Qantas IA2 Business Investigation Report PDF

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HSC IA2 business investigation feasibility report on Qantas including SWOT analysis and point of interest grid. May prove to be useful...

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TapiwanasheMasvaure

IA2BUS

BusinessInvestigationReport

TableofContents BusinessBackground..............................................................................................................................3 Businesssituationandproblem..............................................................................................................3  MarketingandOperationsStrategies.....................................................................................................3 Marketing............................................................................................................................................3 Operations..........................................................................................................................................3 S.W.O.TAnalysis.....................................................................................................................................4 Stakeholderanalysis...........................................................................................................................6 P.I.GMatrixAnalysis...........................................................................................................................6 Evaluationthecriteria.............................................................................................................................7  Marketing............................................................................................................................................7 Competitiveness.............................................................................................................................7 Stakeholdersatisfaction..................................................................................................................7 Operations..........................................................................................................................................7 Competitiveness.............................................................................................................................7 Stakeholdersatisfaction..................................................................................................................8                  2 

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BusinessInvestigationReport

BusinessBackground QantasAirwaysLtdisthe“nationalcarrierofAustralia”(IBISWorld,2020).Ithasanextensivedomestic andinternationalnetwork(IBISWorld,2020),anditsmostpopularinternationaldestinationsinclude New Zealand, Bali and the United States (IBISWorld, 2020). This report seeks to identify Qantas’s existing operating and marketing strategies and investigate a problem faced by the business in its hostile and highly competitive environment, and recommend new solutions that could be implementedtoretainitscompetitivenessinthemarket.

Businesssituationandproblem Qantas operatesinthehostileAirandSpaceTransportindustry  (IBISWorld,2020) andpossessesan estimateof30.6%sharesintheInternationalAirlinesindustry(IBISWorld,2020)(refertoAppendixA). COVID‐19hashadaprofoundimpactontheaviationmarketinAustraliaandglobally.Inresponseto thevirusoutbreak,thetravelbansimposedbythegovernmenthaveresultedinairpassengervolumes plummeting,andresultingly,domesticcommercialflightssuchasQantas‐have declined by 93.6% (April2020)(G+T Editors,2021).Additionally,consequently,thedomesticair travelmarket hasalso drasticallydroppedindemandby89%(September2020),whichtranslatestoanexpectedlossof$19 billion(US)dollarsinairlinerevenuesinAustralia(2020)(IATA,2020)–asaresult,Qantas’revenues areexpectedtodeclinesignificantlyover thenext twoyearsat anannualisedrateof 10.2%through 2020‐21.Fromthestatisticsabove,itisevidentthatissuesoffearanduncertaintyfeltbyconsumers hasbeendetrimental tothe travelindustry andthus,consumerconfidenceisthebiggest obstacle Qantashastoaddressasamatterofurgencyifitistosurvivebeyondthepandemic.

MarketingandOperationsStrategies Marketing In order to maintain competitiveness in a hostile and mature environment that has been greatly influenced by COVID‐19, Qantas has positioned themselves as Australia’s leading premium airline (Qantas,2017)throughthepromotionalmarketingmix.Usingadvertisinganddirectmarketing,and inlightofuncertaintimeswhereapproximately100ofitsplaneshavebeengroundedfor12months, Qantashasrecentlyreleasedpromotional campaignsaimedatsustainingand regaining itsdomestic consumers’interests(Thorn,2020).Throughitsinfamousbrandpositioningas“thespiritofAustralia” (Qantas,2017),anditsabilityto playon itsAustralianconsumer’spatrioticemotions,whilepaying tribute to their love of travel, Qantas has been competitively advantageous and in regaining its domestic consumers’ flying confidence. Furthermore, its reinvestment in domestic travel is also greatlyadvantageousforconsumerresearchhasshownastrongpurchasingintentfordomestictravel. 2021interstatetraveltrendsshowthattwo thirdsof respondentsareconsideringinterstate travel (AppendixB)(B&TMAGAZINE,2021),andthat22%ofthoserespondentsarealsoplanningtospend morethanusualontravelwithinAustralia (Page,2021).Therefore,statistics(shown)onconsumer spending expectations illustrates how, through its use of emotional advertising as a marketing strategy, Qantashas takena bigstepinregainingitsconsumerconfidence byfosteringasenseof connectionwithtravellers,to which,emotional responsestoitspromotionalcampaignmaygreatly influenceconsumers’intentiontoflywiththeairline.

