Category: Qantas Airways

Executive Summary

This study recommends that Qantas outsource its heavy machinery services to Asia in order to reduce the companys costs of operations. Also key in the success of the company is a focus on the development of the companys strategies around four major areas of competency which are attraction of new customers, management of company fleet of planes, management of employees and management of finances. These findings have been developed through a comprehensive analysis of Qantass core business strengths and competencies together with an analysis of the Australian aviation industry.

Preliminary findings identified that Qantas is heavily reliant on the development of the Australian economy as well as an increase of passenger demand. Additionally, the companys performance is greatly boosted by the fact that it has developed good bilateral relationships with other leading airline market leaders. These competencies together with upcoming new opportunities in the aviation industry are set to see the company post increased growth and revenue. However, as this progress is expected, the company is bound to experience a number of legal and union barriers. These factors are further discussed in detail.

Qantas Business Strategy and Corporate Mission

Launched in 1920 as Queensland, Australias Qantas undertakes both local and international flights across the globe. The company boasts of being among the largest global airlines in the world; propelled by its prudent strategies as well as an upheaval of its mission statement of being the leading provider of global transport and logistic services in Australia and the world at large (Martin, 1997, p. 53).

Qantas reports that the industry has just come out of an all time low in financial performance, although the aviation industry still remains challenged in light of increasing competition and volatility. With regards to these developments, the companys latest annual report maintains its two-airline strategy to counter the industrys unpredictable nature. Qantas is of the opinion that this strategy provides some sense of flexibility where it can ride through the different economic cycles of the aviation industry and leverage the various cycles existent in the market.

In addition, the company upholds the opinion that the two-airline strategy will help it maintain a robust business strategy in coming years. The two-airline strategy incorporates the low fare Jetstar and the full service Qantas which the company hopes to sustain in the long run (with regards to the stiff competition that is characteristic of the aviation industry) (Business Day, 2010).

The main goal of creating jetstar was to provide the lowest costs airline in the world. This strategy was expected to sustain growth in the coming few years and live to be a positive and energetic brand as the companys corporate mission demanded of it. This strategy has been tried out in 2010 through the adoption of the iPad as an in-flight entertainment system. This was only unique to the airline because no other company had undertaken such an initiative (Business Day, 2010).

Plans are still underway to improve this corporate strategy with fifty recent purchases of Boeing 787 to effectively rejuvenate the two brands. The first batch was expected on June 2010. Fifteen of the new planes will be allocated to the Jetstar brand while the A330-200s will be reallocated to the Qantas brand and the B767-300s will be eliminated from normal operations (Business Day, 2010).

Elimination of old planes brings us to another of Qantass core business strategies which is cost cutting and grounding of old airplanes. In this regard, the company has had a good record of diligence and discipline in minimizing its costs over the past few quarters. For instance, in the last quarter, revenues fell by close to 13.4% but the costs were equally slashed by approximately 16.2% (Business Day, 2010).

This measure has enabled the company realize minimal costs as compared to previous years but it has also been supplemented by suspension of flights to unpopular routes. This strategy has enabled the company experience full flights even in light of the recent recession; though its low fares have also been identified to enhance the same (Nigam, 2010).

Industry Structure

Key success factors for the Australian aviation industry and indeed the world have had a positive impact on Qantas. Through a comprehensive strategic analysis of Qantas, the key success factors for the Australian industry have always been the analytical tools for the aviation industry in which the company operates. Considering Qantas majorly relies on the Australian market for its primary customers, this industry analysis is essentially inspired by the tremendous progress the Australian aviation industry has had over the past few years.

The Australian aviation industry has largely endured the motions of the recent financial crisis better than most aviation markets did. While other aviation industries recorded a significant drop in passenger and cargo services, the Australian aviation industry grew. Of the total domestic and international passenger volumes, the Australian passenger volume increased by 1.4% in the year 2009 when the world was experiencing a decrease in passenger volumes. For instance, America recorded a drop of 5.2%; United Kingdom (UK) recorded a drop of 7.2% while Spain recorded the highest drop of 8.1% while other major aviation markets like Germany posted even lower drops (Australian Government, 2010).

The Australian aviation industry has therefore been supported by increasing volumes in passenger services both domestically and internationally. However, the input of the Australian government cannot go unmentioned because through government initiatives, many Australians have been able to travel within and out of the continent for both business and leisure purposes. This was majorly undertaken through a governments stimulus package that saw many Australians keep their jobs and become very confident about travelling (Australian Government, 2010).

Finally, the productivity of the Australian aviation industry has been largely supported by the growth of the Australian economy. Considering Australia is located in one of the most isolated continents in the world, the economy has been largely dependent on the aviation industry. Increasing economic performance, especially compared to other developed economies has therefore increased the demand for Aviation services and consequently led to the increase in demand for Qantass services.

SWOT Analysis

Qantas SWOT analysis describes the factors influencing the companys performance and also justifies its business strategies to date. The companys growth and future sustainability is also largely dictated by the SWOT analysis.

Strengths

As the Australian aviation industry witnessed an increase in profit margins, Qantas has also seen a significant increase in profit margins. Also key to its success strategy has been the companys range of subsidiary businesses. This diversity has enabled the company achieve considerable gains from different business portfolios like catering, luggage handling, and engineering sectors (Plunkett, 2009). This has effectively enabled the company manage its supplier obligations and also effectively control the maintenance costs in the long run.

Qantas is also in partnership with other similar companies namely: the American, British, Canadian and Cathay airlines to form the One World Alliance which has effectively enabled the company manage its non-core business activities. Such activities include the ticketing service; advertising and maintenance procedures which have also enabled the company reduce its cost margin as well as cut down costs in certain functional areas such as ticket pricing. In addition, the company has also been able to effectively connect its passengers with different flights while on transit.

The final business strength is the companys good record of resource management as Australias number one airline company. It subsidiary business entities have also provided supplementary services to the companys main business ventures (Hierling, 2007, p. 16).

Weaknesses

One of the companys core weaknesses lies in the fact that the company has a poor reliability record especially with regard to safety concerns. For instance, in the period 2008/09 the company had various safety incidents with some of its planes. Although nothing happened, these occurrences greatly dented the companys image and left a lot to be desired with regard to their safety policies and procedures (Hierling, 2007, pp. 16-17). The company has also experienced one of the worst strikes in the airline industry in 2009. This almost brought the company to a near standstill because operations were uncoordinated by striking workers even though the protest was not sanctioned by their trade unions. The companys operations were therefore marred by major delays even affecting the operations of other companies.

Opportunities

One of the companys major opportunities lies in the open skies policy. With the Implementation of this policy, the company is set to enjoy a liberalization of the industry in light of current stringent rules and immense government legislation. Other benefits the company is set to enjoy include a liberalization of the competitive landscape, market driven pricing, equal playing opportunities for all competitors and the freedom to undertake cooperative marketing agreements with other like-minded companies.

Threats

As regards the companys threats, Virgin Blue poses a lot competition especially with regards to market share because it is the only strong competitor in the Australian aviation market (Hierling, 2007, p. 16). This SWOT analysis can be further summarized as follows:

SWOT Analysis

Core Competencies and Competitive Advantages

Qantas has a number of core competencies that have elevated it to be a world-class market leader. First, the company enjoys some form of monopoly of the Australian aviation industry and is therefore immensely knowledgeable on how the Australian aviation market operates. This fact has even made it a highly sought target for partnership agreements with similar airline companies like British Airways and Deccan in India as a strategy for penetration into the Australian market. Secondly, Qantas enjoys sound bilateral relationships with other world leading airlines in the One World Alliance that enabled it achieve a world-class stature (Hussey, 1998, p. 375).

Strategy Recommendations

One of the most viable options for Qantas is to outsource its heavy maintenance services to Asia. Asia is a good destination because as compared to other outsourcing destinations, it is relatively cheap. Moreover, it is in close proximity to Australia. This should especially be done with regards to its long haul fleet of airplanes. This strategy is bound to increase the level of specialization and improve efficiency in the organization because specialized maintenance functions will be undertaken by a specialized company in Asia. In the same regard, the company can also reduce its operational costs because it will not be required to undertake the same services locally (Clark, 2007, p. 208). This will mean a reduction in staff and maintenance costs which are usually expensive in the long run.

The companys strategy should also seize to be general or specific on only a few functional areas. Studies have affirmed that the airline industry is supported by the pillars of customer attraction, finance management, fleet management, and human resource management which need to be supported by all airline companies that want to withstand the highly competitive nature of the aviation industry (McCabe, 2010).

Thus, the success of Qantas will lie on the companys strategy to attract many customers, how it will manage its fleet, how it will manage its people and how it will manage its finances. However, with regards to attracting its customers, Qantas has been able to sustain low prices even in light of increasing costs of operations although more still needs to be done with regards to management of the other three core areas. However, this does not mean that it will be smooth sailing all the way after adoption of these strategies because a number of hurdles still lie on the way.

Potential Fallout

Outsourcing a majority of the companys maintenance services may probably cause a number of job losses. The rough approximation is about 2500 jobs (Rochfort, 2006). Most of this impact will be felt in Australia because approximately 90% of the companys workforce is based in the locality (Rochfort, 2006). In addition, there a number of legal barriers expected to be advanced by the Australian Licensed Engineers Association which is likely to surface in protection of Engineers rights if the company seeks to outsource its services.

