Detailed Business Case Analysis: Qantas Airways and Competition

This business case analysis examines the challenges faced by Qantas Airways, Australia's flagship airline, amidst increasing competition from low-cost carriers and other airlines. The report identifies the core problem as competitive pressure, leading to potential revenue and market share decline. It explores the benefits of addressing these issues, including improved share valuation and government revenue through increased tax payments. The analysis presents strategic options, such as adopting a low-cost model, and evaluates their impacts considering social, environmental, and economic factors. Financial analysis, risk assessment, and recommendations are provided to guide Qantas in managing its operations effectively and maintaining profitability. The report emphasizes the importance of stakeholder considerations and a sustainable approach in the airline industry.

Running head: BUSINESS CASE ANALYSIS
BUSINESS CASE ANALYSIS
Name of the Student:
Name of the University:
Author’s Note

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BUSINESS CASE ANALYSIS
Executive Summary
The main purpose of the assessment is to analyse the business problems which are faced by the
business of Qantas ltd during the period. The business problems which affect the business of
Qantas ltd is the high-level competition which is faced by the management of the company. The
competitive pressure has resulted in fall of revenue of the business and affected the profitability
of the business. The assessment would also be showing the value proposition diagram for the
business and business canvas model which the management of the company would be following.
The assessment would also be including recommendation and actions which needs to be taken by
the business for managing the operations of the business.

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BUSINESS CASE ANALYSIS
Table of Contents
1. Part 1 Problem.............................................................................................................................4
1.1 Background............................................................................................................................4
1.2 Definition of the Problem......................................................................................................4
1.3 Evidence of the Problem........................................................................................................5
1.4 Timing Considerations...........................................................................................................5
1.5 Consideration of the Broader Context...................................................................................5
2.0 Benefits......................................................................................................................................6
2.1 Benefits to be Delivered........................................................................................................6
2.2 Importance of the Benefit to the Government.......................................................................7
2.3 Evidence of Benefit Delivery................................................................................................7
2.4 Interdependencies..................................................................................................................8
3.0 Strategic Options.......................................................................................................................8
3.1 Strategic Approach................................................................................................................8
3.2 Strategic Options...................................................................................................................8
3.3 Recommendation...................................................................................................................9
4.0 Option Analysis.........................................................................................................................9
4.1 Unit and Stakeholders............................................................................................................9
4.2 Social Impacts........................................................................................................................9
4.3 Environmental Impacts........................................................................................................10

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BUSINESS CASE ANALYSIS
4.4 Economic Impacts...............................................................................................................10
4.5 Financial Analysis...............................................................................................................10
4.6 Risks....................................................................................................................................11
5.0 Recommendation.....................................................................................................................11
Reference.......................................................................................................................................12
Appendix........................................................................................................................................15

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BUSINESS CASE ANALYSIS
1. Part 1 Problem
1.1 Background
Business competition is considered as a process in which the companies belong the same
industry compete with each other (DaSilva & Trkman, 2014). It needs to mention that there is a
key advantage of business competition leads to innovation in products and service offerings of
the companies. At the same time, it has a significant disadvantage since it can bring the
companies in unfavourable circumstances that can contribute towards the underperformance of
the firms. In the same manner, the entrance of new competitors is harmful for the businesses of
large companies since these small companies create threat for them (Adner, Oxley & Silverman,
2013).
1.2 Definition of the Problem
Australian airline industry is considered as a major competitive industry due to the
presence of some large companies like Qantas, Virgin Airlines and others along with certain
well-performing small airlines like Air Australia, Scoot and others. In the current situation, large
airline companies are facing immense competition from the not-so-large and small companies
because these small companies are coming with innovative aviation solutions in affordable price.
Qantas is considered as the flagship airline of Australia which is facing a new threat due to the
re-launch of Australia’s newest airlines. This aspect is creating immense competition in the
Australian airline industry. This can be considered as a major threat to the business of Qantas
(couriermail.com.au, 2019).

