Assignment One - Report PDF

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Assessment One for Innovation of Entrepreneurship. A strategic report for a chosen company. ...

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STRATEGIC ANALYSIS - QANTAS

Subject Name: Innovation and Entrepreneurship Subject Number: 21227

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Table of Contents EXECUTIVE SUMMARY..................................................................................2 INTRODUCTION................................................................................................3 STRATEGIC ANALYSIS.....................................................................................4 EXTERNAL ANALYSIS.....................................................................................5 MACRO-ENVIRONMENTAL ANALYSIS.....................................................5 COMPETITOR ANALYSIS..............................................................................6 CUSTOMER ANALYSIS.................................................................................7 INTERNAL ANALYSIS......................................................................................7 ORGANISATIONAL ANALYSIS....................................................................7 INNOVATIVE RECOMMENDATIONS.............................................................8 RECOMMENDATION 1..................................................................................8 RECOMMENDATION 2..................................................................................9 CONCLUSION....................................................................................................9 REFERENCES...................................................................................................10 APPENDIX.........................................................................................................11 APPENDIX 1 – SWOT ANALYSIS...............................................................11 APPENDIX 2 – PESTEL ANALYSIS............................................................12

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EXECUTIVE SUMMARY The aim of this report is to provide a strategic analysis for the chosen company Qantas. Qantas is a well-established Australian airline business that focuses on the importance of maintaining their relationships with their loyal customers. Through the report it will discuss and outline QA internal and external environments within the business and emphasise on how QA displays on each. Additionally, the report will then follow two innovative recommendations for QA to adopt, in order to hold their high value within the aviation market and successfully grow as a business.

The report makes the following recommendations: 1. Hybrid Plane Engine Systems 2. QA Airport Application The aim of these recommendations is to allow Qantas to innovate, in order to improve its competitiveness in the marketplace. Furthermore by applying these recommendations Qantas will be able to differentiate them from their competitors in the aviation market.

INTRODUCTION 3

This report has been designed to provide a strategic analysis for the company Qantas Airways Limited, which will guide them to get an understanding the importance of future innovative services – allowing the company to gain further competition over their competitors within their market (aviation market). The report will utilise the analysis from the internal and external analysis to make informed recommendations on how the business can successfully innovate – in order to improve its competitiveness in the market. These recommendations will help guide Qantas to successfully continue as a business – and maintain their lead within the aviation market. Founded in 1920, Qantas has become Australia’s both largest Domestic and International airline – with over 30,000 employees, in which approximately 93 per cent them are based within Australia (Our Company, n.d.). The company is recognised as the ‘world’s leading long-distance airline, as well as one of the strongest brands in Australia’. In order for Qantas to hold their high reputation and position within the market, they must undertake procedures highlighting their values for creativity, innovation and originality. With having a large amount of competitors, Qantas must adhere the recommendations that will be provided within this report - as it will allow them be innovative and differentiate themselves from their competitors. This is an importance aspect, as each airline all offers the same service – travelling to their chose destination. Qantas must overlook on how they can create a competitive advantage over their competitors.

STRATEGIC ANALYSIS In order to have innovative recommendations for the business and create a future strategy they must follow to create success in the long term it is crucial to understand the functionality of the internal and external company. The report will now undertake a closer look and understanding on the internal business structures of Qantas, along with the environment Qantas does business in.

