that Qantas first launched to moment 100,000 tickets at $49. Secon dly, Support activities consist of incorruptible infrastructure, Human resources (HR) management, Technology and procurement (Grant, 2013). Support activities can help primary activities to work more effectively. Firm infrastructure relates to structure of the manufacture. Qantass infrastructure includes functional departments such as accounting department, financial department, marketing department, customer service department or engineering department. Qantass HR strategy focuses to ensure a flexible, universal and safer workforce, improve tug unit costs and productivity, develop management and leadership capabilities as one of the largest employers in Australia, approximately 37,000 people (Qantas, 2012). Qantass HR concentrates on four areas corporate, business segments, shared services, and learning and development. Each area has own responsibilities to help deliver the human resource strategy.Besides that, Qantas group is also known as the Australias largest aviation tra iner. There are many raising courses to help the Qantas employees to improve their knowledge and skills. For example, in 2011/2012, Qantas invested $65 million in training approximately 2,300 pilots (Qantas, annual report 2012). Furthermore, in thepast four years, 122 young people graduated through the Qantas program. Their training enables them to welcome with various aspects of airline management and they may provide the next generation of aviation executives. Regarding technology development, technology has an alpha role in supporting Qantas business to deliver enhanced value. Technology development of Qantas focuses on main five areas which are project and program management, business governing body analysis, testing and quality assurance, services and relationship management, and architecture (Qantas, 2012). Qantas is also spend in new technology for customers Qantas is the first airline to offer iPads as an plectrum entertainment for passengers to access to the latest e ntertainment. These activities can support for main purposes to enhance the quality and create reputation for Qantas group. The purpose of Qantass procurement is maximizing the shareholders value from all supplier relationships (Qantas, annual report 2012). This is implemented through a chain process such as disciplined, overbearing and ongoing process. All procurement activities are ensured through Qantas procurement policy. One of the heavy procurement activities is that goods and services meet specification and are transferred on time at competitive prices from stable suppliers. Others procurement activities are also applied such as financial risk, total cost prefatory must be reduced and supplier relationship management is center on win-win outcome.3.0. EXTERNAL AND INDUSTRYIAL ANALYSIS3.1. Macro economyQantas as a part in the global airline industry has continued to pull in from globalization where growth trade and tourism increase demands for travelling. According to the World Tourism Organization, throughout 2011, international tourist arrivals went up by 4.4% to 980 million, from 939m in 2010. The context also creates corporative opportunities for Qantas. For example, in early 2011, Qantas acquired Network Aviation, a western Australian charter airline that contributed around $19 million in revenue and other income (Marketline 2012). However, globalizations with the participation of many airline industries also flagellum Qantas in provide good service at reasonable price. Besides that, the increasing and unpredicted fuel price and foreign currency motion picture also challenges the Group when participate ininternational operation.3.2. Five forces analysisPorters Five Forces is a most widely used framework in practice to warnmine intensity of competition and the take of profitability for companies (Grant 2013). Porter (2008) stated that five forces shape the structure of industries and launch the basement for competition and profitability wit hin industry. These include threats of new entrants and substitutes, negotiate place of substitutes and buyers, and opposition among existing competitors. According to Dobbs (2012), five forces assessments of threats and opportunities are potent responses of managers to challenging environment where they must to compete with rivals and increase profits. The first important element is threat of substitutes. Substitute products/services perform a kindred function as an industry product by a different means and at times at a bargain-priceder price. This makes the competitions become more violent for all. It corresponds to industry profitability suffers. Therefore, companies have to reinvest themselves such as their services, product and event low price and restructure their organizations in order to populate in challenging environment. They have estimated what threats coming from substitutes whose product are same to that of a company/brand that is established within the indust ry and give some strategies for themselves. The aviation business now tries to boost up diverse options and promotions trip with low price to persuade the customers.Under pressure of substitutes like Virgin, Delta, Tiger Airlines, especially coaches or trains, Qantas have to plan some strategies not only in Airline industry but dribbleation industry The second of five forces is threats of new entrants. When new entrants have launched in an industry, the ratio of industrial profits has changed. They bring new dexterity and desire to share a market with the others, and simultaneously put pressures on old rivals rough prices, qualities of services and goods, cost and rate of necessary investment. When