Strategic Analysis of Qantas Airways: External & Internal Factors

This report provides a strategic analysis of Qantas Airways, examining its external and internal environments. Part 1 includes a business background, industry analysis using PESTLE and Porter's Five Forces frameworks, and an assessment of the competitive landscape, identifying opportunities and threats. Part 2 delves into Qantas's resources, capabilities, and core competencies. The report then proposes an information system based on artificial intelligence to manage data and flights, offering recommendations for implementation. The analysis covers various aspects, from the airline's history and industry dynamics to its competitive positioning, resource management, and future strategic direction. The report uses scholarly sources to support its arguments and provide a comprehensive overview of Qantas Airways' strategic management.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive Summary
The report is based on the analysis of a major airlines organization of Australia named Qantas
Airways. The organization will be analysed based on the external environment and the
industry in which it operates. The competitive environment of the organization has been
analysed in the report along with the threats and opportunities. The resources which have
been gained by the organization and the capabilities have been analysed. The core
competencies have been discussed based on which an information system has been
recommended. The recommendation is based on the implementation of artificial intelligence
for managing data and the flights by the organization.

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Table of Contents
Part 1..............................................................................................................................3
Introduction................................................................................................................3
Background of Qantas Airways.................................................................................3
Background of airlines industry.................................................................................3
General environment analysis....................................................................................4
Industry environment analysis...................................................................................6
Competitive environment...........................................................................................7
Opportunities and threats...........................................................................................7
Part 2..............................................................................................................................8
Resources of Qantas Airways....................................................................................8
Identification of the capabilities of Qantas Airways..................................................8
Core competencies of Qantas Airways......................................................................9
Proposed information system to be implemented in Qantas Airways.......................9
Recommendations based on the information system...............................................10
Conclusion....................................................................................................................11
References....................................................................................................................12

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Part 1
Introduction
The report will be based on the internal and external environment of an organization
that operates in a competitive industry. The organization that has been chosen for analysis is
Qantas Airways that operates in the airlines industry of Australia which is highly competitive
in nature. The micro and macro environment of Qantas Airways will be analysed in the report
along with recommendations based on the information system (Barros, Hernangómez and
Martin-Cruz 2016). The information system that can be implemented by the organization in
order to increase the speed of operations will be recommended in the report. This will help in
improving the customer base of Qantas Airways as well.
Background of Qantas Airways
Qantas Airways is the flag bearer organization in Australian airlines industry with
respect to fleet size, international destinations and international flights. This is the oldest
airlines based organization in the country after other two major organizations namely,
Avianca and KLM. The organization was established in the year 1920 and the international
passenger based flights have started operations in 1935. The airlines organization is based in
Sydney in the suburb of Mascot. Qantas had 65% share in domestic airlines industry in the
year 2014 and 14.9% of the passengers travel in and out of the country.
Background of airlines industry
The domestic airlines are subjected to the turbulent conditions related to trading in the
last five years. The price based competition that has taken place between Virgin and Qantas
in the Australian airlines industry has an immense effect on its performance. The two
organizations have started reducing the prices of their services with the aim of increasing
their shares in the industry. Qantas Airways has tried to compete with its competition in the

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industry with the help its low cost subsidiary Jetstar. The high levels of competition that exist
in the airlines industry of Australia have immense effects on the revenues and profitability
levels that are gained by organizations like Qantas Airways. Duopoly has been created in the
Australian airlines industry by Virgin and Qantas. The rise in profits of the organizations are
low due to the strong competition based on prices that are offered to the customers. The
domestic airlines industry of Australian is in the growth phase and is able to contribute to the
economic growth of the country.
General environment analysis
The general environment of Qantas Airways can be analysed with the help of
different macro-environmental factors. The PESTLE framework is considered to be quite
useful for proper analysis of the external environment. The position that has been developed
by the organization in the industry can be analysed with the help of this framework (Daspit et
al. 2017).
Political factors – The political factors are considered to be important for the
operations of organizations in the airlines industry. The issues faced by Qantas Airways
mainly include, corruption, taxes and political stability in the country as well. The
government of different countries are able to affect the performance which is depicted by the
organization. The regulations that are developed by the organization are considered to be
important factors which can affect the operations of Qantas Airways. The political instability
in Bangkok has affected revenues of the organization (Demir, Wennberg and McKelvie
2017).
Economic factors – The economic factors are able to influence the levels of
performance of Qantas. The decline in economic performance is able to have a major impact
on the revenues and operations of the organization. Recession has influenced the Australian