EXTERNAL ANALYSIS 4

MACRO-ENVIRONMENTAL ANALYSIS To gain and develop a clear understanding of Qantas’ macro-environment, the PESTEL analytical tool was used. With the use of PESTEL it helps to examine and categorise the external environment of the company into six main themes, which allows the organisation to gain a clear understanding of each element in depth - which potentially guides for the company to make their informed strategic business decisions. The political relations between countries has a significant impact within the aviation industry, as each government has their own restrictions and regulations that all airlines must obey by in order to successfully run their business. A common regulation an airline must follow is the time of landing and departing aircrafts – this may be due as the location of the airport is close to housing and the noises of aircrafts are too loud. ‘Open Skies’ is a political agreement made in 2016 by Australia and China that is focused on having an ‘open aviation market. Demonstrated in appendix 1, the agreement allows Australia and Chinese airlines to service destinations between and outside both countries, as well as enabling them to take full advantage of their cooperative arrangements with their commercial alliance associates (Maslen, 2016). Additionally, from this political agreement it will enable the two countries to remove all capacity restrictions between each other (Ciobo, 2016). From this, it allows QA to have unlimited access to China and can potentially increase trade and tourism through their partnership with southern and eastern China airline. With Qantas focusing on the Asia region, this has resulted around 50 per cent of the business’ international capacity dedicated to the region – this results QA offering more than 130 returns flights a week between Australia and China (Maslen, 2016). Technological is a major factor within Qantas’ external environment, as technology is changing rapidly everyday - QA must ensure they keep up to date with new technological improvements, as it essential for the success of the company. Qantas’ PESTEL analysis highlights on the importance of being aware of their external environment, as it guides them to make successful business decisions based on the macro-environment. Additionally, ensuring they make innovative strategies along the way for long-term success and business growth.

COMPETITOR ANALYSIS 5

The Aviation industry is an area where competition is extremely critical and significant as each and every airline operator is on the lookout to achieve the greatest share in the market. Due to Australia’s liberal aviation policy as well as the increasing boost of the economy, there have never been that many offshore competitors to enter the Australian international aviation market. Porters Five Forces analysis breaks down the competitive nature of the aviation industry focusing on the intensity and attractiveness of a market (CGMA, 2013). Due to Qantas operating both domestically and internationally, they attract an array of competitors. However, focusing on the domestic sector their most significant competitor is Virgin Airways. Both Qantas and Virgin compete against each other due to the price cuts in their services. Virgin’s aim is to introduce new aircrafts, catering services and explicit customer service at a lower price than other airlines (Gekara, 2017). For example, Virgin have included more flights into regional ports around Australia such as Townsville and Hervey Bay, whereas Qantas offers complimentary meals for all customers on all their domestic flights. This exemplifies how passengers today have the power to choose a variety of services in who they wish to travel with due to the increased rivalry between airlines. Adding on, Qantas’ power with their supplies is narrow due to the limited competition of suppliers within the market. Not many organisations worldwide have the facilities and materials to produce the needs of such large aircrafts like the Boeing 747 which Qantas store and transport worldwide. Therefore, Qantas have the ability to understand that in order to move forward they need to provide that efficient supply chain with multiple suppliers in order to maintain the companies margins within the market (Fern Fort University, 2017). The threat of new entries into the market for Qantas is at a decreased stage due to the extreme amount of funds needed to launch an airline. However, Qantas take this into consideration, and they overcome any new entrant by innovating new products and services. This has been demonstrated through the Qantas Entertainment App allowing all passengers to sit back and gain access to any type of entertainment during their flight (Simple Flying Content Team, 2018). Lastly, the threat of substitution is fairly low due to the lack of low entries into the industry. However, Qantas focuses on this notion as they are a company known as being service oriented rather than product oriented as their ultimate goal is to satisfy their customers in order to achieve customer loyalty.

CUSTOMER ANALYSIS 6

One of Qantas’ main goals as a business is to constantly improve their customer experience as well ensuring they cater for all customers. The company Jetstar was introduced by Qantas that offers the same concept of service as QA – customer travelling to their desire destination; at a lower and more affordable cost. This allowed for QA to have a larger range of different customers and be able to offer and cater for all different needs and expectations. By introducing the Dual Brand Strategy this ensured QA was able to meet all expectations from their customers and create high quality customer experience. Through the Dual Brand Strategy, Qantas has been able to remain to service the premium leisure and business market segments, while Jetstar delivers low prices for their services to their large base of customers in the price-sensitive market (QA Annual Review, 2017). Both Qantas and Jetstar offer same services; wifi on board, meals, in flight technology entertainment (movies and television shows) and confront on all flights – creating high customer satisfaction. By ensuring to maintain this high customer satisfaction, QA must ensure they listen to their customers and increase their customers experience.