threats are high, managers must implement a number of methods into the marketing mix in order to deter new entrants. According to Grant (2013), there are some mavin sources of barriers to entry Capital requirements, economies of scale, absolute cost advantages, and product specialism s, access to carry of distribution, governmental and legal barriers, and retaliation. The effectiveness of barriers to entry depends on the resourcesand capabilities that potential entrants possess. The new entrants, Virgin Airlines or Tiger Airline, become competitors to Qantas with new full service airline and crummy tickets. In order to compete, Qantas is focused on business market which does not have a strong market competitor. The group also try to control the budget airlines through introducing of Jet thaumaturgist (Reference for business, 2006). In addition, although Emirates airline is a international competitor, Qantas has corporation with Emirates to enhancing their shared network across the Tasman. This hit the competition in Australia and New Zealand (Cornwell 2013).The third is rivalry among existing competitors. According to Grant (2013), in some industries companies compete aggressively, sometimes the prices are under the value of output and leading definitely loss incurred. In the others, they focus on the innovation, advertising and non price dimensions. The intensity of competition of companies base on some factors concentration, diversity of competitors, product differentiation, excess capacity and exit barriers, cost condition. Simultaneously Qantas operates Jetstart to compete the other companies by cheap tickets, Qantas also cooperate with Woolworths in Frequent Flyer program to maintain loyal customer (Qantas FactFiles, 2010) . The next is bargaining power of suppliers suppliers are also described as the market of inputs ability of suppliers to put the buyers under pressure. There are two factor effected on aviation industry including aircraft manufactures and fuel supplier. According to Qantas annual report, 2009, Suppliers of Qantas are Boeing, Airbus, and Bombardier. They have strong power to deal with Qantas because they determine cost and delivery times and can be potential to turn into competitors. Lastly, bargaining power of bu yers Customers are described as the market of outputs and put the firm under pressure of low prices and quality of services. Therefore, Qantas have to cooperate with the other airline such as Emirates, Vietnam airline to rival the others. Qantas also has to impulse its sale with quality product and cheap price in several channels such as travel agency and website to deal with others. What is your conclusion from the 5 Forces Analysis?4.0. STRATEGY TO have COMPETITIVE ADVANTAGEIn the competitive environment, enterprises have to create competitive advantages or they depart be died. Grant (2013) says that a firm can achieve a higher rate of profit over a rival in two ways supplying an identical product or service at a lower cost, or providing a unique product or service that is differentiated with others in order to persuade customer pay a price premium that exceeds the special cost of the differentiation.4.1. Cost leadershipIn order to take advantages in cost, the corporation has t o structure and effectively exploit resources, apply some drivers of cost advantages such as economics of scale, product design, technology and inputs cost (Grant 2013).Figure 6 Qantass expenditure in 2011-2012 (Source Qantas data book 2012, p.18)As can be seen, there are three main parts from Qantass expenditure in both 2011 and 2012. They are fuel cost, labour cost and aircraft operating aviation.Figure 7 Fuel cost of Qantas (Source Qantas Data Book 2012, p.19)Fuel cost is the highest expense of Qantas, accounting for more than 25% of total expenses. In 2012, the fuel makes a new record at 27% of total costs at $4.22 billion in compare with $593million in 2011. The Group uses several strategies to reduce the influence of fuel prices. They are hedging passing fuel surcharges to tickets shortening the jet fuel supply chain fuel conservation investment in new fuel-economic aircraft value managing air traffic and enhanced technology in flying techniques and soaring approach. (Qanta s data book 2012). Aircraft operating variable spent $3 billion in costs in FY2012. It includes route navigation charges, landing fees are charged by the relevant airport company or authority, criminal maintenance cost and passenger expenses (in-flight consumables and amenities, entertainment). Therefore.? Moving to cost leadership strategy can be applied by Jetstar that focus on low cost airline to gain market share in disparity target customer than with the main brand.Due to nowadays, there are many low cost airways emerge worldwide. Thus, the firms that can offer the cheaper price will be gain the customers. Jetstar want toreach the lower price than others neck airlines so the company designs to adapt another strategy such as partnership strategy to deal with the main competitors. In current years, near aviations industries have considered about how to the firms getting the customer faster than competitors. Also, Jetstar recognizes about low price with fast sale so the firm t ries to create new promotion to attract and gain the customers quickly than another firm. The firm can take advantages in cost by increasing passenger elongate factor (promotion), reduce fuel cost, in-flight consumption and entertainment of customers.4.2. DifferentiationAccording to Grant (2013), differentiation is not just about the product, it embraces the whole relationship between the supplier and customer. Differentiation can be categorised into two types as