A market analysis of Qantas Airways Limited
The Qantas Airways Limited has the mission statement to achieve the purpose of them as the best airline of the world. According to Aviation business (2009) stated that “The corporate mission statement for the 2008/09 FY was 'restoring our reputation, confronting the crisis, operating sustainably and planning for the future'.” To achieve the vision of Qantas group which include Qantas Airways and Jetstar, they focus on the five factors such as safety is first antecedence, providing the aircraft to match with the right routes, offering the best customer services, operational effectiveness, and two strong complementary brands both Qantas and Jetstar. (Aviation business, 2009; Qantas Airways, 2010) First factor is safety first. Qantas is the premium that provide full-service both global and local airline. (Qantas Airways Limited, 2010) They maintain and unchanged the best safety by exercising and reporting the safety to be the world’s best safety airline. (Qantas Airways Limited, 2010) Second, providing the aircraft to suit the route, Qantas focuses on renovate the aircraft to be competent as well as match with the direction. (Qantas Airways Limited, 2010) For example, Qantas Group arranges for 50 Boeing 787s to revamp their aircraft to match with network. (AAP, 2010) Third, offering full customer services, the best customer service is the basis of their objective. (Qantas Airways Limited, 2010) Forth, operational effectiveness, Qantas attempts to accomplish by straightforwardness as well as create productivity through their company. (Qantas Airways Limited, 2010) Last, making strong brand both Qantas and Jetstar, the company endeavors to create the best premium brand for Qantas and Jetstar as low cost. (Qantas Airways Limited, 2010)
Qantas’s Business Strategies
Refer to Qantas’s corporate mission; the company applies the business strategy to accomplish their mission which emphasize on several things such as forward thinking, safety first, sustainable operations, strong reputation brands, great people, superior infrastructure, caring customers, environmental responsibility, and giving feedback. (Qantas Annual Review, 2010) In addition, Qantas focuses on all types of business strategy such as cost leadership and differentiate but the company emphasize on differentiate from other airlines.
First strategy is forward thinking. Qantas has been undertaking the innovation of technology to be higher performance and be the leader of product and service in airline business. (Qantas Annual Review, 2010) The company also uses this strategy to be a part of their culture as well as the innovation is always considered about their customers’ demand and shareholder’s need. (Qantas Annual Review, 2010)
Second is safety first. It is one of the strategies that Qantas concerns. Safety first is the heart of their company due to the company needs to be the best safety training and reporting of the world. (Qantas Annual Review, 2010) Qantas focuses on flying safety, safety management, security, occupational health and safety, and performance. (Qantas Annual Review, 2010) Qantas invests amount of money to support high standard of operational safety and performance. (Qantas Annual Review, 2010) All staff safety training is overseen by policy that everyone is able to show the safety through individual act and effectively management risk. (Qantas Annual Review, 2010) Moreover, the Qantas group’s occupational Health and Safety (OHS) program provide useful system such as health and safe work surrounding and strong safety culture to support the company to avoid harm. (Qantas Annual Review, 2010)
Third, this is sustainable operations. According to The Qantas Group Annual Review (2010) mentioned that “For the Qantas Group, sustainability is about managing short–term and long–term risks, seizing opportunity, and doing things right for our shareholders, our customers, our people and our community.”
