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Executive summary
This report concentrates on analysing Qantas using the 13 steps of firm analysis. It has established that the business establishment is one of the largest enterprises operating in the aviation sector in Australia. In addition, the company has expanded its operations to international markets. The report notes that Qantas is characterised by strengths such as marketing, versatile businesses and customer satisfaction. Weaknesses of the company are over-reliance on a single market, spiralling oil prices and poor employee relationships. Increased competition from business rivals and increased prices of aviation equipment. The following are the opportunities of the enterprise: expanding global population, better aeroplanes and improved technologies. Various recommendations have also been suggested in order for the management to deal with threats.
Introduction
Qantas was founded in 1920 in Queensland to offer air transport services (Qantas par. 1). Two years after its establishment, it merged with a British air firm to expand services to the UK and neighbouring nations. However, its operations were disrupted in 1942 after the World War II negatively impacted Singapore. It is notable that the firm has experienced many changes with regard to restructuring that were aimed at increasing performance outcomes. It has also been involved in a number of mergers and acquisitions (Mules 2). For example, in 1992, it purchased Australian Airlines from the Australian government. Although the air aviation industry is typified by a high level of competition, the company has always focused on remaining up to date with aeroplanes. For example, in 2005, the management ordered 115 Boeing 787. However, it experienced problems that were related to outsourcing. In fact, by 2009, the aeroplanes had not been delivered to the firm. Thus, it resulted to other ways of acquiring modern aeroplanes that could greatly improve its performance (Bonn and Rundle-Thiele 615; Qantas par. 4). Although its turnover increased in 2013, it is important to underscore that net profit reduced marginally for the 2012-2013 financial year. The first five steps concentrate on external factors while the remaining eight steps deal with internal matters. This paper aims at analysing the firm using the 13 steps of company analysis. In addition, it focuses on giving recommendations that should be adopted by the management so that it would the performance of the business establishment.
External analysis
Step 1: The industry
The company operates in the aviation industry in Australia (Qantas par. 1). It is notable that the sector is characterised by a number of players, which implies that there is a high level of competition. Different airline companies use various methods to attract and maintain customers, who are from local and international markets. It is important to note that the industry is regulated to ensure high levels of safety and business transparency (Bonn and Rundle-Thiele 615).
Step 2: General environment analysis
From a business perspective, it would be critical to assert that the environment plays an important role that could negatively or positively impact any business organisation. In the context of Qantas in Australia, seven elements in the environment could be analysed. These are economic, physical, socio-cultural, global, technological, political/legal, and demographic (Bonn and Rundle-Thiele 616).
Over the years, economic issues have been positively or negatively affecting the firm. For example, dynamics in currency exchange rates have affected the earnings realised by Qantas. Another economic factor is the rate at which money loses value (inflation rate).
Physical elements have enabled the firm to achieve exemplary results. For example, the government has focused on building modern airports that help airline firms to operate effectively. In addition, airport facilities in other nations are developed well to give airline firms modern physical facilities to support their operations (Bonn and Rundle-Thiele 617).
Socio-cultural elements with regard to Qantas could be viewed from a social standpoint. The Australian and international markets are typified by changing cultural attributes due to relatively high rates of migration. If the firm can aim at learning socio-cultural trends, then it can greatly improve its performance.
Global elements impact the business establishment because it operates in both local and international markets. For example, global issues in relation to terrorism might negatively impact the firm because local and international travellers might not travel to destinations that are characterised by terrorist threats (Bonn and Rundle-Thiele 620). In addition, changes in global events might lead to strengthening and/or weakening of the Australian dollar and international currencies. For example, political instabilities in some parts of the world might weak currencies weak and/or strong.
Technological elements have been affecting many organisations in the past. Notably, technological advancements have realised in the recent past. The adoption of the internet in relation doing businesses has been a critical step towards achieving exemplary results. It is notable that the airlines firm uses an online platform, which is used by consumers to book flights across the world. In addition, the adoption of social media platforms, such as Facebook and Twitter, has culminated in better outcomes because the firm can respond to issues in a fast and more effective manner (Bonn and Rundle-Thiele 618).
