Socio-Political Context of Management: Qantas Airlines

This study analyzes the importance of socio-economic context for Qantas Airlines and identifies the factors affecting its performance using PESTLE analytical model. It recommends employee-centric approaches and reducing ticket prices to deal with economic downturn, competition, employee strike, and increasing fuel cost.

Running head: SOCIO-POLITICAL CONTEXT OF MANAGEMENT
Socio-Political Context of
Management
Qantas Airlines

SOCIO-POLITICAL CONTEXT OF MANAGEMENT 1
Executive Summary
The aim of this study is to understand the importance of Socio-economic context for the
organization activities. Besides this, it is also aimed at identifying the factors that affect the
performance of the organization in the market with the help of PESTLE analytical model.
The organization that has been selected for this study is Qantas Airlines, which is one of the
oldest airlines in the world with successful operations in the market. From the analysis, it has
been concluded that the company is operating effectively but presently dealing with the
economic downturn, competition, employee strike and increasing the cost of fuel in the
market. Therefore, in order to deal with all these issues, the study has recommended Qantas
to adopt employee-centric approaches to have a clear communication. Besides this, it is also
recommended to reduce some prices of flight tickets to give strong competition to low price
airlines.

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Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Overview of Qantas Airlines..................................................................................................3
The mission of Qantas Airlines..........................................................................................3
Values of Qantas Airlines..................................................................................................3
Methodology..........................................................................................................................4
Political Factors..................................................................................................................4
Economic Factors...............................................................................................................4
Social Factors.....................................................................................................................4
Trade..................................................................................................................................5
Legal...................................................................................................................................5
Environment.......................................................................................................................5
Analysis..................................................................................................................................5
PESTLE Analysis of Qantas Airlines................................................................................5
Financial Performance of Qantas Airlines.........................................................................8
Conclusion and Recommendation..............................................................................................8
References................................................................................................................................10

SOCIO-POLITICAL CONTEXT OF MANAGEMENT 3
Introduction
Socio-economic context is very essential for the management of the organization as it
supports business in identifying the activities that are taking place within the environment it
is working in as well as inside the business organization in order to increase the chances that
the strategies of the organization developed will suitably imitate the organizational
environment (Ari and Lavee, 2011). The purpose of this study is to recognize different
environmental as well as socio-economic factors that influence the operations of Qantas
Airlines and in relation to that, company strength and weaknesses will be discussed.
Overview of Qantas Airlines
Qantas is the famous Australian flag carrier airway and it is the biggest airline in terms of the
size of the fleet, international destinations, and international flights. In the world, it is one of
the oldest airlines, after Avianca and KLM. Qantas started its flights with an international
passenger in May 1935. The acronym of Qantas name is “Queensland and Northern Territory
Aerial Services,” and it is called with a nickname i.e. “The Flying Kangaroo.” It is the
founder member of the one world airline alliance (Qantas, 2016).
The mission of Qantas Airlines
Qantas is one of the premium-leading airways and is committed to always being the est. The
aim of the company is to meet the expectations of the customers every time they fly and
therefore they endure to invest in their operations and will struggle to offer customers an
excellent service level (Sun, 2014).
Values of Qantas Airlines
The company is always focused on safeguarding the planet by minimizing the influence they
have on the environment (Foley, 2008). The whole group controls the system of integrated

SOCIO-POLITICAL CONTEXT OF MANAGEMENT 4
management that content safety, environment legislative, health, regulatory requirements, and
security. The company’s environment activity is reinforced by tough governance procedures
to confirm effective performance and the Qantas Board Committee monitors risks, which
comprises oversight for Safety, Security, Environment, and Health (Qantas Group, 2018).
The Qantas Group is dedicated towards creating and nurturing a culture under which
diversity is appreciated and to providing a place of work that is respectful and safe. The
employees of the company treat their suppliers and customers with dignity, equity, trust,
fairness, and respect. Human rights are prioritized and respected within the organization. As
Qantas is called as an equal opportunity employer, it is focused towards offering an
environment of working which is free from unauthorized discrimination, bullying, and
harassment. Any behaviour that founds to be unlawful discrimination, bullying, or
harassment is intolerable and is treated as misbehaviour or serious misconduct.
Methodology
Pestle Analysis is the concept of marketing principles, which is utilized as a tool by the
businesses to trail the environment they are working in or are thinking to launch a new
service or product. The pestle is a cue, which in its protracted form signifies P for Political, E
for Economic, S for Social, T for Trade, L for Legal, and E for Environmental (Rastogi and
Trivedi, 2016). It offers a bird’s eye view of the complete environment from verse
approaches that one needs to check and maintain a track of while anticipating on a convinced
plan or idea.
Political Factors
Political factors take into account the range of government interference in the economy.
These factors are necessary as organizations require political stability in order to operate their
activities or they will fail to attain the anticipated profitability level (Gupta, 2013).

SOCIO-POLITICAL CONTEXT OF MANAGEMENT 5
Economic Factors
Businesses that are dealing with economic factors have a huge impact on their profitability.
This factor comprises exchange rate, disposable income, inflation rate, and interest rate.
Social Factors
The social environments in which a company run its functions also possess an intense
influence on its process. The social factors comprise the target market beliefs and cultural
influences (Ho, 2014). For instance, a product can be considered offensive in a specific
culture whereas it can be normal in any another culture.
Trade
Under the trade factor of PESTLE Analysis the fair trade practices of the organization is
identifies that contribute towards the development of the country. Besides this, it talks about
the organization’s contribution to human resource capabilities development that supports the
operation of trade.
Legal
Legal factors are considered to be one of the essential shares of the macroeconomic scenario
and concentrate on the subjects such as the safety of the product, equal opportunities, safety
and health, consumer rights and laws. For businesses to operate successfully, they must not
just understand but also accept the regulations and rules of the nation they work in (Perera,
2017).
Environment
Environmental factors might be considered a comparatively new count to the macro-
economic investigative tools. However, they have attained importance due to the increasing
issues in terms of the environment among the masses (Perera, 2017).