tangible differentiation and intangible differentiation.4.2.1. Tangible differentiation completing service According to Qantas FactFiles (2010), Qantas has provided In-flight entertainment with full-option in all Qantas international flights such as A380, B747 and A330 aircrafts. Simultaneously, Qantas Club lounges with full of necessary facilities are provided to the Qantass members at more than 130 lounges worldwide. As Group route network, the Qantas Group have operated numerous flights to cover 173 destinations in 42 c ountries together with partner airways. According to Qantas annual report (2009), Qantas provides premier price with full service option to serve the customers. For example, Qantas creates unique experiences to Qantas members like bringing Chef Heston Blumenthal to meet food and drink (QANTAS 2012). As the result, customers can feel superior when perceive the product or service. This strategy offers unique can enhance value of the product to the customers. The other point is that Qantas designs multi-brand model such as Qantas, Frequent flyers, and Jetstar which give customers the experience they desire. Specifically, Qantas provides the sop up choice for business and premium leisure travellers. Frequent flyer builds the worlds best loyalty business while Jetstar brings the clear choice for price sensitive travellers (QANTAS 2011). Grant (2013) states a low-price no-frills whirl is associated with a unique brand image. Hub airportsQantas has developed Airport terminal integratin g project. This reduces in minimum connection times, underpins Sydney as Qantas main hub, and supports the international network alliance strategy, long term price and infrastructure surety. This strategy also increases product differentiation and seamless end-to-end customer experience (QANTAS 2011).4.2.2. Intangible differentiationSafety is always the first priority of Qantas aviation firm. Qantas is the leader of safety aviation industry (QANTAS 2008). Qantas is rigorously subjected to the International Air Transport Associations (IATA) and Operational Safety Audit Certification, which is an internationally treasure safety audit program, once every two years. Moreover, Qantas is regularly scrutinised supernumerary external audits by around 75 external organisations. This capability feature with constant prudence and proactive prevention is fundamental to Qantas maintaining its leading safety record and reputation.5.0. CONCLUSION AND RECOMMENDATIONIn conclusion, strategy is win (Grant 2013). Enterprises with expertness strategies and successful implementation will generate advantages in the competitive environment. By applying several strategic analysis methods in analysing the internal and external context of Qantas Airlines Limited, the report has indentified the groups strategies. Base on the analysis, some strategies has been recommended for the corporation to create competitive advantages by two strategies, cost leadership and differentiation Expeditionary Marketing Travel agent can be an important channel to distribute the product and service. Therefore, the Qantas should conduct a plan to merge its business activities with the travel agents and sometime the firm has to create a monopoly with those travel agents to decrease competitors. The corporation should also offer promotion to reduce free seat in flight. Unique Service Style The price of ticket that should included the price of baggage may set up footling bit expensive than others low cost airlines without luggage price. It can be attract the customers especially, women. Due to almost women need space for their clothes and augmentative that is often liquid may be banned to carry in a passenger area. Fuel hedging Qantas should continue research for new technology and investin low-fuel consume aircrafts. Charging fuel surcharges to passengers is better than fuel hedging. Foreign exchange risk hedging Continue hedging foreign currency to reduce risk by using other first derivative financial instruments such as option or forward contracts. push cost Qantas can expand to other countries where labour willing to work for lower payment than in Australia, meanwhile reduces intermediates or agencies, directly or online sell tickets to customers.6.0. REFERENCESAirlines network news and Analysis, 2012, Australian international traffic developing strongly but Qantas is losing market share US and Indonesia see biggest gains, viewed 15nd venerable 2013, http// /04/20/australian-international-traffic-growing-strongly. Allayannis, G, Weston, G 2001, The Use of Foreign Currency Derivatives and Firm Market Value, The Review of Financial Studies, Vol. 14, No. 1, pp. 243-276. Cornwell, A 2013, Emirates and Qantas to hit competition in Australia and New Zealand, viewed 15th August 2013, http// Dallas, H 2010, Qantas in the global airline industry, Strategic management battle and globalisation (4th Asia-Pacific ed), pp. 434-440. Dennis, A 2012, Is Qantas the dying kangaroo?, Herald Sun, viewed 15rd August 2013, http// Dobbs M E, 2012, Dobbs, Michael E, 2012, Porters Five Forces in Practice Templates for Firm and flake Analysis, Competition Forum 2012, Vol. 10 Issue 1, p22. Grant, R.M 2013, Contemporary Strategy Analysis, eighth edn, John Wiley & Sons, NewYork. Fickling, D&Wang, J 2012, Qantas, China Eastern Plan cheap Flights for Asia Middle, Bloomberg, viewed 15rd August, http// International Air Transport Association 2013, mellowed cost environment to continue, Financial Forecast, viewed 15rd August 2013, http// mail service Business Staff 2012, Qantas posts 204m loss as its fuel bill hits 3.6bn, daily Mail, p.46. Marketline 2012, Qantas

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