Operations Inordertomeetandmaximisecustomersatisfactionwiththeservicesitoffers,operationstrategies mustbeimplementedbythebusiness(Adams,2019).Whencompetinginahostileenvironment,itis importantforQantastoensurethatthetotalityofitsfeaturesandcharacteristicsofitsservicesbear theabilitytosatisfytheneedofallitsconsumers(Kiprono,2018),andtheairlinehasdoneso,through 3 

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itsuseoftheoperationalprocessoftotalqualitymanagement(TQM).TQMhelpsQantasimproveits effectivenessandefficiencyinitsvariousoperationsfunctions,togainconsumerconfidence.Inthese uncertaintimes,QantasutilisesTQM’sprincipleofcustomercentricity,throughcustomerservice,as adifferentiatortoitscompetitors.Bypositioningteamscomposedofemployeeswithgreatexpertise andempathyat customerservice,theairline hasaimedtominimisecustomerdissatisfaction inthe peak of flight cancellations and long waiting durations (Giuliani, 2021). Additionally, through its initiativeQantasFlightTraining,theairlinehaseffectivelytraineditscustomerserviceemployeesto dealwithvulnerableconsumersandhasmotivateditsstaffto bemoreresolution‐oriented(WARC Editors, 2021). It is because of this, the brand has domestically been claimed as possessing an unbeatenleadingcustomersatisfactionrating of84%(AppendixC)forthe past 5 consecutive years (RM Editors, 2020). Furthermore, Qantas uses TQM to continuously improve, through quality managementandservicesledbytheentirecompany,tomeetconsumersatisfaction.Inlightofhealth and safety being a current great fear for consumers, through its Fly Well Program, Qantas has introducedanumberof initiativesto improve safetyandpeace‐of‐mindfordomesticflyers,suchas the inclusion of masks and sanitising stations onboard and enhanced aircraft cleaning, as well as addingmoreflexibilitytobookingstoensureconsumersplanandflywithconfidence (Qantas,2020)

S.W.O.TAnalysis Table1:SWOTANALYSIS InternalFactors Strengths Weaknesses ‐ Highlyskilledcustomer‐centric ‐ Loweringcoststhrough workforcethroughQantasflight restructuringresultedin6,000job traininginitiative(Qantas,2021) losses(Khadem,ABCNews,2020) andleadtohighlevelsof ensuresconsumerneedsare consistentlyandefficientlymetand unemploymentwhichnegatively buildsapositivebrandreputation. impactsbrandreputation. ‐ FlyWellPrograminitiative, ‐ Lackoftechnologyinvestment implementedinresponsetoCOVID‐19 impactstheefficiencyand (Qantas,2020),ensuresconsumer effectivenessofoperational safetypre‐flightandonboardthus functionswhichmayleadto increasingconsumersafetyconfidence. consumerdissatisfaction. ‐ Airlineleading(84%)incustomer ‐ Non‐refundabletickets(Qantas, satisfactionindomesticairlineindustry 2021)mayleadtodissatisfied (RMEditors,2020),strengthens consumers. positivebrandimage.  ‐ Offeringcheapairfaresandflight flexibilityforconsumersduring pandemiciscompetitively advantageous(Qantas,2020) ExternalFactors Opportunity Threats ‐ Increaseconsumerspendingpower ‐ QantasoppositiontoVirgin’sbailout afterCOVID‐19 createsamonopoly(negative) ‐ ‘Travelbubble’agreementbetween perceptionofthecompanywhichmay AustralianandNewZealand reduceconsumerconfidence(Khadem, ABC,2020).For,withoutanoperating government,allowingflightsbetween bothcountries,mayincreasetravel competitor,theairlinemaystop demand,encourageeconomicgrowth workingondifferentiating 4 

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andincreaseprofitableopportunities forQantas(Brown,2021). StrategicallianceswithAirbnbexpose Qantastoanichemarketwhichallows themtogainanewconsumerbase (advantageous)andcreatesan additionalsourceofincome(PSMJ RESOURCES,2020).