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BUSINESS CASE ANALYSIS
1.3 Evidence of the Problem
In the current situation, Qantas is fighting for regaining its position in the Australian
airline industry, but the company is facing major competitions from the newest airlines since
these companies are preparing to enter into the market with innovative products and services. For
example, Strategic Airline launched their low- cost carrier named Air Australia with a green and
gold colour scheme. The aim of this new airline would be to cover the domestic destination such
as Bali, Thailand and Hawaii (couriermail.com.au, 2019). After gaining the permission from the
International Air-Service Commission, the launch of Air Australia would lead to increased
competition and expansion in the niche market. In addition, Qantas is also facing competition
from domestic carrier Virgin Blue and Scoot. These low-cost carriers are giving tough
competition to Qantas (couriermail.com.au, 2019).
1.4 Timing Considerations
The presence of this immense competition in the airline industry due to the entrance of
low-cost carriers would affect the long-term profitability of the airlines like Qantas. At the same
time, there would be reduction in the market share of Qantas due to the entry of these low cost
carriers in the Australian airline industry. In order to address this issue, it would be necessary for
the management of Qantas to undertake appropriate strategies initiatives (traveller.com.au,
2019).
1.5 Consideration of the Broader Context
It is important to mention the fact that the arrival of these low-cost carriers would affect
the profitability and market share of large airlines of Australia which would require effective
strategic action to resolve this issue. It implies that the whole airline industry of Australia is
expected to be impacted by the introduction of these low-cost carriers (traveller.com.au, 2019).

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BUSINESS CASE ANALYSIS
2.0 Benefits
2.1 Benefits to be Delivered
The project would be undertaking a detailed analysis of the problems which are faced by
Qantas Airways in effectively launching the products in the market. If the problem which is
related to increasing competition is solved than the business would enjoy better performance and
increase in the sales revenue of the business. In addition to this, the business would be enjoying
better valuation of the shares of the business in Australian Market.
Figure 1: Share valuation of Qantas Airways
Source: (Qantas.com., 2019)

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BUSINESS CASE ANALYSIS
The above figure shows valuation of shares of Qantas ltd which has shown to have
slightly fallen which can be due to various reasons which included increasing competitive
pressures in the market. The project would be identifying certain value proposition activities
which can help the business greatly to enhance the valuation of shares. The value position has
included certain measures which the business of Qantas ltd needs to incorporate in order to
further improve the efficiency of the business (Osterwalder et al., 2014). The first measure which
can be taken is related to increasing customers satisfaction, second measure would be to build
brand loyalty and name, third measure which can be taken is increase the profitability of the
business and the fourth measure would be to follow an appropriate policy which can attract more
customers to the business.
2.2 Importance of the Benefit to the Government
The benefits which will be resulting from the development and solving the problems
would result in better functioning of the business and generation of more revenue. Effective
generation of revenue would also result in more tax payment and thereby also more generation of
revenue. In addition to this, if the problem is solved, the country would also be enjoying better
airline services in the country.
2.3 Evidence of Benefit Delivery
The business is trying to combat the increase in competitive pressure which is faced by
the management of the company and take proper steps for managing the operations of the
business in the most efficiency manner as possible (Qantas.com., 2019). The business intends to
follow a low-cost model which would help the business in generation of more revenue for the
business.

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BUSINESS CASE ANALYSIS
2.4 Interdependencies
The business follows a low-cost model for the purpose of meeting the increasing
competitive pressure and still maintain a steady flow of revenue in the business (Pearson &
Merkert, 2014). The macro-environmental factors along with the different projects which are
undertaken by the business plays a vital role in managing the operations of the business.
3.0 Strategic Options
3.1 Strategic Approach
The strategic approach which can be followed by the management of the company for
combating the increasing level of competition in the market is by following a low-cost model.
This would also the management of the company to appropriately manage the operations of the
business and that too with efficiency (Baldassarre et al., 2017). The strategic approach would
help the management of the company to enhance the profitability of the business.
3.2 Strategic Options
The options which are available to the business is to introduce new carrier fleets which
can follow a cost-effective approach in managing the operations of the business. The
management of the company has taken appropriate steps for managing the operations of the
business by considering the low-cost model. The low-cost model effectively requires the
business to introduce new carriers which has a low cost (Sengupta, Bamel & Singh, 2015).
Another new low-cost carrier, Scoot, will begin flying between Singapore and a range of
destinations from next year onwards. The management of the company has also launched
strategic for further promoting the low-cost approach of the business. The business has also

