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Chief Executive Officer
Review some of the historical origins and contributions of major management theory on today’s management practice.
Critically examine the central contribution of one major management thinker to the development of management thought.
Qantas Airways Limited
December 17, 2014.
Pursuant to your directive that an investigative evaluation be conducted to develop alternative future strategies for the venture, I hereby present this analysis report. The report develops a logical evaluation of the organizational situational analysis, as attached under the appendices, and subsequently recommends goals and strategies for future improvements, offering justification and tactical approaches for each.
Among the key evaluated strategic approaches that the organisation can apply include increasing its strategic industry alliances, internationalisation process as well as the development of an e-commerce platform. I believe that this report meets your request scope and expectations.
Table of Contents
The Australian aviation industry, similar to the global aviation industry is gradually changing. In this regard, the industry driving factors, operational margins and regulations are all changing simultaneously. In this regard, the changes causes ripple market effects necessitating simultaneous changes by the operating organisations in a bid to remain competitive. The Australian market is served by two key aviation industry players namely the Virgin Airlines and the Qantas Airways respectively. One of the longest serving organisations in the Australian aviation industry is the Qantas Airline that has a considerable market share (Yi-Hsin, 2012, p.1328).
This report develops a critical analysis of the Qantas Airlines operations with respect to its mission statement evaluating the performance through the application and use of the SWOT and Porters Five forces model evaluation tools. In this regard, the evaluation discusses the various alternative strategic approaches and goals that the organization can adopt and apply into the future to increase its performance and market success both locally in the Australian, market as well as internationally. A summary of the organisations SWOT and porters five forces model analysis are attached under the report appendices section under appendix 1 and 2 respectively.
The organizational mission is based on the provision and facilitation of quality aviation transport services at affordable prices. Therefore, the mission statement requires the organization to expand its product portfolio as well as propositions as a measure to increase and facilitate guarantee in the market. Therefore, the need to exert its influence in the Australian market as well as expand to other global markets form part of the organizational strategic need and goal into the future (Roos and Kennedy, 2014, p.262). This report evaluates the specific approaches and goals through which to achieve and successfully execute its mission statement.
One of the strategic goals that Qantas Airways should focus on is developing and applying the use of alliances in the industry. Currently, as Morschett, Schramm-Klein and Zentes (2010, p.14) stated, a situational analysis on the venture establishes that the organization is enjoined in the One world alliance as well as an alliance with the Emirates organization. In this regard, the evaluation of the alliances performance establishes their successful organizational performance and market success. Therefore, an increase in the use of such alliance into the future would increase the organizational market performance and success into the future.
In the execution of the above alliances developments goal, this report argues that the organization should adopt the following strategies to achieve the goal
· Develop alliances with industry aviation services providers
· Develop alliances with consumer organisations such as tourism agencies to boast consumer base.
· Develop alliances with the suppliers and labor organisations in a bid to reduce the overall industry and organizational operational and production costs.
One of the fundamental advantages and merits of developing alliances is the likelihood of sharing organizational resources. As indicated under the SWOT analysis, Qantas Airways is facing a rising cost of production in the market a virtue that reduces its overall market profit margins. In this regard Kielbowicz (2003, p.917) stated that, the adoption and development of increased alliances will facilitate the sharing of resources such a expertise, lounges and passengers parking areas, thus reducing on the ventures capital investment needs, reducing the cost of production.
In order to successfully attain the goal of developing increased industry analysis, this evaluation report develops key areas and activities through which the venture can develop the alliances.
· The first step is to evaluate the existing market opportunities in the areas through which the venture needs increased resources inputs.
· In this regard, the organization should develop a critical analysis through which to evaluate and profile the existing viable alliance partners in the market.
· In the process of crafting and establishing the partnerships, the venture should ensure that the established alliances are in line with the organizational mission of providing quality aviation services in the market.
· Finally, in order to increase the proposed alliances success, the venture should establish benchmarks through which to evaluate the alliances performance and consequently develop the rational improvements into the future.