The Qantas sales act is the major legal barrier to this kind of strategy because its enactment preceded Qantass privatization in 1995. The act stipulates that of the facilities, taken in aggregate, which are used by Qantas in the provision of scheduled international air transport services (for example, facilities for the maintenance and housing of aircraft, catering flight operations, training and administration), the facilities located in Australia, when compared with those located in any other country, must represent the principal operational centre for Qantas (Rochfort, 2006).

Qantass management is therefore expected to prove that it is not in breach of the law as its tries to strike out a balance between caring for the needs of its employees and stakeholders while also ensuring the companys prospects for growth is on course. The sales act therefore needs to be reevaluated with regard to the companys rights in legal foreign ownership. Without any legal amendments to the act, existing legislation is likely to limit Qantass access to capital. A lot of union activity should also be expected if the company intends to pursue this strategy (Rochfort, 2006).

References

Australian Government. (2010). Opening Address To Airservices 2010 Waypoint Conference. Web.

Business Day, (2010). Qantas Affirms Its Two-Airline Strategy. Retrieved from: https://www.smh.com.au/business/qantas-affirms-its-twoairline-strategy-20100903-14t4o.html

Clark, P. (2007). Buying The Big Jets: Fleet Planning For Airlines. London; Ashgate Publishing, Ltd.

Hierling, M. (2007). The Australian Airline Industry and the Case of OzJet  A Strategic Analysis Report: Case Study about OzJet and the Airline Industry in Australia. Sydney: GRIN Verlag.

Hussey, D. (1998). Strategic Management: From Theory To Implementation. London: Butterworth-Heinemann.

Martin, S. (1997). The Impact Of Privatisation: Ownership And Corporate Performance In The UK. London: Routledge.

McCabe, R. (2010). The Ability For Airlines To Succeed Today Is Measured According To Several Key Success Factors. Retrieved from: https://gbr.pepperdine.edu/2010/08/airline-industry-key-success-factors/

Nigam, S. (2010). Australias Qantas Airways  The Worlds Most Agile Airline Brand? Retrieved from: http://simpliflying.com/2010/australias-qantas-airways-the-worlds-most-agile-airline-brand/

Plunkett, J. W. (2009). Plunketts Transportation, Supply Chain and Logistics Industry Almanac 2009 (E-Book): Transportation, Supply Chain and Logistics Industry Market Research, Statistics, Trends and Leading Companies. New York: Plunkett Research, Ltd.

Rochfort, S. (2006). Legal Barrier To Qantas Strategy. Retrieved from: https://www.smh.com.au/business/legal-barrier-to-qantas-strategy-20060220-gdn034.html

How We Will Act Responsibly

As an airline company, we have the responsibility to act in a manner that will reduce the degradation of environment by ensuring that our operations have the minimum negative effects to the environment.

The first thing that the company must ensure is that all its fleet uses the latest technology in the aviation industry such that carbon emission from the fleet of airlines is reduced. This way, the company will have offered its contributions to the greenhouse effects management menace.

Carbon Footprint Response

As noted by Urip (2010) all companies that deal with transportation have a responsibility to reduce the amount of carbon released to the atmosphere. Qantas airline has invested on the technological path to reduce carbon emissions. The airline seeks to use aircrafts whose engines are of the latest technology to reduce carbon emissions to the atmosphere.

The second strategy utilized by the organization is the use of fuel efficient aircrafts. When an aircraft burns less fuel for specified miles, it means that its contribution to the effects to the atmosphere are limited which makes the aircraft to be environmentally friendly.

Qantas airline on its part has embarked on an elaborate effort to ensure that all of its fleets are fuel efficient to ensure that it does not contribute too much carbon to the atmosphere.

Another strategy that has been employed by Qantas in its bid to manage its carbon foot print is the use of carbon offsetting programs (Qantas Airline 2010). These are programs that are designed to allow individual responsibility of business and persons who use their services.

Carbon offsetting services that are put forth by the airline allow it to charge a premium amount to customers who are willing to reduce their carbon footprints. This extra charge, however, is voluntary in nature.

However, the system has contributed heavily towards making the firm proves its ethical responsibility to the society where by the extra charges charged to the clients who accept the carbon offsetting offer is toped up with some contributions from the airline and later donated to organizations that manage the control of carbon menace.

Through carbon offsetting programs and use of environmentally friendly aircrafts, Qantas airline hopes to protect the Australian environment for sustainability. The group also has adopted another environmentally friendly approach whereby it plants forests and takes care of them till their maturity.

This way, the company is sure that all the carbon produced in its course of running business is taken care of by the forests. These measures are vital approaches that shall guarantee that the firm heavily contributes to the elimination of carbon dioxide in the atmosphere (Qantas Airline, 2010).

In the airline industry, there are several measures that are being employed to control the carbon menace. As noted by Wankel and Malleck (2008) most airlines have adopted the use of online booking, ticketing and electronic receipts or flight confirmation notifications.

These are among the measures that have been put forth in the industry to caution the world against the escalating levels of carbon pollutants. A good example of this in the airline industry is the WestJet airline that has little paper work to reduce cost and environmental pollution.

Another practice that has been advocated by Holloway (2008) and Newell, and Paterson, (2010) is the use of fuel efficient jets that ensures that there are less emissions to the atmosphere and efficient use of fuels. Qantas is slowly becoming renown in this area, which is making the company to gain a competitive edge in the market.

In conclusion, it is recommendable that all airlines should embrace the use of advanced technology in jet engines to ensure that the consumption of fuel and emission of poisonous gasses is put in check.

It is also recommendable that the use of carbon offsetting programs be encouraged to ensure that travelers have an initiated and direct response to the question of carbon footprint. Airline companies such as Qantas must ensure that all the contributions from the customers in the carbon offsetting program submitted to the right organizations having been topped up with the companys contributions.

Reference List

Holloway, S., 2008. Straight and level: practical airline economics. New York: Ashgate. Print.

Newell, P. and Paterson, M., 2010. Climate Capitalism: Global Warming and the Transformation of the Global Economy. London: CUP. Print.

Qantas Airline, 2010. Qantas Response 2009 CDP7. Web.

Urip, S., 2010. CSR Strategies: Corporate Social Responsibility for a Competitive Edge in Emerging Markets. New York: John Wiley and Sons. Print.

Wankel, C., and Malleck, S., 2008. Global sustainability initiatives: new models and new approaches. New York: IAP. Print.

Qantas Airline, 2010. Carbon offset, CO2 Australia. Web.

Introduction

As suggested by Teeple, 2000 globalization is thought of as various mechanisms or processes that aim at creating and consolidating a unified world in terms of economy and culture characterized by a complex link of information sharing that is world wide.

With this concept, the world has experienced free movement of people, goods and services and capital between and among countries made possible by the advent in technology information. As a result the world has no doubt turned into a global village fashioned by interconnectedness and interdependence.

It is evident that through globalization cultures are being exported throughout the world as various societies are compelled to evolve and co-exist with the changes brought about by globalization. It is worth remembering that globalization has impact not only in terms of economy but culture, politics as well as environmentally.

All these have brought about contemporary issues when doing business in the international arena. Having in mind that businesses need to stay competitive, there is thus need to adequately and timely address the emerging contemporary issues (Swanson, 1993).

For the sake of this assignment, Qantas airlines will be used in providing insights on issues facing airline industries when doing business beyond borders. The airline was founded back in 1920 and is the flag carrier of Australia. The airline is Sydney where it has its main hub.

The airline has been deemed to be a four star airline according to Skytrax. Globally, it has been voted to be the 7^th best airline although this is a drop from previous years. It also trades in the Australian stock exchange markets. Being the second oldest airline in the world, it started going international back in 1935. Currently, the airline operates both domestic as well as international flights.

Among the international destination include; Africa (South Africa), East Asia (China and Japan), south Asia (India), southeast Asia (Indonesia, Philippines, Singapore and Thailand), Europe (Germany and UK), North America (U.S), South America (Argentina). Domestic destinations include Queensland, northern territory, and New South Wales among others.

This thus shows clearly that the airline operates internally since its flights are destined to all continents. The essay will thus elucidate on the major contemporary issues facing the airlines, the available alternatives and finally one best alternative is selected for recommendation (Chesterton & Markson, 2008).

Key contemporary issues facing Qantas airlines

One major issue facing the airline is with regards to safety and security. Considering the happenings of September 2001 in United States of Americas and in the recent past where individuals have been intercepted carrying detonators and bombs, there customers have raised concern and are scared on who to trust when travelling to other countries.

With such a case customers have already shifted to other airlines that have been deemed to be more secure inn terms of screening. It is worth noting that all these issues concerning terrorism have been heightened by technological advancement. Terrorists need not to travel to be given instructions on how to execute the evil act; this can be comfortably accomplished through various means such as e-mails despite the geographical distance.

Additionally, it is worth to note that the recent happenings especially in Middle East countries and some countries in Africa particularly Egypt, Libya and Tunisia have threatened the airline business expansion strategy. The political instability which has seen to it that the various infrastructures and security issues have been negatively affected jeopardizes the airlines plans of expanding its business.

According to Joshi, 2009 stiff competition in the airline industry is another contemporary issue facing Qantas airlines. It is worth noting that while carrying out international business; it finds itself fighting with other giant companies such as British Airways, Virgin Atlantic which is new in business among others.

It has been shown that when a firm does not have a sound plan on how to tackle competition, it can easily find it self in trouble and even close its business operations. Just like any other organization whether for profit or non profit ethical issues when failed to be adequately addressed or prevented from happening can negatively impact on an organization.

