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).
2.0 External Analysis
External analysis is used to analyze the external environment of an organization to identify any threats and opportunities, which is part of SWOT (Hill, Jones Galvin & Haidar, 2007). This part of the essay will be looking at what…show more content… The reason behind this is Qantas’s diverse flight operation of 142 destinations and its access to huge customer base (Datamonitor, 2007).
Over dependence on domestic market with over 70% of its revenue generated domestically (Datamonitor, 2007). With the Australian market not expected to grow Qantas would have problems with its sales in the future.
There are three levels of strategies business, functional and corporate level strategies each are used by organization to “survive and prosper in the fast changing and globlally competitive environment” (Hill et al, 2007). Therefore to assist firms to create competitive advantage and distinctive competency at an organization level (Hills et al, 2007). This part of the essay will be looking at what changes did Qantas implement to help them stay profitable and competitively advantages.
4.1 Cost-Leadership Strategy
Cost leadership strategy is used by firms to surpass their competitors by reducing their cost from production of goods or services and is part of the business level strategy (Hills et al, 2007). There are four factors that influence a company’s ability to build and sustain a competitive advantage: efficiency, quality, innovation and responsiveness to customers. These factors allow a company to (1) differentiate its product offering to create greater perceived customer value and (2) lower its cost structure, which will then build a competitive