Forth, Qantas focuses on strong brand reputation. As Qantas is the main airline of Australia, the company is the premium transporter that provide the full service both international and domestic route with safety. (Qantas Annual Review, 2010) There are two keys factor that Qantas concerns such as exactly time and faithfully to meet customer satisfaction as well as the company still attempt to preserve with high performance standards. (Qantas Annual Review, 2010)
Fifth, Qantas concerns for the great people both men and women to work with excellent place as well as offer training and improvement their staff’s skill. (Qantas Annual Review, 2010) For example, the company invests in improving leadership skills for managers to operate staff to meet everyone satisfy. (Qantas Annual Review, 2010)
Sixth, superior infrastructure is one of Qantas’s business strategies. To success in flight, it is essential to invest to renew the aircraft for developing in safety, travelers comfort, costs, fuel efficiency, noise, emanation, freight capacity, and range capability. (Qantas Annual Review, 2010) Moreover, creating superior infrastructure, Qantas also concerns for engineering due to it is one of factors that build Qantas reputation for security, trustworthy, and production. (Qantas Annual Review, 2010) In addition, Qantas is also concerning about the catering that serve to passenger both international and domestic as well. (Qantas Annual Review, 2010) What is more, the airport is one of the superior infrastructures that the company concerns due to the firm cares for high quality of terminal and lounges facilities to support passenger who transfer the flight. (Qantas Annual Review, 2010)
Seventh, Qantas does everything to meet customer’s need from booking and boarding and from in flight to suitcases collection. (Qantas Annual Review, 2010) The company provides to assists the travelers what they want as well as caring for safety, happiness, and convenient. (Qantas Annual Review, 2010) For example, Qantas offers the next generation check in which include seat selection, online and mobile check-in, kiosks, and premium service desk and security. (Qantas Annual Review, 2010)
Eighth, environmental responsibility, Qantas is always considering for the environmental strategy by emphasizing on fuel preservation as well as supporting the environmental organizations throughout the Qantas Foundation. (Qantas Annual Review, 2010)
Last, giving feedback is one of Qantas’s business strategies that works as affiliation to encourage, offer opportunities, save the surrounding and assist something that suffer from catastrophe. (Qantas Annual Review, 2010) In addition, Qantas is also supporting and being sponsor for sports such as Formula 1and football World Cup 2022. (Qantas Annual Review, 2010) What is more, the company is giving back for the society and families that support them from abroad. (Qantas Annual Review, 2010)
In term of industry structure, the essay is analyzing with Porter’s five forces with current situation of airline industry. Qantas Company Limited is an example to examine for the industry structure. The company can describe with industry rivalry, potential new entrants, substitutes, suppliers, and buyers.
First of all is industry rivalry. In the past, Australian Airline market is regulating by government but in 1990 it changed to deregulation so Qantas acquired local Australian Airline and being the market leader. (Flight Global, 2010) However, there are many competitors that had occurred in the airline industry after deregulation that can compete with Qantas. Therefore this industry is high competition and low risk due to rate of return and high cost as well as airline industry can face with the big problem such as economic crisis. (Investopedia, 2010) Therefore Qantas confronts with high industry rivalry that existing in the airline industry especially international airline. Air Asia, for instance, it is the low cost airline that flight across Southeast Asia and Australia. (Thomas, 2010) Consequence, there are many competitors that existing in the market at the present; it can continue increased in the future as well.
Second, potential new entrants is one of the current situation of industry structure that Qantas has to concern. As airline industry need to use large amount of money to enter in this industry so it is quite difficult for the new investors to invest. (Investopedia, 2010) Moreover, it is depending on the financial situation as well. (Investopedia, 2010) However, if the new airliners can create the company reputation, they can easily to catch the customers even the price are higher. (Investopedia, 2010) Therefore the potential new entrants are somewhat high in the airline industry because of deregulation as well.
Third, substitutes, airline industry have high competition as well as a cost is also high. (Investopedia, 2010) For the domestic, travelers can take car or train or bus instead of using airline service that can effect with airline industry. (Investopedia, 2010) However, some passengers who use international flight can a little effect with airline industry due to they do not have more choice to go abroad. (Investopedia, 2010) Therefore the substitutes may high or low, it is depending on the customer’s favorite such as convenient, budget, and time. (Investopedia, 2010)
Forth, bargaining power of suppliers is one of forces that can analyze the business strategy. Airbus and Boeing are primarily supply the aircraft for airlines business. (Investopedia, 2010) For example, overall of aircrafts of Qantas is approximate 246 aircraft which including Boeing 747s, 767s,737s and 717s, Airbus A380s, A330s and A320s, Bombardier Dash 8s and Bombardier Q400s. (Qantas Airways Limited, 2010) As mentioned for Qantas’s aircraft, it is can see that most of fleets are supplying by Boeing and Airbus. Therefore the bargaining power of suppliers is high in current airline industry.
