Qantas Airways, is the Australian national flag carrier and the biggest airline in Australia in terms of fleet size and destinations. It also has the largest international flights and the third oldest flight in the world after Avianca and KLM. It was founded in 1920 although its passenger flights for international destinations started later in May 1935 (An, 2014). Its nicknamed the fling Kangaroo a name coined due to its nationality in Australia. Its main hub is Sydney Airport and has a majority command in domestic flights at 65%. It carried a total of 14.9% of all the total passengers flying out of Australia. It has various subsidiaries including Jet connect and Qantas Link. It is also big in New Zealand and also has a low cost low budget airline by the name Jetstar airways. Jetstar airlines operated both in domestic and international destinations especially in New Zealand (Akbar and Stark, 2013).
This is a tool for analyzing competition within the organization. It aims at looking for industry attractiveness, profitability, competitiveness and general market intensity. The forces include
For an aeroplane industry that requires a lot of capital only big organizations can make an entry in the business. The following factors are inhibitors to market entry, and upon entry makes it hard for componies to exit.
With all this factors, it is difficult to make an entry and also to make an exit.
With differentiated subsitutes, the entry is hard hard. Differentiated subsitutes in airlines industry ensures that Qantas uses both low cost and high cost products for differentiation. Different airlines in Australia have different subsitutes for their products. The factors that affect differentiation include;
This depends on the market outputs. In airline industry, there is no bargaining power as prices are set based on profitability, competition, cost and customer demands. The company factors that affect the bargaining power of customers include; purchasing power of the population of Australia, Rising prices at traditional resorts, competition from western air carriers and seasonality of demand(Damodaran, 2016).
It is also known as market inputs. Suppliers of services, labor and expertise are a source of power when there are few subsititites. This is why the prices are relatively high due to few competitors in the airline industry.
The intensity of industry competitiveness is a major determinant of the competitive nature of the aeroplane industry. Having an understanding of rivals within the aeroplane industryis vital in marketing strategy for Qantas products(DeFusco, et al, 2015).. Positioning distinguishes competitors and their respective products. Pricing and marketing strategies is important in business productivity.
This is the strength, weaknesses, opportunities and threats in the industry that Qantas has to factor in its marketing strategy.
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Strengths · Increased propensity to fly · Highly trained airline staff · High number of fleet the biggest in Australia · Ability to segment the market inorder to have different pricing and servicing decisions. |
Weaknesses · Huge capital oulay required · Difficulty in making changes and due to staffing commitments · Large workforces in different geographical locations requiring close monitoring. |
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Opportunities · Continental expansion in both leisure and business destinations · Technological innovations ensuring reduction in costs · Customer friendly services · Technological innovations leading to increased revenues |
Threats · High levels of competitions from domestic and international airlines · High prices of fuel · A plague of terrorist attacks affecting the general airline industry · High taxes and stringent government regulations. |
c) Corporate strategy used by Qantas since 1992 to serve both its domestic and international markets
Although some scholars share these terms, each of them has to do with the same general concept. J. Harrison and his colleagues (Harrison et al., 1995) point out that “the strategy makes it possible to clarify the mission, establish clear long-term goals of the organization and formulate understandable integrated steps aimed at achieving them.”
Why should organizations be engaged in planning?
— Clarification of intentions. If the organization is striving to expand the chances of success, it must clearly represent the direction of its development, be guided by clear objectives and priorities.
-Correcting intentions. The organization must coordinate the movement of all its units or departments in the same direction to the same system of goals. A well-defined strategy, including the definition of common values, contributes to the formation of a corporate approach (the term corporate strategy is also used). However, the organization’s strategy is not self-sufficient. Successful implementation of plans implies an effective communication system and a high degree of participation in the activities of the organization of all its members (Deo, and Sethi, 2016).
Participation in the implementation of intentions. Even clearly articulated and brought to the attention of each member of the organization, the strategy does not stand a chance of implementation if the employees do not share its provisions. Management needs to assess whether the organization has the financial, labor and other resources to implement the plans.
— Creation of a structure for making operational decisions. Although the strategy is aimed at long-term business development, it defines the actions of the organization in the short term. In the event that the main concepts or master plans are not a guide to direct action and a basis for monitoring development, they do not make sense.
So, if the strategy forms the context for making everyday decisions, what are the “strategic” decisions? If the strategy deals with the “direction or scale of the organization in the long run”, the following questions arise. Should the organization concentrate its efforts on one type of activity or on several? How useful are operations in several markets, as is the case with multinational conglomerates. Where should the boundaries of the organization lie. On the contrary, everyday, or “operational” solutions are focused primarily on actions that are routine in nature and affect not the organization as a whole, but its part or units. Operational decisions are important, but they do not go beyond the context of the overall strategy.
The competitiveness of an airline today is largely determined by its ability to adapt to the conditions of a market economy and make the management mechanism as efficient as possible. Analyzing the activities of the world’s leading airlines, it can be noted that the most successful of them have one common aspect – a developed corporate culture(DeFusco, et al, 2015).. Their leaders have long realized that success in the market is the result of joint efforts of the entire staff of the organization. Caring for people, the atmosphere of trust and openness, creating conditions for the disclosure of talents are integral parts of a corporate culture that can bring tangible financial results. The foregoing is fully applicable to Australian air transport enterprises, for which the following features are characteristic:
– About 30% of airlines are on the verge of bankruptcy, which creates a complex psychological climate and conflict situations in the team against the background of a lack of adequate skills in personnel management;
There are two accounting principles that will be closely watched by the industry auditors and accountants. They include;
Assets and liabilities in the industry are quite high. The principle of full disclosure in the aviation industry is due to the massive assets and liabilities involved in the industry. It runs into billions of dollars and is used to make a successful company.