Although the airline has not yet been reported to have violated the rules of business to gain enormous profits at the expense of the relevant stakeholders, there is need to have plans in place to ensure this does not happen. Similarly, the world has come to realize that to save the environment; individuals to corporate have been called upon to cut down on their carbon footprints.

This is one area that the airline has found it rough (Daniels et al., 2007). Cutting down on carbon footprint will enhance a cleaner environment. Having in mind that the only constant is change, the recent technological advancement is one issue that has proved to be a challenge to each and every organization Qantas airlines not being an exception.

A number of organizations that have mastered how to manage technological adoption have used the same as a competitive advantage. The airline in the wake of early 2000 was lagging behind in adopting technology (Chesterton & Markson, 2008). However, when it did, the strategy was not well crafted to be successfully utilized in marketing, training workers as well as attaining the demands of customers.

Another serious contemporary issue that was and still proves to be a challenge to the airline is with regards to customers issues. It has been noted that the firm has lost control over the customers. This has been attributed to technological advancement and competition.

Additionally, there is need to note the demographic changes in the customers that need the airlines services (Chesterton & Markson, 2008). The younger generation needs latest entertainment equipment among other sophisticated things. On the same note due to technology and better education the expectations of customers have tremendously change as majority demand for high quality and sophisticated services.

Operating cost creep and financial crisis not only have a domestic impact but also a global impact. Interestingly, when there is a financial crisis for instance the one that happened between 2008 and 2010, majority of the potential travelers opted to tighten the zips of their wallet and only spend their money on necessary goods and services.

At such times the currency tremendously loss value (Kaplan, 2005). For that matter the industry failed to enjoy enormous revenues and profits forcing it to lay off some employees. On the same note, uncontrollable costs such as government taxes and tariffs, insurance as well as utilities have tremendously risen.

This coupled with the unpredictable jet fuel prices has negatively impacted on the airlines business. Additionally, there are a number of global uncertainties apart from terrorism. For instance diseases outbreaks such as SARS have negatively impacted to the industry.

It is worth mention also that bird flu also brought a considerable loss tot eh firm. Although no one has control over natural disasters, the volcanic eruption in Europe as well as bad whether in countries of destination brushes the industry the wrong way (Joshi, 2009).

Alternative actions

According to Daniel, et al, 2007 there are several options that the firm can take to address the raised issue before things go beyond hand. In business, one option is to do nothing and leave nature takes its course. Secondly adopting a culture of a learning organization has been brought forth by numerous scholars to be another alternative that can be adopted in solving a myriad of issues facing an organization.

Thirdly, it will also be rational if the airline sought to form alliances with other similar organization. This can be done by forming partnerships, merging as well as acquiring other firms. Similarly reengineering and restructuring will call for the organization to fully change everything with regards to how it does business.

To successfully tackle the issue of competition, the airline can resort to gain competitive advantage through offering customers high quality in-service, improved security and safety measures among others. The service can include comfortable seats that are well spaced, sophisticated entertainment services similarly the variety of food served need to be further expanded to include endless list of bites drinks and other foodstuffs (Kaplan, 2005).

Alternatively, the airline can actively engage in adopting a promotional strategy that will help show case Australia. This will help enhance international tourism hence increasing customers or passengers numbers. To meet the demand of increased number of passengers, it might be rational for the firm to increase the number of flights.

Lastly and more importantly, I propose that the firm need to come up with policies and code of conducts that will be inline with the host country to help curb ethical issues (Chesterton & Markson, 2008).

Evaluation of the alternatives

All the proposed alternatives have their stronger and weaker sides. Not doing anything is a reactive strategy that will make the firm loss the trust of all its stakeholders starting from passengers. The only advantage with this alternative is that it requires no financial budget, however if the worse happens then the whole organization will be brought to its knees.

Adopting culture of an organizational learning has numerous advantages but one major one is that it will make the organization be an environment where its workforce are open minded and willing to adopt change (Travis, 2007). The major problem with the strategy is that it will take time and resources for it to be realized.

Reengineering and restructuring will mean that the company changes almost everything ranging from its vision and mission statement. The new picture created may be appealing to some of the existing customers as well as new ones. However, the alternative calls for allocation of huge resources and might results to losing loyal customers.

Merging, alliances as well as acquisition helps organization pull together resources hence have a sound when it comes to negotiating for a number of issues in business. It also helps cut down running costs there by increasing profit margin (Laurie, 2001).

However there are higher chances of conflict of interest when organizations merge or form a partnership. Offering of high quality in-service will definitely attract customers but only for a short term. On the other hand, the venture is too expensive and it can be easily copied by the competitors eventually making the whole initiative obsolete.

Developing policies and code of conducts that are in line with the laws and regulations of host country will help in upholding higher standards of ethics. Nonetheless, this limits individuals not to think outside the box hens inhibiting innovation and creativity (Travis, 2007).

Conclusion and Recommendations

From the analysis of the proposed alternative, I suggest the airlines adopt the one with regards to a learning organization. It is worth mentioning that a learning organization has a number of benefits. For instance it will help the airline maintain higher levels of innovation and creativity hence being competitive.

Similarly, a learning organization will better place Qantas airlines in responding to external factors hence maintaining competitive advantage (Senge et. al. 1994). Similarly, learning organization when it comes to the issue pertaining to changes, the firm will be at an advantage as it can adopt change quickly and successfully.

In situations where the relationship between the organization and their relevant stakeholders are analyzed, a learning organization through the five characteristics of a learning organization (team learning, system thinking, mental models, and personal mastery and shared vision) makes it to be people-centered firm. This brings with it a number of advantages such as improved corporate image.

References

Backman, M. & Charlotte B. 2003. Big in Asia: 25 strategies for business success. Basingstoke: Palgrave Macmillan

Chesterton, A. & Markson, S. (2008). Qantas QF30 drama potentially threatens jumbos future. The Sunday Telegraph. July 27 2008.

Daniels, J., Radebaugh, L., Sullivan, D. 2007. International business: Environment and operations. New York: Prentice Hall.

Joshi, R. 2009. International business. Oxford University: Oxford University Press.

Kaplan, S. 2005. Bag the elephant: How to win & keep big customers. New York: Wiley & Sons.

Laurie, D. 2001. From battlefield to boardroom: winning management strategies for todays global Business. New York: Palgrave.

Senge, P. et. Al.1994. The fifth discipline fieldbook: Strategies and tools for building a learning organization. London: Sage.

Swanson, C. 1993. The dilemma of globalization: emerging strategic concerns in international business. Greenwich, Conn.: JAI Press.

Teeple, A. 2000. What is globalization? In McBride, S. Globalization and its discontent. London: Macmillan.

Travis, T. 2007. Doing business anywhere: The essential guide to going global. Hoboken: John Wiley & Sons.

Introduction

Qantas Airline is the oldest Airline in Australia and comes in second in the world. It was started in the year 1920 by some pilots from Australia; these were Paul McGinness and Hudson Fysh. The Company was registered as Queensland and Northern Territory Services Limited. This was on the sixth day of the month of November. Initially, the Company started by giving joyrides and two years it began scheduling its passengers. (Davies, 1964)

More than eighty years later, the Company has gone global and operates more than fifty flights daily to various destinations throughout the world. It has a total of five hundred and sixty flights daily. (Jackson 2000) the Airline has about fifty five destinations regionally. And in the year 2000, the Company transported thirteen million passengers on routes based regionally and about seven million passengers for its international routes.

Internal and external triggers that led Qantas Airline to develop markets internationally at various stages of their development

There are four stages that the Airline Company had to undergo before and during entry into international markets. These stages are as follows;

1. Before the World War
2. jet age in 70s
3. September attacks
4. present day (Robert & Minnow, 1995)

Before the World War

This stage is characterized y introduction of services to a new international market. During market entry stage, there were a number of factors that prompted the Company to enter into some countries. This stage occurred before the Second World War. These shall be examined below

Competitors in the Industry

The Company had to consider who were the competitors in the respective countries of choice and what advantages did this potential competitors have over them. For example in entry in the American market, Qantas had to consider other Airline Companies that offered low budget tickets and in this regard, charges in the country of entry had to be readjusted to deal with that competition in the market. 4Cs company description-(Smith, 2002)

Economic climate

One major reason that prompted the Airline to enter into other countries was because of the introduction of the General agreement on trade and tariffs by the World Trade Organization. This agreement ensured that the Airline was protected against barriers to trade. Before Qantas could enter certain countries, it had to examine the economic conditions prevailing in those respective countries. It scrutinized the stability of their currency in relation to the Australian dollar. Besides this, Qantas had to make sure that the countries it targeted were feasible for trade. PEST analysis-(University College Cork, 2007)

Political/legal factors

Some countries had passed rules and regulations that encouraged foreign investment. There was the war that deterred airline transport a great deal. These countries prompted Qantas to consider them first. The Airline had to choose politically stable countries like the USA and Japan. Besides, it also examined employment regulations in those countries and realized that they were conducive for the operation of business. PEST analysis-(University College Cork, 2007)

Geographical factors

Initially, the Company had to choose destinations that were frequently visited most air passengers. Examples of such destinations include Britain and the USA. This was because operation in countries of choice had to make business sense and they had to ensure that those countries were geographically accessible. PEST analysis-(University College Cork, 2007)

Cultural factors

The brand image presented by the Airline in those respective countries had to coincide with the culture of the country of choice. This was the reason why Qantas first started with areas that were similar in culture to Australia in order to ease its entry. This was enforced when the Airline chose most of its European destinations. Marketing strategies did not have to differ to large extent. But when it entered Asian countries like Japan, it had to adjust its marketing approach because the Japanese are generally known as a conservative lot. PEST analysis-(University College Cork, 2007)

Jet age in 70s

This stage was characterized by focusing products in locations that are most favorable to the Company. This means that a Company should not spread its services equally in all the areas it has invested in. Instead, it should put most of its activities in areas that are favorable for business.

