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Industry Attractiveness

Qantas Airways is the largest airline of Australia in terms of the size of the fleet of the airline company, the international destinations covered by the airlines and the number of the international flights that the company undertakes. Qantas Airlines was established on the 16th of November in the year 1920 and has grown to be the third largest airline in the world. The airline company derives its name from an acronym that stands for the original name of the company. Queensland And Northern Territory Aerial Services. The company is headquartered at Mascot, a suburb of the city of Sydney and the main hub of the airlines is located at the Sydney Airport. The airlines is reported to have generated a revenue of AUD 15.8 in the fiscal year of 2015 (Qantas.com.au, 2017).

The industry attractiveness refers to the relative future potential of a certain industry to generate profit. In order to determine the industry attractiveness of a certain company, the company needs to be analyzed using the Porter’s Five Forces Framework (Rothaermel, 2015). The analysis of the Australian airline company, Qantas that has been used to evaluate the nature of the competition that is faced by the Qantas Airlines.

Competition Rivalry – The competition rivalry that is faced by the airline industries has been increased especially through the acquisitions, subsidiaries and the mergers.

Threats due to the new entrants – The entry of the new companies in this industry is barred by the requirement of a huge capital investment in the initial levels of the business.

Threats due to substitutes – There are present many substitutes that a potential client might avail. It is often observed on comparison that the substitute options for the travel of long distance is generally cheaper but since the air travel has a great advantage in matters of time, the threat towards the company with respect to its substitutes is comparatively lower.

Bargaining power of the Suppliers – The main suppliers for the aircrafts used by the airline companies are Airbus and Boeing. The airlines companies are in constant need for the fuel that is needed for the smooth running of the company. Thus, it might be said that bargaining power of the suppliers has been quite high (Lucarelli, 2014).

Bargaining power of the buyers – The clients of the concerned airlines companies are known to possess a very high bargaining power due to the preference that they have in the field of the prices. The consumers hold liberty of choosing among the multitude of airline companies that have been offering their services based on what helps in providing the best value for the money that the consumer might invest.

Thus, it might be concluded from the above analysis that the airline company, Qantas Airline Limited needs to take care of the rivalry that exists in the global market due to the acquisitions, subsidiaries and the mergers that the competing firms go through. The company enjoys a minimal threat due to the entry of the potential entrants. In order to hold on to its client base, the airline company must take notice of the pricing of the services offered by them. The company may face challenges due to the high bargaining power of the suppliers of both necessary equipment and fuel. The company may lower the prices that they charge against the services that they provide to their clientele.

Resources and Capabilities

The key resources that are needed for the smooth functioning of the airlines are the man force and the air crafts. The airlines company may boast of having access to the superior quality of lounges at the variety of destinations that the airlines operates in. The brand operates at more than 182 destinations over 44 countries with the help of a fleet that consists of 252 aircrafts. The concern has been operating on an aircraft fleet that comprises of Boeings and Airbuses (Qantas.com.au, 2017). The company comprises of a number of brands that include the Jetstar brands as well. The management decided to introduce non-stop flight schedules from Australia to United Kingdom in the year 2015. According to Alan Joyce the chief executive officer of the company, the service of the non-stop flight between the two countries would have been the first of its kind and thus would help the company to attract more clients towards the services that the company provided (Calder, 2017).

The airlines company demonstrate a number of capabilities like the supreme quality of the lounges that are open to the customers of the company while they wait to board their flights at the various destinations that are covered by the fleet managed by the Qantas Airlines. The on-time performances of the staff of the company also constitute the capabilities that are demonstrated by the company. The airlines company is capable of demonstrating an important capability of reduction in the costs that are incurred by the customers. The company aims to attempt a reduction in the frill service that it had been offering to their customers. This may help in the reduction of the costs that were charged from the customers of the airlines. The reduction of the costs may be undertaken by using various other strategies such as the maximizing the working time of the plane crew but at the same time ensuring that the working hours comply with the regulations of aviation all over the globe (Peteraf, Gamble & Thompson Jr, (2014).

The VRIO model of analysis refers to a technique analysis that is considered to be apt for the evaluation of the resources of the company and therefore aids the analysis of the competitive advantage. The VRIO model of analysis derives its name from the initials of the names of the dimensions that are used for the evaluation. The evaluation dimensions are Value, Rareness, Imitability and Organization (Afuah, 2014).