Last, bargaining power of buyers, as Qantas is the premium, full service in-flight both international and domestic airline. (Qantas Annual Review, 2010) The company had focused on the customer satisfaction. (Qantas Annual Review, 2010) There are high price if the passenger prefer to change the airplanes but the airline can compete with the service such as comfortable. (Investopedia, 2010) On the other hand, as the current situation customers have many options such as buy ticket via travel agent, or website itself to choose, they may concern for price, quality and service. Therefore the bargaining power of buyers is high for the airline industry.
SWOT analysis uses for evaluating the strategy of the company which can divide into 2 parts such as external and internal environment. External analysis is looking at the Opportunities and Threats outside the organization as well as Internal analysis is emphasizing on the Strengths and Weaknesses within organization. (Value Based Management, 2010)
External Analysis (Opportunities and Threats)
Technology advance, Qantas uses the technology to apply with products and service for customer to have more convenient. For example, according to Tay (2010) “A 2D barcode image is replacing paper boarding passes for domestic passengers using Qantas's new Mobile Check-in service.” This service provide customers check in on their mobile which they will receive text message confirmation with 2D barcode. (Tay, 2010) Moreover, Jetstar also will launch this system as well. (Tay, 2010) In addition, as Qantas is one of the members of Oneworld alliance that is big alliance group. This group can lead Qantas has many services for example, Frequent Flyer program can create brand recognition and customer loyalty for Qantas. (Qantas, n.d.)
There are many threats that can affect with Qantas current situation such as fuel price, economic crisis, environmental problem and deregulation. Nowadays, fuel price is unstable and trend to increase, it is the problem that every airline worry. According to ABC News (2008) mentioned that “Qantas CEO Geoff Dixon says fuel prices are a greater challenge to the global airline industry than SARS or the September 11, 2001 terrorist attacks in the US.” In term of economic crisis, it can affect with airline business revenue that passenger use less of travel by airplane due to high cost. Moreover, environmental problem, refer to a volcanic explosion in Iceland; it can affect with Qantas stopped flight and causes of delay. It can lead to disappoint for passengers who have to wait at the airport. (AAP, 2010) Moreover, deregulation of airline industry can effect with Qantas. Deregulation brings up the airline focuses on complete in low cost instead of service and safety. (“Study Finds”, 2010)
Internal Analysis (Strengths and Weaknesses)
Qantas Airways Limited has strong business strategy with full service and premium as well as Jetstar focuses on the low cost fare. (Qantas Airways Limited, 2010) The company has high strong brand recognition and brand reputation which receive the award for the best premium economic class. (Qantas Airways Limited, 2010; Platt, 2010)) The company also emphasize on the best safety and customer service. Moreover, Qantas is one of the members of Oneworld Alliance which include the big airline such as American Airlines, British Airways, Canadian Airlines and Cathay Pacific. (“Study Finds”, 2010) The purpose of this group is helping each other within the group such as engineering and performance as well as provides many facilities to passenger when connecting flight. (“Study Finds”, 2010)
Refer to Qantas manages the human resources especially engineering and maintenance from overseas. It can lack of qualified and knowledge of staff to maintain the aircraft. (“Study Finds”, 2010) It also can damage the brand image and customer loyalty. In addition, the company provides inadequate training of staff. Moreover, Qantas is unable to control their staff. (Harvey, 2009; Bourke, 2010) As Qantas focuses on the safety first, everyday flight 24 hours even holiday but their engineers strike for holiday that can effect with them. (Harvey, 2009; Bourke, 2010)
In term of core competencies, it is necessary for the business to bring the business strategies with the competitive advantage to apply in the business process. (Value Based Management, 2010; Matt, 2010) Those competencies can develop the end products more efficiency as well as core competency consist of abilities of acquaintance, production process, customer relationships and staff which help the company to reach the goal and being the market leader. (Vitez, 2009)
Moreover, strategic architecture can describe the possible ways that the company is able to go to future and bring the company go along the new core competencies to create the benefits as well as reach the customer’s need and provide them to use those benefits efficiently. (Hamel and Prahalad, 1994, p.118) Strategic architecture such as information and social architecture is the ways to define the top managements to allocate the human resources correctly. (Hamel and Prahalad, 1994, p. 117) For example, According to Hamel and Prahalad (1994, p. 117) stated that “ To create a social architecture senior management must have a point of view on what values should predominate, what behaviors should be encouraged, what kind of people should feel comfortable working in the company.”