This is the principle that shows that a company is expected to continues in business over the foreseeable future. Going cocern principle shows that the company is still healthy in terms of its revenues, cost principles, assets, liabilities and equity.
Increased competition due to the entry of other market participants into global alliances, m & a transactions, the weakening of legislation on foreign carriers (earlier only Australian airlines could be present on the Australian market) (Awate, et al, 2015)
In 2013, the net profit of the Qantas Group was A$ 7,334.7 billion. During the same year, Qantas itself transported 20.9 million passengers, and taking into account all the airlines of the Qantas Group, it was 31.4 million. In 2014, according to the aeronautical consulting company Skytrax, Qantas was recognized for the third time as the best airline in Eastern Europe.
Currently, the company has developed a provision on corporate information policy in Qantas. The Regulation on the Corporate Information Policy is a regulatory document that establishes the priorities and standards of the company’s information activities in relation to its target audiences, determines the list of information disclosed, the channels and the timing of its dissemination. The regulation covers such issues as the goals and principles of corporate information policy, interaction with target audiences, communication management, rules for providing information (Healy and Serafeim, 2015). The Regulation determines the list of publicly available documents and information to be disclosed to all interested parties, regardless of the purpose of their receipt; documents, information (materials) to be provided to shareholders and their representatives; as well as the methods and terms for their disclosure and provision. Based on the Regulations, the Company’s communication strategy is formed in accordance with the Strategic Development Concept approved by the Board of Directors of Qantas (Madsen, and Walker, 2015).
The financial report for Qantas in 2013 reprted that the company had spent $ 1.3 billion in its customer product and fleet during the year. Six new unencumbered aircraft were added to the fleet. The year 2013 severely undermined Australian aviation, after which many companies could not recover, aviation fuel remains expensive. High prices for aviation fuel. Qantas can hedge only 15% of the fuel bought abroad. Due to the development of the NTP, the model of aircraft that Qantas uses is becoming obsolete. A renewal of the park is quite a costly and lengthy process. There are currency risks of exchange rate fluctuations (may affect the price of purchased fuel and dividends on shares (Easton, et al,2018)
The system of forecasting and planning deals with a number of departments. Their powers include the duties of overseeing competing firms, providing information on the latest innovations and innovations, on planned bills, on financial changes on exchanges, on suppliers, on identifying errors with their subsequent elimination (Easton,et al,2018).
One of the merits of Qantas is its captious attitude to any inconsistencies. Every omission, hindrance, defect is immediately checked by the Quality Improvement Department (Damodaran, 2016). This is a big expense, but thanks to these developments, Qantas has the name of a safe carrier.
The position is based on the fact that the Company is an open joint stock company and conducts its business in Australia and abroad. It takes into account the requirements of Australian and international legislation (McNichols, and Stubben, 2015).
g) Conclusions and recommendations.
Therefore, the key factors that pose a threat to Qantas current strategy are factors related to the risks of deterioration in the economic situation, government regulation of the industry, a rise in the cost of aviation fuel, and a loss of opportunities for expanding the route network(Trugman, 2016).. The main problem that exerts a comprehensive influence on activity of the airline, is a high debt load. During the SWOT-analysis a number of strategies aimed at eliminating external threats airlines, as well as to eliminate its weaknesses. Priority strategies, in my opinion, are:
References
An, N.L.T., 2014. Business analysis and valuation: Case of Thanh Cong-Textile Garment-investment-trading joint stock company (Hose: TCM) (Doctoral dissertation, International University HCMC, Vietnam).
Akbar, S. and Stark, A.W., 2003. Deflators, net shareholder cash flows, dividends, capital contributions and estimated models of corporate valuation. Journal of Business Finance & Accounting, 30(9?10), pp.1211-1233.
Awate, S., Larsen, M.M. and Mudambi, R., 2015. Accessing vs sourcing knowledge: A comparative study of R&D internationalization between emerging and advanced economy firms. Journal of International Business Studies, 46(1), pp.63-86.
Damodaran, A., 2016. Damodaran on valuation: security analysis for investment and corporate finance (Vol. 324). John Wiley & Sons.
DeFusco, R.A., McLeavey, D.W., Pinto, J.E., Anson, M.J. and Runkle, D.E., 2015. Quantitative investment analysis. John Wiley & Sons.
Deo, P. and Sethi, D., 2016. Financial Planning-A Shareholder Perspective.
Easton, P.D., McAnally, M.L., Sommers, G.A. and Zhang, X.J., 2018. Financial statement analysis & valuation. Cambridge Business Publishers.
Healy, P.M. and Serafeim, G., 2015. An analysis of firms’ self-reported anticorruption efforts. The Accounting Review, 91(2), pp.489-511.
Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
McNichols, M.F. and Stubben, S.R., 2015. The effect of target-firm accounting quality on valuation in acquisitions. Review of Accounting Studies, 20(1), pp.110-140.
Trugman, 2016. Understanding business valuation: A practical guide to valuing small to medium sized businesses. John Wiley & Sons.
Wahlen, J., Baginski, S. and Bradshaw, M., 2014. Financial reporting, financial statement analysis and valuation. Nelson Education.
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