This report analyzes the strategies of Qantas Airways, including micro and macro environment analysis, competitive advantage, Porter's Generic Strategies, and Ansoff Matrix. Strategic recommendations are also provided.
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Running head: INTERNATIONAL STRATEGY MANAGEMENT International Strategy Management Name of the Student Name of the University Author’s Note
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1INTERNATIONAL STRATEGY MANAGEMENT Table of Contents Introduction......................................................................................................................................2 Micro Environment Analysis of Qantas Airways............................................................................2 SWOT Analysis...........................................................................................................................2 Porter’s Five Forces Analysis......................................................................................................3 Macro Environment Analysis of Qantas Airways...........................................................................4 PESTEL Analysis........................................................................................................................4 Competitive Advantage...................................................................................................................5 Porter’s Generic Strategies..............................................................................................................6 Ansoff Matrix..................................................................................................................................7 Strategic Recommendations............................................................................................................8 Conclusion.......................................................................................................................................9 References......................................................................................................................................11
2INTERNATIONAL STRATEGY MANAGEMENT Introduction Strategy Analysis is considered as a major tool to uncover, analyze and evaluate the major business strategies that are the major contributors for the success of business. The main aim of this report is to conduct an analysis on the strategies on one of the major Australian companies,Qantas Airways. Established in the year of 1920, Qantas Airways is regarded has become the largest domestic airways of Australia and international airlines. The main business of Qantas group involves in the transportation of the customers with the use of two complementary airline brands; they are Qantas and Jetstar. It needs to be mentioned that the Qantas Airways has an employee base of 30,000 people and approximately 93% of them is based on Australia. The operation of different brands of the airline can be seen in the regional, domestic and international market (qantas.com 2018). The Australian aviation industry is a major industry that has a number of airlines operating both domestically and internationally. Over the years, there has been major growth in this Australian aviation industry due to the economic growth on the country. In addition,thereisincreaseintheimportanceaviationindustryasAustraliaisanisland (aph.gov.au 2018). Micro Environment Analysis of Qantas Airways The following discussion shows the use of SWOT analysis and Porter’s Five Forces Analysis for analyzing the micro environment of Qantas Airways. SWOT Analysis StrengthsWeaknesses oStrong international as well as domesticoLowprofitmarginininternational
3INTERNATIONAL STRATEGY MANAGEMENT presence is a major strength. oSteady and consistent growth helps in business success. oSuccessfulcostcuttingstrategyis another area of strength. flights is a major weakness. oLimitedinternationalpresencewhen comparedtotheotherairlinesis another weakness. OpportunitiesThreats oTheopportunitytotieupwiththe international airlines can increase the business opportunity. oIncreaseinthebusinesstravelis creating business opportunity. oIncreasing price of fuel is a major threat for the business of Qantas Airways. oIncreaseincompetitioninthe international airline market is a major threat. Porter’s Five Forces Analysis Bargaining Power of Buyers (HIGH):The buyers or consumers have the large option to choose from premium class air travelling services, low cost travelling services and others. Bargaining Power of Suppliers (LOW):In the Australian aviation industry, availability of large number of suppliers can be seen offering similar kinds of services (Kotler 2015). Threat of Substitutes (LOW):There is not any faster medium of transportation that the airlines and it makes this threat lower. Rivalry among Existing Firms (HIGH):Severe competition can be seen in the Australian aviation industry as Qantas Airways is directly competing with Virgin Airlines. Threat of New Entry (LOW):In the presence of huge amount of investment, it is difficult for the new companies to enter into this market (McDonagh and Prothero 2014).