In case of Qantas, Airways Limited, the company’s core competency is premium airline with full services. The company applies their core competencies with two strong brands reputation both Qantas and Jetstar and human resources. What is more, Qantas Airways Limited puts core competencies to create the firm to have competitive advantages.
Refer to Michael Porter’s competitive advantage is called generic strategies that have 3 main areas such as cost leadership, differentiate and focus or niche strategy. (Marketing Teacher, 2010; Matt, 2009) Focus group can divide into 2 parts namely cost focus and differentiate focus which look within focus market. (Value Based Management, 2010; Mind Tools, n.d.)
Refer to Qantas Airways Limited, the company emphasizes on differentiate and cost advantage to reach competitive advantage. Hence, Qantas Airways Limited concerns competitive advantage which looking at the differentiate advantage and cost advantage.
According to Investing Smart (n.d.) pointed out that “Jetstar’s quick rise to be one of the world’s most successful low-cost carriers places the Qantas Group well in term of product offering and differentiate.” A380s and B787 Dreamliners, for instance, Qantas organizes to book those 2 aircrafts to serve the passenger to compete the competitive advantage more than others. (Investing Smart, n.d.)
In case of Qantas establishes the frequent flyer program that different from other airline to make customer loyalty. (Qantas, n.d) According to Hoffman (2010) stated that “Qantas announced today that Qantas Frequent Flyer has reached seven million members and predicted ongoing solid growth over the foreseeable future.” The purpose of this program is to motivate passenger travel by using Qantas. The benefit of using frequent flyer, they will get point to upgrade the seat if earn enough point or using point in some alliance store and upgrade for weight of baggage as well as accessing to the Oneworld alliance lounge which provide foods, drinks, and other facilities. (Qantas, n.d.; Hoffman, 2010) Moreover, Qantas is also coalition with many local companies such as supermarket, restaurant & entertainment, travel & travel services, finance and business and shopping & car. Woolworths, for example, Qantas uses frequent flyer program to associate with Woolworths Everyday Rewards to gather the point which provide the competitive advantage to each other. (Evan, 2010; Hoffman, 2010)
Refer to Qantas Airways Limited is the premium full airline service with the premium price. The company starts the Jetstar for low cost airline to serve the passengers who travel in domestic such as Sydney and Melbourne. (Qantas Airways Limited, 2010) Moreover, as Qantas is one of the world recognition and reputation brand with the full service and safety in the airline industry. Qantas is also pushing Jetstar to flight for global destination in Asia Pacific to serve travelers to get more option as good service as Qantas with the economical fare. (Gregg, 2007)
As Qantas Airways Limited have plausible business strategies that can lead their business successful. Nevertheless, the company also has some weaknesses can cause many problems. Consequently, Qantas should pursue some recommendation to sustain the brand recognition and reputation.
