Strategic management for Qantas Essay Example

  • Category:
    Management
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    2
  • Words:
    995

6STRATEGIC MANAGEMENT FOR QANTAS

Strategic management for Qantas

The firm’s resources

Qantas intangible resources include the highly skilled workforce that carries on the operations the company engages in. For instances, the airline has earned a global reputation for engineering proficiency (Eurominitor, 2013). The company operates one of the world’s largest engineering and maintenance firms in Asia Pacific, which offers training, upgrades and inspections. The alliances and codeshare agreements entered by the airline has allowed it to share a range of resources across its global operations (Eurominitor, 2013). These shared resources include joint bookings, lounges and frequent flyer points. The company has an efficient management team that has been integral to the success of the airline (News.com, 2014). Intangible resources include the large fleet of aircrafts that makes it effective to cater for the growing demand of domestic and international flights. The hubs the airline operates in are also critical resources that have enabled the firm to negotiate favourable deals, leading to reduced operation costs.

Qantas’s Core Competencies

Qantas is recognised globally. It also enjoys exceptional brand equity in addition to outstanding customer loyalty, as evident from its more than 4.6 million members of its “frequent-flyer program.” The airline connects Australia to major worldwide destination. Qantas has earned a reputation as the world’s safest airline (Eurominitor, 2013). It is among the oldest in the world with an exceptional record for safety. Hence, it is universally recognised for safety, an attribute that has earned it a differential advantage against its competitors, such as Virgin Australia. Additional key competencies include customer value, corporate values, service quality and route innovation. Corporate values are considered as the core competencies since they are non-imitable, valuable and rare. The company has harnessed its competences to ensure it has a sustainable competitive advantage in the Australian airline industry. Qantas also maintains a leading position in Australian premium market and the leisure market and a loyal business class customer base (Hurst, 2014).

Capabilities analysis

Qantas airline enjoys a range of capabilities such as on-time performances that has made it a preference for business flights, especially among time conscious travellers. It also has luxurious lounges where customers can wait for flights. Cost reduction is another key capability. Reduction of the frills service provided to customers enables the company to charge low fares (Hurst, 2014). Qantas also undertakes cost reduction using a range of strategies, such as maximising the period that the plane crew works while ensuring that the time is consistent with the relevant aviation regulations (BBC, 2014).

Value chain analysis

Qantas Airline’s inbound logistics include its sustainable operations and efficient management of the supply chain. Examples of operations include the application of computerisation in customer booking and effective conveyance of customer luggage. The company’s outbound logistics include order processing and luggage delivery to customers. The company is focused on speed and high quality services sustain competitiveness (Eurominitor, 2013).

Financial Condition

Qantas has a weak financial standing. On February 27, 2014, the company reported an Underlying PBT loss of $252 million, in addition to a Statutory Loss After Tax of $235 million, for the 6 months ended December, 31 2013 (Qantas, 2014). The losses are attributed to the giant of global airline capacity, given the increase in competitor capacity by 46 percent since 2009. Australia’s distorted domestic market due to the existing aviation policy has allowed Qantas’ major competitor to strengthen its financial base against Qantas, since it is majority-owned by three foreign government-backed airlines (which invested $300 million in Virgin Australia in 2013) although it can still access Australian bilateral flying rights (Qantas, 2014).

Current strategies

Because of the highly competitive airline industry, Qantas has concentrated on product differentiation. To the passengers the company uses scheduling basic features. These include having customer-friendly departure and arrival time, as well as the number of stops and type of aircraft. The company’s quality product offering include comfort-based features such as in-flight meals, lounges, in-flight entertainment, drinks and seat width (InvestSmart, 2014). The company’s pricing methods include using cost plus margin to determine the cost of production before adding the margin for profits. The price is also based on the market, where the company matches demand with supply before determining the fares. Most importantly, the company uses competition-based methods to determine fares (Ahlstrom & Bruton, 2009). For instance, it watches over competitor airline, such as Virgin, to charge competitive prices. The company also uses cost differentiation. Its current strategies include using low-cost carriers targeted at capturing a large customer-base. Promotional strategies include advertising through brochures, newspapers, magazines, internet, billboards, television, radio and travel agencies. The company also uses a Loyalty scheme dubbed the Frequent Flier Program to increase customer loyalty (InvestSmart, 2014).

Current strategies

Since it is listed on ASX, the company’s key objective is profit, both in the long-term and current period. Qantas’ goal is to provide satisfactory returns to the shareholders and to generate sufficient profits in reserve that can finance further growth, expand operation and acquire new planes (Eurominitor, 2013). Its additional objectives include increasing the sale of passenger tickets, increasing its market share in the industry, ensure sustained growth of corporate size and reduce operating costs. Its long term strategy is to restructure international business so as to eliminate the rising losses (Hurst, 2014). This is intended to reduce capital intensity of the business by forging alliances and partnerships with other carriers (BBC, 2014).

References

Ahlstrom, D. & Bruton, G. (2009). International Management: Strategy and Culture in the Emerging World. New York: Cengage Learning,

BBC. (27 Feb 2014). Qantas to cut 5,000 jobs in A$2bn cost-cutting move. BBC News Business. Retrieved: <http://www.bbc.com/news/business-26362322>

Eurominitor. (2013). Qantas Airways Ltd in Travel and Tourism. Euromonitor International. Retrieved: <http://www.euromonitor.com/qantas-airways-ltd-in-travel-and-tourism/report>

Hurst, D. (5 March 2014). Qantas inquiry to investigate airline’s financial problems. The Guardian. Retrieved: <http://www.theguardian.com/business/2014/mar/05/qantas-inquiry-to-investigate-airlines-financial-problems>

InvestSmart. (2014). Qantas Airways Limited (QAN). Retrieved: <http://au.investsmart.com.au/shares/asx/QANTAS-AIRWAYS-LIMITED-QAN.asp>

News.com (2014). Qantas starts with senior management as airline moves to cut 5000 jobs. Retrieved from: <http://www.news.com.au/finance/business/qantas-starts-with-senior-management-as-airline-moves-to-cut-5000-jobs/story-fnkgde2y-1226846618599>

Qantas. (2014). Qantas Group Financial Results. Retrieved: <http://www.qantasnewsroom.com.au/media-releases/qantas-group-financial-results>