Focusing international flights in certain regions

This was the main reason why the Airline has majority of its international flights located in the USA, UK and Japan. (4 Cs description of Qantas-Jackson, 2000) The decision to concentrate most flights on these areas was because there were larger market segments in these areas and it was easier to conduct airline business in these areas than other countries in the world. (Morrison and Winston, 1997)

Economic factors

The Company was faced with the challenge of dealing with increased use of jets rather than other modes of air transport. This was an aspect that the Company did not provide and it therefore had to increase the quality of service provision in line with this new competition. PEST analysis-(University College Cork, 2007)

September attacks

This stage of development involved changing strategies in service or product processes to suit a given market because international market present different challenges from mother Companies.

Political factors

After the September 11 attacks, the Airline industry faced a serious challenge because the credibility of the industry was undermined. The Company had reduced bookings during that period. It dealt with the blow by increasing advertisements and also by reduced ticket costs to boost revenues. PEST analysis-(University College Cork, 2007)

Partnerships

At this stage of its development, the Company started engaging in partnerships and had to consider going into other parts of the world that it had not previously entered. An example was in the year 1995; Qantas formed an alliance with British Airways called One World. This was to synchronize flights between the three continents of Europe, Asia and Australia. The Alliance prompted Qantas to expand its market into other countries to facilitate services between the two Companies. (Doganis, 2002)

Fleet development

The airline has been constantly growing since its inception as a result of increasing fleets. Qantas has been purchasing Boeing aircraft makes like the 747-400. The availability of more aircrafts meant that the company can maintain schedules and meet maintenance needs of the old aircrafts. This implies that it had the capability of expanding its operations into other countries and still maintains service delivery. (Directory, 2007)

Present day

This stage was characterized by new strategies that expand the current market of the Airline in a given international market segment. (United Nations, 2001)

Improving operating procedures

For example purchase of engines in case they need modification, upgrades in interior parts of aircrafts and also in purchase of the actual product.

Capital expenditure is also required for incorporation of other services that come with the airline industry. This mostly refers to hospitality services like Porsche seats, video watching and recruitment of members of staff like pilots, aeronautical engineers, cabin crew members and others. All these are issues that have to be re examined by Qantas so that the Company can expand its market base by attracting new clients (Doganis, 2001)

Keeping up with technological advancements

The Company has appealed to some customers through introduction of compartments where laptops can be placed in its business class section thus appealing to a new IT- conscious clientele. The Company has also kept up with technological advancement through introduction of the Qantas Telstra visa card. Besides this, the Company has provisions for online booking and has conducted a number of marketing activities online. All these are geared towards attracting new consumers to the market. (Travel and Tourism home page, 2007)

Benefits of internationalization to Qantas in various stages of development

Internalization has mostly been beneficial to the Airline. These are the reasons why;

Utilization of capital

Qantas as an airline company is in serious need of capital for its products. The main resource in the aviation industry is aircrafts. Entry o the Airline into certain countries have helped the Company to minimize costs on capital due to the fact that the Company can be able to acquire fleets locally I those countries it has entered. This mean expenditure is greatly reduced and consequently profits are consequently increased. (Butler and Keller, 2000)

Increased sales

Changes in strategies during the value chain engineering stage have brought about increased sales. This was especially witnessed in the year 2000 when the Company saw an increase in international sales by twenty six percent. It gained revenues of 374.8 million Australian dollars in the international flights sector as compared to the local flights that generation income of 272 million Australian dollars. These increased sales were due to improves safety measures, adequate maintenance of aircrafts and reliability from the Airline

Cheap labor costs

Operation of the Companies services in some countries is cost effective because the Company has recruited staff members from those respective countries and these members require low amounts during their enumeration. This has been applicable in some Asian countries like India, where the Australian economy is stronger and is therefore at an advantage compared to the Indian economies. (Online Media Matrix, 2007)

Key limitations of internalization to Qantas at every stage of development

Some limitations have arisen from this business endeavor mostly because internationalization is a business risk in itself and might not always bring favorable results.

International disasters

The Airline industry is susceptible to disasters and these can generate negative publicity for he affected Company in other countries that may be utilizing services offered by the Company. (University College Cork, 2007)This scenario was observed in the year 1999 when a Qantas Airplane was involved in an accident at Bangkok and serious doubts arose as to the credibility of the Airline Company in other parts of the world especially in its core business area-Australia. (Jackson, 2000) The Company had to spend numerous resources to investigate the cause of the accidents and to remold its image.

Capital costs

Qantas had to set aside numerous amounts of capital because the purchase of aircrafts is no easy task. This meant that initially all the profits generated form those markets that had just been penetrated were used to offset initial capital costs. (Robert & Minnow, 1995)-benefits of globalisation

Conclusion

Qantas has undergone numerous changes during its development into the international market. The Company has had to study foreign environments before it could enter them. While it has been trying to establish itself in these new environments, it has had to come up with different strategies that will ensure survival in those markets. Overly, the Company has benefited from the venture despite minor limitations here and there. (Richard, 1995).

Reference

Jackson, M. (2000): Qantas Airways Limited: narration section of Chairmans Address; Report on the Annual General Meeting of 2000-(4 Cs Company Description).

Travel and Tourism home page (2007): Qantas Airways Ltd. Web.

Butler, G.F., Keller, M.R. (2000): Handbook of Airline Operations. Aviation Week; McGraw-Hill Companies.

Davies, R.E.G. (1964): A history of the worlds airlines, Oxford U.P.

Directory: (2007): World Airlines, Flight International. p. 77.

Doganis, R. (2002): Flying off Course: The Economics of International Airlines, 3rd edition. Routledge, New York.

Doganis, R. (2001): The Airline Business in the 21st Century. Routledge, New York.

Morrison S. and Winston C. (1997): The fare skies: air transportation and Middle America, Brookings Fall, 1997.

Smith, M. J. (2002): The airline encyclopedia, 1909-2000. Scarecrow Press.

Richard T. (1995): International Business Ethics and culture, New Jersey: Prentice-Hall, Inc.

Robert A.G. & Minnow, N (1995): Emerging Global Business marketing Oxford: Blackwell Business.

United Nations (2001); Global impact: corporate leadership in the world economy. United Nations office, New York.

University College Cork (2007): PEST analysis. Web.

Online Media Matrix (2007): Porter analysis Airline Industry. Web.

Introduction

The article chosen for analysis is about a business partnership between two of the most respected airlines in the world; Emirates and Qantas Airlines. It was an interesting article to analyze because it can act as a blueprint for other multinationals that want to participate in international alliances.

This case study will provide an example of the motivations, processes, obstacles, models and strategies that constitute global alliances

Case study

Qantas is an Australian-based Airline that is renowned for its excellent quality and great travel experiences; Emirates is famous for its extensive network as well as its quality standards.

These two organizations partnered through a joint services agreement that was designed to coordinate their prices, integrate their flying networks, arrange similar schedules and participate in a benefit sharing model. The agreement will last for ten years and will create benefits for customers as well as the two business partners.

Deresky and Christopher (2011) explain that organizations often go global because of reactive reasons or proactive ones. It is likely that Qantas was motivated by both types of incentives to participate in this global alliance.

First, global competition, as a reactive measure, has prompted Qantas to consider the move. Many Airlines are consolidating their services on a global scale and if Qantas maintained the status quo, then it would be more difficult to compete with these firms in the future.

Additionally, the issue of government restrictions in the Middle Eastern region may have prompted Qantas to rely on an insider in order to access that large market; Emirates was the ultimate solution. Another reactive reason was demand from customers for certain services.

Qantas consumers needed direct access to Europe and Asia, but the Airline could not provide it with its prevailing infrastructure. Consequently, the organization chose to liaise with another Airline that already has those networks in order to meet its customers’ demands (Qantas 2012).

Alternatively, the motives to enter into a partnership may be proactive and strategic. Firms do it to take advantage of the economies of scale that come with greater capital (Todeva and Knoke 2005).

In this case, Qantas was in the middle of a reengineering program that would see it expand its operations and turn around its performance.

The alliance with Emirates was the major route to achieving this objective as Qantas would use the firm’s terminals and routes without committing the financial resources needed to have its own.

Alternatively, the need to grow may also prompt firms to engage in expansion (Deresky and Christopher 2011). This was true for Qantas, which had already exploited most of the avenues for growth in Australia. It needed to overcome this plateau phase by adopting a new strategy for enlargement.

The company could also experience some cost savings through the operation because it was working on a sustainability program that would undercut some of the firm’s financial problems.

Through direct routes to key markets, the company would cut down on unnecessary coordination and resource usage in these locations, and this will save money (Qantas 2012). The partnership was also created for other smaller reasons, but the above-mentioned ones were the key drivers.

The model of alliance chosen between these two airlines is also worth noting in the analysis. They selected a joint services venture in which both organizations would not make an equity investment in the partnership.

Kang and Sakai (2000) explain that organizations may commit heavily to an alliance or may choose a short-term avenue for cooperation. In this case, Qantas’ level of commitment in this alliance was moderate; ten years is a relatively long period of time, but not long enough to constitute a permanent arrangement.