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economy in an adverse manner, which has in turn affected the revenues and costs of Qantas
Airways. Lower demand of the services is related to the low rates of per capita income of
people (Durand, Grant and Madsen 2017).
Social factors – The trends and social conditions have an influence on the demands of
consumers in airlines industry of Australia. Social trends that are prevalent in the industry
suggest that the levels of acceptance of low cost based air travel have increased currently. On
the other hand, there is a lack of demand for premium air travel services that has a negative
influence on the demand for services that are offered by Qantas Airways (Dyer et al. 2015).
Technological factors – Online reservation systems are being used by the customers
in airlines industry and the booking process has become total automated in nature. The
technological factors are applied in the organization and it is evident that Qantas Airways has
been able apply satellite technology in the landing based system on a global basis (Engert,
Rauter and Baumgartner 2016).
Legal factors – The performance of Qantas Airways has been influenced by the legal
factors and conditions. Carbon tax in different countries need to be borne by the organization
and it implies legal formalities can affect the operations as well.
Environmental factors – Environmental factors can have an immense effect on the
airlines industry of Australia. The regulatory authorities and boards have developed different
regulations which are helpful to deal with environmental ineffectiveness. The analysis of
Qantas is able to indicate that an airline organization aims at reducing the emission rates in
order to decrease the levels of pollution (Ethiraj, Gambardella and Helfat 2018).
The external environment based factors are able to affect the operations and
profitability levels of Qantas Airways in a huge manner.

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Industry environment analysis
The airlines industry can be analysed with the help of Porter’s Five Forces framework
which can help in providing a detailed picture of different factors which can affect Qantas
Airways.
Bargaining power of the buyers – The bargaining power of buyers or customers are
high in the airlines industry due to huge number of options that are available for them. The
industry has many other organizations which are able to offer similar premium airlines
services to the customers. This has increased the power of buyers and their influence on the
prices.
Bargaining power of the suppliers – The bargaining related power of the suppliers in
airlines industry of Australia is low. This is due to the huge number of suppliers who offer
similar services to the organizations. The suppliers offer their services to the major
organizations like, Virgin Airlines and Qantas Airways.
Threats of the substitutes – The threats of substitute to the services that are offered in
the airlines industry are low. This is mainly due to the speed of services which are provided
by the airlines based organizations in the industry. The fast travel options that are offered by
airlines organizations have reduced the threats based on substitutes.
Rivalry among the firms – The rivalry between different organizations in airlines
industry is high and currently, Virgin Airlines is the biggest competitor of Qantas Airways.
The levels of competition between the two organizations are high and the price based wars
are mainly responsible for this rivalry.
Threats of the new entries – The huge levels investment which are required for new
organizations in the airlines industry has been able to reduce the levels of threats as well. The

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development of a proper infrastructure is considered to be important for the ways by which
the organizations are able to perform.
Competitive environment
The competitive environment which is developed in the airlines industry is considered
to be important for the organizations that operate in the industry. The airlines organizations
which operate in the industry compete with each other in order to gain share in the market.
The biggest competitor of Qantas Airways in the industry is Virgin Airlines which engages in
aggressive price wars based on price cuts of the services (Frynas and Mellahi 2015). The
competitors of the organization have incurred losses recently in spite of the performance
which has been shown in the last few years. The scenario that has been developed in the
industry is not favourable due to the reduction in the number of customers in the competitive
environment. Qantas Airways faces huge challenges from other organizations like, British
Airlines, Air Asia, Southwest Airlines and Ryanair (Hill, Jones and Schilling 2014).
Opportunities and threats
Opportunities – The increase volume of business travel in the economy and business
class has provided growth opportunities to the organization. Reduction of fuel prices in the
industry has provided cost based opportunities to Qantas Airways. The carbon tax and
depreciation costs have also been reduced and has in turn affected the margins which are
gained by the organization (Hubbard, Rice and Galvin 2014).
Threats – The increasing levels of aggressive competition from the brands like,
Lufthansa and British Airways have provided threats to the revenues of Qantas Airways.
Another major threat which has been faced by Qantas Airways is based on drastic levels of
fluctuations in the costs based on fuel. The organizations in airlines industry have started
struggling to balance the pricing and costs in an adequate manner (Kasemsap 2014).

