Strategic Management

Background of Qantas
Qantas is a flag carrier airline in Australia which established in Winton, Queensland since November 1920 and the second oldest airlines in the world. Nowadays, Qantas developed an international airway while it commences both domestic routes and international routes. Qantas provide both of economy and differentiation service for passengers. There are five flight attenders routes for instance, Internal from Australia, Internal from New Zealand, international from the UK, domestic within Australia and regional Australia. According to the report called ‘The world’s Top Airlines- ranking 1 to 20’, it shows that Qantas Airways ranked 15 around the world. Qantas is the group of top airlines of the world. Qantas Airways always win prizes such as the best airline in Australia/Pacific in 2011& 2012, world’s best airline first class, economy class and premium class in 2012 etc. (The World Airline Awards, 2013) Analysis of Qantas

External analysis
a.What industry is it?
Aviation industry is one of the core industries around the world and countries. It is the transportation hub which carries goods and passengers from the country to another country. Airlines carry large amount of products and goods which supplying around the world such as medical, beverage and products. On the other hand, airlines are the main middle man between export companies and import companies. As the result, aviation industry generates a large amount of income globally in tourism industry (Conjecture Corporation, 2014). b. General environment analysis

General environment affect the demand of airlines and directly their income, there are seven environment segments should be investigated in order to gain strategic advantage and success such as demographic, economic, physical environment, sociocultural, global, technological and political/legal etc. The major portions of customers of Qantas are Australian, focusing on visitors’ arrivals in Australia. According to the database, it shows that more than 6.7 million tourists arrivals and increase 8.3% relative to 2013. More than 586,000 tourists arrive Australia during July 2014 and increase 12.1% comparing the previous year (The Australian Bureau of Statistics, 2014). Economic

According to the website, it shows that the rates of inflation around the world most of the countries are growing, it means that the inflation is increasing in the future. As the external part of the report, inflation rates are increasing, forecasting it will have a significant increase. It means the cost of Qantas will be increase such as human resources, cost of fuels, facilities and food. Qantas not only has to maintain its differentiation and increase income and reduce expenditure in the plan (global-rates.com, 2014). According to the Australian Association Press ‘Australia’s unemployment rate falls to 6.1% in August’, it mentions that the unemployment rates fell in August and the NSW figure decrease 0.2%. Queensland has significant drop from 7.2% to 5.9%, it decline more than 1.3%. Then, Tasmania eases to 7.1% to 7.6%. Victoria unemployment reduces 2%. On the other hand, both Northern Territory and ACT rose for about 0.3%. Overall, the unemployment rate of Australia has a drop (Australian Associated Press, September 11). More and more citizens may travel for business and leisure time. The demand of flights may increase; it is an opportunity for Qantas. Political/legal

‘Qantas fails to keep pace with competitors’ mention that the legal restrictions are a big hinder for Qantas Airways to gain revenue. It obstructs the development of Qantas Airways said by Mr Abbott. The rule also limit their international marketing expertise to improve Qantas which make Qantas cannot move on in aviation industry. Also, bilateral restrictions block it flying. As the result, Qantas difficultly fight with other competitors such as Virgin Australia and Singapore Airlines. Sociocultural

In 20th century, women are commonly in the workforce, some of them flight for business purpose. The airline can provide some specific products and services for women during their onboard. Nowadays, customers have the expectations of customer service are higher than before. Customers demand of quality services, innovative products and special experience during onboard. Technological

Nowadays, science and technologies change rapidly. The demands of passengers will be change; they would expect a higher level of products and services of airline than before. Qantas must apply more and more new technologies by upgrading their products and facilities. Moreover, Qantas has to deliver innovative products and facilities so as to attract more and more loyalty customers. Global

Political events, diseases and terrorization will cause influences of the demand of flights; commonly, people will afraid of their safety on the aircraft and the affecting areas, and also their health of bodies. For example, 11/9 terror, SARS disease and shut down Bangkok etc. As the result, people will not have a flight for a long time; it may a shock for airline. Physical environment

The rising awareness of environment protection leads to people determines the impacts of global warming and iceberg melting to the world. It is changing the preferences of customers. Nowadays, customers will prefer eco-friendly products more than the original products. Also, the shortage of fuel and the influence of carbon dioxide emissions of aircrafts to environment that will affect increase the costs of Qantas and affecting the environment. The airlines have to employ some expertise to take experimental researches and develop renewable energy efforts. c. The industry environment

Apply the Porter’s five forces to analysis the industry environment which are supplier bargaining power, buyer bargaining power, potential entrants and substitute products and rivalry of competitors. Supplier bargaining powers directly affect Qantas’ operation. Suppliers can increase the value of fuels and aircrafts, it means that an increase of costs of fuels and lower the profits of Qantas. Then, buyer bargaining power, the major buyers of Qantas such as travel agency they may bargain a lower price because of non-seasonal period and political events or disease blow in the destination. What is more, potential entrants and substitute products indirectly affect the profits of Qantas and share the market share domestically and globally. Furthermore, Nicholas Katers states twelve steps to start an airline. Entering aviation industry must have professional knowledge and capabilities of airline.