Furthermore, the chosen approach was a non equity alliance. It is likely that Emirates and Qantas were not willing to participate in an equity alliance because of the legal, operational, ownership and financial risks involved.

Equity alliances are often done in order to ensure that the two entities create a new and separate business entity, which may unite the two partners or allow them to exist independently. Qantas and Emirates wanted to maintain their individual identities, so this was not a viable option (Qantas 2012).

The companies went for a non equity alliance because they wanted to enjoy the flexibility that emanates from such a strategy. They did not need to make a strong commitment to each other since they could not predict how successful their alliance could be.

Non equity alliances have no limitations and imposition on initial conditions, and this was an attractive quality for Qantas. Kang and Sakai (2000) affirm that non equity alliances are appropriate for those organizations that are uniting core activities. In this case, Qantas and Emirates were bringing together key areas of operation.

It was essential to select an approach that would not subject them to unnecessary risk. If non core activities were involved, then chances are that the organization would have selected a joint venture for the alliance.

Instead, it selected a joint services agreement that would permit both organizations to maintain their distinct style but still amalgamate their services.

When carrying out a global alliance, Deresky and Christopher (2011) explain that most organizations must go through several phases. They need to develop a strategy, assess potential partners, negotiate a contract, commence operation and plan termination.

The first phase of developing a strategy for a global alliance entails analyzing the objectives of engaging in the partnership, predicting possible issues that may emerge and determining the resources needed to execute the plan.

Although Qantas does not outline this phase critically in the article, it is evident that the company thought about how it will redefine its Asian operations. It probably prepared for the reengineering of its network as well as its connections.

The firm also planned how it will withdraw some of it services from non performing hubs like the one in Frankfurt (Qantas 2012). The organization also thought about the alterations it would need to make with regard to its customer quality.

In order to synchronize activities with Emirates, it would be necessary to forfeit some of its service priorities in favor of Emirates Airlines’ more efficient strategies.

Partner assessment is one of the most crucial aspects of forging a global alliance. Isoralte (2009) explains that one must look at the weaknesses and strengths of the partner, their management style as well as their resource capabilities in order to make the partnership viable.

Qantas did their partner assessment very carefully because it took them a long time to come to this decision. Additionally, Qantas considered the resource capabilities of Emirates and found that they were exactly what they needed.

The target organization had a large fleet of airplanes and a vast international network (Qantas 2012). Qantas also considered the management style and the standards of quality in Emirates Airlines. The organization’s CEO had an eye for detail and was known for effective management skills.

Additionally, the company had a strong reputation for quality (Qantas 2012). This meant that it would be easy to synchronize the two organizations’ operations. The partnership would not hurt but promote Qantas’ business outlook.

Some of the other phases of global strategic alliance formation are yet to be known as the company unveiled this alliance in late 2012. However, contract negotiation must have been done well. Qantas will be making some sacrifices if differences emerge between the two partners’ service offerings.

Nonetheless, it will also be maintaining its distinct style and enjoying a series of benefits. All these issues were negotiated in the contract.

The concerned alliance is still in its infancy. It is not possible to determine whether it will succeed or fail. However, Qantas and Emirates can do a number of things to ensure that they thrive.

First, they need to have clarity of direction; both organizations ought to understand why they are engaging in the alliance.

This clarity should trickle down to all aspects of management (Cebuc 2008). Additionally, the two partners must ensure that each group enjoys the benefits of the alliance. If benefits are lopsided, then frustrations will develop and failure may follow.

Finally, the companies need to break silos or compartments that may arise during operation. Both companies need to communicate regularly and transparently, internal divisions are one of the biggest barriers to successful international partnerships.

Conclusion

The article under analysis is a typical depiction of how to manage across borders, especially during the first stages of a global relationship. Qantas got into the alliance for the right reasons. It also selected a form of partnership that would work well for it.

Furthermore, the company went through a comprehensive alliance selection process before choosing Emirates. Thereafter, it also negotiated the partnership contract effectively. The future will reveal whether the partnership will succeed. However, given its rigorous strategic decisions, it is likely that it will do well.

References

Cebuc, G 2008, ‘The role of strategic alliances in international business’, Romanian Economic and Business Review, vol. 2 no. 4, pp. 27-33.

Deresky, H and Christopher, E 2011, International Management: Managing across Borders and Cultures, Pearson Education Australia, Frenchs Forest.

Isoralte, M 2009, ‘Importance of strategic alliances in a company’s activity’, Intellectual Economics, vol. 5 no. 1, pp. 39-46.

Kang, N & Sakai, K 2000, ‘International strategic alliance: Their role in industrial globalization’, OECD Science, Technology and Industry Working papers, no. 5, 1-42.

Todeva, E & Knoke, D 2005, ‘Strategic alliances and models of collaboration’, Management Decision, vol. 43 no. 1, pp. 1-21.

Qantas 2012, The world’s leading airline partnership Alan Joyce, Qantas Group CEO, http://www.qantas.com/travel/airlines/media-releases/sep-2012/5442/global/en#.ULr4SRps4rw.email

DHL over Baghdad and Qantas Flight 32 are two exceptional cases of airmanship when the flight crew successfully landed the plane despite the failure of normal flight controls that could have been “a death sentence” (Aviation Today par. 1). Due to excellent both technical and untechnical skills, stress management, collaboration, and wisdom in decision-making, the flight crew in both cases managed to do the impossible.

DHL over Baghdad

The DHL A300 aircraft was one of the planes that delivered mail and humanitarian aid to the US soldiers in Baghdad. On 22 November 2003, soon after the aircraft had taken off, it was hit by the SA-14 surface-to-air missile (Aviation Today par. 3). The missile hit the left wing of the plane and, although the left engine was not damaged, all hydraulic systems and flight controls were lost, which is why the flight crew had no other choice than to use throttles-only control. In result, they managed to turn the plane and land it safely in Baghdad.

The accident with the DHL A300 was the first time when a civil plane was hit by a missile (Kirby 8). Admittedly, there were attacks before that, but all of them were against military or official aircrafts only (Kirby 8). However, in the view of unsafe airspace and the possibility of attack, a special take-off procedure was applied in order to accelerate the climb maximally (“Missile Strike” 22). Since the precautions had been taken and even that could not help, it can be concluded that the accident was probably unpreventable.

As Lutz and Greeves stated, Crew Resource Management (CRM) “was absolutely essential to survival” (34). In this particular case, dividing the tasks among the crew members was of the highest priority. And the flight crew did it: Captain Eric Gennotte did his best to control the aircraft, first officer Steve Michielsen kept track of attitudes and distances and flight engineer Mario Rofail focused on the amount of fuel left in the damaged left wing (“Missile Strike” 23). During this accident, every member of the flight crew demonstrated composure, critical thinking, and excellent teamwork skills.

After the accident with the DHL A300, those airlines that still provided civil flights to Baghdad decided to suspend their services (Kirby 2).

Qantas Flight 32

The accident with Qantas Flight 32 happened on 4 November 2010 soon after the aircraft had taken off the ground (Australian Transport Safety Bureau par. 1). During the climbing, at an altitude of 7,000 feet, the flight crew faced the catastrophic uncontained engine failure that resulted in crucial damages of structures and systems. If this aircraft had crashed, it would have possibly been the “deadliest air disaster the world has ever seen” since there were nearly 500 people on board (Passion Aviation). The crew managed to turn the aircraft and land it at the Changi Airport in Singapore.

The QF32 incident could have been prevented. As the Australian Transport Safety Bureau revealed in its report on this case, the explosion in the engine was caused because of too thin walls of oil feed stub pipes installed in the number two engine of the aircraft (par. 2). Since the walls were too thin, cracks developed, oil was leaking, and an explosion finally happened. After the accident with Qantas Flight 32, a range of steps was taken to remove these oil feed stub pipes from the exploitation.

As in the case of the DHL A300, the flight crew demonstrated CRM skills that helped to save the situation. First of all, the crew remained “calm-headed” (Killalea par. 5). Secondly, they were aware of the situation and did not turn the plane until all calculations were made and it was concluded that turning around was actually an option (Killalea par. 9). Finally, the crew demonstrated a great teamwork and the ability of quick and efficient problem-solving. For example, they calculated the optimal speed for the landing and finally landed the aircraft with only 150 meters left to the end of the runway.

Works Cited

Australian Transport Safety Bureau. In-flight uncontained engine failure Airbus A380-842, VH-OQA, overhead Batam Island, Indonesia, 2010. Web.

Aviation Today. System Enables Safe Landings With Total Failure of Normal Flight Controls 2004. Web.

Killalea, Debra. How pilot Captain Richard de Crespigny and his crew saved QF32 from aviation disaster 2014. Web.

Kirby, Steve. Missile Damages DHL Cargo Plane Over Baghdad 2003. Web.

Lutz, Terry and Brian Greeves. “Throttles Only Control (TOC).” INTERpilot (2004): 32-34. Print.

“Missile Strike.” Flight Safety Australia 8.6 (2004): 22-24. Print.

Passion Aviation. “Air Crash Investigation S13E10 – Qantas 32 Titanic In The Sky Qantas Flight 32.” Online video clip. YouTube. 2014. Web.

