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In this report, a critical strategic analysis of Qantas Airline is performed. The analysis mainly provides brief background information about Qantas including its vision, mission and values. The strategic goals of the airline reveal that it aims at providing safe air travel services and at the same time, delivering the best possible quality services to its customers. However, the analysis of the past, present and future of Qantas indicates that the airline has made significant growth in the past which makes it the flagline carrier of Australia and it is known as the premium air travel service provider. The tagline of long route carrier is also associated with Qantas, and the future indication of the airline indicates that it aims at achieving further growth through performing alliance with the other major airline operators across the world. The corporate level strategy that has been chosen for analysis in this report is the expansion as sought to achieve by Qantas through alliances with other airline and this would require the company to achieve support from all its major functional areas including marketing and sales, finance, HRM and IT and R&D.
Overview of the Organisation
The organisation that has been selected to perform the strategic analysis is Qantas Airline. It is the premium airline based in Australia and provides high quality air travel services to travellers across the globe. The scope of this report is limited to performance of strategic analysis of Qantas Airline with major emphasis will be placed on analysing a brief background of the selected company, its mission, vision and values and the company’s current position. In addition to this, a critical evaluation of the internal strengths and weaknesses and external threats and opportunities of Qantas is performed through considering the SWOT analysis. This is followed by an analysis of the corporate or business level strategies of the organisation and the assessment of functional levels of the business which helps in the effective accomplishment of the organisational strategy. The entire findings from the analysis would be included in the conclusion section of this report.
Brief Description of the Selected Company
Qantas is known as one of the largest domestic and international airline of Australia that has started its operation in 1920 for the first time. Since its inception, Qantas has placed considerable effort to become the world’s largest airline and its continuous efforts have resulted into the reputation of being the strongest brands in Australia. Qantas has been successful in establishing itself as the safer airline of Australia through achieving operational efficiency and also by applying its excellence in engineering and maintenance. The main business of Qantas is the airline business which involves providing travelling services to passengers flying from one area to another. The company operates under two different brand names such as Qantas and Jetstar and it operates throughout Australia and also in the international countries. Overall, it has been a successful Australian brand within the airline industry (Qantas Airlines, 2012).
Strategic Overview: Mission, Vision and Values
As far as the vision of Qantas is concerned, its long term vision is to operate as the world’s best premium airline and also to become the world’s best low fare carrier. In order to successfully achieve the main vision, there are certain key values and objectives that are integrated to the existing business practices of Qantas including:
- Ensuring safety in its operations.
- Right aircraft, right routes.
- Customer service excellence.
- Operational efficiency.
- Two strong complimentary brands (Qantas Fact File, 2010)
Where it was, where it is and where it wants to go
The analysis of Qantas airlines reveals significant findings about the past, present as well as the future intention of the airline. The analysis of the past implies that Qantas was founded in Winton, Queensland on 16th November 1920. The initial operations of the airline implies that the airline operated as air mail services subsidised by the Australian government and was popularly known as linking railheads in western Queensland. Between the periods of 1926 to 1928, the airline has developed various aircraft and in 1935, Qantas carry passengers to international destinations for the first time. Thereafter, Qantas has achieved significant growth and it is now popularly known as the flagline carrier of Australia and one of the oldest and largest airlines in the world.
At present, Qantas offer air travel services across all major parts of the world and the airline also has access to various long aircrafts that have the capacity to carry 450 passengers at a time. The major strategic growth has become possible to Qantas once the Australian Government sold the domestic carrier Australian Airline in 1992 and followed by it in 1993, Qantas was privatised. This has resulted into huge purchases of aircrafts by Qantas in order to increase its fleet and destinations, and the resulting impact is that the airline today is known as the premium long destination airline that serves majority of the regions across the world. Thus, at present, the airline can be said to be at the top most position in the entire airline industry, as it provides premium air travel services across all the major regions in the world.
However, the future outlook of the airline implies that the airline seeks to achieve higher level of growth and recognition within the entire airline industry across the world. Although, the past and the current performance of Qantas imply that the airline has achieved higher level of growth, yet the formal announcement by the airline about its strategic plans in the next five year indicates that the airline seeks to achieve higher international growth by performing alliances with other major airlines such as Malaysian Airline, British Airways and South African Airways. The airline is also improving its forefront in terms of providing low cost air travel services through its subsidiary Jetstar. The deregulation of the entire airline industry has given rise to higher level of competition among the existing players and in response to this, Qantas subsidiary Jetstar seeks to compete through its low cost strategy (Australia’s airline Qantas announces five years plan, 2011).
