QANTAS
CASE ANALYSIS REPORT
MARK ANTHONY ANDRIJCICH
STUDENT NUMBER – 10513924
MGMT3347 – STRATEGIC MANAGEMENT
SEMESTER 2, 2011
TUTORIAL 4 – MONDAYS, 15:00
ROOM BUSN:161 – THE CULLITY TUTORIAL ROOM
TUTOR – DOUG MOFFAT
INDIVIADUAL CASE ANALYSIS REPORT
TABLE OF CONTENTS
EXECUTIVE SUMMARY……………………............................3
EXTERNAL ANALYSIS OF QANTAS………………………...4 --Industry --General Environment Analysis --Six General Elements --Demographic --Economic --Global --Political/Legal --Socio-Cultural --Technological
--The Industry Environment --Michael Porter’s 5 Forces That Shape Strategy --Competitive Environment
INTERNAL ANALYSIS OF
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It operates in the low-cost airline segment through Jetstar. It is also engaged in providing time bound freight services. Other services offered by Qantas include international and domestic holiday tours, catering, ground handling, and engineering and maintenance services. The company also offers group flight training, and leverages its infrastructure and competency for operational training. It also provides services for defense sector in aircraft and engine maintenance, among others. Qantas is headquartered in Mascot, New South Wales, Australia (Qantas 2011b).
EXTERNAL ANALYSIS OF QANTAS
INDUSTRY
Qantas Airways Limited is in the airline and aviation industry—both domestic (Australian) and international. Its main business is the transportation of passengers using two complementary airline brands—Qantas and Jetstar (Qantas 2011a)
GENERAL ENVIRONMENT ANALYSIS
DEMOGRAPHIC
Growing Size of the Middle Class. The size of the middle class is growing globally and many of them like to travel internationally as often as their work life and bank balance allows (Hanson 2010).
ECONOMIC
The Global Financial Crisis (GFC). The late-2000s financial crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930’s (Reuters 2009). The impact of the GFC on airlines has been severe, putting the industry in major trouble that may be prolonged (Hanson 20011, p. 439; Qantas 2009).
The Qantas Group employs approximately 32,500 people and operates a fleet of over 250 aircraft,
1) Qantas Airways Limited is the national airline of Australia, it is also the largest airline in Australia. The Qantas Group’s principal business is providing domestic and international air transport services for passengers. Additionally, Qantas owns several subsidiary companies such as Jetstar and QantasLink that also operates flights to domestic and international locations, and Q Catering, a premium full service flight caterer.
This method involves selling products below production cost. This attracts customers to the business, who then purchase other products. Ultimately, this improves profits, brand loyalty, and market share. Qantas has used this strategy during the launch of its subsidiary, Jetstar, in 2006. For example, flights from Melbourne to Sydney was offered at $19. These low airfares attracted customers away from its competitors, such as Virgin Blue. This had seen
Qantas is one of the major companies in Australia, and also is an important part of the airline global industry. However, this report suggest that, it is not an appropriate time to invest in this company, because the company is going through financial
Qantas is one of those biggest and oldest airlines in the world who managed to keep making profit out of their businesses
The purchase of Australian Airlines in September 1992 allowed Qantas to more efficiently use their aircraft and improve management of passenger capacity and transfers between domestic and international services. Through their increasing economies of sale, they were able to gain a cushion for the economic
Qantas airline is Australia’s largest airline and one of the oldest in the world. Its history goes back to when the Australian defence department asked the collaboration of two former Australian officers to survey and provide supplies to participants of an air race competition. After the successful completion of such assignment, both officers embarked on an ambitious project and founded their very own airline company; the Queensland and Northern Territory Aerial Services Limited (Qantas) a small airline company in Australia.