DHL 2003 crash is an outstanding example of excellent airmanship. The primary cause of the accident is that the jetliner was hit by a missile that damaged its left wing. Pilots have lost control of flight controls and had to use engine power to make sure that landing is safe. One of the most important aspects that need to be noted is that the crew that the issue that it was an uncontained failure of the engine at first, but smoke was noticed. The primary cause of the incident that happened during Qantas Flight 32 in 2010 is that the engine rotor has failed, and the chain reaction has led to numerous other complications. The damage to the structure and systems was immense. It is extremely likely that airplanes would not be able to land safely under different conditions because such situations are rare and require lateral thinking.

The first accident could have been prevented if an anti-missile system was implemented. It needs to be said that it is especially important in this region because it is associated with terrorist activities. It is understandable that an attack was not expected, but it should have been considered as a major threat. The second accident could have been avoided if procedures that are related to monitoring of airplane parts were performed much more carefully. It could have been noticed that one the disks may become significantly larger than it is supposed to be under pressure, and it is one of the primary causes of this accident. Also, it is paramount to note that risk factors that are associated with the design of the parts should have been considered during the manufacturing process.

The recommendations are appropriate because a computer system that helps to make sure that an aircraft is landed safely in case of emergency is needed, and could have prevented numerous accidents. It needs to be said that the current technologies are incredibly efficient and were tested by time, but an introduction of an alternative is an excellent opportunity to guarantee the safety of aircraft.

The lesson that can be learned from the first case is that it is necessary to consider the risks that are related to the security of airplanes in particular regions, and it is important to introduce systems that would help to deal with similar attacks. One of the most important aspects that can be learned from the second case is that it is important to take necessary measures to make sure that the parts that do not meet the standards and not used during the construction of aircraft. Such instances are incredibly rare, but the possibility should not be disregarded because the safety of airplanes is of utmost importance.

It needs to be said that crew resource management (CRM) was essential in both cases because cooperation was of utmost importance, and it was necessary to come to a consensus on the decisions that were made. During the first accident, each crew member has focused on a particular task, and communication was especially important in this case. Furthermore, the aspects such as the amount of jet fuel had to be considered to achieve a positive outcome.

CRM was also paramount in the second instance. The duration of the process was nearly two hours, and it would be hard to keep composure if every member of the crew did not understand their responsibilities during the second accident. It is imperative to note that issues were solved because crews were well-trained and had significant experience that helped them to address the problems that appeared.

Both accidents can be used as examples of great CRM. The most significant aspect that needs to be discussed is that the sequencing of procedures was identified in both cases, and problems were addressed according to their importance. The use of differential thrust by the crew during the first accident was essential and required cooperation. It also needs to be said that it was paramount to use the resources that were available to their full potential.

Any mistake at that point could have been fatal, but crews were able to prevent tragedies because they utilized enhanced communication and other significant aspects of CRM. In the second case, the team has focused on the engine overheat, and it was the correct decision in this situation. The number of messages that appeared was truly astounding, and it was necessary to set priorities based on the information that they could access.

In conclusion, it is necessary to say that CRM had an enormous influence on the outcomes of both accidents, and an ability to keep composure in such stressful situations was especially important to make sure that there are no severe consequences. It is also imperative that these accidents have drawn attention to problems that are associated with civil turbine engines, and it is necessary to address them to prevent similar accidents in the future. Overall, teamwork and creative approaches were essential in both cases.

DHL Accident in Bagdad

The root cause of the DHL A300-B4 accident in Bagdad on 22 November 2003 was a terrorist attack resulting in severe damage to the left-wing, complete loss of hydraulic plane control systems, fire causing more destruction, and the left fuel tank devastation (Mickolus and Simmons 12). The accident was preventable since the corresponding services warned the public regarding the possibility of a terrorist attack in this region (Mickolus and Simmons 13).

The major lessons learned from this accident are that CRM is the key preventive measure when it comes to flight safety and security promotion measures. It is only with the perfection of the team members that the pilot could land the plane and save the crew’s lives. This conclusion can be made because the plane completely lost its control due to the asymmetric destruction. Also, this case demonstrates that it is important to continue to increase flight safety in the world since terrorism movements continue to maintain a high level of preparedness to similar acts of terror. After 13 years since this accident, similar cases continue to take place in numerous areas around the globe. The calamity addresses the companies and countries that seem to be the leaders in the area of antiterrorist protection. A vivid illustration is the latest accident of the Russian plane in Egypt taking away the lives of over 300 innocent people returning home from vacation.

DHL accident suggested that CRM is an effective system for flight safety and security protection, and still, it needs to be more elaborated to ensure better outcomes (Wilkins 58). The examples of CRM in the case of this flight are the exemplary performances of the three people comprising the plane crew. The crewmembers demonstrated outstanding professionalism by landing the plane with the major damage to one of its wings, with only one engine working, total loss of hydraulic control, unsafe landing speed, and complex ground characteristics of the landing surface (Stewart 15).

Qantas Flight 32 Accident on the Way to Dubai

Qantas Airbus A380 flying at the height of 7,000 feet encountered a sudden engine rotor problem on 4 November 2010 (“A380 Engine Explodes” par. 1). As a result, considerable structural damage was caused to the plane. With the exemplary actions from the flight crew, control over the plane’s system was returned, and the plane landed in Changi Airport (O’Sullivan 93).

The root cause of the accident was the technical issue in the construction of the plane. According to ATSB, “several issues [were identified] during the manufacture of Trent 900 HP/IP hub assemblies that resulted in their release into service with non-conforming oil feed stub pipes” (“A380 Engine Explodes” par. 4). The conclusions made by ATSB regarding the accident cause made it clear that Qantas was guilty of flight security violations because it did not manage to diagnose a serious safety issue with their Airbus A380 model. The technical defect of the model could cause deaths of hundreds of passengers because Airbus A380 is very common in the company park.

The accident with Qantas Airbus A380 was preventable as found by ATSB (Zhong 64). The board of researchers made the following conclusion as to the impact of this case, “even though modern civil turbine engines are very reliable, and UERFs are very rare events, the resulting damage from such a failure can be significant and the potential effects catastrophic” (par. 4).

The recommendations provided by ATSB are fully appropriate because they are supported by the technical research findings and experts’ opinions. Moreover, the company producing Airbus A380 acknowledged the existing problem and introduced considerable changes to the model to eliminate the security issues (Zhong 67).

The major lessons learned from this case are (1) the necessity to increase the intensity of safety testing during the stage of a plane production and every time it is intended to serve a particular flight; and(2) the importance of excellent CRM because this strategy can help save hundreds of people’s lives even in the event of extreme danger. Qantas Airbus A380 case is another vivid illustration proving that millions of American dollars spent by airlines around the globe on CRM can be identified as the most effectively used funds.

CRM became the central power affecting the ultimate outcomes in the given case. Only because of perfection in the actions of the flight crew, the passengers were able to reach the land safely. Particular examples of CRM demonstrated by this case are an effective distribution of responsibilities and tasks among all the team members available, incorporating the efforts of support pilots present on the board to trace the plane’s systems work to modify the approach to flying the plane, and outstanding performance of flight crew in the area of passengers’ panic management (Zhong 69). Another noticeable example illustrating the importance of CRM is the ability of the major members in the crew to manage all resources available in the plane for the common purpose of enabling the vessel to reach the land safely.

Works Cited

A380 Engine Explodes On Qantas Flight 32. 2012. Web.

Mickolus, Edward F., and Susan L. Simmons. The 50 Worst Terrorist Attacks, New York, N.I.: ABC-CLIO, 2014. Print.

O’Sullivan, Matt. Mayday: The Inside Story of the Fall of Qantas, London: Penguin, 2015. Print.

Stewart, Scott. “The Continuing Threat of Libyan Missiles.” Security Weekly 3 (2012): 7-18. Print.

Wilkins, M. J. “Are Machines Better Than Humans in Crisis?.” SPE Intelligent Energy Conference & Exhibition. Society of Petroleum Engineers, (2014): 58-64. Print.

Zhong, Lunlong. Contribution to Fault Tolerant Flight Control under Actuator Failures, Toulouse: INSA de Toulouse, 2014. Print.

Introduction

The given paper is devoted to the comparison of Richard Branson, one of the founders of Virgin Atlantics, and Fergus McMaster, a creator of Qantas, outstanding Australian airlines, their visions, ideas, and strategies employed by companies to guarantee their rise. It also shows the importance of strategic management of aviation as it helps to generate a competitive advantage and evolve (Zhang et al., 2019).

Vision

Successful companies are created based on a unique vision, which is a mental image of the rise of the firm and its state in the future. Qantas was founded with the prior goal to provide people with opportunities to reach various regions in Australia and the world. The firm’s mission states that a brand should be “a great airline that champion’s the Spirit of Australia” (Qantas, 2019, p. 3). It also presupposes optimism, experience, unity, and innovativeness (Qantas, 2019).

Virgin Atlantic has a similar vision as it appeared as a company that would provide services to people living in Britain and helps them to travel. The brand states that it follows the idea to “grow a profitable airline, that people love to fly and where people love to work” (Virgin Atlantic, 2018, p. 3). The given assumption impacts the functioning of the organization and its strategies.

Profit, Shares

In 2019, Qantas managed to generate an underlying profit of about $1,30 billion (Qantas, 2019). It is 17% lower than in 2018; however, it remains high, and there are forecasts predicting further growth and the stable functioning of the firm (Sarina & Wright, 2015). The brand remains a leading domestic airline (65% of the market), with about 28% passenger share in international markets (Qantas, 2019).

Virgin Atlantics can also be described as a powerful and influential airline that shapes the global discourse. Its market share constitutes 3,1% in 2018, or about 5.1 million out of the total 165 million passengers on scheduled services (Virgin Atlantic, 2018). Both compared companies remain prosperous and potent actors that might compete with rivals.