INTERNAL ANALYSIS ORGANISATIONAL ANALYSIS The Resource-Based View fundamentally provides a perspective on why organisations succeed or fail (Srivastava, 2016). Services that are valuable, rare, inimitable and nonsubstitutable allows opportunities for businesses to grow and provide competitive advantages (Barney, 1991). QA demonstrates high value towards their customers by offering their air services to many destinations both domestic and international– this allows for QA to provide a large range of destinations, ultimately creating high valuable services to their customers. One of Qantas’ main focus as a business is safety – which has led them to a rare advantage of having the title ‘Worlds Safest Airline”, this creates a competitive advantage as many customers would choose QA to fly with due to this title (Smith, 2019). As Qantas is a wellknown brand that has a high volume of power, QA is inimitable as their competitors are incapable to copy the well-known brand. Qantas partnered up with leading hotels, restaurants and brands globally to enable a rewarding system for their loyal customers – ‘Frequent Flyer Program’. From this it creates a customer loyalty for the brand, as the company is providing a service that benefits their customers when they choose them to travel with.

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INNOVATIVE RECOMMENDATIONS By assessing the external and internal influences on QA, the report will now outline and discuss two innovative recommendations to guide QA to establish additional competitive advantages and successfully hold the high value view the business has.

RECOMMENDATION 1 The first recommendation for Qantas is the introduction of a new Hybrid Turbine Engine System. This type of innovation will not only help in further improving their Corporate Social Responsibility (CSR), but will allow the company to meet future emission targets and provide a quieter experience for its consumers at a lower price. This will be largely due to its reduced fuel demand and consumption. Along with this system comes with a generator which converts electrical power from the battery to mechanical rotational and converts rotation back into energy in order to charge the battery that sits within the electric motor. This is good for many reasons, one being whilst in pure electric mode, zero emissions will be emitted. The other good reason is for its quietness. This will be very ideal for consumers to be able to get a better sleep rather than try to ignore the high noise level of the combustion turbine engine. Today, companies such as Airbus and Rolls Royce are engineering and design projects that involve this type of Hybrid Turbine Systems. They currently claim a reduction of CO2 by 75%, decrease of NOx (nitrogen oxide by 90% and noise reduction by 65%. Competitive advantage for Qantas amongst its rivals is, o Lower plane ticket costs o better comfort for its consumers o Lower operating cost. Implementation of this new system should be slow. This is to allow Qantas to get consumer thoughts and insights into their experience of flying on a Hybrid Plane. If all consumer feedback is positive, then implementation may increase over time. If, however consumer feedback tends to lean negative, Qantas will need to look for ways to further improve the technology and discuss the problems its consumers have with it with its suppliers of the engine system that being Rolls Royce or any other manufacture.

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RECOMMENDATION 2 Service Process Innovation is a significant factor in maintaining a firm’s competitive advantage and to enhance their capabilities facilitating firm performance (Chen, 2016). A proposal for Qantas to consider is to enhance an technology innovation; an application that features and guides their passengers about all of the important requirements of travelling. The application will offer real estimate times for important points and procedures the passengers should be at e.g. check in (luggage and passport) customs/security and boarding gate – this will ensure all of QA passengers are on time schedule. Many individuals face ‘air travel anxiety’ which is essentially people having a fear of flying which can result people to become anxious and unaware of their surroundings. To ensure all passengers are familiar with their surroundings, the application has access to each of all airport layouts QA travels to, allowing for all of their passengers to have a clear and visual understanding on key areas within the current airport they are located. From this, it will enhance their customer service as less or none of their passengers will miss their flight due to lack of timing. For Qantas to successfully develop this type of application, QA I.T team, must apply key features within the application e.g. a wide range of languages to choose from. As QA has many international passengers, they must ensure that the new innovative application is useable for any user. This will ensure there is no limitations to use the app.

