Implementation Challenges: Emission Trading Schemes

Overview of the organization

Discuss about the Implementation Challenges : Emission Trading Schemes.

The assignment deals with the Qantas Airways limited, an Australian based company. The report presents an overview of the organisation. The comprehensive situation analysis of the organisation involves the analysis of the environmental forces influencing the organisation and the market it is currently operating in. Further, the paper presents the SWOT analysis of the organisation. Based on the internal and external analysis the paper defines the problem faced by the organisation. The report discusses the strategic alternatives for the organisation using Ansoff’s matrix. Lastly, the report recommends strategic options for the organisations based on the analysis.

“Qantas Airways limited” is the largest Australian based airlines dominating the country’s domestic market with 65% market share. Founded in 1920, it is the third oldest airline in the world. Qantas refers to aerial services in “Queensland and Northern territory” (Lucarelli 2014). The major aviation hub of the company is Sydney from which the airlines operates out and connects to all the major airports across the world. The airlines offers range of services to its international and domestic passengers. The mission statement of Qantas is to accomplish the goal of being the leader in the airline industry. To achieve its corporate mission the airlines employs all types of business strategies such as cost differentiation or leadership that are different from other airlines (Mules 2013).  

The Qantas problem statement is- with the increasing cost the competition in airline industry is also high. It may in turn push the customers to seek alternate options which may severely impact its business. For example, Singapore Airlines and Qatar Airways cover more routes at a lesser cost. Therefore, the business must become more profitable, efficient, and competitive in the domestic market (Lucarelli 2014).

Political- the possibility of being hijacked is negatively affecting the business after the hijack of Malaysian airlines (De et al. 2014). The restrictions imposed on capital ownership may negatively impact the investors and the working policies. Due to internationally favourable trading policies Qantas can break trade barriers by following bilateral, multilateral, and regional trade policies (Jayasuriya and Cannon 2015).

Economic- In order to increase the fuel buying powers Qantas has to employ non-monetary method as there is a fluctuation in oil prices. It needs airlines to buy large quantities of fuel by creating contractual agreements with oil suppliers. Low rate of employment in Australia is increasing the burden of cost of recruiting people from overseas. The Global Financial Crisis is the major crippling factor of economy (Zuidberg 2014).

PESTEL-analysis of macro-environment

Social- Due to operations of committed pressure groups in Australia, Qantas have to deal with “corporate social responsibility” factors with great effort. Qantas can tap new customers by exploiting social media. Australians have high purchasing power parity which is currently not favoured by Qantas (Mizrachi and Sellitto 2015).

Environment- Emissions from the aircraft significantly damage the atmosphere. It leads to air and noise pollution.  

Technological- Technological With the help of e-commerce it is far easier to reach the customers with services like ticketless travel. It has improved the communication system with the customers (Mizrachi and Sellitto 2015)

Legal factors– Negative impact on the aviation industry due to carbon tax. Therefore, travellers need to pay extra in tickets to offset costs. Further, unfair advantage due to government subsidies that are lower than the market conditions influence airlines negatively (Van Zeben 2015).

The three main elements of micro-environment are-

Competitors- Intensity of competition in airlines has been rising due to acquisitions, mergers and subsidiaries. British Airways and Singapore Airlines are threatening the market share of Qantas by providing high customers service at low price (Belobaba et al. 2015).

Customers- Customers tend to opt for same services that are of high quality and are cheap. With the advancement in technology, customers tend to compare the services of different airlines using Sky Scanner. Since they have low switching cost they have high power to bargain.

Suppliers- The main suppliers of Qantas that is Airbus and Boeing have less influence on fuel price. Since Qantas is highly dependent on the oil prices to maintain its profit margins, it is increasing the bargaining power of the limited suppliers (Lucarelli 2014).

Strengths	Weaknesses	Opportunities	Threats
Adoption of new technology is attracting the customers for example use of “Mobile Check-in service” for 2D barcode image which in turn sends notification to the customer’s mobile; good connectivity across the world; Best operational facilities in the class; High brand value recognition	Disputes with major union in Australia; Increased operational cost Inappropriate management after merging with British airways Only 13 internatuioanl flights Qantas recruits overseas human resources for its engineering and the maintenance department but does not provide adequate training and development programs. Therefore, they may, lack required knowledge and qualification to maintain aircraft; damage the brand image and customer loyalty; Engineers strike for holidays which can affect the company’s “safety first” strategy.	Can operate into more inland domestic and international routes; Increase travels by exploiting social media and offer loyalty bonus to its customers When competition is huge it can increase its Jet star operations (low cost airline of Qantas)	Current situation may be effected due to changes in Fuel prices, fluctuating political situation, environmental problems, economic crisis and deregulation. Rise in cost may affect the passenger’s frequency of travel by aeroplane which may affect the business revenue. Deregulation may push Qantas to focus on low cost rather than safety and services.