Political/legal issues of the environment could be used to learn about how the business establishment has been affected by politics and legal matters. In Australia, political events have not negatively affected the firm. In fact, the political atmosphere in the nation has been important to support operations of organisations in the aviation industry. For example, the government has been at the forefront in designing policies that would result in more effective operations in the sector. Furthermore, policies have been implemented with a view to making airline companies improve their outcomes and enhance safety of travellers. In the context of international markets, the enterprise does not have much influence on political/legal issues. However, such issues affect it. For instance, political instability in countries such as Egypt and Afghanistan could imply reduced business activities, which could reduce earnings made by the firm. In relation to demographics in Australia, it is notable that both the middle-aged and the aged are more conscious about safety and prices. Thus, the two issues (safety and prices) could present huge opportunities to the management, which would focus on improving safety trends and using the appropriate approach to set very competitive prices for various destinations. In fact, the two issues could be utilised to gain competitive advantage both in the local and foreign markets (Qantas par. 7). In analysing the demographics of Qantas, one might conclude that there is a good market of middle-income groups in Australian cities that require fast, relatively cheap and safe airline transportation services (Bonn and Rundle-Thiele 619).
Step 3: The industry environment
In analysing the industry environment, it would be critical to look at the five Porter’s forces. First, supplier power is relatively low, and this ensures that firms in the aviation sector could have much influence on suppliers when they are making purchases. Second, buyer power is high, which implies that consumers have to be considered when prices are being set. In addition, other factors have to be put into consideration. Third, issues involved in new entrants prevent many potential companies from entering the sector. For example, business establishments are required to adhere to a minimum capital requirement, safety regulations and personnel requirements, among others. The requirements make the industry hard to enter. Fourth, with regard to substitute products, it is critical to note that there are no alternative services to air transport. However, people could result to travel using effective and fast trains and vehicles. Finally, rivalry among competitors is remarkable in the aviation sector in Australia (Qantas par. 8). Various companies are aiming at attracting and maintaining customers, who would be essential in improving outcomes. Different approaches are used, such as low pricing. It is critical to conclude that the key force in the environment is rivalry among competitors. However, it is prudent to conclude that the industry is quite attractive.
Step 4: Competitive environment
The top three business rivals of Qantas are Virgin Australia Holdings Limited, United Continental Holdings, Inc. and Singapore Airlines Limited. The capabilities that the firms have are excellent physical facilities, competent workforces, effective marketing, and corporate social responsibilities. In addition, they use pricing strategies. Thus, if Qantas adopts high pricing, then it would lose the market to its competitors.
Step 5: Opportunities and threats
Opportunities and threats are external factors that could affect the business establishment. It is essential to emphasise that opportunities would result in better business outcomes while threats would result in reduced earnings. An important opportunity is in relation to the expanding global population, which implies that there would be increased demand for airline transport services. In addition, the management would attract and retain customers using improvements of technological platforms. Finally, the manufacture of modern aeroplanes might result in better services if the management would purchase them. One threat that would affect the company is increased competition from business rivals. Another threat is increase in prices of modern aviation facilities, such as aeroplanes (Qantas par. 3).
Internal analysis
Step 6: The firm’s resources (both tangible and intangible)
Resources within a firm are grouped with the aim of helping the management to make strategic decisions, assessing the worth of a company and allowing investors to reap the benefits of asset ownership (Ringland and Young 67). Tangible assets are used to represent opportunities in relation to the production of goods. They include buildings, land and aeroplanes. On the other hand, intangible resources do not have physical forms, but they are used to represent sources of economic advantages that would result in the future. Examples are goodwill and intellectual property rights (Mules 2).
Based on the financial information of Qantas, the business establishment has goodwill of 195,000 USD. However, property plant and equipment are not reflected on the balance sheet (Fusion Media Limited par. 4). The total value of intangible assets is about 548,000 USD.
Step 7: Capabilities identification
The firm is typified by the following capabilities:
- Marketing
- Customer satisfaction
- Versatile businesses
Over the years, Qantas has been involved in strategic marketing of its services. This has been critical in attracting and retaining customers in the airlines transport sector. Another capability that the company has is in relation to customer satisfaction. The management focuses on ensuring that consumers are handled in the right ways, resulting in loyalty and increased revenues. Finally, the firm has adopted other business activities that are not related to flight services, such as catering and aircraft engineering (Mules 2).
