ORGANISATIONAL STRUCTURE AND EFFECTIVENESS
Qantas Airline 6
ORGANISATIONAL STRUCTURE AND EFFECTIVENESS
Qantas airline company leadership style
Qantas Airline Company was established in 1920 in Queensland by the pioneering aviators Hudson Fysh, Fergus McMaster and Paul McGuiness and was initially owned by the government. The airline is considered as the eleventh largest airline company in the world and the second oldest (Qantas 2016). In 1993, 25% of the company’s shares were sold to the British airways and in 1996; the company was privatized in 1995. The airline’s major business is passenger transport but has also ventured into cargo freight (Dunphyet al, 2003).
In the period between 1947 and 1995, Qantas airline company leadership structure underwent a lot of structural changes that acted as the defining movement in the history of the company. There has been debate amongst scholars as to which leadership style has been adopted by the management of the organization over the years. There are those who believe that the leadership style is a transformational leadership style. After the merging of Qantas Airline Company with Australian company to form a global company, Qantas (Dunphyet al, 2003). The then chief executive officer, James strong took the company through a transformational leadership style where the main focus has been on the human resource practices and giving the employees the freedom to accomplish tasks without being given specific instructions on how to carry out the tasks. The organization during this period adopted a flatter organizational structure where the number of levels of management was reduced in order to give more responsibility to the employees (Dunphyet al, 2003). The organization saw the need to ensure that the employees are more motivated for them to perform effectively for instance by improving their working conditions and improved contracts. The objectives of the changes introduced by Mr. James strong were aimed at significantly reducing the cost of operation and aligning the company’s operations to the dynamics of the aviation industry. Alan Joyce took over the post of C.E.O and continued with the transformational leadership styles adopted by James Strong putting the company into the global limelight and earning several individual awards as a result (Dunphyet al, 2003).
The company’s leadership has however been criticized before for using autocratic methods to achieve their goals. Their aviation industry in Australia being very political, the airline company has often being accused of using their influence and power to lobby the government to put in policies that favor them. The policies touch on labor relations, pacific routes as well as tax concessions (Dunphyet al, 2003). The perfection of this method has ensured that the authorities often overlook the labor relations violations by the company.
Qantas’ Strategies within Australia and/or overseas markets
The company’s strategies include a 2 billion dollar cost reduction that included the reduction of the workforce by 5,000 employees, selling of fifty of the airline’s aircrafts or deferring them, a 1 billion expenditure reduction and a focus and investment on customer service (Qantas, 2016). The company has had an objective of permanently reducing its cost across the Qantas group through to the financial year ending in 2017 by introducing changes to its network as well as its fleet, improving its productivity, consolidating the company’s business activities, introduction of new technology and procuring a savings culture. To achieve these objectives, Qantas airline company’s management intends to either defer or sell at least fifty of its aircrafts and laying off of 5,000 workers who have been employed on a part time basis by the financial year 2017 (Qantas, 2016).
Apart from its cost reduction strategies, the group has segmented its business into two main brands, Qantas airlines and Jet star. The former serves the customer base with premium products on those routes with sufficient demand, while the latter operates on those routes considered leisure targeting the price sensitive category of consumers. The strategy is aimed at maximizing the growth prospects of the company and also attracting tourists into the airline since most of them could fall in one of these categories (Qantas, 2014).
The other strategy by the company is the diversification of its portfolio. The company is pursuing opportunities of growth both in the domestic and the international market in order to diversify and increase its sources of income and more importantly reduce its risks. In the 2005/2006 financial year, the company contributed 320 million dollars when carrying exports and transporting them to overseas destinations (Sarina and Wright, 2015). The cargo is carried in the under floor space of the aircraft. The company also offers freight services to a global network of 135 countries. The company has expanded its operations in Asia by acquiring 44.5% stake in Orange Star which owns the Jet Star, a Singapore based company (Sarina and Wright, 2015). The cooperation between the two firms is aimed at assisting the development of the tourism industry in favor of Australia. With the Australian government effort to improve the tourism industry by funding intensive marketing, this has complemented the efforts of the Qantas airline company to target the tourisms majorly fro Asia to visit the tourist destinations in Australia (Sarina and Wright, 2015).
Comments on this company’s structure and strategies
There have been divergent observations on the structure of the organization. What is clear however is that the company has been able to cut down its hierarchy by eliminating a number of management levels and concentrating most of the company’s responsibilities on the lower level management. Apart from reducing the costs of operation, the company was able to increase its efficiency in doing business and improving their competitive strategy (Qantas, 2014). The company has concentrated its strategies on costs and customer service. The company achieved this by cutting down the fleet size as well as the workforce. This strategy was very instrumental in improving the productivity of the business to the top. The aviation industry being very dynamic, the company’s management has realized the need to align its operations with the dynamics of the market. The flattened structure of the company, its transformational leadership style and the strategies both in the domestic and the international arena, the company has been able to significantly improve its profit margins (Qantas, 2014). This however has not been without a number of obstacles such as the objection of the trade unions on the decision of the company to cut down its workforce by a significant number.
Dunphy, D.C., Griffiths, A and Benn, S 2003, Organizational change for corporate sustainability, New York, Routledge.
Qantas 2016, Expanding overseas…and at home. Retrieved 19th Sept. 2016 from http://www.qantas.com/travel/airlines/history-expanding/global/en
Qantas 27th Feb. 2014, Qantas Group Strategy Update. Retrieved 19th Sept. 2016 from http://www.qantasnewsroom.com.au/media-releases/qantas-group-strategy-update-2/
Sarina, T and Wright, C.F 2015, “Mutual gains or mutual losses? Organisational fragmentation and employment relations outcomes at Qantas group”, Journal of Industrial Relations, vol. 57, no. 5, pp. 686–706. doi: 10.1177/0022185615590905.