Business Analysis of Qantas Airways

This article provides a detailed business analysis of Qantas Airways, including Porters Five Forces analysis, SWOT analysis, corporate strategy, financial performance, and recommendations for the future. The article covers the airline's history, subsidiaries, and market share. It also discusses the accounting principles and policies that are closely monitored by accountants and auditors in Qantas. The financial performance of the airline is analyzed, including revenues and expenses. The article concludes with recommendations for the future of Qantas Airways.

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Business Analysis
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Introduction
Qantas Airways, is the Australian national flag carrier and the biggest airline in Australia in
terms of fleet size and destinations. It also has the largest international flights and the third oldest
flight in the world after Avianca and KLM. It was founded in 1920 although its passenger flights
for international destinations started later in May 1935 (An, 2014). Its nicknamed the fling
Kangaroo a name coined due to its nationality in Australia. Its main hub is Sydney Airport and
has a majority command in domestic flights at 65%. It carried a total of 14.9% of all the total
passengers flying out of Australia. It has various subsidiaries including Jet connect and Qantas
Link. It is also big in New Zealand and also has a low cost low budget airline by the name Jetstar
airways. Jetstar airlines operated both in domestic and international destinations especially in
New Zealand (Akbar and Stark, 2013).
a) Porters Five forces analysis for Qantas Airline
This is a tool for analyzing competition within the organization. It aims at looking for industry
attractiveness, profitability, competitiveness and general market intensity. The forces include
1. Threat of new entrants
For an aeroplane industry that requires a lot of capital only big organizations can make an entry
in the business. The following factors are inhibitors to market entry, and upon entry makes it
hard for componies to exit.
 Government policies
 Capital requirements
 Absolute cost
 Brand equities and economies of scale

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 Customer loyalty
 Industry profitability
With all this factors, it is difficult to make an entry and also to make an exit.
2. Threats to substitute
With differentiated subsitutes, the entry is hard hard. Differentiated subsitutes in airlines industry
ensures that Qantas uses both low cost and high cost products for differentiation. Different
airlines in Australia have different subsitutes for their products. The factors that affect
differentiation include;
 Customer propensity to substitute
 Costs of switching form one product to another
 Availability and ease of substitution
 Number of substitute products.
3. Bargaining power of customers
This depends on the market outputs. In airline industry, there is no bargaining power as prices
are set based on profitability, competition, cost and customer demands. The company factors that
affect the bargaining power of customers include; purchasing power of the population of
Australia, Rising prices at traditional resorts, competition from western air carriers and
seasonality of demand(Damodaran, 2016).
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4. Bargaining power of suppliers

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It is also known as market inputs. Suppliers of services, labor and expertise are a source of power
when there are few subsititites. This is why the prices are relatively high due to few competitors
in the airline industry.
5. Industry rivalry
The intensity of industry competitiveness is a major determinant of the competitive nature of the
aeroplane industry. Having an understanding of rivals within the aeroplane industryis vital in
marketing strategy for Qantas products(DeFusco, et al, 2015).. Positioning distinguishes
competitors and their respective products. Pricing and marketing strategies is important in
business productivity.
b) SWOT Analysis for Qantas competitive strategy
This is the strength, weaknesses, opportunities and threats in the industry that Qantas has to
factor in its marketing strategy.
Strengths
 Increased propensity to fly
 Highly trained airline staff
 High number of fleet the biggest in
Australia
 Ability to segment the market inorder
to have different pricing and servicing
decisions.
Weaknesses
 Huge capital oulay required
 Difficulty in making changes and due
to staffing commitments
 Large workforces in different
geographical locations requiring close
monitoring.

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Opportunities
 Continental expansion in both leisure
and business destinations
 Technological innovations ensuring
reduction in costs
 Customer friendly services
 Technological innovations leading to
increased revenues
Threats
 High levels of competitions from
domestic and international airlines
 High prices of fuel
 A plague of terrorist attacks affecting
the general airline industry
 High taxes and stringent government
regulations.
c) Corporate strategy used by Qantas since 1992 to serve both its domestic and
international markets
Although some scholars share these terms, each of them has to do with the same general concept.
J. Harrison and his colleagues (Harrison et al., 1995) point out that "the strategy makes it
possible to clarify the mission, establish clear long-term goals of the organization and formulate
understandable integrated steps aimed at achieving them."
Why should organizations be engaged in planning?
- Clarification of intentions. If the organization is striving to expand the chances of success, it
must clearly represent the direction of its development, be guided by clear objectives and
priorities.

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-Correcting intentions. The organization must coordinate the movement of all its units or
departments in the same direction to the same system of goals. A well-defined strategy, including
the definition of common values, contributes to the formation of a corporate approach (the term
corporate strategy is also used). However, the organization's strategy is not self-sufficient.
Successful implementation of plans implies an effective communication system and a high
degree of participation in the activities of the organization of all its members (Deo, and Sethi,
2016).
Participation in the implementation of intentions. Even clearly articulated and brought to the
attention of each member of the organization, the strategy does not stand a chance of
implementation if the employees do not share its provisions. Management needs to assess
whether the organization has the financial, labor and other resources to implement the plans.
- Creation of a structure for making operational decisions. Although the strategy is aimed at
long-term business development, it defines the actions of the organization in the short term. In
the event that the main concepts or master plans are not a guide to direct action and a basis for
monitoring development, they do not make sense.
So, if the strategy forms the context for making everyday decisions, what are the "strategic"
decisions? If the strategy deals with the "direction or scale of the organization in the long run",
the following questions arise. Should the organization concentrate its efforts on one type of
activity or on several? How useful are operations in several markets, as is the case with
multinational conglomerates. Where should the boundaries of the organization lie. On the
contrary, everyday, or "operational" solutions are focused primarily on actions that are routine in

