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Strategic Management Ideas Of Qantas Airways

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Question:

Discuss about the Strategic Management Ideas of Qantas Airways.
 
 

Answer:

Introduction

The study investigates the strategic management ideas of Qantas Airways, the largest airline company in Australia to determine how the strategic moves of the management have led the growth foundation of the airline company. Throughout the study the application several theoretical concepts has been addressed to find out the impact of the same of the management practices of the corporation in the target market (O'Sullivan, 2014). Interestingly, the company is one of the oldest airline corporations of the world set up in 1920.

In the recent past, tough market competition from other domestic as well as international airlines companies has created substantial issues for Qantas Airways. Primarily, Air New Zealand, Singapore Airlines, and Virgin Airways can be identified as the leading market rivals affection the business structure of Qantas Airways. In the study, suitable theoretical concepts have been drawn into conclusion to identify the industry attractiveness, company’s resource-based views based on Barney’s concept, and competitive advantage of Qantas.

Application of Theoretical Concepts

Industry Attractiveness

In order to identify the concept of industry attractiveness in the Australian Airlines industry, first of all, the competitive structure and potential market for the business participants must be determined. Currently, the growth outlook of international as well as domestic airlines is increasing in rapid order. Due to increasing number of customers, a number of airlines companies are participating in the market (Dawid, & Reimann, 2015). Therefore, the strategic industry analysis based on Porter’s five forces of competition has been included in the study to identify the market positioning of Qantas Airways. Apparently, Porter’s Five Forces describes the economic environment and industry’s framework based on components such as purchaser’s bargaining power, supplier’s bargaining power, threats of latest market entries, and substitute services. Precisely, each of the determinants has convincingly identified the level of competition and market orientation of a company (Rotha?rmel, 2017). Based on Porter’s Five Forces, the industry attractiveness for Qantas has been briefed in the underlying section.

The analysis of the industry based on Porter’s Five Forces has represented fierce market competition for the Australian Airlines company, Qantas. Due to the substantial number of airlines services, the buyer’s bargaining power is comprehensively high creating significant rivalry and price war. Following that, the suppliers bargaining power is relatively controlled, to say the least. In the recent time, Qantas has managed to merge with a number of suppliers that impact the services of the airlines (Korporaal, 2016). As a result of the same, the position of the airline company is strong in the industry. Alternatively, due to increasing infrastructure and technological development, threats of current participants are high. On a comprehensive note, new substitutes do not make a massive impact in the airline industry (Ethiraj, Gambardella, & Helfat, 2016). By considering Porter’s Five Forces, the industry attractiveness can be easily pointed out. Moreover, the challenging market has created a number of management problems for Qantas as well.

 

Resource Based View

On the basis of Resource Based View (RBV) Theory of Jay Barney, the resources, capabilities, and core competencies of Qantas’s business structure have been described as follows.

Resources

Identifying the available resources has been the crucial factor leading to the successful business environment. According to Barney’s Resource Based View (RBV) Theory, an organisation must constitute a human resource pool that cannot be substituted or imitated by the competitors (Ray, Barney, & Muhanna, 2013). Thus, utilisation of human resources can lead to competitive advantage on a long-term basis. Based on this concept, Qantas Airways has created a well-trained and knowledgeable workforce to deliver quality services towards the customers. In this way, resources can be turned into capabilities of the organisation.

Capabilities

Decisively, employees of an organisation can be identified as the leading sources of organisational capabilities. Qantas Airways has influenced the customers through the brand identity. Clearly, the brand name of Qantas Group has supported the business environment. Moreover, the services quality, facilities given to the target demographics, and employee attributes have worked in favour of the firm to stay ahead of the rivals. Additionally, the corporate social responsibility towards the community has also listed as the capability leading to success.

Core Competencies

By understanding the resources and capabilities, Qantas has featured two core competencies i.e. loyalty of the target demographics and satisfaction of the clients in the business dimension. Through value creation, the company has utilised the capabilities to meet the satisfaction level of the domestic as well as international passengers. By following the RBV theory, Qantas Management has created a unique employee portfolio in the services sector that cannot be matched by the competitors. Such quality of services has impressed the target demographics to prefer Qantas achieving loyalty of customers.

Competitive Advantage

The concept of competitive advantage presents the factors that help a firm to stay ahead of its rivals. The competitive advantage theory has been developed Michael Porter that explains that factors leading to comparative advantage of a nation over any other nation. The same theory has been used by modern management professionals to evaluate the factors leading to the competitive advantage of an organisation (Oxenbridge, Wallace, White, Tiernan, & Lansbury, 2010). It is important to note that an individual firm competes in the international market and a collection of firm forms an industry. Hence, the collective performance of the industry is used to judge the competitive edge of an economy.