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BUSINESS CASE ANALYSIS
acquired JetStar airways for ensuring that the activities of the business are cost effective in
nature.
3.3 Recommendation
The recommendation which can be suggested to the management of Qantas ltd is that the
business can effectively follow the low-cost model and also ensure that the price or fare which is
charged for the services and products of the business are low. This would ensure that the
business is able to achieve the profitability targets and also appropriately manage the operations
of the business.
4.0 Option Analysis
The options which are available to the management of Qantas Airways is that the
management can follow a low-cost model. One of the option which is available to the
management of Qantas Airways is that it can introduce new carrier aircrafts which can be help
the business to attract more customers and also enhance the profits of the business (Åkesson et
al, 2016). Another option which is available to the business is to introduce proper control so that
the costs of the business can be controlled effectively.
4.1 Unit and Stakeholders
The management of Qantas airways has the option to effectively considers the needs of
stakeholders which can be employee, subsidiary businesses, shareholders and society in general.
The management needs to ensure that the interest of the stakeholders of the business are
considered at all times and on the basis of the same important decisions can be taken by the
management of the company.

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BUSINESS CASE ANALYSIS
4.2 Social Impacts
The social impact also plays a consideration in decisions which are taken by the business
while taking important decisions relating to the business. The project of introducing new
carrier’s aircrafts for promoting low cost approach in the business would help in meeting the
social consideration as this would make traveling quite easy and that too with quality. The social
impacts on the activities of the business and therefore proper consideration is to made on the
same so that the activities of the business are effectively met.
4.3 Environmental Impacts
The management of the company is engaged in the business of airline and therefore the
activities of the business are closely related to the environmental impacts of the business. The
management of the company needs to follow cost effective measures for ensuring that the
activities of the business are considering the environmental consideration in the business. The
new project of introducing new aircrafts would be follow a sustainable approach for managing
the activities of the business.
4.4 Economic Impacts
The management of the company needs to appropriately manage the costs of the different
projects which are undertaken by the business along with introduction of new activities would
help the business to appropriately ensure that the business is following a sustainable approach
which would help in managing the operations of the business.
4.5 Financial Analysis
The management of the company has conducted a cost benefits and NPV analysis which
can help the business to appropriately decide whether the project which is to be undertaken by

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BUSINESS CASE ANALYSIS
the management is appropriate or not. The NPV of the project is shown to be appropriate and
therefore, it can be recommended that the management should proceed with the project.
4.6 Risks
The risks which are faced by the business are mainly related to the increasing level of
competition which is faced by the business. It is for these reasons that the management of Qantas
ltd has decided to introduce new low-cost model aircrafts which can help the business to face
competition appropriately. However, there are also risks which is associated with such an
approach as well which is that the business would not be able attract more clients which would
affect the revenue of the business. The management of Qantas ltd need to formulate appropriate
strategies so that the proper revenue can be generated by the business.
5.0 Recommendation
On the basis of the discussion which is shown above, the management of Qantas ltd
needs to move forward with the new project plan which is formulated by the management of the
company and appropriate measures need to be taken accordingly in the business. It is anticipated
that the new approach would enable the business to enhance the profitability and combat the
competitive pressure in the market. In addition to this, the low-cost model would also ensure that
the business attracts more customers to the business. The management of the company can also
benefit from formulation of an appropriate marketing plan for the purpose of informing the
customers regarding the low-cost model carriers which has been introduced and different
destination which is covered by such flights. This would ensure that the customers are aware of
the options available to them and on the basis of the same decisions can be taken by the

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BUSINESS CASE ANALYSIS
customers and this would also enhance the revenue which is made by the business during the
period.
Reference
Adner, R., Oxley, J. E., & Silverman, B. S. (Eds.). (2013). Collaboration and competition in
business ecosystems. In Collaboration and competition in business ecosystems (p. iii).
Emerald Group Publishing Limited.
Åkesson, M., Skålén, P., Edvardsson, B., & Stålhammar, A. (2016). Value proposition test-
driving for service innovation: How frontline employees innovate value
propositions. Journal of Service Theory and Practice, 26(3), 338-362.
Baldassarre, B., Calabretta, G., Bocken, N. M. P., & Jaskiewicz, T. (2017). Bridging sustainable
business model innovation and user-driven innovation: A process for sustainable value
proposition design. Journal of Cleaner Production, 147, 175-186.
DaSilva, C. M., & Trkman, P. (2014). Business model: What it is and what it is not. Long range
planning, 47(6), 379-389.

