Select an Australian multinational organisation from the ASX top 50 to create a portfolio report. What are the strengths and weaknesses of the firm in relation to your PESTLE analysis? And what advice/solutions would you recommend to the firm?
Socio-economic context is very essential for the management of the organization as it supports business in identifying the activities that are taking place within the environment it is working in as well as inside the business organization in order to increase the chances that the strategies of the organization developed will suitably imitate the organizational environment (Ari and Lavee, 2011). The purpose of this study is to recognize different environmental as well as socio-economic factors that influence the operations of Qantas Airlines and in relation to that, company strength and weaknesses will be discussed.
Qantas is the famous Australian flag carrier airway and it is the biggest airline in terms of the size of the fleet, international destinations, and international flights. In the world, it is one of the oldest airlines, after Avianca and KLM. Qantas started its flights with an international passenger in May 1935. The acronym of Qantas name is “Queensland and Northern Territory Aerial Services,” and it is called with a nickname i.e. “The Flying Kangaroo.” It is the founder member of the one world airline alliance (Qantas, 2016).
Qantas is one of the premium-leading airways and is committed to always being the est. The aim of the company is to meet the expectations of the customers every time they fly and therefore they endure to invest in their operations and will struggle to offer customers an excellent service level (Sun, 2014).
The company is always focused on safeguarding the planet by minimizing the influence they have on the environment (Foley, 2008). The whole group controls the system of integrated management that content safety, environment legislative, health, regulatory requirements, and security. The company’s environment activity is reinforced by tough governance procedures to confirm effective performance and the Qantas Board Committee monitors risks, which comprises oversight for Safety, Security, Environment, and Health (Qantas Group, 2018).
The Qantas Group is dedicated towards creating and nurturing a culture under which diversity is appreciated and to providing a place of work that is respectful and safe. The employees of the company treat their suppliers and customers with dignity, equity, trust, fairness, and respect. Human rights are prioritized and respected within the organization. As Qantas is called as an equal opportunity employer, it is focused towards offering an environment of working which is free from unauthorized discrimination, bullying, and harassment. Any behaviour that founds to be unlawful discrimination, bullying, or harassment is intolerable and is treated as misbehaviour or serious misconduct.
Analysis of Qantas Airlines' Strengths and Weaknesses
Pestle Analysis is the concept of marketing principles, which is utilized as a tool by the businesses to trail the environment they are working in or are thinking to launch a new service or product. The pestle is a cue, which in its protracted form signifies P for Political, E for Economic, S for Social, T for Trade, L for Legal, and E for Environmental (Rastogi and Trivedi, 2016). It offers a bird’s eye view of the complete environment from verse approaches that one needs to check and maintain a track of while anticipating on a convinced plan or idea.
Political factors take into account the range of government interference in the economy. These factors are necessary as organizations require political stability in order to operate their activities or they will fail to attain the anticipated profitability level (Gupta, 2013).
Businesses that are dealing with economic factors have a huge impact on their profitability. This factor comprises exchange rate, disposable income, inflation rate, and interest rate.
The social environments in which a company run its functions also possess an intense influence on its process. The social factors comprise the target market beliefs and cultural influences (Ho, 2014). For instance, a product can be considered offensive in a specific culture whereas it can be normal in any another culture.
Under the trade factor of PESTLE Analysis the fair trade practices of the organization is identifies that contribute towards the development of the country. Besides this, it talks about the organization’s contribution to human resource capabilities development that supports the operation of trade.
Legal factors are considered to be one of the essential shares of the macroeconomic scenario and concentrate on the subjects such as the safety of the product, equal opportunities, safety and health, consumer rights and laws. For businesses to operate successfully, they must not just understand but also accept the regulations and rules of the nation they work in (Perera, 2017).
Environmental factors might be considered a comparatively new count to the macro-economic investigative tools. However, they have attained importance due to the increasing issues in terms of the environment among the masses (Perera, 2017).
The Australian government always support Qantas Airlines due to the contribution of the organization within the economy. The company possess 65% share in the market of the nation and is running domestic as well as international flights (Adamkasi, 2016). Qantas Airlines gets the support of the government in monetary terms and allow its interference within the management decision-making procedure. The airline carries the country’s flags and it is called as government-owned airlines in many nations. The government design policies for the Qantas and the political stability influence the business operations of the company because it supports in the development of the business.