Step 8: Core competency analysis
Core competency analysis could be analysed by conducting four steps that are presented in the table below:
Figure 1. Analysis of the core competencies of the firm.
Step 9: Value chain analysis
Value chain analysis could be done by analysing the primary and support activities of the company (Ringland and Young 20). In this context, the primary activity of the firm is offering airline transport. Support activities include all other activities that are aimed at achieving the goals vis-a-vis the primary activity. They include marketing and CSR activities (Mules 3). Thus, it can be concluded that it has focused on implementing support services in order to achieve its core activity.
Step 10: Weaknesses
Notably, the company is typified by three key weaknesses. First, it has poor relationships with its personnel. The management was involved in conflicts with personnel working in its engineering department in 2008. The conflict resulted from a wage agreement that was effected by the management. However, the issue was solved later and the employees’ wages were increased by between 4% and 5.8%. It is critical to note that the matter was important to the operations of the firm because it could lead to disruption of its activities. In addition, such a matter could make workers have negative trust to the business establishment. Second, Qantas over depends on a single market. Although the firm has entered international markets, it is clear that it generates much of its revenues from the Australian market (Mules 2). Thus, any negative market dynamics in the local market would have great negative impacts on its earnings. Some of possible issues include unstable political atmosphere and economic depression. Third, spiralling costs in the aviation sector, especially fuel costs, have impacted the enterprise negatively (Mules 4). In 2008, the management stated that it could utilise the best approaches to prevent effects of spiralling oil prices. However, the business environment was very very unpredictable. As a result, it was forced to reduce other costs in relation to operations so that it could remain competitive in the market. Some of the costs were those that were related to salaries and flight capacity (Mules 4).
Step 11: Pulling it together (SWOT analysis)
Based on the evidence identified in the internal analysis and external analysis, a SWOT analysis of the firm could be summarised as follows:
Figure 2. A SWOT analysis of Qantas.
Step 12: Current strategies
It is notable that Qantas has adopted three key strategies to achieve its goals (Ringland and Young 34). First, the management has focused on establishing a strong corporate image. This is aimed at making the firm a company to reckon with both in the local and international markets. Second, the firm concentrates on offering exemplary customer service. It achieves this by employing sufficient workers to handle customers. Its main goal of offering high quality customer service is to gain competitive advantage by attracting and retaining consumers (Ringland and Young 34). Third, the management has been at the forefront in terms of adopting corporate social responsibility. This has been aimed at managing the environment, which supports its operations (Mules 3).
Step 13: Strategies
In order for the company to deal with the threats identified in this report, it would be important for it to adopt a set of recommendations at the business level, corporate level and international level. It would be recommended that the management should focus on low pricing, which would be applied at international level to attract consumers. In fact, this would be achieved in relation to pricing strategies adopted by international business rivals. At the business level, the firm should adopt personalised marketing, which would aim at addressing needs of specific customers. At the corporate level, it would be recommended that the business establishment should concentrate on adopting effective communication approaches to pass messages to various stakeholders.
Conclusion
It is evident that Qantas is a giant that specialises in offering flight services and other versatile business services. The 13-step analysis adopted in this report has demonstrated various factors that typify the organisation both internally and externally. Based on the analysis, the firm would utilise market opportunities by adopting the recommendations proposed in this paper.
Works Cited
Bonn, Ingrid, and Sharyn Rundle-Thiele. “Do or die—Strategic decision-making following a shock event.” Tourism Management 28.2 (2007): 615-620. Print.
Fusion Media Limited. Qantas Airways Ltd. (QAN). Web.
Mules, Rachel. “The long haul: The QANTAS-Emirates Alliance.” Busidate 21.3 (2013): 2-4. Print.
Qantas. Home. Web.
Ringland, Gill, and Laurie Young. Scenarios in Marketing: From vision to decision. John Wiley & Sons, 2007. Print.
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