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BUSINESS CASE ANALYSIS
Has the flying kangaroo become a limping wallaby?. (2009). Traveller. Retrieved 7 June 2019,
from http://www.traveller.com.au/has-the-flying-kangaroo-become-a-limping-wallaby-
ggae
Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How
to create products and services customers want. John Wiley & Sons.
Pearson, J., & Merkert, R. (2014). Airlines-within-airlines: A business model moving
East. Journal of Air Transport Management, 38, 21-26.
Qantas facing competition from new Aussie airline. (2011). Couriermail.com.au. Retrieved 7
June 2019, from https://www.couriermail.com.au/travel/australia/qantas-is-facing-a-new-
threat-as-australias-newest-airline-relaunches/news-story/
4ba06ca4d2f68caf8af3bd10b27a86e5?sv=d8edd147c90c0b29d6ae2725761c9
Qantas.com. (2019). Performance against our strategic pillars | Qantas. Qantas.com. Retrieved
7 June 2019, from
https://www.qantas.com/us/en/qantas-group/delivering-today/performance-against-our-
strategic-pillars.html
Sengupta, A., Bamel, U., & Singh, P. (2015). Value proposition framework: implications for
employer branding. Decision, 42(3), 307-323.

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Appendix

Running head: BUSINESS CASE ANALYSIS
Value Proposition Canvas
The value proposition is the fit between the Profile and the Service Value Map. Value Propositions articulate what the target market
really cares about for each product and service.
Profile
Follow a low-cost model
Offer better quality services
to clients
Increasing the number of
customers which the
airlines serve whic
Provide more appropriate
services to the clients.
Introduction to new
carriers for better services
Introduction of
new low-cost
carriers for the
purpose of
attracting
customers and
enhancing the
sales of the
business
Product
& Service
Gain Creators
Pain Relievers
Increased level of
competition in the
market and proper
maintenance of
operations of business.
Pains
Enhance the Reputation
of the business and
follow a low-cost model
for improving
profitability
Gainss
Jobs
Increasing customers
satisfaction.
Build brand loyalty and
name.
Increase the
profitability of the
business
Attract more customers
to the business
fit
Value Proposition
Service Value Map

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BUSINESS CASE ANALYSIS
Key Partners
 Jet Star Airways
 Scoot Carrier
airways.
 Qantas Loyalty
Programs
Key Activities
 Following a
low-cost model.
 Increasing the
quality of
services which is
provided to the
customers.
 Improving
efficiency in the
operations of the
business.
Value Proposition
 Lowering the
costs of the
business and
thereby also
lowering the
price of the
services and
products which
is offered.
 Introduction of a
low cost model
carrier which
can enhance
efficiency of the
business.
Customer
Relationships
 Emphasis and
focus on the
needs of the
customers.
 Customer
loyalty and
rentention.
Customer
Segments
 Business or
economy class
people both in
terms of
domestic and
international
travel.
Key Resources
 Proper and
skilled staff and
also experienced
management of
the company.
Channels
 Management
Channels of
Qantas Airways.
 Support from
subsidiaries such
as Jet star
airlines

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BUSINESS CASE ANALYSIS
Cost Structure
 The company is trying to reduce its cost in order to
attract more customers and have more profits.
 The most costly activity is the advertisement and
promotion of the of the brand name of the company.
Revenue Streams
 The customers are interested in the products which are
low price and appropriate quality and therefore are likely
to accept such services more often
Financial Analysis
Summary incoem statement Amount in ($'000,000)
Base Year 1 Year 2 Year 3
Initial invetsmnet
-
250
0
Net income
Net passenger revenue
1471
5 15009.3
15459.
58
16077.
96
Net freight revenue 862 879.24 905.62 941.84
other income 1483 1512.66
1558.0
4
1620.3
61
Revenue and other income
1706
0 17401.2
17923.
24
18640.
17
Less: Expenses

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BUSINESS CASE ANALYSIS
opertaing expenses
-
1548
7 -15796.7
-
16270.
6
-
16921.
5
Finance expense -230 -234.6
-
241.63
8
-
251.30
4
Tax expense -411 -410.958
-
423.28
7
-
440.21
8
Total expense
-
1612
8 -16442.3
-
16935.
6 -17613
Statutory profit
-
250
0 932 958.90 987.67
1027.1
8
NPV at 10%
583.
38
Mean
351.
44
Median
973.
29
Jetstar Amount in ($'000,000)
Base
Year
1 Year 2
Year
3
461
470.2
2 484.33
503.7
0
72 73.44 75.64 78.67

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BUSINESS CASE ANALYSIS
120 122.4 126.07
131.1
1
653
666.0
6 686.04
713.4
8