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4INTERNATIONAL STRATEGY MANAGEMENT Macro Environment Analysis of Qantas Airways The following discussion shows the use of PESTEL analysis for analyzing the macro environment of Qantas Airways: PESTEL Analysis Political:The support of the Australian government towards Qantas Airways along with the warm relationship of Australia with most of the countries like China and others are major political contributors to the success of the company (smh.com.au 2018). Economical:Negative effect of Australian government’s liberal aviation policy is a major hindrance for the growth of Qantas Airways. At the same time, decrease in oil price is a positive aspect for Qantas Airways (smh.com.au 2018). Social:Large public trust, support and huge customer base can be seen for Qantas Airways as it is Australia’s national carrier. In addition, domestic partnerships are major boosters of the business of Qantas Airways. Technological:One critical success factor for Qantas Airways is the investment in technology and innovation. In addition, Wi-Fi and Stan Steaming is major boosters for the success of Qantas Airways (qantasnewsroom.com.au 2018). Legal:Qantas Airways has to comply with different legal requirements like the Carbon Tax law bytheAustraliangovernmentandothers;andithurtstheoperationofthecompany (theaustralian.com.au 2018).
5INTERNATIONAL STRATEGY MANAGEMENT Environmental:Qantas Airways is also required to take into consideration the negative effect of theirbusinessontheenvironmentlikethecarbonemissionfromjetfuelandothers (theguardian.com 2018). Competitive Advantage It needs to be mentioned that there are certain aspects in the business of Qantas Airways that help the company to get the necessary competitive advance over its rivals. Some of the major strategies helping the company in gaining competitive advantage are the implementation of the dual brand strategy of Qantas Airways for ensuring both segment and market growth; the strategyrelatedtothestructurallyadvantageddomesticposition;theimplementationof innovative loyalty business that provides value to the customers of the company; the strategy related to the market positioning in Asia with Premier Airline Partnership; and the reputation of the company for operational and safety excellence (qantas.com 2018). Apart from these, innovation is regarded as another major aspect that provides competitive advantage to the company. Some of the major innovative services and products of the company are net generation aircraft and product; personalized services and experience; “Smart” operations; and the extension in market and business model. In addition, the strategies of Qantas Airways related to brand and marketing is considered provide the competitive advantage. Qantas Airways has adopted an effective pricing strategy that helps their customers to avail the high quality service of the company in competitive prices and it is one of the major reasons for the popularity of Qantas Airways. Most importantly, depth of customer data is a major competitive advantage of Qantas Airways that helps the company in embracing the digital economy with the help of integrated digital offering. For this reason,
6INTERNATIONAL STRATEGY MANAGEMENT Qantas Airways has been able to develop their enhanced mobile application and social media channels that the customers use for using the services and products of the company. Lastly, it needs to be mentioned that the competitors of Qantas Airways somewhere fail to provide the customers with these innovative products and services that provides the competitive advantage to Qantas Airways (qantas.com 2018). Porter’s Generic Strategies Two of the major aspects of the Porter’s Generic Strategies are product differentiation and cost focus or cost advantage. In the following discussion, these two aspects are discussed in relation to Qantas Airways: Product Differentiation:The quick rise of Jetstar as a low cost carrier can be consider as the result of the profut differentiation strategy adopted by Qantas Airways. In this strategy, Qantas Airways introduced two major aircrafts that are A380s and B787 Dreamliners in order to serve the passengers for gaining competitive advantage from the competitors (businessinsider.in 2018). In this regard, another major example is the introduction of Frequent Flyer Program by Qantas Airways and the main purpose of this program is to provide benefit to the passengers. Under this plan, the passengers will be able to upgrade their seats as well as increase the weight of baggage based on the earned points (qantas.com 2018). Apart from this, the company is collaborating with the companies like supermarkets, restaurants and entertainment chains to provide the users with extra benefits. Thus, from the above discussion, it is evident that Qantas Airways is always up to launch new products and offers for differentiating with their core competitors. Cost Focus or Advantage:It needs to be mentioned that Qantas Airways is premium Airline Company with premium price. From the aim to be cost effective, the company launched Jetstart