(Source: Lucarelli 2014)

Based on the analysis the threats commonly effecting Qantas includes low cost airlines, fuel cost, employment crisis, and alternative transportations. The suppliers do not have much control over the fuel prices. As operators are highly competing with each other in terms of price there is an intense increase in rivalry. Since there are many alternatives of transportation such as bus and car there is an increasing number of substitutes although not very effective. It is in turn increasing the buying power of the customers. The competitors are following the foots steps of Qantas in employing its two brand strategy that is establishing its “low cost Jester”. It helps to gain competitive advantage in the market. Therefore, Qantas must adopt alternate strategies to sideline the competition in the market.

Analysis of micro-environment

For developing its growth strategies, Qantas can adopt a tool such as Ansoff’s product/market expansion grid. Ansoff’s matrix provides strategic alternatives for accomplishing the organisational objectives.  The four main areas of Ansoff’s matrix are-

Market Penetration

As the existing products of the Qantas airlines are marketed to its present customers, the company can increase its revenue by repositioning its brand, promoting the product and so on. The company however, do not seek any new customers as the product is not altered (Lucarelli 2014).

Market Development

The company cannot develop its market without marketing the existing products in the new region. The same products when marketed to the new audience it leads to market development (Gegg et al. 2014).

Product Development

Quanta’s existing customers requires new products. Therefore, the organisation must replace the existing products with the new and innovative ones such as high speed Wi-Fi connectivity and Smartphone support in cabin. When the existing models of the products are updated at cheaper price than its competitors and marketed it leads to the product development. It can focus more on economy class rather than first class (Jayasuriya and Cannon 2015).

Diversification

Diversification is achieved when new products are marketed to the new customers. Qantas can achieve related diversification by introducing new products in the familiar market for maintaining profit margin example low and premium fares, short and long haul, business and leisure or investment in rail business (Mules 2013).

There is need of installing modern devices such that aircraft produces less pollution. To increase the productivity Qantas must use advance technology in remodelling its aircraft. Increased use of IT ensures higher operational efficiency (Wallace and Omachar 2016). Qantas may employ lucrative and low pricing strategy (Zuidberg 2014). It must increase the international routes to overcome competition with Singapore airlines and Qatar airlines. Qantas must capture new markets as there is increasing number of immigrants. It must increase the training and development programs for creating highly competent workforce and recruit best engineering that can fulfil the customer’s satisfaction and preserve the company’s objectives. Therefore, it needs to invest huge money for which it needs to maintain stable financial situation both in present and the future. Another way to make the passengers happy is through alliance (He and Balmer 2017). Qantas must collaborate with both domestic and international companies for example popular hotels. It must employ strategic schedule planning to prevent delays (Wu 2016).  De-regulation being one of the potential fallout adopting a corporate level strategy will be the long term approach that can focus on cost reduction. It must employ a business level strategy that focuses on need for “differentiation” and greater sharing of the wallet schemes. It is the only way it can respond to the external environment and succeed (Wensveen 2016).

Conclusion

Qantas Airways Limited has successful business strategies. It has strong brand reputation in the global due to its customer friendly services and advance technology, and emphasise on “customer safety first”. It also applies its core competencies to address customer needs   However, it needs to focus on its weaknesses to overcome domestic and international competition. It needs to adopt strategic options to improve its market share, brand loyalty and high quality standards to accomplish its mission objectives. 

References

Belobaba, P., Odoni, A. and Barnhart, C., 2015. The global airline industry. John Wiley & Sons.

De Fu, S.C., Tse, P.P., Mathivanan, G. and Chaidaroon, S.S., 2014. Caught in The Air: Suspension of Tiger Airways Domestic Flights in Australia & Implications for Stakeholder Management. NIDA Case Research Journal, 6(2), pp.129-140.

Gegg, P., Budd, L. and Ison, S., 2014. The market development of aviation biofuel: Drivers and constraints. Journal of Air Transport Management, 39, pp.34-40.

He, H.W. and Balmer, J.M., 2017. Alliance Brands: Building Corporate Brands through Strategic Alliances?. In Advances in Corporate Branding (pp. 72-90). Palgrave Macmillan UK.

Jayasuriya, K. and Cannon, D., 2015. State transformation and resource politics: Australia and the regional political economy. The Pacific Review, 28(3), pp.391-410.

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

Mizrachi, I. and Sellitto, C., 2015. Building a Facebook Strategy: Some Insights From Australian Accommodation Small Tourism Enterprises (STEs). Journal of Quality Assurance in Hospitality & Tourism, 16(1), pp.63-79.

Mules, R., 2013. The long haul: The QANTAS-Emirates Alliance. Busidate, 21(3), p.2.

Van Zeben, J.A., 2015. Implementation Challenges for Emission Trading Schemes: The Role of Litigation. 2016), Research Handbook on Emissions Trading, Environmental Law Series, Cheltenham: Edward Elgar.

Wallace, A. and Omachar, A.E., 2016. Effects of Green Procurement Practices on Operational Efficiency at Kenya Airways Limited, Kenya. Imperial Journal of Interdisciplinary Research, 2(7).

Wensveen, J.G., 2016. Air transportation: A management perspective. Routledge.

Wu, C.L., 2016. Airline operations and delay management: insights from airline economics, networks and strategic schedule planning. Routledge.

Zuidberg, J., 2014. Identifying airline cost economies: An econometric analysis of the factors affecting aircraft operating costs. Journal of Air Transport Management, 40, pp.86-95.