SWOT Analysis of Qantas
In case of Qantas airlines, it is also having certain strength points. As for instance, the major strength point of Qantas is that the airline has access to profitable domestic routes that accounts for majority of its profitability. At present, majority of the routes are served by Qantas which allows it in sustaining the leadership position in the industry. In addition to this, Qantas has well developed reputation within the airline industry, as it is known as the flagline carriers of Australia and also accounts for the position of most premium airline in the entire airline industry. Apart from this, Qantas is world’s leading long distance airways and it is continuously expanding its network by forming alliances with other major airlines throughout the world. Thus, the main strength point from the discussion can be considered as the monopoly as sustained by Qantas in terms of accessibility to the profitable domestic routes (Coorey and O’Sullivan, 2012).
The next major aspect of SWOT analysis is weakness and it is internal to an organisation. Qantas is also suffering from certain kinds of weaknesses and the major weakness of Qantas airline is that the airline does not have strong features that would allow it to sustain even though its profitable routes are being under the threat of competition. As indicated by Prahalad and Hamel (1993), every organisation should have certain core competence area that would allow it in achieving competitive advantage over others and also ensure the sustenance of the firm in the turbulent situations. The core competence area is the strength point of the organisation that others cannot imitate as indicated by Prahalad and Hamel (1993). But in case of Qantas, the case analysis revealed that the decision of Etihad to acquire stake has raised concern over the sustainability of Qantas and this can be regarded as the major weakness of the organisation (Coorey and O’Sullivan, 2012).
Apart from strengths and weaknesses which are internal to the organisation, opportunities and threats are regarded as external to an organisation. Opportunity implies the available options to an organisation to achieve higher level of growth and they allow them in attaining superior position in the industry (Bohm, 2009). With respect to Qantas case, the analysis indicates that the Qantas has the opportunity to achieve higher level of growth in its international operation through seeking permission for foreign direct investment. At present, the company is restricted from foreign direct investment by the Foreign Investment Review Board and by getting freed from such restrictions, Qantas can not only perform the foreign direct investment, but it will also able to effectively compete with the other major airlines at both the domestic as well as international arena. Thus, the opportunity to achieve significant growth exists with the airline as reflected from the case study (Coorey and O’Sullivan, 2012).
Finally, the threats imply the adverse impact as posed by the external environment to an organisation. Threats are also external to an organisation and an organisation has limited control over the threats as posed to it by the external environment. In relation to Qantas, the case analysis indicated that Qantas is faced with significant threats from the external business environment that leads to claim by the MPs of Qantas that it would go under from the acquisition of a stake by Etihad over Virgin Australia. The major threat to the Qantas from such a deal between Etihad and Virgin is mainly because of the Qantas Sale Act as imposed by Foreign Investment Review Board which restricts the airline from competing with others. Further, the Qantas Sale Act limits the foreign direct investment to 49% and this act as a major threat to the airline in competing effectively (Coorey and O’Sullivan, 2012).
Strategic Topics to be Analysed
This section of the report is aimed at performing strategic analysis of Qantas with specification of its corporate and business level strategy. Not only the description of the strategy of Qantas is performed, but this section also includes an analysis of the functional level of the business that would allow for the effective execution of the strategy. The strategic analysis of Qantas is performed as follows:
Strategies of Qantas: The analysis of Qantas Airways indicates that there are wide number of corporate level strategies and business level strategies of Qantas Group. As for instance, the major strategic goals of Qantas can be summarised as follows:
- Achieving operational efficiency through integrating simplicity in its business processes and also focuses on productivity at the same time.
- To be the best airline in both the premium and low fare brands within Australia and internationally.
- Selecting the right routes for delivering the world’s most effective fleet flying is also an important aim of the airline.
- Its major strategy has been to achieve safety in its operation by resorting to the world’s best safety practices and reporting.
- To remain highly committed towards the environment by focusing on environment protection initiatives (Aulenbach, 2007).