Qantas is established in the Queensland outback in 1920 and after that it has become biggest domestic and international airline and strong brand in the Australia. It is enrolled as the Queensland and Northern Territory Aerial Services Limited (QANTAS) and the group two airlines brands are Qantas and Jetstar those provides transportation services of the customers. Qantas created its strong brand reputation through deliver safe and secure services, focus on customer services, maintain reliability of operations and focus on maintenance, engineering and technology (Qantas Airways Limited, 2014). Quanta main business aims or objectives are:
The Australian aviation industry faced toughest operating environment in the past 2 years driven by increased capacity in the domestic and global market, weak consumer sentiments after repetitive plane crashes, the ever rising and unstable oil prices and the economic uncertainty prevailing due to global economic crisis. Qantas introduced transformations in the form of maximising cost reduction, right-sizing fleet and network by reducing the staff, working existing assets harder, deferring growth, aligning capital expenditure to financial performance and accelerating simplification which are hard yet necessary precautions to be maintained for a profitable and sustainable future (Anon., 2014, p. 5). Qantas recorded $204 millions of benefits in the second half of 2013/14 due to the transformations even though Qantas recorded a loss of $646 million loss before tax, associated with an increase in fuel price by $253 million compared to 2012/13 and revenue decline of $550 million. Demand reduced drastically in the domestic market with decrease in consumer spending as an impact of low business activity in mining and government sectors (Anon., 2014, p. 6). Qantas introduced leaner, focussed and sustainable transformation reducing unit cost by 3%, and only if there is relative international and domestic capacity growth,
As a strategic role of operations management, Qantas and Fruity Fro-yo both use cost leadership to gain customers through the low price, whilst Qantas also uses goods/service differentiation to gain a competitive advantage over the competition. After the 2011 shutdown, the quality of their service decreased, therefore demanding Qantas to improve their performance. Both Qantas and Fruity Fro-yo offer a variety of options to speed up processes whilst maintaining flexibility, a low cost and the ability to experience a product or service customised to a certain degree, without high costs towards the businesses. Qantas must ensure that they regain their status of a quality service by introducing new products or service design and development with
The Australian domestic airlines industry operations usually consist of transportation of freight and passengers domestically (IBISWORLD, 2010). The industry has been experiencing slightly negative annual revenue growth of negative 0.4% for the past five years (IBISWorld, 2010). The domestic airlines industry consist of two major players such as Qantas Airways and Virgin Blue, and three minor players such as Regional Express, Skywest and Tiger Airways (IBISWorld, 2010).
Qantas has become Australia's largest domestic and international airline, it was registered initially as the Queensland and Northern Territory Aerial Services Limited (QANTAS) which broadly viewed as the nation's top leading long distance airline and is top airline brands in Australia. Qantas have built a good reputation in safety, operational reliability, building and support, and customer services. Qantas is at the forefront of the universal civil aviation industry, will be continuing providing outstanding service to their customers. Qantas first priority is safety and forms the foundation of every single sound decisions and activities inside the company.
In 2014 Qantas Airways LTD reported the deepest loss in the airline’s history. Qantas informed they made massive losses and cut thousands of jobs (Ross K, 2014). The situation was caused by write-downs, higher fuel costs, weak demand in Australia and market capacity growth outstripping demand (Creedy S, 2014). Qantas chief executive Alan Joyce said that the company needed to take measures to fix the airline. Qantas Frequent Flyer is a loyalty program. A person who flies Qantas Airlines, books a hotel or rents a car can earn points and exchange them for rewards. Qantas Frequent Flyer has a value of $3 billion (Wardell J, 2014).
Jetstar Airways is an Australian low-cost airline headquartered in Melbourne, Australia.[3][4] It is a subsidiary of Qantas, created in response to the threat posed by low-cost airline Virgin Blue (now known as Virgin Australia). The airline operates an extensive domestic network as well as regional and international services from its main base at Melbourne Airport,[5] using a mixed fleet of Airbus A320 family and Airbus A330 aircraft. Parent company Qantas also has stakes in sister companies Jetstar Asia Airways and Valuair in Singapore, Jetstar Pacific Airlines in Vietnam and the new Japanese carrier Jetstar Japan. Jetstar shares its parent's strong competition with Australia's biggest low-cost carrier Virgin Australia. Both Tiger
In this long operation period, Qantas constantly developed and improved so as to achieved some achievement and earn good reputation. For example, in 2012, it got different awards about entertainment facilities, the best first class and business class within 10. In addition, it was the best safety airline in the world from Airline Ratings in 2013. These good growth can lead Qantas come into a good situation and bring more passengers.