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7INTERNATIONAL STRATEGY MANAGEMENT so that they can serve the passenger to travel domestically such as Melbourne, Sydney and others. It can be observed that the main objective behind the introduction of Jetstar is to make the air travel affordable for every kind of passengers (newsroom.jetstar.com 2018). As per the recent strategy of Qantas Airways, the company is considering to introduce Jetstar in the international market as low cost carriers. Thus, from this discussion, this aspect is clear that gaining cost advantage is one of the major strategies of Qantas Airways. Ansoff Matrix Four major aspects can be seen in the Ansoff Matrix and they are as below: Figure 1: Ansoff Matrix (Source:Hussainet al.2013) Market Penetration:This aspect refers to the selling of same products in the same market. It needs to be mentioned that Qantas Airways has been involved in the introduction of new
8INTERNATIONAL STRATEGY MANAGEMENT products and services that are superior in comfort and safety. The introduction of Jetstar can be considered as a major example for this. Qantas Airways is introducing products in four major segments; they are first class, international business, international and premium economy class (Shaw 2016). Produce Development:It needs to be mentioned that Qantas Airways provides immense importance for the development of new products. The main aim behind the development of new products is to attract the new customers along with holding on to the current products. In addition, the company considers profitability as of highest priority. Under Qantas Airways, Qantas offers premium travelling arrangements for the customers. On the other hand, Jetstar provides low cost flying arrangements for the customers of Australia (Hussainet al.2013). Market Development:It needs to be mentioned that market development is one of the major parts of the strategies of Qantas Airways. In the year 2002, Qantas Airways launched Australian Airlines in order to make expansion in the international market. In the year 2004, Qantas Airways launched Jetstar for the domestic expansion of their business in Australia. In the year 2012, Qantas Airways launched Jetstar Japan for expanding their business in Japan (qantas.com 2018). Thus, from the above discussion, it can be observed that Qantas Airways uses different kinds of strategies for ensuring the growth of their business like market penetration, market development, new product development and others. Strategic Recommendations Based on the above discussion some recommendations are provided that Qantas Airways and pursue to maintain the success of their company. They are as follows:
9INTERNATIONAL STRATEGY MANAGEMENT oThe recommendation for Qantas Airways is to aim towards establishing competitive advantage over the competitors by adhering to the product differentiation as well as cost focus approach. oQantas Airways is recommended to increase alliances with the global airline brands so that they can provide services to larger customer base. oQantas Airways should plan for more business acquisitions that will lead the company towards gaining more market share as well as increase in the customer base of the company. oItisrecommendedtoQantasAirwaysthattheyneedtostrategicallytargetthe competitors; in addition, they need to chalk out the customer segment more properly. For instance, the adopted means for influencing the middle aged men cannot be the same with the means for attracting the teenagers. oQantas Airways is required to put more focus on a friendly and well crafted customer service so that they can retain the existing customers along with attracting the new ones. oIt is required for Qantas Airways to determine the segregated strategies in order to cater to needs of the low budget as well as premium customers. For this reason, bringing flexibility in price needs to be the prime objective for Qantas Airways. Conclusion The above discussion sheds light on the strategies of Qantas Airways. It is evident from the above discussion that both the effects of micro as well as macro environment are there on the business operations of Qantas Airways. Some of these effects work as a major contributor for the success of Qantas Airways; at the same time, some of them work as hindrance for the business of
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10INTERNATIONAL STRATEGY MANAGEMENT Qantas Airways like compliance with many regulations and others. It can also be observed that innovative business strategies as well as innovation in technology provide major competitive advantage to Qantas Airways over the other rivals. The application of Porter’s Generic model on Qantas Airways, it can be observed that the company uses both product differentiation as well as cost focus strategy for their business. Apart from this, the major growth strategies for Qantas Airways are product development, market penetration and market. In can also be observed that Qantas Airways has to face major competition from their competitors.
