Jet Star: Quantas’ Business Level Strategy

2378 WordsApr 14, 201310 Pages
Written Case Report Case “Jet Star: Quantas’ Business Level Strategy” Abstract Qantas is the largest Australian airline company. The industry in which Qantas exists seems to be attractive as it brings enormous profits for the company, however, new entrants would face many difficulties in the entering this industry. Qantas uses two-brand growth strategy while offering two types of service: premium and low-price. The premium service is being delivered by the company itself and the low-price service is delivered by subsidiary of Qantas named Jet Star that was established in order to avoid price wars with big competitor Virgin Blue and maintain the Qantas image of being premium services offering company. Qantas uses differentiation…show more content…
The bargaining power of buyers is high in Jet Star and low in Qantas. As Jet Star’s customers expect low prices from the company they are very sensitive for any price changes. If the prices in Jet Star increase it is very possible that customer will try to find better prices in another low-price offering airline Virgin Blue. However, in the case of Qantas offering premium flights the situation is different because customers are more concerned with quality than prices which means that its customers’ bargaining power is low. The bargaining power of suppliers is high. Firstly, there are very few aircraft suppliers what means that they have quite big power in offering prices. Secondly, Qantas subsidiary Jet Star is price sensitive as its objective is to reduce its costs as much as possible. This means that Jet Star is very dependent on the prices its suppliers’ offer. However, Qantas by itself is more concerned on the quality offered which leads to the fact that its suppliers bargaining power decreases. And, finally, the threat of new entrants is low. To begin with, it is hard to enter air travelling industry because it requires big investments as very expensive equipment has to be bought. In addition, this industry is quite mature already as there are such airline business giants as Qantas and Virgin Blue already in the market. The Reason of why Jet Star was created. Did it serve the purpose? Qantas company

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