According to Porter, there are four major determinants of competitiveness that are used to plan the strategy of a firm or economy as a whole (LaPlaca, 2008). The factors influencing the competitive advantage of Qantas in the international market has been discussed herein below:

  • Demand Conditions: Qantas is the number one airline company in Australia with its operations spread all across the globe. The developing economy of Australia has resulted in the growing demand for airline businesses that has further leaded to the competitive advantage of the business (Qi, Zhao, & Sheu, 2011). But, the recent boom in the Australian inflation rate has resulted in the rise of aggregate price of different products and services resulting in the fall of demand for the airline businesses.
  • Factor Conditions: Qantas employs the best talent in the market leading to an effective workforce and knowledge resource that acts as a competitive advantage for the organisation. On the other hand, the company has the best physical resources to support the changing needs of the consumers (Godet, 2009). Additionally, the financial position and modern infrastructure of the organisation has also supported the firm to seek competitive advantage in the international market.
  • Supporting and Related Industry: The chaining price of oil and raw materials directly impacts the profitability of the firm. Recently, Qantas has signed several contracts with the suppliers to stabilise its procurement processes and improve the quality of its services. On the other hand, the changing policy of the government related to carbon emission and environmental conservation has become a primary challenge for the organisation.
  • Firm’s Structure, Strategy and Rivalry: Qantas has a horizontal organisational structure that makes the decision making process faster and effective (McGee, 2014). On the other hand, the flexible business strategy of the firm supports the changing needs of the market. Furthermore, the growing rivalry of the business has emerged to be a current challenge for the firm.

Recommendation

Qantas has been quite successful in meeting the growing competition and changing factors in the international market. But, there is a need of certain changes in the strategy of the firm to enhance its growth in the long run. Therefore, the following recommendations are suggested to the management of Qantas on the basis of the above analysis:

  • Focus on Corporate Social Responsibility: Qantas needs to focus on corporate social responsibility policy to seek a competitive advantage in the market. For example, the management must focus on reducing the pollution occurred due to the operations of the firm (Maritan, 2011). The improved CSR policy will help the firm stay safe from legal obligations and financial losses in the future.
  • Improve Pricing Policy: The management of Qantas needs to make changes in the pricing policy in order to meet the changing demand of the market. The competitive pricing policy will be helpful to seek competitive edge. On the other hand, the company can make use of premium pricing policy for its business class services.
  • Market Expansion: Market expansion can be another strategic change that can be implemented by the management of Qantas to seek competitive advantage in the international market (Maritan, 2011). For example, the company can introduce new routes and flights in the emerging markets to expand its business territory.
  • Service Diversification: Service diversification is required to meet the growing competition in the market. For example, Qantas has introduced new catering service to meet the growing needs of the consumers. On the other hand, the company can consider home pickup services for the premium clients to enhance its market positioning.

Conclusion

The current strategic management practices of Qantas have been quite effective in meeting the changing needs of the markets. But, the company needs to consider several changes in its operation strategies in order to meet the growing competition and changing external market factors. There is a need of service diversification, better pricing policy, market expansion strategy, and improved CSR policy to enhance the grow rate in the international market. Conclusively, the firm requires a flexible strategic management policy in order to survive and seek growth in the competitive business environment

 

References

Dawid, H., & Reimann, M. (2015). Evaluating Market Attractiveness: Individual Incentives Versus Industry Profitability. Computational Economics, 24(4), 321-355.

Ethiraj, S., Gambardella, A., & Helfat, C. (2016). Replication in strategic management. Strategic Management Journal, 37(11), 2191-2192.

Godet, M. (2009). Effective strategic management the prospective approach. Technology Analysis & Strategic Management, 1(1), 45-56.

Korporaal, G. (2016). Women fly Qantas higher. Theaustralian.com.au. Retrieved March 2017, from https://www.theaustralian.com.au/business/aviation/qantas-alan-joyce-diversity-is-making-the-difference/news-story/176faa7ef737b8ba36819efbc37a2ba7

LaPlaca, P. (2008). Industrial marketing management. Industrial Marketing Management, 37(3), 245-246.

Maritan, C. (2011). Competitive strategy (1st ed.). Cheltenham: Elgar.

McGee, J. (2014). Strategic management (1st ed.). Chichester: Wiley.

O'Sullivan, M. (2014). Qantas unveils big management reshuffle. The Sydney Morning Herald. Retrieved March 2017, from https://www.smh.com.au/business/aviation/qantas-unveils-big-management-reshuffle-20141212-1262q5.html

Oxenbridge, S., Wallace, J., White, L., Tiernan, S., & Lansbury, R. (2010). A comparative analysis of restructuring employment relationships in Qantas and Aer Lingus: different routes, similar destinations. The International Journal Of Human Resource Management, 21(2), 180-196.

Qi, Y., Zhao, X., & Sheu, C. (2011). The Impact of Competitive Strategy and Supply Chain Strategy on Business Performance: The Role of Environmental Uncertainty. Decision Sciences, 42(2), 371-389.

Ray, G., Barney, J., & Muhanna, W. (2013). Capabilities, business processes, and competitive advantage: choosing the dependent variable in empirical tests of the resource-based view. Strategic Management Journal, 25(1), 23-37.

Rotha?rmel, F. (2017). Strategic management (1st ed.). New York, NY: McGraw-Hill Education.

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