Environmental Analysis of Qantas Airways: A Business Report

This report presents an environmental analysis of Qantas Airways, examining both its external and internal environments. The external analysis utilizes PESTEL and Porter's Five Forces models to identify opportunities and threats, highlighting factors like government policies, economic conditions, social trends, technological advancements, environmental concerns, and legal regulations. The internal analysis employs a resource-based view to assess Qantas's strengths and weaknesses, focusing on tangible and intangible resources, capabilities, and competitive advantages. The report also discusses Qantas's Corporate Social Responsibility (CSR) practices, managerial ethics, and the strategic leadership of its CEO, Alan Joyce, and how it affects the company's strategy and success. The analysis concludes with an evaluation of Qantas's market position and recommendations for achieving sustainable competitive advantage in the airline industry.

Running head: ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
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1ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
Executive Summary
This report makes an environment analysis of Qantas and gives outcomes at the end of each
analysis. The external environment shows that Qantas has growth opportunity yet the
company is also facing losses due to recession and intense competition. The internal analysis
identifies the excellent service quality as their niche, cost leadership and differentiation
brought success for the company. However, the losses prevails.

2ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
CSR and Business Ethics.......................................................................................................3
External analysis....................................................................................................................3
PESTEL analysis................................................................................................................3
Porter’s five forces model..................................................................................................4
Internal analysis.....................................................................................................................5
Resource based model........................................................................................................5
Resources...........................................................................................................................5
Capabilities.........................................................................................................................6
Competitive advantage.......................................................................................................6
Strategy formulation...........................................................................................................6
Strategic leadership................................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

3ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
Introduction
The objective of this report is to analyze the external as well as internal environment
of Qantas Airways Limited and identity the strength, weakness, opportunity and threats from
the analysis. This analysis will be important in identifying the market position of Qantas and
formulating strategies which the company needs to develop to sustain in the market and get a
competitive advantage. The main plan of this process involves performing PESTEL and
Porter’s five forces model to figure out the opportunity and threats coming on Qantas. For the
internal analysis resource based model is used. At the end the report gives some outcome
regarding Qantas and the strategies development the CEO to attain sustainability in the
market.
Discussion
CSR and Business Ethics
Qantas is solely depended on their stakeholders for their success. The stakeholders
include employees, clients, suppliers, shareholders and society. In order to retain
sustainability Qantas is responsible for safeguarding the interest of the stakeholders. The
social responsibility of Qantas towards their employees is the main priority as they are the
main stakeholders of the company. Qantas has made a strategic plan of employee reduction.
Out of their 33000 employees 5000 will be laid off from the company. The impact will be
severe for employees being laid off as it will be difficult for them to find a job in any other
airline industry in Australia. To reduce the impact Qantas has taken the responsibility of
relocating them to other industry and will provide necessary training for the new job.
However due to the reduction in employees the remaining employees of Qantas will receive
increased incentives and fringe benefits when there would be a rise in profitability (Maryani,
2018).
Nowadays organizations are responsible to serve the society rather than maximising
profits. They face numerous issues from their stakeholders therefore the corporate leaders of
Qantas follow the ethical business standards and comply with the law with handling their
customers, suppliers and competitors. All the operations performed in Qantas are in
accordance with the corporate laws and regulations prevailing in Australia. The company
have set a zero tolerance policy for any crime or misconduct performed in Qantas. As Qantas
follows a strong ethical practise thus having a positive impact on the employees of the
organization. High employee satisfaction will result in high quality output from them (Al
Farooque, Kotey and Ahulu, 2014).
External analysis
PESTEL analysis
PESTEL analysis helps to analyse the elements affecting the macro environment of the
business and pinpoint the potential opportunities and threats of any organization. It is an
acronym of Political, Economic, Social, Technological, Environmental and legal factors
affecting an organization (Sohel, Rahman and Uddin, 2014). The PESTEL analysis of Qantas
is shown below:
 Political Factors The government policies have a huge impact on Qantas. Political
instability with some regions of Middle East and Bangkok have negatively impacted
the revenues of the company. However, the Australian government have shown their
support to Qantas thus the company holds 65% of share in the market. The
government has shown attention to the company's management and provides political
assistance helping Qantas to establish in international destination.
 Economic factors The economy of Australia is directly proportional to the economy
of Qantas. Therefore as the economy of Australia is diminishing so is the performance

4ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
of Qantas also. As Australia is hit by recession the low income of the Australians is
leading to low demand of the air services. This is evident from the continuous losses
Qantas is making over the years in their operations.
 Social factors Qantas being the most popular airlines in Australia and one of the
most globally recognized brand, has enough customers who prefer receiving service
from this airline. Along with their excellent customer services Qantas is also
providing rebates on their air tickets to delight the customers even further and
establish a brand loyalty.
 Technological factorsWith the technological advancements Qantas has also made
developments in their operations like online ticket booking facility, online check in
facility where the customer does not have wait in long queue in the airport. Qantas
have bought new planes having IT technology which helps them to travel between
two continents without any break. Qantas is the first company to apply satellite
technology while landing (KIPTOO).
 Environmental factorsThe environmental factors have become a much concern able
issue for every business organization. The factors include the carbon cost, pollution
limit and climate change. Qantas have to follow this environmental guidelines
developed by the government. As the airline industries are dealing with the issues of
carbon emission Qantas has reduced their impact by offering their clients choice of
paying extra for their flight journey so that it can be carbon free. Qantas even does not
waste their used fuel thus adhering to the environmental guidelines.
 Legal factorsThese are equivalent to the political factor however this factors
include more detailed and specific law like discrimination law, consumer protection
law, ensuring well-being, employment legislation and antitrust law. Qantas have taken
steps to ensure the well-being of their customers by providing better quality food and
services and prohibiting smoking in the plane. However, the company has to bear the
carbon tax which is a part of legal formality (KIPTOO).
Porter’s five forces model
Michael Porter have designed this five forces model to analyze the profitability,
attractiveness and competitive intensity of a business. The five forces analysis of Qantas is
shown below:
 Threat of new entryEntry in the airline industry would require huge capital
investment for a new organization. Qantas has an established brand loyalty and the
consumer switching cost to another brand might be higher. Therefore Qantas faces
very low threats from any new entrants.
 Bargaining power of buyersThe consumer’s negotiating power in aviation industry
is high as the customers have different options to choose from and the consumer
switching cost is also lower. The number of buyers is less than the number of sellers
thus affecting Qantas by making the industry more competitive.
 Bargaining power of suppliersSupplier’s have a low negotiating power as the
number of suppliers are more than the number of buyers offering similar kind of
products and their lack of forward integration.
 Threat of substitutesTravelling through air is the more fastest and comfortable
mode for long journey therefore the threat of substitutes from any other company is
lower for Qantas airways.
 Rivalry among existing firmsIn the domestic market of Australia Qantas faces
intense rivalry from Virgin Airlines (PAN, 2019.). The competition between these
two firms is so intense that they suffer huge suffer huge losses for gaining more
customers (Xian, 2018)

5ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
Hence, from the PESTEL and Porter’s five forces model, all prevailing opportunities and
threats in Qantas’s macro environment can be identified. Qantas holds the position of the
leading airways company in Australia therefore Qantas has the opportunity of increasing their
market share by formulating unique strategies. The political assistance from the government
has given Qantas the opportunity to establish further internationally. However intense
competition with the domestic company Virgin Airlines pose as threat for Qantas. Due to this
rivalry the company is running at severe loss by cutting off their air ticket prices to remain in
the market. The financial crisis of the Australian inhabitants reduces the demand of air
services, environmental issues and the rise in oil prices have become threats for Qantas.
Internal analysis
Resource based model
This model helps to analyze the company resources, which are Valuable, Rare,
Expensive to emulate, Non-substitutable (VRIN). Strategies are developed accordingly for
the resources and the core competences, to develop a sustainable competitive advantage for
the company (Arnould, Price and Malshe, 2014)
Resources
In respect to Qantas, the resource based model scrutinize the major tangible and
intangible resources which the company has.
 Intangible resources Major immaterial assets of Qantas is their trademark
name, as the company is known as the flag line career of Australia. Along with
that, their brand value makes Qantas the most premium airways globally.
Qantas provides airline services to most parts of the world therefore they have
a significant network across the world.
 Tangible resources The airline staff present on-board and on ground are
highly skilled and professional. They provide excellent quality services to the
customers during the journey. Qantas has over 220 airplanes which has
helped them to increase their services across the world and all the planes have
advanced technology which helps them to serve premium services to their
customers (Xian, 2018).

6ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
Capabilities
Having a valuable resource would not suffice in today’s dynamic world. The brand
name alone has failed to sustain the competitive advantage of Qantas. Arrival of competitors
in the industry and the financial crisis of consumers in the external environment have forced
Qantas to cut down their ticket prices. However, Qantas has responding by establishing a
sister company JetStar providing low fares to customers (Whyte and Lohmann, 2015). The
firm is also giving major importance to the well-being of their clients and people by having
good control on their operations.
Competitive advantage
Qantas has undergone a change by implementing data and technology in their aircrafts
which gave them the differentiation from their competitors. With the help of technology
Qantas was able to give best services to their customers. The diversity of business has
enabled Qantas to achieve cost leadership as different business produced different outcomes
which reduced the operational cost and brought profits to the firm (Grant, et al., 2014).
Strategy formulation
The main strength of Qantas is their quality service provided to the customers.
Therefore the company should the right employee for their industry and provide proper
training. As the price of fuel is increasing the company should look for an alternative thereby
reducing their operation cost and having a cost leadership over their competitors.
Hence from this model the strength and weakness of Qantas can be identified. The
strengths of Qantas are is a globally recognized brand, offering excellent customer services,
emphasizes on safety of customers, Jetstar offers low priced airlines, partnership with other
airlines. However, Qantas is suffering losses due to their price cuts in airlines to remain in
competition, the operations cost of Qantas is quite high (Homsombat, Lei and Fu, 2014).
Strategic leadership
One of the main core values of Qantas is to ensure the safety and well-being of their
customers. The CEO and the management team has made safety as their priority and this
strategy has proved to be the most valuable factor behind the company’s sustainability and it
also makes them distinguishable from their competitors.
The Irishman, Alan Joyce, who has been the CEO of Qantas for more than 10 years,
has led the company to a successful position. With the practice of emotional intelligence and
building effective customer relationship, the company is able to rise from losses and is
achieving profits currently. The recent announcement of non-stop flights by the CEO has
earned customer trust and revenues for the company. The flight will be operating from
Sydney to London without any break, aircrafts like Airbus and Boeing could not make up to
that, therefore this strategy will be a huge success for Qantas (KIPTOO). Alan Joyce has been
able to introduce this non-stop flights with the help of advanced technology.
In the present scenario any Australian employee in the aviation industry would want
to work under Alan Joyce. After making Qantas achieve profits once again Alan Joyce has
been become the favourite boss of the employees. The industry attractiveness, financial
success and Joyce’s expertise and leadership motivates employees to work under Joyce
(Douglas and Tan, 2017).
Nowadays most customers prefers air travel with low fares, in order to capture the
market Qantas launched a new brand called Jetstar which provided air services at low cost.
Alan Joyce wanted Jetstar to give services at the lowest price possible therefore they made a
partnership with AirAsia to gain a competitive advantage. Furthermore the company keeps on
changing their promotion strategy to gain new customers quicker than any other firms.

7ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
Conclusion
Hence, from the above report it is concluded that Qantas has the leading market
position in Australia due to their brand recognition, excellent service to customers,
technological advancements in their aircrafts and it also has growth opportunities in the
market. On contrary, the company is facing losses for years, having intense competition with
Virgin Airlines, the political issues with Middle-East Asia and recession in Australia have
resulted in the downfall of Qantas. However, Alan Joyce, CEO of Qantas, has developed a
new strategy of introducing non-stop flights thus bringing Qantas into the boom stage again
and becoming the leading airlines in Australia.

8ENVIRONMENTAL ANALYSIS OF QANTAS AIRWAYS
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