11INTERNATIONAL STRATEGY MANAGEMENT References Aph.gov.au. (2018).Australian Airline Industry – Parliament of Australia. [online] Available at: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/ pubs/rp/rp0203/03RP10 [Accessed 26 May 2018]. BusinessInsider.(2018).BusinessInsider.[online]Availableat: https://www.businessinsider.in/This-airline-CEO-is-challenging-Airbus-and-Boeing-to-step-up- their-game/articleshow/61303175.cms [Accessed 26 May 2018]. Hatch, P. (2017).Qantas can't become complacent, says Alan Joyce. [online] The Sydney MorningHerald.Availableat:https://www.smh.com.au/business/companies/qantas-cant- become-complacent-says-alan-joyce-20170825-gy4b1x.html [Accessed 26 May 2018]. Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment, and growth-an interactive triangle.Management and Administrative Sciences Review,2(2), pp.196- 206. Jetstar to introduce interlining with Qantas and multiple international airlines . (2018).Jetstar to introduce interlining with Qantas and multiple international airlines. [online] Available at: http://newsroom.jetstar.com/jetstar-to-introduce-interlining-with-qantas-and-multiple- international-airlines/ [Accessed 26 May 2018]. Kotler, P., 2015.Framework for marketing management. Pearson Education India. McDonagh, P. and Prothero, A., 2014. Sustainability marketing research: Past, present and future.Journal of Marketing Management,30(11-12), pp.1186-1219.
12INTERNATIONAL STRATEGY MANAGEMENT O'Sullivan, M. (2013).Type of government support for Qantas is important, Moody's says.[online]TheSydneyMorningHerald.Availableat: https://www.smh.com.au/business/type-of-government-support-for-qantas-is-important-moodys- says-20131201-2yjp3.html [Accessed 26 May 2018]. O'Sullivan, M. (2015).Qantas role re-examined amid high-flying as government rolls out redcarpetforforeignairlines.[online]TheSydneyMorningHerald.Availableat: https://www.smh.com.au/business/companies/qantas-role-reexamined-amid-highflying-as- government-rolls-out-red-carpet-for-foreign-airlines-20150325-1m74tb.html [Accessed 26 May 2018]. Qantas News Room. (2018).Welcoming Stan On Board Our Wi-Fi aircraft. [online] Available at:https://www.qantasnewsroom.com.au/roo-tales/welcoming-stan-on-board-our-wi-fi-aircraft/ [Accessed 26 May 2018]. Qantas.com.(2018).ExpandingOverseas...andatHome|Qantas.[online]Availableat: https://www.qantas.com/travel/airlines/history-expanding/global/en [Accessed 26 May 2018]. Qantas.com. (2018).Frequent Flyer - Flying Qantas and Partner Airlines - Flying with Partner Airlines-EarningQantasPoints.[online]Availableat: https://www.qantas.com/fflyer/dyn/flying/earning-points-partner-airlines[Accessed26May 2018]. Qantas.com.(2018).NextGenerationAirline|Qantas.[online]Availableat: https://www.qantas.com/travel/airlines/next-generation-airline/global/en[Accessed26May 2018].
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13INTERNATIONAL STRATEGY MANAGEMENT Qantas.com.(2018).OurCompany|Qantas.[online]Availableat: https://www.qantas.com/travel/airlines/company/global/en [Accessed 26 May 2018]. Qantas.com. (2018).Qantas CEO Alan Joyce American Chamber Commerce Speech. [online] Availableat:http://www.qantas.com/travel/airlines/qantas-ceo-alan-joyce-american-chamber- commerce-speech/global/en [Accessed 26 May 2018]. Shaw, S., 2016.Airline marketing and management. Routledge. Slezak, M. (2018).Qantas worst airline operating across Pacific for CO2 emissions, analysis reveals.[online]theGuardian.Availableat: https://www.theguardian.com/business/2018/jan/17/qantas-worst-airline-operating-across- pacific-for-co2-emissions-analysis-reveals [Accessed 26 May 2018]. Theaustralian.com.au.(2014).Qantasblameswoesoncarbontax.[online]Availableat: https://www.theaustralian.com.au/business/aviation/qantas-blames-woes-on-carbon-tax/news- story/2977348a0624fa22445bd404101eec78?sv=346f0a4991adc9fe971c4d35f1a423c9 [Accessed 26 May 2018].