Cost and competition
Regarding to airline industry is deregulation which independence from the government. It can lead to the intense of competition in case of cost. Airlines can freedom to set the price and some have less quality. Thence, the government should re-deregulation for airline industry. (Lowy, 2010; Elliott, 2010; “Study Finds”, 2010) This can avoid the airline competition with the lower cost and maintain the good quality of customer services as well. (Lowy, 2010; Elliott, 2010; “Study Finds”, 2010) Moreover, it also helps to renew the financial situation of airline industry as well as brand recognition. (Elliott, 2010). In addition Re-deregulation can decrease the new competitors to cut the costs as well. (Elliott, 2010)
As airline industry is both products and services that provide customers and reach the best satisfaction. Alliance is one of the ways that can provide the passenger’s happy. Qantas should collaborate with both domestic and global company. Metro Hotel, for example, the hotel is the partner of Qantas Frequent Flyer program when the customers using the frequent flyer card with this hotel they will get the point that can convert to be the money or voucher or discount from some events. (Metro Hotel, 2010) It is not only hotel but also car rental, grocery store, and bank. (Credit Card Finder, 2010) This way can make both companies get the customer loyalty and motivate them to use their service. Moreover, Qantas should make survey to update the detail what customers want such as service, catering, seat, entertainment, flight attendant, and lounge. (Platt, 2010) This study can help Qantas to maintain the rank of the world’s best airline, sustain customer’s pleasure, and retain the profit of the company as well. (Platt, 2010) In addition, Qantas should not focus only the first class but also economy class as well. To reach customer satisfaction, the company should provide and serve all class with the best service such as meals, seat, and drinks. (Govindasamy, 2010)
Qantas should focus to human resources by providing more training to meet customer’s fulfillment as well as brand recognition. The company put facilities and urge for staff‘s training to meet the standard of customer service and reach customer’s satisfaction. (Creedy, 2009) In addition, the company should encourage staff to be a part of their business as well. Moreover, safety is one of the first priorities that every airline must concern. Qantas Airways Limited, for example, as airline industry is high risk, the company needs to maintain the standard of safety. It is because of if the company lack of safety and security; it can be in trouble that can cause damage of brand recognition and reputation. (Sykes, 2010) Qantas should invest to hire the best engineering to preserve the objective of the company. If the company provides the best wellbeing and security, it can build up the brand image and profit as well. (Sykes, 2010) Moreover, Qantas should provide dependability to all customers and employee as well as manage the environmental friendly in the areas. (Sykes, 2010; Qantas Airways Limited, 2008)
Regarding to Qantas Airways Limited achieves the vision and goals of company itself and be the best premium with full service airline. Anyway, the company can meet some failures. Hence, the company needs to keep their firm going and maintain the financial situation stable in the present and future as well. The potential fallout can include human resources and re-deregulation that Qantas should be worried.
First of all, Qantas may be unsuccessful due to the human resources. Refer to Qantas’s goals, the company concerns for the safety first. The company has to invest large amount of money to training and hire outsourcing staff especially engineering and maintenance but they are unqualified. (The Daily Telegraph, 2008) Qantas can fail due to their staff are lack of attention and participate to maintain the good quality of engine as well as some of them lack of knowledge that can cause of accidents. (The Daily Telegraph, 2008) For example, Qantas’s aircraft faces the accident due to the inadequate of employee to check properly. (“Study Finds”, 2010) Moreover, from some study found that Qantas’s training such as emergency evacuations and baggage handling fail. (ABC News, 2010) Therefore refer to world’s best airline rank; Qantas had dropped. (Platt, 2010) It can lead Qantas damage of brand reputation as well as customer loyalty.
Re-deregulation can be one of failures that airline industry may face. As deregulation allows the airline set the cost by them, it can increase the intense of competition in low cost. Regarding to Qantas focuses on the premium and full airline service; moreover they also focus on Jetstar as a low cost airline. If the authorities restore the re-deregulation, it may affect with Qantas and Jetstar. It is because the government may control the price and the standard of service. When the passenger needs to travel in domestic, they may change the behavior to use other modes such as cars, train or bus that because of high cost of air ticket (“Study Finds”, 2009) Refer Jetstar may affect due to they focus in low fare ticket, it can reduce the profit of the company.
Qantas Airways Limited has strong brand reputation in the premium and full service airline with a subsidiary Jetstar as the low cost airline. They provide great the products and services for passenger and create the brand reputation in the global. The company also stresses on the advance technology, safety is first priorities, customer services, environmentally friendly and human resources. Besides they apply their strategies and core competencies to reach customers’ want and build up customer loyalty.
Anyway, there is some threatening such as domestic and international competition that can lead Qantas weaken. Those contestants can snatch the market share and create brand loyalty by better service, less accident, and punctual. Thus, Qantas has to maintain standard the quality of service to be the world’s best airline in the world.
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