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Analysis
PESTLE Analysis of Qantas Airlines
Political
The Australian government always support Qantas Airlines due to the contribution of the
organization within the economy. The company possess 65% share in the market of the
nation and is running domestic as well as international flights (Adamkasi, 2016). Qantas
Airlines gets the support of the government in monetary terms and allow its interference
within the management decision-making procedure. The airline carries the country’s flags
and it is called as government-owned airlines in many nations. The government design
policies for the Qantas and the political stability influence the business operations of the
company because it supports in the development of the business.
Economic
The economic factors have a major influence on the Qantas performance in the sense that the
decreasing economic performance of the economy of Australia has also influenced its level of
performance considerably. For example, the economy of the Australian is dealing with the
recession is a negative sign because the per capita income of the resident has weakened
severely which has ensued into decreasing demands of air services (Fern Fort University,
2018). Qantas is also facing the effect of decreasing demand. Besides this, changes in the oil
prices and an impending slowdown are other shocking matters that are disturbing the growth
of the airline industry. Airline companies need to manage the effect of declining travelers,
fuel high prices, competition, increasing maintenance cost, and demands of labor (Pestle
Analysis, 2014). In order to manage come up with the losses due to economic decline and
increasing fuel cost, the company has adopted different cost-cutting strategies.

SOCIO-POLITICAL CONTEXT OF MANAGEMENT 7
Social
The social factors as predominant in terms of the airline industry have influenced the Qantas
performance at a greater level. The airline industry analysis in precise specifies that it is
influenced by the social trends which reflects that there has been a greater level of acceptance
for low-cost airline services among consumers. This has influenced the airline companies like
Qantas, which offers premium class services. In order to deal with this problem, Qantas
adopted a change management strategy. Under this company focused at cost-cutting and a
decrease in the labor cost to confirm efficiency, and an indication of flexible structures by a
versatile and attentive workforce. Cost cutting in Qantas was followed with strict procedures
by the human resource management department such as decreasing wages and salaries by
eliminating expensive practices (Wassener, 2014).
Trade
Qantas in the Australian market performs fair trade practices under which it considers the
rights and safety of its customers and all the shareholders. The objective of Qantas is to
increase the shareholder value from all important supplier relationships. This is attained by a
well-organized, organized, and continuing procedure for attaining consistent and ethical
supply of externally acquired services, at the same time decreasing the overall cost and
enhancing the quality level, technology, and service (Qantas, 2018).
Legal
It is compulsory for the airline companies to comply with the legal aspects of the nation and
industry. The airline has taken some steps for the health and safety of its employees and
customers. The travelers get outstanding food and other different services and smoking are
banned within the airlines, and this has been done considering the health of the passengers.
The airline has to pay carbon tax because of its performance and it has to comply with the

SOCIO-POLITICAL CONTEXT OF MANAGEMENT 8
rules to obey the lawful position of the industry (Adamkasi, 2016). Qantas airline has to
follow numerous legal regulations to operate its activities smoothly.
Environment
The environmental factors influence the industry of airline because the regulatory and
authority board of airline have framed some significant regulations for dealing with the
ineffectiveness within the environment on the part of airline operators. An examination of
Qantas specifies that the company has the aim to attain decline in its pollution emissions by
2050 by 50%. Presently, 95% of the carbon footprint by Qantas is majorly from the flying
processes (Adamkasi, 2016).
Financial Performance of Qantas Airlines
According to the annual report of Qantas Airlines, the company’s revenue for 2018 is
$17,060m, which is more than the revenue of 2017 i.e. $16,057m (Qantas, 2018). This
reflects that besides the economic downfall in Australia airline is performing well in the
industry with the support of its experienced employees and competitive strategies.
Source [(Morning Star, 2018)]
Besides this, with time Qantas Airlines is able to increase its Asset turnover ratio as in 2017 it
was 0.92 and in 2018 is it 0.93. The return on asset ratio of the company has also increase
from 5.02 to 5.46 in 2017 and 2018 respectively (Morning Star, 2018).

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Conclusion and Recommendation
From the above analysis, it could be said that Qantas Airlines is one of the most successful
airlines in the world with the best food and security services for the customers as well as
employees. The mission of the company is to become the leading airways in the world with
best offerings to the customers. The study has conducted an analysis of the external
environment of Qantas Airlines in order to identify the factors affecting the business
operations of the company. From the analysis, it has been recognized that the government of
the country is the supporter as well as the strength of the company as it offers monetary help
to the company. However, on the other side, Qantas Airlines have faced some issues due to
the present social and economic factors in the market.
The above study has identified various aspects of the organization positive as well as negative
that has affected the productivity of the business. In terms of economic factors such as
increasing fuel cost, the economic downturn and increasing competition from low-cost
airlines, the company is facing huge losses. In order to overcome these losses, it can be
recommended that the company can reduce some prices of its ticket such that customers
could choose Qantas Airlines for traveling.
Besides this, the steps taken by the company of cost-cutting in order to deal with the
economic downturn, increasing fuel cost, and the competition was proved to be a big fail
because the HR department of the company decided to do cutting in the salaries of pilots and
wages of the workers without any prior notice. Due to this step, employees of the company
went to strike as a result the company faces huge losses (Wassener, 2014). Therefore, in order
to deal with these types of issues within the organization company must update its
communication model. Moreover, a business must adopt employee-centric approaches
because it considers the employee interest as a key element.

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