Qantas Airways should focus on developing a strong online presence through increased provision of services through an e-commerce platform to supplement the organizational physical services platform.
In order to achieve the above goal, this report recommends strategies such as
· Contracting third party e-commerce platform hosting.
· Creating regional based e-commerce platforms to ensure services to all consumers based on their unique needs.
A justification for the proposed goal and strategies for the development and expansion of the organizational e-commerce platform is based on previous application of the system by industry competitors. In this regard, as Kamel (2006, p.21) stated, the Virgin Australia, as a key market competitor has developed a strong online presence. In this regard, the liberty to book, and secure flights and other services online has offered the organization an increasing influence in the Australian market. Therefore, in order for Qatar Airlines to counter this development and increased domestic market influence it should counter the application through the development and establishment of its own online e-commerce platform. As such, although a direct attack on its competitor, the organization will guarantee and offer a fair and equal market level to counter increased market competition in the market (Samad, 1997, p.16).
Based on the above strategies and justification for the implementation and development of an e-commerce platform this report develops and advocates for the following tactical approaches in the market.
· Conduct a market survey to benchmark other operators’ e-commerce platform. The evaluation should be based on establishing the overall services offered by competitors.
· Moreover, the organization should conduct an audit on its own platform to establish the existing services gap that need to be incorporated.
· A valuation of the actual costs of executing and implementing the proposed e-commerce platform should be developed and based on a critical examination of the alternatives between internally developing the platform and externally hiring third party alternatives.
· The venture should ensure the development of operational benchmarks. In this case, the developed e-commerce platform should not only be based on the development and establishment of services offered by the competitors. Instead, the platform should provide additional unique and innovative services.
· A continuous improvement approach should be adopted as the management tool to ensure that the e-commerce platform features and provided services are improved and enhanced on a regular basis a competitive edge retention basis.
An additional development and strategic performance goal for Qantas Airlines into the future is the adoption of the internationalization approach that will include expansion and development onto the international markets across the globe, in a bid to compete and align itself at peer with peers on the international platform (Sachse, 2012, p.17).
There are two strategic internationalization strategies in the aviation industry namely:
· Direct investment into new markets
· Adoption of industry market alliances to expand to new foreign destinations
A key justification for the proposed strategic goal is the changing Australian aviation industry market. In this regard, as indicated under the SWOT analysis tool, the organization has its main challenge in limiting its increased focus and investment concentration in the Australian aviation industry. However, as noted under the porters five force models, the industry in the Australian market is gradually experiencing allow suppliers bargaining powers, a virtue and industry condition projected and expected to project and increase into the future (Shchiglik and Barnes, 2004, p.19). Therefore, as a strategic proactive approach to counter and overcome the challenge, the organization should strategies and focus onto the international market.
In addition, as identified in the porters five force model, the global aviation industry I developing with economic changes expected to increase the revenues and expansion rates even further into the future. As such organisations such as Singapore Airlines and the Emirates Airlines have ventured into this market, increasing their global reputation. Therefore, for Qantas to attain such global it should consider venturing onto the global market, while retaining its focus and control on the domestic Australian market.
In order to successfully apply and execute the internationalization process, the organizational management should conduct and evaluate the listed factors and activities accordingly
· First, the venture should develop and conduct an expansive global market survey. The survey should focus on evaluating the different international markets that the airline could benefit by expanding to, based on macro economic factors such as economic growth rates both in the present and into the future as well as nature and level of competition not overlooking market regulations.
· Upon suitable target international destinations and market evaluation, the venture should evaluate and decide on the best internationalization approach for each of the market whether direct or through alliances and joint ventures.
· Finally, unique services needs and products propositions for the respective new markets should be evaluated to enhance and promote market success probability.