Fleet Type

The type of employed aircraft depends on the routes, maintenance and fuel efficiency, and business models. Virgin Atlantic’s fleet is not too large as the company has 37 aircraft in service, such as Boeing 747-400, 787-9, and Airbus A330-300, A340600, based at Heathrow. It means that the company’s facilities and resources are limited. Being a long-haul carrier, it possesses aircraft that can guarantee transportation to distant regions; however, the number of planes is low due to the nature of the firm and its vision, which presupposes the gradual growth from a local organization (Lutte & Bartle, 2017).

Qantas has many planes, which is explained by the nature of the company as it is considered a major domestic and one of the leading international carriers. At the moment, it uses 137 aircraft of various types, such as Airbus 330 (27), Airbus A380 (10), Boeing 737 (78), Boeing 787 Dreamliner (11), Boeing 747 (5), and Boeing 767 (1) (Qantas, 2019). The use of these models is explained by their ability to guarantee safety and comfort to passengers. Moreover, as a long haul carrier, Qantas benefits from its fleet characteristics such as the combination of maintenance and fuel cost, and distance covered. Altogether, both fleets meet companies’ needs and correspond to their business models.

Number of People

The high number of aircraft and the scope of the company means that Qantas employs multiple specialists who guarantee its functioning. At the moment, the company has 26,150 employees working in various departments and regions (Qantas, 2019). Moreover, it carries about 22 million passengers every year (Qantas, 2019). This data evidences that the company has a sophisticated and complex structure along with a developed organizational culture (Hobbs & Lyall, 2016). The company offers training for all workers as a part of the quality improvement process. Additionally, there is a social package for workers to provide them with safety guarantees. In general, Qantas has all elements of the corporate culture.

Virgin Atlantic is a smaller company, which means that it also has a limited number of people. In 2018, it had 8571 workers who functioned in different departments (Virgin Atlantic, 2018). Additionally, the company carries about 5.1 million passengers every year. (Virgin Atlantic, 2018) The given difference indicates that analyzed companies have opposite approaches to their evolution and functioning (Abeyratne, 2016). It means that as a comparatively small carrier, Virgin Atlantics can create a close and friendly atmosphere within the collective, which reflects its main vision. Additionally, there are multiple opportunities for successful training.

Strategy

At the first stages of Qantas Group’s evolution, McMaster introduced a simple and effective strategy that considered safety and convenience as the central priorities (Cusick, Cortes, & Rodrigues, 2017). It tries to become the world’s leading airline with an outstanding quality of care. For this reason, customer data and digital innovation are considered a competitive advantage for Qantas as these factors help to overcome rivals and attract new clients (Qantas, 2019).

From Porter’s five forces perspective, the strategy of Qantas rests on the power of its customers and suppliers, which helps to compete with rivals and face the threat of new entries (Agarwal et al., 2015). The company is a full-service carrier (FSC), and it targets the segment of business travelers who move outside Australia and are characterized by the middle or high level of income (Qantas, 2019).

As for Virgin Atlantics, as one of the founders and its leaders, Branson promotes another growth strategy. It presupposes the transformation of the airline from a point-to-point company to a network carrier with the appearance of multiple opportunities for further evolution and growth (Virgin Atlantic, 2018). It will also help to engage passengers in group flights and meet their requirements for the diversification of provided services and their quality.

Applying Porter’s concept, the strategy of the company presupposes dominance in a particular segment, which helps to increase the power of buyers and suppliers and meet new entries or competitors (Singh, Sharma, & Srivastava, 2018). Virgin Atlantics is also a full-service carrier with the target audience consisting of upper-class clients or business passengers who travel on transatlantic routes (Virgin Atlantics, 2018).

Competitors

As it has already been stated, the civil aviation industry is characterized by the high level of rivalry that is explained by the strategic importance of the sphere and the high revenues that can be accumulated by companies working here. For this reason, both Virgin Atlantics and Qantas face fierce competition and have to shape their strategies regarding this factor. The most important rivals for Branson’s company are Qatar Airways, Emirates, Jet2, Easy Jet, Etihad (More, 2019).

These companies work in the same market segment and have a similar target audience. For Qantas, the pool of competitors has some different brands: Singapore Airlines, Cathay Pacific, AirAsia, Malaysian Airlines, Emirates, British Airways, and Delta (Qantas, 2019). The divergence in the brands that should be considered the primary competitors come from the geographic location of selected firms, and their focus (Kearns, 2018). For instance, Qantas also tries to cover Asian regions, which means that airlines operating there are significant actors that should be considered.

Branding and Pricing Strategy

One of main Branson’s ideas was to create a recognizable and memorable brand that would attract people’s interest. Today, Virgin Atlantic benefits from its unique branding strategy, which emphasizes the high quality of the provided services. Striking red elements and decorations peculiar to all aircraft and the image of a flying lady attract customers (Clarkson, 2016). Additionally, the relevant pricing strategy is characterized by high flexibility. The company does not fall into the low category; instead, it offers unique opportunities to differentiate provided services and establish a desired price.

Qantas employs a similar branding strategy as it tries to create a recognizable image. Kangaroo, as a unique Australian animal, is selected by McMaster as the symbol of the brand that represents its spirit and focuses on the domestic market. (Qantas, 2019). The company promotes its outstanding services and quality as two primary factors that should attract clients and guarantee their devotion. Additionally, there is a Price Promise stating that if a client finds a better price for the same dates, conditions, and offer, he/she will be refunded the difference (Qantas, 2019; Sharma & Singh, 2017). It means that the company’s pricing strategy considers its close competitors and tries to make costs more attractive to passengers.

Motivation to Achieve Success

One of the main success factors that motivated McMaster to move forward was the absence of an effective and reliable domestic carrier that would meet people’s requirements for the quality of travel (White, 2018). For this reason, this idea influenced all employees to engage in the activity that would help to create an Australian carrier.

Virgin Atlantic’s founders followed other visions and motifs. There was a need for innovation and reconsideration of traditional approaches used in the aviation sector to guarantee its further evolution, growth, and the ability to fulfill diversified requirements of clients (Vision Atlantic, 2018; IATA, n.d.). For this reason, Branson engaged in the activities that fostered the rise of the firm and its successful transformation.

Customer Service and Promotional Activities

Both brands recognize the significance of useful promotional activities and customer service. Thus, Branson emphasized the fact that clients’ satisfaction is the fundamental factor for the evolution of any carrier. Virgin Atlantic offers multiple loyalty programs for passengers who have many miles and continue using the brand’s services (Virgin Atlantic, 2018). At the same time, the firm’s customer service employs specific tactics involving social media, Internet, and online platforms to remain in touch with all clients, monitor their feedback, and offer specific changes that will help to stay attractive for people (Lin, 2017). They help to ensure the loyalty of the target audience and monitor their feedback.

Qantas also prioritizes promotional activities and customer service as the basic tools needed to generate a competitive advantage and remain beneficial. For instance, the Frequent Flyer program is designed to reward individuals who use the airline’s services often and are devoted to it (Joyce, 2017). Special points can be generated and then redeemed to acquire the desired benefit.

Quality Improvement and Marketing Strategy

One of the major common features of the airlines is that they operate as full-service carriers. It means that they offer passengers the opportunity to select economy or business class travel (Doyme, Dray, O’Sullivan, & Schäfer, 2019). There are additional services, such as meals, beverages, and comfort packages that can be selected by individuals if needed (Chandu, 2018). This approach provides all customers with the desired flexibility and diversification levels (De Syon, 2019). The adherence to this strategy is a part of the organizational culture of both brands as they position themselves as high-quality, reliable, and safe carriers that have a wide range of options suitable for representatives of different classes (Crane, 2017; Ongaro & Ferlie, 2020).

Virgin Atlantic and Qantas encourage passengers to leave their feedback to be able to respond to it and eliminate factors that trigger the growth of dissatisfaction (Clarkson, 2016). This idea was one of the fundamental concepts introduced by founders with the prior goal to align the continuous improvement of carriers (Lutte & Bartle, 2017; Grant, 2017). As a form of quality improvement, Qantas uses external catering businesses to provide passengers with premium food that will be able to meet their requirements (Qantas, 2019). It guarantees an increased level of loyalty and the desire to use the company’s services again (Cook & Billig, 2017). Virgin Atlantic follows similar patterns with the leading purpose to avoid deterioration of its image and acquiring new clients.

Conclusion

Altogether, both Branson and McMaster managed to found successful airlines that transformed into the leaders of the industry with multiple opportunities for further growth. Virgin Atlantics and Qantas are full-service carriers that are focused on the business class that uses transatlantic routes or moves from Australia. The firms benefit from successful branding methods, flexible prices, and effective strategies that meet their visions.

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Introduction

Technology and internet has led to huge interconnectivity in the world of business. Additionally, the business arena is awash with cutthroat competition because of interconnectivity and the emergence of developing nations. This means that consumers have the ultimate power in influencing decision-making in companies.

Therefore, many businesses are looking for viable options to increase market relevance and to bolster their profitability. It is also crucial to note the ever-increasing accessibility to information. International trade has been growing upon this bedrock. This paper analyses two recent articles that touch on important concepts in international trade.

These concepts include globalization, national economy, and political decision-making, the influence of culture on international trade, and the ethics surrounding the conduct of business internationally. While it is crucial to look for ways to cut down on costs to increase shareholder value by looking at cheap options, it is also crucial to consider the stakeholders involved. This is the decision that Telestra Sensis, a directories company based in Australia, is grappling with.