Although, the strategic analysis of Qantas implies that the airline pursues large number of strategies at both the corporate level and the business level, yet for the purpose of analysis in this report, the corporate level strategy of Qantas that has been selected for analysis is to service key international markets including UK, US and Asia. This corporate level strategy of providing air travel services across the major target regions such as UK, US and Asia is also evident in the five year plans of Qantas which is to achieve higher international growth by performing alliances with other major airlines such as Malaysian Airline, British Airways and South African Airways. The airline seeks to pursue higher level of growth in terms of its routes and number of destinations and this is quite revealed in the five year strategic plans as revealed by the airline. This corporate strategy of higher growth is mainly sought to perform by Qantas through performing alliances with other major airlines operating throughout the world, as this is an important way of entering into foreign markets and to provide services (Australia’s airline Qantas announces five years plan, 2011).
Execution of Corporate Level Strategy through Functional Level: The corporate level strategy of Qantas to perform expansion of its air travel services across major regions of UK, US and Asia requires significant level of support from various functional level of organisation. As for instance, there is a crucial role to be played by the important functional areas including finance, HRM, marketing and sales as well as IT and R&D functions. The role of these key areas in allowing Qantas in successfully executing its corporate level strategy of performing expansion is discussed as follows:
- Finance: The finance function has a significant role to play in allowing Qantas in successfully executing its strategy of international expansion. As for instance, the international expansion in the form of alliances with other airlines and also in expanding the routes to newer areas necessitates Qantas to purchase new aircrafts which requires huge financial resources. Apart from aircrafts, the financial resources is also needed to perform alliances with other major airlines and all these requires effective support from the financial function of the organisation.
- Human Resource Management: The support from human resource function of the organisation is also highly crucial from the perspective of effective execution of the international expansion growth strategy as sough to pursue by Qantas airline. The support from HRM function would be in the form of skilled and talented employees to perform the operations across newer destinations. Since, the expansion strategy of Qantas mainly involves new aircrafts and new destinations; this would require additional employees that have the skill and abilities to effectively handle the services across newer regions. This can be effectively attained through the effectiveness of HRM functions of the organisation.
- Marketing and Sales: The successful execution of its strategy of delivering air travel services across new regions requires adequate support from the marketing and sales functions of the organisation. This is mainly because the services to the new routes needs to be aggressively marketed so that the travellers can be made aware of the newer routes as served by the airline. In addition to this, the alliances with other airline also lead to expansion of the network of Qantas which would require aggressive marketing strategies on the part of airline to promote its long destination air travel services. Further, positive sales can be accomplished through extra efforts from the sales personnel in developing attractive packages for travellers across newer routes. All these can be effective achieved through adequate support from the marketing and sales function of the organisation.
- IT and R&D: The role that the IT and the R&D functions have to play is also crucial from the point of view of allowing Qantas in the successful execution of its corporate level strategy of higher expansion through alliances with other airlines. The role of technology is crucial in case of airline industry because the entire process of delivering air travel services is dependent on IT starting from booking tickets to flying to destinations. The safety aspect is highly crucial especially in case of airline industry and new technology has significant role to play in allowing for delivering better air travel services. The R&D function helps in identifying the best possible technology that can be integrated to delivering high quality and safe travelling services. This indicates that the role of R&D and IT functions is crucial from the point of view of allowing Qantas in successfully executing its strategy.
The analysis above clearly reflects that the role of various functional areas is crucial in allowing Qantas in performing the execution of its corporate level strategy of expansion through alliances with other airlines and purchasing new aircrafts.
The analysis as performed regarding the strategic analysis of Qantas revealed that the Qantas is the most popular airline based in Australia and it is rapidly seeking expansion to international markets. The analysis of the vision, mission and values of the company has indicated that Qantas has been highly focused towards attaining safety and higher level of growth in its airline services through offering high class premium quality air travel services to its customers. At the same time, the airline is pursuing rapid strategy for achieving higher level of growth in the domestic as well as the international markets. The analysis of the past, present and future of the company indicates that Qantas has achieved significant growth in the past and it is eyeing to achieve further growth in the future by way of expanding its air travel services across all the regions of US, UK and Asia. The SWOT analysis indicated significant strengths and weakness of the airline and it also highlighted the major opportunities and threats to the airline. However, the corporate business strategy that has been selected for analysis is the rapid expansion as eyed by Qantas in its air travelling services through performing alliance with the major airline operators across the world. This would necessitate Qantas to purchase new aircrafts in order to successfully perform the expansion. However, the analysis revealed that the successful execution of its strategy necessitates the airline to get support from its various functional areas and the analysis revealed that the functional areas that would highly support Qantas in performing the implementation of its strategy includes the finance function, HRM, marketing and sales and IT and R&D. Through having effective support from all these functional areas, the successful execution of the corporate business strategy of Qantas can become possible.
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