In summary, the report through the adoption of SWOT and porters five forces analysis tools identified three strategic goals through which the venture can increase its strategic market competitiveness into the future. The goals namely industry alliances, internationalization and e-commerce platform development have been discussed in details. This report concludes that with the implementation of the proposed strategies, the organization will increase its overall market competitiveness into the future. In this regard, it is my humble appeal to your honour the CEO that you consider the recommendations offered in this report and execute them as a means of increasing strategic future market success.
Kamel, M. 2006, "Collaboration for Innovation in Closed System Industries: The Case of the Aviation Industry", Engineering Management Journal, vol. 18, no. 4, pp. 16-22
Kielbowicz, R.B. 2003, "Airlines and Air Mail: The Post Office and the Birth of the Commercial Aviation Industry", The Journal of Economic History, vol. 63, no. 3, pp. 913-914.
Morschett, D., Schramm-Klein, H., & Zentes, J., 2010, Strategic international management: Text and cases, Gabler, Wiesbaden.
Roos, G., & Kennedy, N., 2014, Global perspectives on achieving success in high and low cost operating environments, Business Science Reference, Hershey, PA.
Sachse, U., 2012, Internationalization and mode switching: Performance, strategy and timing, Gabler Verlag, Wiesbaden.
Samad, S.A. 1997, "The US Federal Aviation Administration's airspace system in a changing world", Cost Engineering, vol. 39, no. 8, pp. 14-17
Shchiglik, C. & Barnes, S.J. 2004, "Evaluating Website Quality in the Airline Industry", The Journal of Computer Information Systems, vol. 44, no. 3, pp. 17-25.
Yi-Hsin, L. 2012, "Knowledge brokering for transference to the pilot's safety behavior", Management Decision, vol. 50, no. 7, pp. 1326-1338
· An extensive industry network through alliance development such as with Emirates and the One world alliance;
· A strong and reputable brand image.
· Operational efficiency leading to a two times win of the cumberbatch trophy for having an efficient engineering function.
· A strong domestic influence in the Australian market
· Increasing costs of production such as labor unlike competitors.
· Increased focus on the domestic Australian market alone.
· The risk of British Airways withdrawal of its Qantas ownership
· Developing E-commerce operations.
· Increase international travel destinations preferably in the Asian market.
· Increase market and industry alliances to provide joint services.
· Increasing cost of labor across the globe
· Rising global competition from international airlines such as Virgin Australia, Singapore, and New Zealand Airlines.
A SWOT analysis is an ideal management tool that involves the development and evaluation of organisations internal structures to develop a critical and elaborate audit on such an organization’s competitiveness. In this regard, an evaluation of the Qantas Airways SWOT analysis establishes that key among its strengths includes its Australian market dominance and a strong brand reputation. However, challenges such as increasing production costs and failure to focus on the international market are its main weaknesses. However, despite the threats of increased competition, the venture has opportunities in expanding to other global markets as well as developing increased industry alliances.
Discussion on Industry
Buyers Bargaining power
· Buyers bargaining power is average.
· the low switching costs across the airline companies
· Is reduced by the limited number of airline organisations in Australia.
Suppliers bargaining power
· Suppliers bargaining power is limited.
· High operational costs and increased global competition and uniformity of services reduce the bargaining power.
· The industry competition level is relatively high.
· Domestic competition emerges from the Virgin Australia Airlines.
· International competitions emerges from peers such as Emirates, Singapore Airlines and New Zealand Airlines among others
Threat of new entrants
· The Australian aviation industry operates on a free market basis.
· Increases the risk of new industry entrants from the global platform.
· High operational costs reduce local new entrant’s threats.
Threat of substitutes
· High threat of substitutes
· Increased global campaign on aviation industry pollution effects
· Likelihood for future adoption and use of alternative renewable jet fuel.
The porters five forces model is one of the key situational analysis tools applied and used in evaluating the current and expected industry performances. An evaluation of the aviation industry establishes that while the buyers bargaining power is average, the suppliers’ power is minimal due to global competition, which increases the industry competition levels. Moreover, the free market standards in Australian increase the threat of new entrants while pollution campaign risk future industry substitutes such as alternative fuel sources.