Many commitments and contract between governments, suppliers of fuels and catering, manufacturers, recruitment of employees, advertisement of baggage handlers, counter personnel and skycaps and also the airfields lease out hanger space and runway, airline insurance etc. Complicated steps and enormous investment, it is not attractive to new entrants (Katers, N, 2014). Professor Sir David King is a director of the Smith School of Enterprise and Environment at the University of Oxford who told that massive helium balloons or blimps would replace aircraft and that is the way to cut global warming emissions. Recently, Boeing and Lockheed Martin who are help to develop the technology of massive helium balloons or blimps (Jowit, J, 2010). d. Competitive environment

The competitive environment has to investigate both domestic and international routes of Jetstar which is under Qantas Airways. In domestic routes, Virgin Australia and Tigerair are the competitors to Qantas. Virgin Australia is the biggest competitior in domestic routes development which ranks twelve. In international routes, although Qantas Airways associate with Emirates, Emirates improve the products and service international routes. There are many competitors globally, according to the world rank of airlines Qantas Airways ranks fifteen. Fourteen competitors are staying in higher level of Qantas Airways such as ranks one Qatar Airways, the second Asiana Airlines and the third Singapore Airlines. (The World Airline Awards, 2013) e.

You now have material about opportunities and threats After the investigation of external analysis, finding there are some opportunities and threats to Qantas by the steps of scanning, monitoring, forecasting and assessing. Income increasing, reducing of unemployment rates, women in workforce, higher living standard and technology application and also the rising awareness of environment protection are the opportunities to Qantas. On the other hand, threats include high inflation, disease spreading, political event, legal restrictions and bilateral restrictions block etc. Internal analysis

f. The firm’s resources, tangible and intangible First of all, firm’s resources include tangible and intangible. The difference between tangible resources are quantified and can be observed and intangible resources are difficult to imitate and analysis. Tangible resources include financial resources, physical resources, organizational resources and technological resources etc. on the other hand, intangible resources are human resources, innovation resources and reputational resources. Qantas Airways provide many associate travelling products and services for passengers. Offering some plan of flights and also the routes maps, timetable, travel insider guides, travel advice, access Qantas on passengers’ mobile phone and even selling gift and travel products to customers. Passengers have no worriment of back-up problems during their flight or trip. Qantas already provide what they needs and wants. Whether passengers want to book hotel, flight, car or activities, customers have to click in the apps or website of Qantas (Qantas Airways Limited, 2014). g. Capabilities identification

Qantas Airways is the largest Australia airline and it is the civil airline which support by Australia government. As the result, Qantas has this critical position to fight with other airlines in Australia. Moreover, Qantas is the oldest and brand name airline that have a large amount of loyalty customers in Australia. What is more, Qantas satisfy both domestic and international markets by low cost strategy and differentiation strategy which have a big portion of market share around the world. Both tangible and intangible resources lead capabilities of the firm, Qantas provide full-service for customers and satisfy customers’ needs and wants with quality service and new technologies. h. Core competency analysis

Determine the core competencies of Qantas if its capabilities fulfil four criteria of sustainable competitive advantages. Consider its capabilities are valuable, rare capability, costly-to-imitate and non-substitutable or not. According to the appendix 1.1, it shows that the core competencies of Qantas. i. Value chain analysis

Value chain analysis of Qantas has both primary and support activities. According to the model of the value chain, in value chain activities, Qantas provide flight ticket to passengers through many steps by operation, distribution, marketing and follow-up service. Then, the support functions such as finance, human resources and management information systems. j. Weakness

The weaknesses of Qantas are the slow development, failure distributing resources in domestic rather than international routes, employees demoralized and limit finance etc. k.Pulling it together

SWOT of Qantas Airways including internal aspect and external aspect. For the internal aspect which are strengths and weaknesses. For the external aspect are opportunities and threats. Income increasing and reducing of unemployment rates may leads more passengers have flight for business and leisure. Women are commonly in workforce, Qantas can supply new products and services for women. Higher living standard and technology application push Qantas to upgrade their products and services. And also, the rising awareness of environment protection is the opportunities for Qantas build up CSR by using eco-friendly products. On the other hand, threats include high inflation that may affect the costs of Qantas but it is also an opportunities to strength itself by fighting with other airlines. Disease spreading may influence the desire of trip but it also can build up Qantas expression to customers by providing a higher level of hygiene facilities. Qantas avoided enormous losses by cutting the routes to the place which is happening political event. Finally, legal restrictions and bilateral restrictions are the block for Qantas. l. Current strategies