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Part 2
Resources of Qantas Airways
The resources which are gained by Qantas Airways can be tangible and intangible in
nature. The tangible resources of the organization mainly include, employees, high skilled
employees and the advanced equipments. The analysis of resources which are gained by
Qantas Airways is based on the air travel based services that are offered to the customers.
The intangible resources of an organization are also considered to be significant for its
operations. The brand name of Qantas Airways is another major intangible resource that is
able to affect the profitability (Meyer, Neck and Meeks 2017). The network which has been
developed by Qantas Airways is also an important resource that affects the airlines industry
in different countries.
The alliances of Qantas Airways in the industry are able to play a key role in
providing services to the customers. The tangible resources and intangible resources of
Qantas Airways have played a key role in increasing the profitability levels of the
organization. Qantas Airways owns more than 200 aircrafts which can be considered to be a
major resource for its operations in the airlines industry. The importance of resources is based
on the safe and high quality based services that are offered to the customers. World class
travel based services can be provided to the customers with the proper usage of resources that
are available for the organizations (Michael, Storey and Thomas 2017).
Identification of the capabilities of Qantas Airways
Qantas Airways has been successful in developing a leadership position in the
Australian domestic airlines market with the help of frequency advantage and vast network as
well. The organization is also capable of making high levels of investment in the customer
experience that is offered by Qantas Airways. The capability of structural transformation is

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considered to be quite important for the profitability and operations of Qantas Airways
(Morschett, Schramm-Klein and Zentes 2015). Qantas Airways is capable of providing both
the high cost as well as low cost based services to customers with the help of its subsidiary
organization Jetstar.
Core competencies of Qantas Airways
Qantas Airways has developed its position in the airlines industry as one of the most
successful organizations. The core competencies of the organization which are considered to
be important for the ways by which Qantas Airways has been able to maintain its leadership
position are as follows,
Strong brand – The brand name which has been developed by the organization
is considered to be a major factor which is able to separate Qantas Airways
from its competitors in the industry. The outstanding levels of customer
loyalty are also considered to be important for the competitive advantage of
the organization (Sakas, Vlachos and Nasiopoulos 2014).
High safety levels – The record related to safety which has been developed by
Qantas Airways in the airlines industry is excellent and the organization has
acquired the position of the safest airlines. Qantas Airways has developed a
position of the world’s safest airline based organization (Peltier 2016).
Strong domestic performance – The domestic performance which has been
depicted by Qantas Airways has been highly successful. This is a major core
competency of the organization.
Proposed information system to be implemented in Qantas Airways
Management information system needs to be implemented in the organization in order
to improve its operations in the industry. The implementation of management information

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system or MIS is based on the collection of data based on customers. Data is considered to be
useful for the effective operations of an organization in the industry. The data of customers
can be used for the purpose of analysing their needs and demands from the organization.
Qantas Airways needs to maintain data in order to analyse the customers (Galliers and
Leidner 2014).
The management information systems will be able to play a key role in the operations
of Qantas Airways and the levels of profitability as well. The type of management
information system which can be implemented in Qantas Airways is termed as expert system
and artificial intelligence. ESAI mainly uses the human knowledge that is encapsulated
within the computer for the purpose of solving different computer based issues. The systems
and operations of the organization will become more smooth and fast (Sakas, Vlachos and
Nasiopoulos 2014).
The computerised systems will be helpful in maintaining different organizational
operations in an effective way. Qantas Airways will be able to maintain and use the data of
customers in order to design the services and further develop the operations as well. Artificial
intelligence can be implemented in order to maintain the records of number of flights that are
operated by Qantas Airways on a daily basis (Meyer, Neck and Meeks 2017).
Recommendations based on the information system
The recommendations which can be offered to Qantas Airways related to the
implementation of an information system is based on increasing the levels of profitability and
speed of services as well. The management information system or MIS can be implemented
by Qantas Airways in order to analyse customer data and develop the services based on their
demands and needs. The analysis of customer behaviour is also possible with the
implementation of MIS in different parts of the organization. Artificial intelligence can be

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implemented on the operations and maintenance of the flights as well. The huge number of
flights can be maintained by Qantas Airways can be implemented with the help of proper
artificial intelligence.
Conclusion
The report can be concluded by stating that Qantas Airways has been able to maintain
a leadership position in the airlines industry with the help of huge number of flights and
services that are offered to the customers. The industry environment of Qantas Airways has
been able to depict that the organization can operate on a profitable manner with respect to
different forces in the industry. The external environment based factors can affect the
operations of Qantas Airways in a huge manner. The implementation of management
information system is considered to be an important factor which can affect the levels of
profitability and revenues of the organization in the future. The management customer data
will be affected by the implementation of an effective information system. Artificial
intelligence has been suggested as the best method for maintaining the customer data and
operations of flights by the Qantas Airways in the airlines industry of Australia.