External Environment Analysis of Qantas Airlines

Running Head: BUSINESS ENVIRONMENT 1
BUSINESS ENVIRONMENT

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Executive Summary
This report purposes to conduct an analysis of external environment of selected Australian
organization i.e. Qantas Airlines. It focuses on finding out different external factors and their
impact on the company’s operations and performance. To assess these factors, two of the major
strategic frameworks are used i.e. PESTLE analysis and Porter’s Five Forces Model. By using
PESTLE analysis, six external aspects are identified i.e. political, economic, sociocultural,
technology, environment, and legal. These are the external factors which have significant impact
on the operations and activities of Qantas Airlines. Moreover, five forces of Porter are used to
analyze the extent of competition, bargaining power of supplier, bargaining power of buyer,
threat of substitutes and threat of new entrants.

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Table of Contents
1.................................................................................................................................................Introduction
.................................................................................................................................................................... 4
2. PESTLE Analysis....................................................................................................................................4
2.1 Political Factors..................................................................................................................................4
2.2 Economic Factors...............................................................................................................................5
2.3 Social Factors.....................................................................................................................................5
2.4 Technological Factors........................................................................................................................5
2.5 Legal Factors......................................................................................................................................6
2.6 Environmental Factors.......................................................................................................................6
3. Porter’s Five Forces Analysis................................................................................................................6
3.1 Competitive Rivalry (High)...........................................................................................................6
3.2 Bargaining Power of Suppliers (High)..........................................................................................6
3.3 Bargaining Power of Buyers.........................................................................................................7
3.4 Threats of New Entrants (Low)....................................................................................................7
3.5 Threats of Substitutes..................................................................................................................7
4. Conclusion...........................................................................................................................................7
References...................................................................................................................................................9

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1. Introduction
The external environment is composed of outside influences and factors which effect the
business operations of a company. One cannot deny the effects of these external forces on
business activities so it is very important for the companies to have knowledge about the
potential factors. The major objective of this report is to analyze the external environment of
chosen organization i.e. Qantas Airways. Qantas Airlines is an Australian flag carrier and it is the
largest airline of Australia by fleet size, international destinations and international flights. The
organization has started its operations in the year 1920 in Australia. After Avinaca and KLM,
this is the 3rd oldest airline in the global airline industry (Qantas Airlines, 2018). Having been
established in 1920, it started its international flights in the year 1935. The major subsidiaries of
this airline are such as Jetstar Airways, QantasLink, Qantas Holidays, Express Ground Handling,
Q Catering, Snap Fresh, Qantas Freight and Qantas Ground Services.
In this report, two frameworks i.e. PESTLE analysis and Porter’s Five Forces analysis are used
in order to evaluate the external environment of Qantas Airlines. The factors of both tools
determine the external factors and their impact on the performance of Qantas Airlines.
2. PESTLE Analysis
PESTLE analysis is a strategic tool that is used to analyze different external factors which can
affect the business operations of a company. It may include evaluating the country related
factors. The PESTLE analysis of Qantas is conducted below:
2.1 Political Factors
Political aspects play a significant part in performance of any airline company. Mainly, these
factors indicate the effect of government and its decisions over the performance of company. In
respect of Qantas, it can be stated that this company has confronted various issues due to
government initiatives across many regions (Head & Crowley, 2015). For instance, it got
impacted by the instability in the politics in Middle East location. Moreover, Political issues in
Bangkok have impacted the company’s operations due to which it is unable to generate enough
revenues from this region. In Australia, Qantas has enough support from Australian government