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Qantas -Competition in Low-Cost Airlines

Essay by   •  April 26, 2018  •  Research Paper  •  4,240 Words (17 Pages)  •  519 Views

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Executive Summary

Competition has been increasingly intensive in the airline industry. The rise of demand comes with airlines offering low-cost. Customers demand more and more for their money while different economic factors lead to fluctuations in cost and profit. With the development of the Internet, negative media coverage is more easily to spread nowadays, it leads to the passenger loss and higher requirement of modern aircrafts and safety control. Confronted with these threats, we evaluate Qantas’s core competencies and management systems, enterprise culture, share value, customer loyalty and image building to see how Qantas response to these challenges.

By thoroughly examine both external (market condition, competition and industry analysis) and internal (value chain, strengths, weaknesses, opportunities, threats and core competencies), this report provides a complete picture regarding the company’s situation provide reasoning for choices made in designing the management control system and recommendations given in order to assist Qantas in realizing its vision and goals. Also included in this report is the take away from the group describing what we have learned through the process of preparing this report giving it a personal perspective. 


Table of Contents

Executive Summary        1

1        Introduction        3

2        Management Control System        4

3        External Analysis        8

3.1        Porter five forces analysis        8

3.2        SWOT analysis        9

4        Internal Analysis        11

4.1        Key stakeholders        11

4.2        Value chain analysis:        13

4.2.1        Primary activities:        13

4.2.2        Support activities:        14

5        Core Competencies.        15

6        United Nation Substantiality Development        16

7        Recommendation        17

8        The Report Experience        18

9        Conclusion        18

Reference List        20

  1. Introduction

 Austrian Airline Qantas was founded in 1920. It is considered one of the largest domestic and international airline firm in Australia (Qantas, 2016). The firm has built a good reputation around the world for its safe history. Recently Qantas was named the safest airline for its outstanding fatality-free record for the fourth year running (The Telegraph, 2017). The firm is aiming to provide the best full-service airline experience to its customers.

The purpose of this report is to identify the management control system of Qantas Airline. It provides an overview of Qantas strategy used to achieve its goals, and conducts an internal and external factor in order to determine Qantas competitive advantages as well as weaknesses and disadvantages. Different techniques such as S.W.O.T. analysis, Porter’s five forces analysis, Value chain analysis and core competencies analysis were applied to determine Qantas position in the airline industry. Finally, recommendation for enhancing Qantas current market position will be provided.  

  1. Management Control System

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Quants set their long term strategic goal to be the best full- services airline in the world. To achieve the firm vision, Quants is facing many obstacles in terms of cost structure, market competition, and customer’s loyalty. The firm has started a transformation program in 2014 to manage their operation cost. Also, they started to make new partnerships with other airlines to increase Quant's air network in the world. Lastly, Qantas has made many partnerships to promote its customer and build a strong loyalty.  

The measurement for the firm performance toward Qantas vision could be measured by the firm performance during the past few years. It can be seen in figure 1 that Quants EBITDA Margin started to increase significantly after the transformation program started. It seems that the firm now has more efficiently in managing the operation cost which would drive the firm to better competitive advantages.

Figure 1. EBITDA Margin for Qantas from 2014 to 2016.                                               Source: (DatAnalysis, 2016).[pic 3]

However, the competition for being the best airlines in the world need a comprehensive effort from Qantas’s management, employee, stakeholder, suppliers, and customers. The firm need to maintain their core competencies and look for future opportunities to create more competitive advantages.

Management aspects

Controls

Financial performance

Key financial ratios such as gross profit margin, net profit/ net profit margin, current ratio, return on equity, return on investment and compare these ratios to targets or previous fiscal years.

Monitoring cost reduction (where applicable) and measure the company’s operating efficiency through the use of efficiency ratio.

Budgeting as a mean of control going forward.

An internal audit committee will be in charge of guaranteeing the accuracy and integrity of financial reports.

Ensuring quality and safety

Collect customer’s satisfaction score and feedback, preparing reports on punctuality, number of incidents and number of complaints as well as keeping track of the airlines’ ranking against competitors on industry reports prepared by organizations like Skytrax.

The number of new and returning customer as an indicator for its service quality, the growth of membership program and its retention rate can also be examined.

Employees

Set requirements for employment (e.g. flying hours and English proficiency for pilots, engineering degree for engineers)

conducting interviews as well as background checks.

Regular training sessions regarding service and safety.

Tests to evaluate employees’ individual level of expertise

Employees will be supervised by their seniors to provide assistance if needed.

Performance reviews will be prepared by managers from all levels at the end of each month/quarter

Aircrafts

Fleet should contain new and modern aircrafts (Boeing 787, Airbus A380), maintain or reduce fleet age over the years.

Careful inspection after flights and regular maintenance are required.

Building the brand image

Surveys on awareness of the brand how it is perceived by customers.

Social network accounts followers and their level of activity.

Number of positive/negative media coverage.

High frequency of advertisement spots on popular travel-related websites and magazines.

Number of celebrity’s endorsement

Working culture

Ensure all of its employees understand the firm’s code of conducts and value preferably through written acknowledgement.

Prepare periodic questionnaire and use the result to assess how effective is the firm communicating to its employees regarding work culture and values.

Commitment to the society

Address environmental issues by measuring the rate of resources (fuel, water, electricity) consumption and CO2 emission.

The percentage of women in managerial positions as well as aboriginal employees will be monitored.

Manage relationships with suppliers stopping co-operation with unethical parties.

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