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PORTER Five Forces Analysis of Qantas

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This report is aimed at performing a strategic analysis of Qantas Airline. The main focus areas in this report are brief description on company, PESTLE Analysis, Porter five forces analysis, competitor analysis, SWOT analysis, and market segmentation and market opportunity analysis. An analysis of all these factors is likely to ensure that there would be complete evaluation of the company in terms of its strategic performance level, and thus, better overall decisions can be undertaken (Moore, 2009).

Brief Description of Qantas Airline

An analysis of Qantas airline indicates that it has been the flagship airline company based in Australia, and it accounts for providing air travelling services to its customers. Qantas has its operations in both the domestic as well as international markets, and the airline accounts for occupying a significant market share in the Australian airline industry. Qantas has been the market leader at present with more than 65% of the market share in the industry. It has strategic alliances with various airlines across international boundaries that allow it in providing air travelling services at the international markets. The company’s performance level in the recent past has indicated that it is not well because of the competitive scenario as present across the industry (Qantas Airlines, 2014).

PESTLE Analysis

This is an important tool in analysing the external environment performance of an organisation, and it evaluates the ways in which an organisation is affected by external conditions as faced by it. The PESTLE analysis for Qantas is performed as follows:

Political: The political factors mainly indicates the influence of government over the performance of the company and in respect to Qantas, its analysis indicates that the airline is faced with governmental actions across various regions. As for instance, the airline is affected by the political instability in the Middle East, and also the political unrest in Bangkok has affected its operations in generating sufficient revenue from it (Moore, 2009).

Economic: The economic factors also have a significant level of influence over the performance level of Qantas in the sense that the declining economic performance of the Australian economy has also affected its performance level significantly. As for instance, Australian economy is faced with recession is a negative way as the percapita income of people has declined severely which has resulted into lower demands for air services. Qantas has faced the heat of lower demand and it is evident in its declining revenue over the years and huge losses as sustained by the airline in its operations (Shaw, 2012).

Social: The social conditions and trends as prevalent in respect to airline industry have also affected the performance of Qantas to a greater level. An analysis of the airline industry in particular indicates that it is affected by the social trends as prevalent within it which suggests that there has been higher acceptance level of low cost air travelling services within customers. This has affected the airlines such as Qantas which accounts for offering premium class air travelling services (Virgin, Qantas battle for business travellers, 2014).

Technological: The technological factors impact the airline industry in the sense that the entire process of bookings of airline tickets is based on online reservation systems. Further, the analysis of Qantas indicates that technological factor is highly applied in respect to Qantas and this is evident from the fact that Qantas Airline became the first company that has performed landing through applying satellite technology which is based on global landing system.

Environmental: The environmental factors impact the airline industry in the sense that the airline regulatory boards and authorities have necessary regulations for dealing with the environmental ineffectiveness on the part of airline operators. An analysis of Qantas indicates that the airline has the ain to achieve reduction in its emissions of pollution by 50% by 2050. At present, 95% of the carbon footprint by Qantas is mainly from its flying operations (Coorey and O’Sullivan, 2012).

Legal: The legal factor affect the performance of Qantas in the sense that there is carbon tax that needs to be borne by the company from its performance, and this carbon tax implies the legal formality that needs to be fulfilled by the airline in successfully performing its operations.

PORTER Five Forces

The porter five forces affecting the airline industry and in particularly the performance of Qantas as follows:

The important elements of porter five forces are indicated above. An analysis of these factors in the context of Qantas Airline is performed as follows:

Bargaining Power of Buyers: The bargaining power of buyers in the airline industry is higher because they have various options to select from such as premium class air travelling services, low cost air travelling services and many more. There are various service providers that offer these services which increase the buyer’s purchasing power.

Bargaining Power of Suppliers- The suppliers bargaining power is lower in the airline industry because of large number suppliers offering similar kinds of services. In respect to the Qantas power, it is lower because of other major airlines in the industry such as Virgin Airlines etc.

Threat of Substitute: In respect to the threat of substitute is concerned, it is lower in respect to airline industry because air travelling mode is the faster way of availing travelling services at longer distances which could not have been possible from road or water transport. As such, the threat of substitute is lower.

Rivalry among Existing Firms: This has been crucial in respect to the airline industry in Australia, as the current situation implies that Qantas is competing directly with Virgin Airline in the domestic market, and the competition is so severe that these airline companies are suffering losses in their operations.