This fundamental innovation strategy will ultimately give Qantas competitive advantages as it will result higher customer satisfaction, fewer passengers being late to their plane and creating relationships with their loyal passengers. In order for this innovative strategy to work smoothly, QA must ensure their I.T. team regularly update and enhance the application.

CONCLUSION In conclusion, this strategic analysis of Qantas summaries that the company has a clear understanding if it’s external and internal environments. To ensure they hold their high value as a business they are recommended to incorporate the two innovative strategies mentioned in this report - in order to create competitive advantages, as well as creating new opportunities for the business.

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REFERENCES Barney, J. (1991) ‘Firm Resources and Sustained Competitive Advantage’, Journal of Management, 17(1), pp. 99–120. Chen. 2015. Service innovation and new product performance: The influence of market linking capabilities and market turbulence.International Journal of Production Economics 172:54-64 · February 2016 with 1,279 Reads. 54(64) Fern fort university. 2017. Qantas Airways Limited Porter Five Forces Analysis. [Online]. [11 April 2019 Gekara. 2017. Qantas Case Study. [Online]. [7 April 2019]. Available from: https://researchcampus.wordpress.com/2017/02/09/qantas-case-studyanalysis/#_Toc430125312 Kasi. 2016. Pestel - Qantas. [Online]. [11 April 2019]. Available from: https://freepestelanalysis.com/pestel-analysis-of-qantas/ Lin, j. & nabergoj, a.s. 2014, "a resource-based view of entrepreneurial creativity and its implications to entrepreneurship education", economic and business review for central and south - eastern europe, vol. 16, no. 2, pp. 163-183,218-219. Maslen. 2016. New China – Australia agreement opens skies to from: https://www.routesonline.com/news/29/breaking-news/270226/new-chinaaustralia-agreement-opens-skies-to-international-connectivity/ Qantas annual review. 2017. Delivering Against Clear Strategic Pillars. [Online]. [13 April 2019]. Qantas airways limited. 2019. Safety - our first priority. [Online]. [13 April 2019]. Available from: https://www.qantas.com/au/en/qantas-group/acting-responsibly/safety-our-firstpriority.html Simple flying content team. 2018. Virgin Australia vs Qantas Economy – What’s Best?. [Online]. [7 April 2019]. Available from: https://simpleflying.com/virginaustralia-vs-qantas-economy-whats-best/ Smith. 2019. World’s safest airlines named for 2019. [Online]. [12 April 2019]. Available from: https://www.airlineratings.com/news/worlds-safest-airlines-named-for-2019/ Srivastava. 2001. The Resource-Based View and Marketing: The Role of Market-Based Assets in Gaining Competitive Advantage.Management. 27(6) 10

APPENDIX APPENDIX 1 – SWOT ANALYSIS Strengths o Due to Qantas being Australia’s most well-known Airline they have gained a very high position in the aviation market.

Weaknesses o The large array of competition in the international aviation market has resulted in Low profits. o

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Being a part of the One world Alliance group has allowed Qantas to establish agreement with other well-known airlines such as British Airways and American Airlines, fundamentally generating a greater reputation for Qantas. (Qantas, 2018).

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Qantas have introduced a variety of new aircrafts which creates flexibility throughout their fleet presentation (Fleet Strategy – providing a variety of air-crafts; creating flexibility).

One of Qantas’ main goals is to constantly improve their customers experience. This is seen through their inflight technology as well as allowing passengers to gain access to WIFI on board. They are also known for their strong values for customer safety and service. Opportunities o The rewards program such as the Frequent Flyer Program that Qantas offers gives customers an extra bonus when travelling.

Union Issues: Qantas has been in conflict with unions such as Tra...