External factors have great influence on the business operation. In the modern marketplace, the business must not ignore the environment in which it is operating. The environmental scan report intends to identify the factors that impact Qantas Airways limited an Australia based company.
Factors influencing the environment in which businesses operates
The four main factors that affect the business environment are- political, economic, social, and legal factors.
The political environment of a business is influenced by the government ideology, country’s political stability, the nature, and the degree of bureaucracy. The socio-economic infrastructure of the country, business cycles and the capital market influences the cost and profit of the business. A social environment of the organisation affects the business functions in terms of the culture of the work, mobility of labour, cost structure and work group. These factors determine the customer’s demand for the product or service. Business is also governed by the legal rules. Depending on the environment of the business, the legal provisions contribute to increase or decrease of income (Chen et al. 2014).
Environmental factors which influence Australian business specifically
Financial crisis and economic vulnerability is the major concern of the Australian based organisation. Australian businesses are influenced by the government funding programs and grants. The business laws in Australia are flexible and are designed to ensure fair competition. Australia has liberal-capitalistic democracy and the state interferes in the economy by implementing laws such as environmental protection laws. Australia has slow adaptation to technological innovation (automation, R&D activity) (Bloch & Bhattacharya, 2016).
Environmental factors which influence Qantas Airways limited
The most important environmental factors specifically influencing Qantas Airways limited are (Epstein & Buhovac, 2014)-
- Political factors- The working policies and the investors are negatively influenced by the restricted capital ownership.
- Economic factors- The fluctuation in the fuel prices is the major disadvantage. There is a need for the organisation to increase its fuel buying power. It may hamper the relationship with the oil suppliers who have higher bargaining power. The crippling factor of Australian economy is the global financial crisis.
- Social factors- Qantas is unable to favour the high purchasing power parity of Australia. It may hamper the relationship with the customers when other airlines offer high quality service at cheaper price. It may hamper the business revenue of Qantas. There is the risk of decreasing travelling frequency of passengers. Qantas have to focus more on the corporate social responsibility in Australia, because of the operation of committed pressure groups.
- Legal factors- Carbon tax have negative impact on the aviation industry. The government subsidies that are lower than the market condition offer unfair advantage to the airlines. It may increase the competitive advantage of the British Airways and Singapore Airlines. It may threaten the market share of Qantas.
Key issues identified
The key is of Qantas airlines due to external factors are-
Decrease in business revenue due to changing fuel prices, rise in cost, carbon tax economic crisis, and fluctuating political situation. De regulation can trigger Qantas to fours on low cost than on safety.
Strategies and justification
Using Ansoff’s matrix, some strategies are developed for Qantas.
In order to maintain the profit margin despite the high fuel prices and carbon tax Qantas must opt for diversification of product. For instance, it can offer short and long haul, low and premium fares or investment in rail business. Qantas can remodel its aircraft to decrease pollution and increase operational efficiency. For product development, it can introduce high-speed Wi-Fi connectivity and Smartphone on economy class (Mules, 2013).
It can decrease cost by operating more inland domestic and international routes. It can also increase the jet star operations during high competition (Lucarelli, 2014).
External factors have great influence on the business operation. It is important for Qantas to analyse its business environment regularly. It should well use its opportunities to minimise threats. Strategic planning is vital to introduce any business policies to ensure success.
Bloch, H., & Bhattacharya, M. (2016). Promotion of Innovation and Job Growth in Small?and Medium?Sized Enterprises in Australia: Evidence and Policy Issues. Australian Economic Review, 49(2), 192-199.
Chen, Y., Wang, Y., Nevo, S., Jin, J., Wang, L., & Chow, W. S. (2014). IT capability and organizational performance: the roles of business process agility and environmental factors. European Journal of Information Systems, 23(3), 326-342.
Epstein, M. J., & Buhovac, A. R. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers.
Lucarelli, G. (2014). The corporate strategy of Qantas Airways. A case study.
Mules, R., 2013. The long haul: The QANTAS-Emirates Alliance. Busidate, 21(3), p.2.