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nature and affect not the organization as a whole, but its part or units. Operational decisions are
important, but they do not go beyond the context of the overall strategy.
The competitiveness of an airline today is largely determined by its ability to adapt to the
conditions of a market economy and make the management mechanism as efficient as possible.
Analyzing the activities of the world's leading airlines, it can be noted that the most successful of
them have one common aspect - a developed corporate culture(DeFusco, et al, 2015).. Their
leaders have long realized that success in the market is the result of joint efforts of the entire staff
of the organization. Caring for people, the atmosphere of trust and openness, creating conditions
for the disclosure of talents are integral parts of a corporate culture that can bring tangible
financial results. The foregoing is fully applicable to Australian air transport enterprises, for
which the following features are characteristic:
- About 30% of airlines are on the verge of bankruptcy, which creates a complex psychological
climate and conflict situations in the team against the background of a lack of adequate skills in
personnel management;
d) Two accounting principles and accounting policies that would be closely monitored by
accountants and auditors in Qantas
There are two accounting principles that will be closely watched by the industry auditors and
accountants. They include;
1. principle of accounting full disclosure
Assets and liabilities in the industry are quite high. The principle of full disclosure in the aviation
industry is due to the massive assets and liabilities involved in the industry. It runs into billions
of dollars and is used to make a successful company.

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2. Going concern principle
This is the principle that shows that a company is expected to continues in business over the
foreseeable future. Going cocern principle shows that the company is still healthy in terms of its
revenues, cost principles, assets, liabilities and equity.
e) Qantas financial performance revenues and expenses
Increased competition due to the entry of other market participants into global alliances, m & a
transactions, the weakening of legislation on foreign carriers (earlier only Australian airlines
could be present on the Australian market) (Awate, et al, 2015)
In 2013, the net profit of the Qantas Group was A$ 7,334.7 billion. During the same year, Qantas
itself transported 20.9 million passengers, and taking into account all the airlines of the Qantas
Group, it was 31.4 million. In 2014, according to the aeronautical consulting company Skytrax,
Qantas was recognized for the third time as the best airline in Eastern Europe.
Currently, the company has developed a provision on corporate information policy in Qantas.
The Regulation on the Corporate Information Policy is a regulatory document that establishes the
priorities and standards of the company's information activities in relation to its target audiences,
determines the list of information disclosed, the channels and the timing of its dissemination. The
regulation covers such issues as the goals and principles of corporate information policy,
interaction with target audiences, communication management, rules for providing information
(Healy and Serafeim, 2015). The Regulation determines the list of publicly available documents
and information to be disclosed to all interested parties, regardless of the purpose of their receipt;
documents, information (materials) to be provided to shareholders and their representatives; as
well as the methods and terms for their disclosure and provision. Based on the Regulations, the

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Company's communication strategy is formed in accordance with the Strategic Development
Concept approved by the Board of Directors of Qantas (Madsen, and Walker, 2015).
f) Qantas financial performance revenues and expenses
The financial report for Qantas in 2013 reprted that the company had spent $ 1.3 billion in its
customer product and fleet during the year. Six new unencumbered aircraft were added to the
fleet. The year 2013 severely undermined Australian aviation, after which many companies
could not recover, aviation fuel remains expensive. High prices for aviation fuel. Qantas can
hedge only 15% of the fuel bought abroad. Due to the development of the NTP, the model of
aircraft that Qantas uses is becoming obsolete. A renewal of the park is quite a costly and lengthy
process. There are currency risks of exchange rate fluctuations (may affect the price of purchased
fuel and dividends on shares (Easton, et al,2018)
g) Differences and similarities between e and f
The system of forecasting and planning deals with a number of departments. Their powers
include the duties of overseeing competing firms, providing information on the latest innovations
and innovations, on planned bills, on financial changes on exchanges, on suppliers, on
identifying errors with their subsequent elimination (Easton,et al,2018).
One of the merits of Qantas is its captious attitude to any inconsistencies. Every omission,
hindrance, defect is immediately checked by the Quality Improvement Department (Damodaran,
2016). This is a big expense, but thanks to these developments, Qantas has the name of a safe
carrier.
Financial Analysis

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The position is based on the fact that the Company is an open joint stock company and conducts
its business in Australia and abroad. It takes into account the requirements of Australian and
international legislation (McNichols, and Stubben, 2015).
g) Conclusions and recommendations.
Therefore, the key factors that pose a threat to Qantas current strategy are factors related to the
risks of deterioration in the economic situation, government regulation of the industry, a rise in
the cost of aviation fuel, and a loss of opportunities for expanding the route network(Trugman,
2016).. The main problem that exerts a comprehensive influence on activity of the airline, is a
high debt load. During the SWOT-analysis a number of strategies aimed at eliminating external
threats airlines, as well as to eliminate its weaknesses. Priority strategies, in my opinion, are:
1. Increase the competitiveness of the airline by increasing the level of service, upgrading the
fleet and expanding the route network;
2. Constant planning of expansion of the route network in new directions
3. Attraction of the capital due to placement of bonds;
4. Strengthening the airline's good reputation and raising its status through social programs,
which at the same time are aimed at stimulating demand during the low activity season;
5. Increase of efficiency of marketing activity, due to the introduction into the staff of a qualified
specialist-marketer;
6. Expansion of activities in the freight market, especially for a period of low demand activity.
SWOT analysis not only confirmed the feasibility of Qantas development strategies proposed in

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analyzing the problem tree, but also allowed for the allocation of additional strategies (Wahlen,
et al, 2014).
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