Strategies For Multinational Enterprise Leadership In Challenging Macro-Environmental Environments

Webjet’s Origins and Business Transformations

For the purpose of understanding the different aspects of the business of Webjet and the different kinds of macro-environmental factors influencing the business, John Guscic who is the Group’s Managing Director of Webjet has been interviewed. In this interview various kinds of macro-economic factors, their impact and the various strategies being adopted to mitigate the impact have been discussed.

1.Webjet had come into existence by the efforts of former Jetset Travel Chief Executive Mr David Clarke along with the help of Mr Allan Nahum and Mr John Lemish, in the year 1998. Since then the company went through a series of activities, which helped in transforming the company in many ways. It got publicly listed in the ASX in the year 2000 (Webjet.com.au, 2018). In the year 2010, it had launched its operations in the United Kingdom in the year 2008 and in the United States in the year 2010 (Webjet.com.au, 2018). In the year 2015, Webjet had started accepting Bitcoin for holiday package bookings. The company had showed great interest in venturing into car rentals and cruise industry. Through all these activities, the company has been able to become one of the fastest growing travel booking companies in the Australian market, which has successfully entered and expanded its international arena as well.

2.Being one of the fastest growing digital travel businesses to have ever come out of the Australian subcontinent, has led to growth of the company. Being actively engaged in the business of travelling, flights and its inline growth prospects have led to its unprecedented rate of success. Increased level of competition both in the Australian as well as in the international market are some of the most influencing factors (Chen & Wu, 2013). The increasing and changing demands of the customers across the globe in the sector has led us to think about our policies and administration (Afr.com, 2018). The new and changing customer’s preferences have led us to be at our feet at all times. The changing preferences of young customers and switch to newer competitors such as Trip Advisor have been problematic. Moreover, a host of other factors have a deep influence on our way of working and our policies. Rising fuel prices across the international arena, increased competition from both the major players in the industry as well as from the newer ones, have created a lot of pressure on us (Winchester et al, 2013). Along with this, some of the other factors which have led to serious problems for us is the activities and demands of the labour unions, increasing economic activities such as fuel prices and international trade wars and political tensions are some of the other factors which have also affected our way of operations and working.

3.We at Webjet, have a strong reputation of assuring its customers, quality services in case of arranging of tickets, hotels and airline flight services. In recent times, there have been some issues with regards to the prices of the supply of raw materials. We have been facing the problem of increasing prices of the raw materials. As a result of which we are compelled to increase our profit margin, and thus in this way, it is increasing our selling prices (Jankovi?, Mihajlovi? & Cvetkovi?, 2016). This is creating a serious impact on the overall profitability of the company.

Influencing Factors on Webjet’s Policies and Working

4.It is true that increasing fuel prices have led to significant amount of impact on the performance of various companies around the world. From car makers to aeroplane companies, travel based companies have also been affected. The International Air Transportation Association has estimated the prices of the oil prices would further increase above the $80 per barrel mark (Burbait?, 2018). It has made the alarm bells ringing in our organisation. This has caused us many types of problems, most notable it has raised our cost of operations and has led to the decline of the profit of our company. The rising fuel prices have led our flight partners to increase their costs, which has directly impacted our profitability. In such scenarios, we are bound to increase our ticket prices for the flight cases. If I look at the overall picture, the problem has seriously affected the revenue from one of the most important markets of the company in the form of the flight tickets.

5.Indeed travelling does form a significant part of our business. In our company, the travelling of the customers from one place to the other is a major problem which is affected by the politics happening in the international as well as on the national level. In the case of heated political events taking place in any country, or any kind of trade wars, which takes place between nations, we do face the ire of all these events. The company sees a dip in the number of customers, from visiting the countries where such kind of events take place. This leads to serious repercussions in the profits of the company (Chitnis et al, 2013). Moreover, the risks of any kind of awkward incidents taking place in such kind of areas to our customers, also increases, and in extreme cases, these could lead to earning a bad name to the company. In such cases, the company has to deal with the dual blows of decreasing profitability and untoward incidents.

In some cases, granting of economic sanctions against any nation, also brings us a host lot of problems. It can lead prevent us from carrying out any kind of trade with that country, if in such cases, some of our suppliers belong to that country, then we have to bear the brunt of these political policies.

6.There are other problems which have plagued us in the past and have increased our problems in recent times too. One of these problems is the rising labour costs. The increasing pressure of trade unions have affected us.  Rising pay levels especially the increasing demand for $15 per hour have seriously affected us. The increasing pressure of Chinese workers and the labour laws prevalent in there, have affected us (Chan, Pun & Selden, 2013). On the international stage, the increasing isolation of the American economy has seriously affected our sales in the region (He et al, 2015). The interests rates of loans which are being increased by the government along with the incessant volatility in the international market with respect to the foreign currencies have also negatively affected us, in our overall sales figures.

Impact of Raw Material Supply and Quality

7.The impact of some of these activities cannot be controlled, which are beyond our control. Some of these factors are international events such as rising oil prices, economic crisis, isolation of countries, trade wars between nations. In case of such factors, we know that they are completely beyond our control. On the other hand, in case of those factors, which are beyond our control, we have tried to devise some of the ways, through which the impact of these can be minimised.

In the case of rising prices of the supplying nations, we generally conduct a thorough survey of the other supplying nations and suppliers, from where we could get our raw materials at a cheaper rate, thus protecting our profit margins and productivity. Similarly in the case of the rising labour costs and the union pressures, we also look for viable options through which quality supply of labours can be received at a cheaper rate. Although we carefully choose the quality of labourers in this case, so that our quality of work is not compromised. The company has also turned its focus on the new kind of technologies for opening up new cash outlets and stop being dependent on the traditional travelling commission income. The company has also taken up the mantle of safeguarding the environment, by increasing its activities under the head of corporate social responsibilities. Through this, the company receives various kinds of benefits from the government and remains in the good books of the government and it also occupies a good image in the minds of its customers. Such kind of image is very necessary is very important as we are mainly part of the service industry, where the importance of the image of any company in the minds of its customers is very important. We are working in a variety of other ways, whereby we could reduce the impact of such external factors, from severely affecting the working of our company.

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