According to the Qantas official website, Qantas states four key points that are reducing $2 billion of the costs and cut $1 billion capital investment, sell more than fifty airplanes and put effort in customer services. Qantas reduce $2 billion costs including 5000 jobs and capital investment in order invest the new technologies, productivity improvements, fleet and network changes etc. aiming to reduce $1 billion leas liability in 2015. To the customers, Qantas Airways promise that they will provide outstanding service for their passengers. For example, open new lounges in Hong Kong and Las Angeles and upgrade the Airbus A330 fleet. What is more, Qantas would process the accelerated Qantas Transformation Program. In this program, Qantas will rearrange the aircrafts so as to satisfy the demand, exit under-performing rotes and dispose of aircrafts etc. moreover, significant workforces change. Qantas is going to restructure line maintenance operation and catering facilities, fleet and network changes, closing the Aviation maintenance base and Adelaide catering etc (Qantas Airways Limited, 2014). Recommendation & Strategies

Business level
Business-level strategy must associate with opportunities and threats turn it to be the core competencies to Qantas. Satisfying the customers’ needs and wants by supplying their preference products and services such as high technology facilities and eco-friendly products. Qantas can apply several business-level strategies which are cost leadership strategy and differentiation strategy in Qantas Airways. Corporate level

In corporate level, suggesting Qantas adopt horizontal integration strategy and product development. Qantas can acquire other airline’s competency and strategic advantages to upgrade its service and products in order to improve their sales in international routes. On the other hand, Qantas must apply new technologies in their products and facilities. Also, Qantas has to deliver some innovative products and facilities so as to attract more customers and market segments. International level

Qantas can adopt transnational strategy in both domestic and international routes, it make the airline achieve both domestic responsiveness and global efficiency. It is the son of global strategy and multi-domestic strategy. Deliver suitable services and products in the specific regions in order to meet every customer’s satisfaction and increase the profits of Qantas. Strategies are centralization and decentralization which provide coordination of products and services and control globally. Decentralization is according to the specific regions and markets, then deliver some extra products and services. This kind of strategies may lead intense competition and have stress to reduce costs whilst strength customized, differentiated and also specialized. It will turn the Qantas Airways to profitable.

References:

1. Hanson, D., Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2014). Strategic management: Competitiveness and globalization (5th Asia-Pacific Edition). South Melbourne: Cengage Learning Australia. ISBN: 9780170227643 (paperback) 2. The World Airline Awards (2013). The World’s Top Airlines – Ranking 1 to 20. Retrieved September 15, 2014, from http://www.worldairlineawards.com/awards_2013/airline2013_top20.htm 3. Conjecture Corporation. (2014). What Is the Aviation Industry?. Retrieved September 15, 2014, from http://m.wisegeek.com/what-is-the-aviation-industry.htm 4. The Australian Bureau of Statistics. (2014). Visitor Arrivals Data. Retrieved September 15, 2014, from http://www.tourism.australia.com/statistics/arrivals.aspx 5. global-rates.com. (2014). Inflation – summary of current international
inflation figures. Retrieved September 15, 2014, from http://www.global-rates.com/economic-indicators/inflation/inflation.aspx 6. Australian Associated Press. (2014). Australia’s unemployment rate falls to 6.1% in August. Retrieved September 15, 2014, from http://www.theguardian.com/business/2014/sep/11/australias-unemployment-rate-falls-to-61-in-august 7. Katers, N. (2014). How to Start an Airline Company. Retrieved September 15, 2014, from http://www.ehow.com/how_5017720_start-airline-company.html 8. Jowit, J. (2010). Blimps could replace aircraft in freight transport, say scientists. Retrieved September 15, 2014, from http://www.theguardian.com/environment/2010/jun/30/blimps-aircraft-freight 9. Qantas Airways Limited. (2014). Qantas. Retrieved September 15, 2014, from http://www.qantas.com.au/mobile-travel/airlines/home/global/en 10. Qantas Airways Limited. (2014). QANTAS GROUP STRATEGY UPDATE. Retrieved September 15, 2014, from http://www.qantasnewsroom.com.au/media-releases/qantas-group-strategy-update-2 Appendix:

Figure 1.1 reference: Hanson, D., Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2014)