MAN306: QANTAS Airways Business Strategy Analysis and Development

This report analyzes the business strategy of QANTAS Airways, focusing on its evolution over the past five years and its current strategic direction. It begins with an introduction to QANTAS, detailing its background and business operations. The report then reviews the airline's past strategies, includin...Read More

Business Strategy Analysis and Development
A case study of QANTAS Airways
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Table of Contents
Introduction...........................................................................................................................................3
Background and Business Details of QANTAS Airways..................................................................3
Review of the past 5-year Business Strategies...................................................................................4
Statement of Current Strategy............................................................................................................6
Recommended Business strategy.......................................................................................................9
Justifications for the recommended strategy....................................................................................10
Conclusion...........................................................................................................................................10
References...........................................................................................................................................11
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Introduction
Business strategies bundle into several tactics which are relevant to business and its
operational success. This writeup is an analytical report based on strategies related to the
case study of Qantas Airways. Strategies are relevant in connection to forthcoming business
planning which shapes strategic thinking for achieving success in a competitive industry such
as aviation. Therefore case study of Qantas Airways is a chosen basis of analysis concerning
some aspects of the analysis in this essay. Firstly the organization Qantas airway is
introduced in this analysis. Previous five years’ strategies have been discussed and evaluated
in this report. Present strategies of the firm hold importance and have been also discussed
here. Moreover, some strategies have been recommended for the case study firm and the
recommendation have been justified in the line of environmental concerns expressed by the
Royal Commission (Teece, 2010). Business firms can never put aside its concerns for the
environment. The strategies for protecting environment and practices which are sustainable in
nature aim for the protection of brand value and image. Strategies related to these domains
are often becoming a regular feature of overall business planning. In connection with the case
study, these all have been discussed in this report which has taken an evaluative form.
Background and Business Details of QANTAS Airways
QANTAS Airways came into being in the year 1920 and ever since emerged to be the largest
international as well as a domestic airline in Australia. QANTAS is a short name while the
full name stands as Queensland And Northern Territory Aerial Services Limited. This airline
has a strong brand value and is considered the most important airline in the world covering
long distance travel. The brand has focuses on some domains to maintain its strong brand
value and these are safety related excellence, engineering and its maintenance, operational
credibility and finally customer service. These are all set to achieve a higher level of
customers’ satisfaction in the aviation industry. The main business of the brand is based on
transportation of customers through flights through two brands under the main operational
brand Montgomery, (2011). These supplementary brands are Jetstar and Qantas. Alongside
this brand is also operational to manage the subsidiary business of some other airlines.
Qantas provides transportation services to its customers who are local, domestic as well as
international. This brand has subsidiary businesses and these are Qantas Frequent Flyer and
Qantas Freight Enterprises. This brand recruits more than thirty thousand people to serve its
business and its customers. Maximum employees of this organization are from Australia.
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Qantas considers that customers have reason to select the service of this airline brand if two
important aspects are taken care of and these are service excellence and great value combined
into the service offered by the airline. This airline company has won many awards and this
has improved the possibility of brand acceptance among domestic and international
customers. The company has high priority for ensuring sustainable practices which denote the
overall focus of business to think for the environment as well as society (Bharadwaj et al,
2013).
Review of the past 5-year Business Strategies
The airline discovered market volatility and economic uncertainty are the main causes
which expedite the adoption of strategies.
Cost reduction worth $2 billion
Across the entire part of Qantas group, cost reductions on a permanent basis were the
foremost focused part of business strategy to ensure improvement in productivity,
fortification of business-related activities, adoption of new and innovative technology along
with savings related to procurement. Reduction of capital expenditure was also part of overall
cost reduction move of the brand. This strategy of cost reduction is highly notable if the firm
to cut on unnecessary expenses in nonproductive fields in its business in a given market
situation which is marked by uncertainty and financial instability. Campbell, Edgar, and
Stonehouse, (2011), opined that cost reduction is not a complete strategy but plays supportive
to some major strategies when market situations undergo structural financial shift along with
deteriorated operating field such as uneven playing context even to a big name like Qantas
Airways. However, if complete action is needed, the cost-cutting option cannot be demeaned.
The pace with competition and modernization bid
Competitors of Qantas improved their capacity in the Australian market by a whopping forty
six percent during this decade and this recorded over double than the average of the world.
Qantas found this significant even at the time of financial uncertainty as well as a higher level
of the price of fuel. But for Qantas, there had been no stop in devising away strategy by
focusing on transformation. The company introduced new aircraft and technology,
modernized services and work practices. As per Meskendahl (2010), modernization of
services is part of service revitalization move they may not adequately back up a plunging
business in sinking economy. This holds the truth from the perspective of the airlines as
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considering the type of challenge the move was not adequate to withstand competition in the
market by many established players including Virgin Australia. Still, the brand has its focus
depending on the government of Australia to take absolute measures to recover from present
Australian aviation related policy and uneven playing loop.