The core competencies of the Qantas Airlines may be analyzed using the VRIO model of core competency analysis.

Valuable

Rare

Difficult to imitate

Exploited resource

Catering business

Yes

No

Yes

No

Collaboration with the other industries for the purpose of multi-branding

Yes

No

No

No

Corporate values

Yes

Yes

Yes

Yes

Engineering

Yes

Yes

No

No

Excellent airport location

Yes

Yes

Yes

Yes

Good brand

Yes

No

Yes

Yes

Good new aircrafts

Yes

No

Yes

No

Multi-branded

Yes

No

Yes

No

Low pricing strategy

Yes

No

Yes

Yes

Route innovation and supportive technological interface

Yes

Yes

Yes

Yes

Marketing

No

Yes

No

No

Service quality and customer value

Yes

Yes

Yes

Yes

 The key core competencies of the concerned airline company lie in the fields of the route innovation and supportive technological interface as well as the service quality and customer value as they have been observed to satisfy all the factors involved in the VRIO model of strategic analysis. The other factors depicted in the table above are the capabilities demonstrated by the company in the airline industry wherein the firm operates. These core competencies may allow the company to gain a sustainable competitive advantage in the airline industry wherein it operates.

The competitive advantages that set the Qantas group apart from the other competitors in the market are enlisted below:

  • The dual-brand strategy that aids in the segmentation and the growth of the target markets of the company (Asx.com.au, 2017).
  • The structural advantage of the domestic position of the company.
  • The innovative loyalty business of the company accompanied by the data insights that are deemed valuable.
  • The positioning of the company in the Asian continent along with the partnerships with the premium airlines operating in the area.
  • The airline company has earned a reputation for the excellent measures in the field of safety and operations.
  • Qantas airlines has an added advantage over its competitors of being an iconic brand in the Australian airline industry.
  • The management of the company plans to introduce non-stop routes to New York and London in order to boost the revenues that are collected by the concern (Abc.net.au, 2017; Bbc.com, 2017).

Conclusion

The airline company in discussion, Qantas Airways Limited, owns a strong reputation of the brand both in the full serviced premium airline as well as in the subsidiary brand of the airline company, Jetstar. The company aims to provide its clients with brilliant services and products that help in the creation of the reputation of the company in the global market. The company should stress more on the advancement of the technology, safety of the crew and the passengers of the aircraft and towards making their services more eco-friendly. The airline company must maintain the standard of the quality of the services that it provides to the client base in order to maintain and its position in the global airline market.

References

Abc.net.au. (2017). Qantas flags 16-hour direct flights to London. ABC News. Retrieved 17 December 2017, from https://www.abc.net.au/news/2017-08-25/qantas-flags-16-hour-direct-flights-london-profits-slip/8841572

Afuah, A. (2014). Business model innovation: concepts, analysis, and cases. Routledge.

Asx.com.au. (2017). Asx.com.au. Retrieved 17 December 2017, from https://www.asx.com.au/asxpdf/20170505/pdf/43j1n2fsbc9w3p.pdf

Bbc.com. (2017). Qantas to fly London to Perth non-stop. BBC News. Retrieved 17 December 2017, from https://www.bbc.com/news/business-38280722

Calder, S. (2017). Airline says a non-stop flight from the UK to Australia could be a reality within two years. The Independent. Retrieved 17 December 2017, from https://www.independent.co.uk/news/uk/home-news/qantas-plans-non-stop-flight-from-uk-to-australia-within-two-years-a6688236.html

Lucarelli, G. (2014). The corporate strategy of Qantas Airways. A case study.

Peteraf, M., Gamble, J., & Thompson Jr, A. (2014). Essentials of strategic management: The quest for competitive advantage. McGraw-Hill Education.

Qantas.com.au. (2017). Qantas.com.au. Retrieved 16 December 2017, from https://www.qantas.com.au/infodetail/about/investors/preliminaryFinalReport15.pdf

Qantas.com.au. (2017). Qantas.com.au. Retrieved 17 December 2017, from https://www.qantas.com.au/infodetail/about/FactFiles.pdf

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.

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