Strategic Management.

Strategic Management
Student’s Name:
Student’s ID:

1
Introduction
The purpose and scope of the essay is to analyze the position of Qantas Airlines in the market
and the methods to improve the market shares. I will evaluate the external factors of Qantas
Airlines which are affecting the airline organization by using Porter’s Five Forces. Porter’s Five
Forces of Qantas Airlines is important as it will help me to understand the industrial environment
of the airline organization and assess the nature of its competitive that is faced by Qantas
Airlines. An evaluation of external actors has the potential to ensure complete analysis of the
airline regarding the level of its strategic performances so that better decisions could be
considered in future.
A Brief Summary of Porter’s Five Forces Model
The Porter’s Five Forces is an easy tool to understand the power of an organization in a business
settings. It also helps the organization to identify its strengths in the present position of
competitive market. The five forces are bargaining power of suppliers, bargaining power of
buyers, threat of new entrants, threats of substitutes and rivalry among the competitors (Moreno-
Izquierdo, Ramón-Rodríguez & Perles-Ribes, 2016). These forces determines the structure of the
industry and the competition level in the industry. Strong competitive forces are the less
profitable for the in the industry. The industry with low buyers and suppliers and new entrant but
high substitution and competitors are extremely competitive and not attractive for its low
productivity.
Bargaining Power of Suppliers - The suppliers might impact the productivity of an
organization by using pressure to reduce the quality or increase the prices.
Bargaining Power of Buyers - The buyers has the power to move from one supplier to other
supplier depending on the profit margin.
Threats of New Entrants - It is the treat where the current business can lose the market shares
due to entry of another business.
Threats of Substitutes - It is the treat of alternative products in every company. If one firm
provide the products in low cost in competition to rival firm, the profit margins will lead to zero.

2
Rivalry among the Competitors - The competition among the companies can impact the
productivity of the whole industry.

3
Application of the Model
Porter’s Five Forces can help Qantas to build a strategic position for itself in the aviation
industry. The application of Porter’s Five Forces Model in the context of Qantas Airlines are
given below:
Bargaining Power of Suppliers - The bargaining power of the suppliers is high in Qantas
Airlines due to less number of suppliers which are providing same services. It is high due to
other airways in the aviation sector such as Air New Zealand, British Airways and Singapore
Airlines (Raynes & Tsui, 2019). Fuel price is also the factor for the suppliers in the airline sector
as they does not have control over it and is determined by the political aspects of the world.
Bargaining Power of Buyers - The bargaining power of the customers is high in Qantas
Airlines as the customers has several options to choose like travelling services in premium class
and travelling services in low priced tickets. There are numerous service providers which
propose the same services and it increase the buying power of the customers. Another factor is
that in the aviation sector the power of the buyers is more as most airlines routes are covered by
more than one airlines (Australia.com, 2019). Stiff competition in prices provides high powers
to the customers.
Threats of New Entrants - Qantas Airlines has low threats of new entrants in the aviation
industry due to the fact that new entrants need huge amount of investment in the infrastructures
in establishing an airline organization which will be difficult to achieve. Another factor for low
threats of new entrants is the limited availability of lands for constructing airports in Australia
(Redpath, O'Connell & Warnock-Smith, 2017). The established airways have already reserved
the lands and so it is difficult for the new entrants to get airports especially with high demand of
passengers.
Threats of Substitutes - Long distance travelling has several substitutes like trains, cruises and
cars in cheaper price. But air travelling has the benefits in terms of time. So, Qantas Airlines has
low threats of substitutions as travelling in air is a faster mode of travelling services at long
distances than the water or road transportations (Farah, Munga & Mbebe, J. (2018).
Rivalry among the Competitors - The rivalry among the competitors is high for Qantas
Airlines as due to acquisitions, subsidiaries and mergers in the aviation industry. The low cost

4
carrier of Qantas, Jetstar has helped the airline to analyze various opportunities of the current
market and set up its product to suit the opportunities and conditions of the market to obtain the
competitive benefits (Zhang, Sampaio, Fu & Huang, 2018). New entrants like Air New Zealand,
British Airways and Singapore Airlines have arrived in the industry and threatening the market
shares of Qantas Airlines. They are offering low prices and better customer services through no-
frill and low costs business. Qantas competes directly with the new entrants in the domestic
market of Australia (QANTAS IN, 2019). The competition is extremely stiff that these airlines
are suffering from losses in their operating areas.
Usefulness and Limitations
Usefulness
Industrial as well my analysis can help the airline organization to gain its competitive benefits
through its strategic management. The principle of strategic management is to set up a unique
position in the market through the five forces of competition, minimize the threats and capitalize
the opportunities. It can help the Qantas Airlines to respond to its external environment and
become successful in the domestic market as well as in international market (Baxter, Srisaeng &
Wild, 2018).
Limitations
As the aviation sector is extremely competitive, so the net profit margin are low for Qantas
Airlines. The bargaining of the suppliers is high that limits Qantas to control its suppliers. High
cost for the new entrants and new competition from them in global aviation market is low.
Industrial as well my analysis can help Qantas Airlines can to overcome all its barriers and rule
the market while complying with the domestic market as well as in international market and
enhance its loyal customers.

5
Conclusion
I had considered Porter’s Five Forces to assess the external factors of Qantas Airlines which are
affecting the airline organization. Qantas Airlines has been top airline organization in Australia.
It has managed to create its brand image effectively by offering its excellent services and also
made its presence in the low costs aircrafts with Jetstar. In my opinion, Qantas need to advertise
more in social media to attract its customers by improved customer services and engage its staffs
through better employee direction systems. It can help the airline organization to maintain its
position in the global market and gain its competitive benefits.

6
References
Australia.com. (2019). Qantas: Flights to Australia - Tourism Australia. [Accessed 9 Apr. 2019].
Available at: https://www.australia.com/en-us/campaigns/offers/qantas/flights-to-
australia.html
Baxter, G., Srisaeng, P., & Wild, G. (2018). The role of freighter aircraft in a full-service
network airline air freight services: The case of Qantas Freight. MAD-Magazine of
Aviation Development, 6(4), 28-51.
Farah, H. A., Munga, J., & Mbebe, J. (2018). Influence of competitive strategies on performance
of commercial airlines in Kenya: A survey of the airline industry in Kenya. International
Academic Journal of Human Resource and Business Administration, 3(1), 170-189.
Moreno-Izquierdo, L., Ramón-Rodríguez, A. B., & Perles-Ribes, J. F. (2016). Pricing Strategies
of the European Low-Cost Carriers Explained Using Porter's Five Forces
Model. Tourism Economics, 22(2), 293-310.
QANTAS IN. (2019). Fly with one of the world’s most experienced airlines. Retrieved from
https://www.qantas.com/in/en.html
Raynes, C., & Tsui, K. W. H. (2019). Review of Airline-within-Airline strategy: Case studies of
the Singapore Airlines Group and Qantas Group. Case Studies on Transport Policy, 7(1),
150-165.
Redpath, N., O'Connell, J. F., & Warnock-Smith, D. (2017). The strategic impact of airline
group diversification: The cases of Emirates and Lufthansa. Journal of Air Transport
Management, 64, 121-138.
Zhang, Y., Sampaio, B., Fu, X., & Huang, Z. (2018). Pricing dynamics between airline groups
with dual-brand services: the case of the Australian domestic market. Transportation
Research Part A: Policy and Practice, 112, 46-59.