Prioritization on an immediate basis
Qantas considered adoption of strategies that may appear unprecedented in terms of scope
and strengthening of the core business. The firm worked its assets harder to be more prolific
by phasing out old aircraft. The firm looked to ensure that the size of the network and fleet
are reasonable to serve a large contingent of customers across all operational fields. Naidoo
(2010), opined that organizations in the competitive field of business cannot defer growth by
looking only within the constricted realm of business. Hakansson (2015), stated that in the
crucial phase of business the main function is cutting on investment and capital injection into
another place which must not collide with cost reduction policy. But the decisions taken by
the firm are undoubtedly difficult in the given market conditions.
Commitment for customers
Services were made available by the company thinking about needs among customers. This
was supported by consumer investment attempt by improving fleet of Airbus A330 and new
lounges came up in two most prominent places such as Los Angeles and Hong Kong with
service motto defined as uncompromised services for customers (Santos, 2012).
Transformation of fleet and network
Qantas after studying its schedules and network focused on demand matching efforts in the
international and domestic market. It reassigned aircrafts, disposed and canceled orders of
aircraft and concentrated on the better use of fleet by taking a departure from routes that were
underperforming. Buckley and Ghauri, (2015) remarked that business often needs to adopt
accelerated transformation programme to support growth and minimization of threats from
competition. From the company perspective, this was important for Qantas to improve
productivity and cutting down unnecessary cost involvement.
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Figure - The Greiner Curve
(Source: www.mindtools.com)
The curve above reflects several phases denoted by the level of growth caused by individual
factors. Based on this theory the airline company understands several phases it undergoes in
its course of business progression. For Qantas to identify the requirement of transformation in
the business knowledge of this growth curve is of all importance.
Changes in workforce
Qantas focused on the reduction of employee numbers equivalent to five thousand to
implement its workforce related change. It includes several strategies which are a reduction
of roles that were found nonoperational, operational efficacy affected adversely by changes in
fleet and network, Line maintenance restructures, closure of maintenance base of Avalon,
restructuring of facilities in catering. These all were vital for the business of the firm to
achieve cost-effectiveness and maximum performance of overall operation backed by
manpower (Gavetti, 2012).
Statement of Current Strategy
Qantas always looks ahead in business which keeps management motivated to steer through
competition in the aviation market. The organization considers that if long-term success is to
be achieved, change is a more crucial aspect in business and most effective outcomes could
be achieved if the business can be responsive to wants and expectations among customers.
The company is eager to seize on opportunities in technology and supportive resources
(Furrer, 2016).
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Adoption with innovation and technology – the company was a fast adopter of jet aircraft.
Innovation to expedite change is the main motive of the business to ensure satisfaction among
customers. Low-cost carrier Jetstar was formed by this company. Link among Australia and
Europe was established by Qantas through its London to Perth services (Trkman, 2010).
The airline builds knowledge about responding to change in the international economy
and shift in the geopolitical balance of power.
This means the company is focused on building the ability to adapt to change of economy and
demands in emerging markets in new regions across the globe caused a shift in the
geopolitical balance of power (Gavetti, 2012).
Dependence on big data and digital connectivity - digital connectedness and big data are
causes of big change in the industry’s outlook to understand the demands among customers.
Qantas has developed intelligent analytics for developing required insights. This is a new
capability that vanquishes the difficulties of a ‘digital native’ organization. Verbeke (2013),
has opined that technological dependence and virtual connectedness do require meticulous
coursework to be worked upon before getting into functional aspects. If this saying is relied
upon then the question arises if Qantas has an adequate volume of talents and even this
evokes positive answer then whether the company’s cost reduction drive can be addressed.
Therefore the significance of digital evolution for the business cannot be predicted so early
(Grant, 2016).
The understanding shift in preferences - this is performed by Qantas to attract future
customers into its business portfolio and service variations. Astrachan (2010), says that
business’s basic rolls with initial thought of customers’ satisfaction which is not possible
unless customers’ needs and variations in demands are considered Gavetti, (2012), argued
and opined that in aviation industry customers’ expectations are not easy to understand since
industry pattern is complicated and nature of competition, aviation policies, rules, and
regulations are profoundly influential to the business success which takes into account
knowledge about customers and their expectations.
The responsible manner of business – Qantas acts in a responsible manner to maintain its
operational standards and to remain transparent all through its business activities. The
company knows that its brand identity and brand image are dependent on corporate
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governance, consideration for people, safety, community development and environmental
protection (Akter et al, 2016).