Recommendations and Solutions
The economic factors have a major influence on the Qantas performance in the sense that the decreasing economic performance of the economy of Australia has also influenced its level of performance considerably. For example, the economy of the Australian is dealing with the recession is a negative sign because the per capita income of the resident has weakened severely which has ensued into decreasing demands of air services (Fern Fort University, 2018). Qantas is also facing the effect of decreasing demand. Besides this, changes in the oil prices and an impending slowdown are other shocking matters that are disturbing the growth of the airline industry. Airline companies need to manage the effect of declining travelers, fuel high prices, competition, increasing maintenance cost, and demands of labor (Pestle Analysis, 2014). In order to manage come up with the losses due to economic decline and increasing fuel cost, the company has adopted different cost-cutting strategies.
The social factors as predominant in terms of the airline industry have influenced the Qantas performance at a greater level. The airline industry analysis in precise specifies that it is influenced by the social trends which reflects that there has been a greater level of acceptance for low-cost airline services among consumers. This has influenced the airline companies like Qantas, which offers premium class services. In order to deal with this problem, Qantas adopted a change management strategy. Under this company focused at cost-cutting and a decrease in the labor cost to confirm efficiency, and an indication of flexible structures by a versatile and attentive workforce. Cost cutting in Qantas was followed with strict procedures by the human resource management department such as decreasing wages and salaries by eliminating expensive practices (Wassener, 2014).
Qantas in the Australian market performs fair trade practices under which it considers the rights and safety of its customers and all the shareholders. The objective of Qantas is to increase the shareholder value from all important supplier relationships. This is attained by a well-organized, organized, and continuing procedure for attaining consistent and ethical supply of externally acquired services, at the same time decreasing the overall cost and enhancing the quality level, technology, and service (Qantas, 2018).
It is compulsory for the airline companies to comply with the legal aspects of the nation and industry. The airline has taken some steps for the health and safety of its employees and customers. The travelers get outstanding food and other different services and smoking are banned within the airlines, and this has been done considering the health of the passengers. The airline has to pay carbon tax because of its performance and it has to comply with the rules to obey the lawful position of the industry (Adamkasi, 2016). Qantas airline has to follow numerous legal regulations to operate its activities smoothly.
The environmental factors influence the industry of airline because the regulatory and authority board of airline have framed some significant regulations for dealing with the ineffectiveness within the environment on the part of airline operators. An examination of Qantas specifies that the company has the aim to attain decline in its pollution emissions by 2050 by 50%. Presently, 95% of the carbon footprint by Qantas is majorly from the flying processes (Adamkasi, 2016).
According to the annual report of Qantas Airlines, the company’s revenue for 2018 is $17,060m, which is more than the revenue of 2017 i.e. $16,057m (Qantas, 2018). This reflects that besides the economic downfall in Australia airline is performing well in the industry with the support of its experienced employees and competitive strategies.
Source [(Morning Star, 2018)]
Besides this, with time Qantas Airlines is able to increase its Asset turnover ratio as in 2017 it was 0.92 and in 2018 is it 0.93. The return on asset ratio of the company has also increase from 5.02 to 5.46 in 2017 and 2018 respectively (Morning Star, 2018).
Conclusion and Recommendation
From the above analysis, it could be said that Qantas Airlines is one of the most successful airlines in the world with the best food and security services for the customers as well as employees. The mission of the company is to become the leading airways in the world with best offerings to the customers. The study has conducted an analysis of the external environment of Qantas Airlines in order to identify the factors affecting the business operations of the company. From the analysis, it has been recognized that the government of the country is the supporter as well as the strength of the company as it offers monetary help to the company. However, on the other side, Qantas Airlines have faced some issues due to the present social and economic factors in the market.
The above study has identified various aspects of the organization positive as well as negative that has affected the productivity of the business. In terms of economic factors such as increasing fuel cost, the economic downturn and increasing competition from low-cost airlines, the company is facing huge losses. In order to overcome these losses, it can be recommended that the company can reduce some prices of its ticket such that customers could choose Qantas Airlines for traveling.
Besides this, the steps taken by the company of cost-cutting in order to deal with the economic downturn, increasing fuel cost, and the competition was proved to be a big fail because the HR department of the company decided to do cutting in the salaries of pilots and wages of the workers without any prior notice. Due to this step, employees of the company went to strike as a result the company faces huge losses (Wassener, 2014). Therefore, in order to deal with these types of issues within the organization company must update its communication model. Moreover, a business must adopt employee-centric approaches because it considers the employee interest as a key element.
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