Threat of New Entry: In respect to the threat of new entry, it has been lower in the industry mainly because of the fact that newer players require huge investment in infrastructure in setting up an airline company which would be difficult to perform (Aulenbach, 2007).

Competitor Identification and Analysis

The competitive scenario in respect to the airline industry is significant as each and every airline operator is competing against each other with a view to acquire the market share of others. An analysis of the airline industry especially in respect to Qantas airline indicates that the most significant competitor of Qantas is mainly Virgin Airline. These two airlines are competing against each other and the competition is mainly evident in terms of price cuts for their services. The most astonishing factor in respect to their performances is that both these airlines are sustaining losses and despite that, they are competing against each other for the purpose of achieving higher level of market share (Virgin, Qantas battle for business travellers, 2014).

The competitive scenario presently across the industry has been extremely bad and this is causing significant amount of loss to Qantas. The industry condition is already not good, as there has been a decline in the number of passengers and at the same time, such highly competitive environment conditions is further affecting the airline industry significantly. The competitive scenario is not only evident in respect to the domestic markets, but Qantas is faced with significant level of competition from the international airline players such as Air Asia, British Airlines, Ryanair, Southwest Airlines etc. This indicates that the competitive conditions are extremely bad in respect to both the domestic market as well as international markets, and as a result, the industry leader such as Qantas is suffering losses in its operations (Virgin, Qantas battle for business travellers, 2014).

SWOT Analysis

The analysis of strengths, weakness, opportunities and threats in respect to Qantas is performed as follows:

Strengths: The major strength available with Qantas is its highly reputed brand as it is known as the flagship airline company based in Australia. In addition to this, it is leader in the airline industry in Australia with a market share of around 65%. The strength point of Qantas is its reputation in the industry as the provider of on-time quality air travelling services to its passengers (Qantas On-Time Performance, 2014).

Weakness: In terms of weakness of Qantas is concerned, the major weakness is mainly in terms of declining performance level of the company despite it has been the market leader. The analysis of the weakness of Qantas further indicates that the management of the airline is not that efficient which has resulted into failing strategy of the company.

Opportunities: The major opportunity available to Qantas is mainly the ability of the airline to further tap the growth opportunities as available in the industry. The only major action needed on the part of airline is mainly with regard to the alteration to its strategies in achieving growth opportunities (Shaw, 2012).

Threats: In terms of threats are concerned, the major threat to Qantas is the higher competition level especially from Virgin Australia in the local market.

Strategic Position and Market Attractiveness

An analysis of the strategic position of Qantas Airline indicates that it has been positioned as the leader airline company based in Australia. It is best known as the provider of quality air travelling services to its customers, but in the recent years, the company has sustained huge losses, and at the moment, it is losing more than $87 per second. This indicates that the strategic position of being the most suitable company is changed and the airline is now struggling to sustain its operations. As per the claims by public at large, it is the managerial inefficiency by Allan Joyce that contributed towards such ineffectiveness with respect to its strategic positions. In terms of market attractiveness, it is not very good in respect to the Australian domestic airline industry because there has been a sharp decline being witnessed with respect to the number of passengers choosing the air travelling companies for their travel. Thus, the market attractiveness in the short run is not that efficient (Qantas announces record $2.84 billion loss in full year results, 2014).

Market Segmentation Analysis

An analysis of the market segmentation in respect to airline industry indicates that it is mainly segmented on the basis of percapita income of the travellers. As for instance, the people with higher income can select the premium class air travelling services as provided by Qantas, whereas people can also select low cost air travellers in availing services. This suggests that the market for airline is segmented based on premium class air travelling services and low cost business model

Identification of Potential Market Opportunities

In terms of market opportunities in respect to airline industry is concerned, the current marketing opportunities is not that efficient in the sense that there has been a decline being witnessed in the number of passengers over the last few year which has adversely affected the performance of airline operators. But the future prospect with respect to airline indicates that it has good growth opportunities provided the airline such as Qantas has good and strong growth strategies in its operations.

Conclusion

In this report, a critical analysis is carried out with respect to the performance of Qantas, and it is analysed that Qantas is losing its potential in the industry mainly because of inefficient market conditions, higher competition level and ineffective management strategies.

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