Lean-safe operations in the industry - Qantas encounter significant volume of competition
and cost reduction pressure. The company always looks at improving operational efficiency
without compromising safety. To meet this requirement lean-safe operation is the suitable
strategy of the company to ensure success in the aviation industry. By lean safe operations,
Qantas tries to achieve the transformation of information systems and its management so that
the process could be flawless and safety, as well as operational objectives, can be achieved
(Young et al,2014).
Figure - Lean-safe tool (5S’s)
(Source: www.breval.co.in)
Qantas in its lean-safe practices has focused on two inseparable elements which are process
oriented along with human-oriented practices to make it certain that value thereof could be
optimized. Qantas applies 5S’s as a lean-safe tool that includes sort, straighten, shine,
standardize, strengthen. With the help of this tool the company identifies unnecessary items,
place items where are needed most, cleanliness is improved as part of the inspection to
remove contamination, standards get established by business and standards get signified by
the arrangement of training and frequent evaluation (Dalkir, 2013).
Criticism of lean-safe operation for Qantas
With the emergence of low-cost airlines, indiscriminate cost-cutting is appearing as the
biggest threat to safety. Safety as a metric of conformity and variable for satisfaction in
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views of customers often disappears in consideration of low-cost facility to customers and
offsetting operational cost by operational savings (Foss, 2011). This is the potentially difficult
factor for the firm to wedge a balance and if not successful then remains crammed in between
customers perception and safety requirement. The airline company needs to be utmost
considerate on this issue and must focus on operational improvement without compromising
safety aspects. In implementation process of lean-safe tool -5S’s per se, problems of
resistance by team members, lack of support from management, complication to solve
workplace problems are likely to arise and these factors need to be managed (Alexander,
2013).
Recommended Business strategy
Focus on Asia to develop market share - Asia offers a lot of potentials to Qantas to build
market share. Keeping with this requirement and opportunity to develop more revenue the
firm needs to have its global network dedicated to Asia. Singapore is another promising
market for the aviation industry and the airline must consider this into its expansion strategy
(Sanden, 2014).
Responsiveness to changes among expectations of employees and customers - The
company must realize that customers and employees are the most important stakeholders.
Their needs and expectations and satisfaction level shape the ultimate business pattern and
profit accumulation. Therefore Qantas must launch many complimentary services in their
flight services for customers. Employees need to be put on several motivational training
which will leave no room for grievance (Parnell, 2010).
Use of higher level of analytics to drive efficiency - with help of advanced analytics
business can improve fuel efficiency in support of planning of 4D flight. This could ensure
solution of passenger disruption.
Qantas can use balance scorecard - To measure performance over the period in support of
operational strategy for strengthening the business.
Qantas must be responsive to climate change and resource limitations - Aviation industry
agrees to move with a global regulatory scheme in tackling issues like climate change and
resource limitations. The royal commission has a large degree of concerns for environmental
aspects. Thus a strong compliance is needed on the firm’s part. Qantas must use data
analytics to understand business-related impact and areas of improvement. The company
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needs to ensure the yearly plan of improvement in fuel burn via measures of efficiency e.g.
ground power utilization for planes at the gate (Spender, 2014). A new measure such as
‘single engine taxi’ is also helpful. Turbines aboard to be avoided by the company.
Justifications for the recommended strategy
Business will achieve a new horizon with improvement in revenue earning and network
expansion in international countries such as Singapore and Asia.
Customers will turn into frequent fliers with the escalated level of loyalty by opting more
service features by the flight service provided by Qantas. Employees will offer more
performance for lifting service quality and organizational work could be rolled into the
possibility of accomplishment of objectives.
4D flight planning is likely to be helpful for bringing about fuel efficiency. If passenger
disruption is minimized then more efficiency in service can be achieved.
Balance scorecard can help business to understand the volume of return on investment, per
year growth rate, benefits out of transformation in business, level of employee engagement,
improvement of the level of innovation in all services and operations (Barney, 2012).
Protection of the environment and scarce resources can be ensured in accordance with the
requirement laid down by the Royal Commission. Compliance regarding climate change can
be achieved by the company followed by better corporate governance.
Conclusion
This report is analytical in form and has included discussion concerning business strategies
spanning previous years. Qantas is a reputed airline organization in Australia with numerous
fleets which operate in domestic and international zones. Current strategies of the company
have been also discussed along with recommendation supported by justification to give
logical meaning linked to each recommended strategies for the firm. The current strategies
include the use of innovation and technology to justify services and products to ensure
satisfaction among customers by responding to their needs, dependence on digital
connectivity, conducting business in a responsible manner. Qantas can achieve more growth
by focusing on markets of Asia, taking of sustainability measures, use of higher analytics to
drive efficiency for achieving fuel efficiency, use of balance scorecard to understand
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achievement in business. By tackling an issue like climate change, Qantas can keep the
business ahead and compliance requirement by the Royal Commission can be ensured.
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References
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