The company wants to outsource and restructure its directories business to cut costs. On the other hand, Qantas, an airline company based in Australia plans to increase its competitiveness through strategic partnerships with an international airline (Emirates, based in United Arab Emirates). The content of the articles will shed light on the nature and intrigues of international trade. The analysis will also include a discussion on the most relevant international trade theories found in the articles (Kay, 1993).

Implications for Australian Businesses- Domestic Firms

The partnership between Qantas, the Australian airline firm and Emirates, based in United Arab Emirates has the potential to have several implications on the domestic firms in the same industry in Australia. One of the preliminary moves is to go to boardrooms to assess the implications on a business from the competitors’ viewpoint and from the industry viewpoint.

The firms are likely to observe the growth of the deal and the results that Qantas is likely to register in the subsequent months to make a move. However, some may make that move even before the operations start after concluding that it will have a huge impact on their business.

However, considering the many routes that Qantas will now enjoy and the expected price reductions and ease of interconnectivity to other world destinations, the highly expected likelihood is a fall in profits of domestic firms. This may trigger a case where the firms look for similar deals internationally to compete favorably with Qantas. This will result in mergers in the airline industry and possible takeovers. It is also a highly probable scenario for many domestic firms to go under because of such deals (Financial Review, 2013).

The Telestra plan to outsource a huge chunk of its operations to a different country may not resonate well with the locals. It may also not be favorable in the eyes of the Australian government considering the comments of the prime minister in one of the radio stations. The locals will most likely refuse to buy products associated with the company and opt for other substitutes.

This may have even deeper consequences towards the operations of Telestra. The company will spend so much money on Public Relations to ensure their image remains intact. On the other hand, the government may refuse to grant the wishes of Telestra. This will save the 400 jobs the union staff members are crying for but will have ruined, albeit not so much, the image of Telestra. Hence, it will have to spend some money to mend it.

The question that Telestra is facing is highly ethical. It does not resonate well with locals that a company they have so dearly associated with may use such bad language while addressing the issue. Additionally, the operation that the company wants to improve on is quite logical.

However, when companies want to make such transitions, it crucial to do it a sensitive way. Domestic firms may have a leaf to pluck from this unfolding chapter in Telestra long history regarding ethics in handling internationalization and globalization in a technological world (Goncalves, 2013).

Multinational Corporations

Just like domestic firms, international corporations’ resident in Australia and beyond will have a crucial lesson to learn. The corporations may have to revise some of their strategies. For example, reduction in prices may not auger well with them as they may be forced to cut down prices.

Additionally, the cost structure of Qantas will be highly adjusted considering improving purchasing economies of scale: all these points towards a bolstered competitiveness. Hence, globalization and international trade brings about better and improved services for clients and has the potential to bring about innovativeness (Johnson, Whittington & Scholes, 2011).

The Telestra planned outsourcing move has been tried internally with sometimes-unfavorable consequences. Hence, Telestra is not treading virgin grounds and the manner in which it is handling the issue may suggest as such. Outsourcing means that jobs are lost in the country in which it happens.

A highly publicized case of outsourcing such as the one Telestra is facing ruins public image of the company and benefits the competitors. This is likely to play out in Australia. The resentment may have the potential to help other companies that have similar operations been outsourced by Telestra and beyond.

Implications for Australian Government

Following the Australian Competition and Consumer Commission approval of the Qantas-Emirates deal, it is logical to conclude that the government is confident that the deal has the best interests of citizens at heart. Qantas in trying to finalize the deal is trying to remain relevant in the international airline market by forming an alliance it deems fit to increase shareholder value and entrench the interest of its customers.

The government will also be a beneficiary of a stable firm, as it will continue to receive tax benefits. However, the government’s most important interest in the deal is to protect the interests on its citizens. Additionally, the commission mandated with this has the noble importance of safeguarding the internally sanctioned principles of fair competition.

Hence, it acts as a referee to the acts of various stakeholders in business operations and strategic moves. If the deal results in operations that may hurt the welfare of either international or domestic firms, then the government will be to blame (Bateman & Snell, 1999).

In the Telestra move to relocate some of its operations to India and the Philippines with the aim of cutting down costs, the government is likely to be the major player as both an arbiter and shepherd of wellbeing of businesses in Australia. However, the plan, which is yet to materialize, is likely to be halted by the government considering the weak case Telestra has.

According to union chief, the company has enjoyed cordial relations with the Australian and such a move is considered an insult. If the government halts the outsourcing plan, it risks been labeled communist and the other options will result in loss of jobs in an already ailing economy. The latter also borders on ethical disregard of international trade principles. Hence, the government is likely to tread a dangerous and tricky ground on this Telestra move (Barney, 2002).

Relevant International Business Concepts for Articles’ Analysis

In the Telestra case analysis, the theory of comparative advantage is quite evident. Although the theory does not champion for existence of complete free trade, it posits a beneficial situation in which countries foster efficiency in the production of a particular commodity or service while another country fosters production of another different service or commodity. Subsequently, the two countries benefit from the mutual relationships developed to fast track economic growth (Hitt & Hoslisson, 2008).

The World Trade Organization is the sole global body that deals with fairness in trade among nations. It designs rules to ensure that large economies and small economies are at par in economic growth. However, its policies and propositions are not popular with most nations.

Its aims are to facilitate demand and supply by ensuring that producers of goods and services find a way to export their products and those that do not produce find a way to import what they need. Through its membership, World Trade Organization facilitates two major world forums. The Doha Development Agenda is a trade negotiations forum. It is designed to achieve groundbreaking reforms in the manner in which world economies conduct their trade.

The forum’s agenda is to inject revised rules and to improve the international trade system through systematic introduction of minimal trade restrictions. It was officially launched in Qatar in 2001.

Ministers of respective countries tasked with commerce, trade, and sometimes finance attend the forum. Each minister goes to the table to air their countries’ views. The Doha development agenda covers around 20 critical areas of world economy, which include agriculture, services, imports, exports, intellectual property, among others (Haberberg & Rieple, 2007).

World Trade Organization’s advocacy for free global trade has not been popular with majority of the nations. Although free trade has many benefits as opposed to closed trade, many countries perceive free trade negatively and bring down any attempts at making the world economy free of national and regional barriers.

For example, in 2003 during the talks that were held in Caucun Mexico, the world witnessed massive protests. This was the third ministerial meeting with the same agenda: trying to break the deadlock that had been experienced in the last two sittings since the first round in Qatar (Cai, 2013).

The second major forum facilitated by World Trade Organization is the World Trade Forum. This forum seeks common ground on how countries can work together in tackling common global problems that go beyond the need for economic integration. This includes the need for development in major areas such as education. Major economies and their leaders normally attend it. They review goals and targets such as millennium development goals.

This forum is generalist compared to the Doha round of negotiations. However, it is important to note that they both champion for a more developed world, which caters for the need of everyone. Although WTO is an effective organization, its influence is dwindling in light of the mistrust that is growing among many countries towards effectiveness of applicability of the organizations principles (Mintzberg & Ghoshal, 2003).

In the second case of the merger between Emirates and Qantas, the modernization theory takes center stage. This theory advances a ‘copy-paste’ method of propagating development. It says that underdeveloped and developing nations can grow by copying the methods that developed nations employed. It lays out stages in development that its proponents believe are applicable to any nation.

Additionally, this theory advances the belief that states are the greatest agents of change in the lifestyles of their citizens. This highlights the need to have stable and working structures of governance and leadership to enable development. Hence, it points towards the fact that many developing countries lack stability in politics and their social systems. This reduces their chances of development since the environment is not conducive for it. Conclusively, this theory advocates for democracy largely (De Wit & Meyer, 2004).

According to this theory, there is a glimmer of hope in the development of many countries. This is because many countries in the world continue to embrace the concept of democracy. The belief is that this will stabilize their nations and create environments for future growth.

However, it is important to note that this stability is sometimes cyclical. Additionally, many countries are still stuck in problems experienced many years ago. This includes coups, revolutions and reprisals as people seek to stamp democratic rights. This is set to continue in the 21^st century (Bartlett, Ghoshal & Beamish, 2008).

The ‘copy and paste’ concept advocated by Modernization Theory is not entirely applicable to many countries. Developed countries have infrastructure and capital intensive acquisitions that many developing nations may take a long time to acquire. Additionally, they have stability in education, which means that they have better generational succession.

It is also important to note these countries are the masterminds of the leading world lending institutions, which they also head. This makes the entire process favorable for the continued dominance of these states. Hence, it is going to be the same old setting where these nations continue to develop at a faster rate than other countries.

The fact that this theory advocates for developed nations to aid developing nations to play catch up is laughable. This is because these countries are in contention of world’s leading resources, including human resource, and assisting them means losing competitive advantage (Bamford & West, 2010).

Conclusion

The paper presents a classical analysis of international trade from the viewpoint of a changing market. The change is because of internet and globalization. The paper critically analyzes the impact of the strategic alliance between Emirates Airline and Qantas on multinationals in Australia, domestic firms and the Australian government.

This similar analysis is repeated in the case of Telestra. Both analyses conclude that both multinationals and domestic firms will have to come up with new strategies to counter the competition. The government will have to grapple with an ethical issue when resolving to simmering dispute between union members in Australia and the employees of Telestra. The paper concludes by highlighting some of the most prevalent theirs in international trade found in the articles.

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