BusinessInvestigationReport

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achievementsforlongterm improvementstomeetconsumer needs.  restrictionsagainsttraveldueto COVID‐19negativelyimpactstravel behaviour,andthus,Qantas’ operations,revenueandprofitsare weakenedbylowconsumerconfidence (OECD,2020).  US–Chinatradewarhasnegatively impacteditsinternationaloperations andprofitperformancebyseverely decliningtravelfreightdemandand thuscostingit$25million(Mickleboro, 2019).

 UsingTQM,Qantas’soperationalstrengthsensurethattheairlineiscustomer‐centricandconsistently andefficientlymeetingtheneedsofitsconsumers.Byimplementinginitiativesinresponsetoexternal environmentalchanges,duetoCOVID,theairlinehaspositivelyandreassuringlyaddressedconsumer sentimenttowardssafetyandhealthconcerns.Furthermore,bybeingtheleadingdomesticairlinein customer satisfaction (85%), Qantas has gained a competitive advantage and strong brand image whichmaygreatlycontributetopositiveconsumerconfidenceintheairline.Additionally,throughan effective pricing strategy of offering cheaper airfares and flight flexibilities, the brand has further emphasiseditscustomer‐centricculturebyacknowledgingitsconsumers’reduceddisposableincome (duetoCOVID)andprovidingthemwithflightpricesthatensure thattheyaregettingmorevaluefor theirmoney.Howevernon‐cashrefundsonpurchasedticketsmayleadtocustomerdissatisfactionas consumersmayprefercashtoboosttheirreduceddisposableincomes(Qantas,2021). Furthermore, though ongoing cost‐cutting initiatives have strongly improved Qantas’s profitability over the previous years (2018‐19), using large‐scale job redundances and restructuring is a great weaknessfortheairline.Thecuttingof jobsposesaninternal threatof losinghighlyskilledworkers andthusreducesefficientoperationalproductivity(McMullen,2019).Additionally,unemployment, due to structural change, may further pose negative socio‐economic consequences which may influence consumer confidence. Moreover, Qantas’s lack of investment in innovative and new technologythatmayincreaseoperationalefficiencies,suchasultraviolet(UV)cabinsanitisation,may leadtocustomerdissatisfactionandlowconfidenceratesthroughexcessive timeconsumptionand inefficientsafety(perceivedunhygienic)practices. TheUS‐Chinatradewarhasbeenthemostdetrimentalthreattotheairline’soperationsand marketing,particularlyinitsinternationalmarket,towhichitpossessesamoderate30.6%share (IBISWorld,2020)(refertoAppendixA).Thetradewarhascreatedbrittleconsumersentiments withintheairline’sglobalandmainfreightmarket,Asia(38%)(appendixD),andresultingly,has costedtheairline$25million(Mickleboro,2019),agreatlossinconsumersanddecreasedconsumer loyaltyandretention.Nevertheless,Qantashasdomesticopportunitiesto(arguably)regainthisloss ofconsumersandrevenuethroughthe‘travelbubble’betweenAustraliaandNewZealandand strategicalallianceswith‐leadinghotelmarketcompetitor‐Airbnb.Seeingasitholds70%ofthe domesticairlinemarket(Curran,2021),bothopportunitieswillgrowtheairline’sbrandawareness 5 

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bydemonstrating(travelbubble)theairline’sagilityinrespondingtogovernmentdirectivesand changesandincreaseitsbrandreach(Airbnb)byprovidingconsumerswithmoreaffordableoptions whichmayleadtostrongerconsumerconfidencethroughconsumerretentionandloyalty. 

Stakeholderanalysis Primaryresponse(AppendixE)hasshownthatQantashasagreatnumberofdifferentstakeholder groups, however 8 of them are considered the most dominant for the following stakeholder analysis. Table2:QantasPointofInterestMatrix

 Table3:TabledResults Theresultsofthegraphareasfollow: Positioning Highpower,highinterest

Stakeholders Lendors,shareholdersand investorsgovernment

Highpower,lowinterest Lowpower,highinterest Lowpower,lowinterest

Suppliers,customers Staffandemployees Community,competitors

Interaction Qantasmustactivelymanage them. Canmakeagreatdifference mustbekeptsatisfied Mustbekeptinformed Mustbemonitored



P.I.GMatrixAnalysis From thematrix,itisevident thatbothinternaland externalstakeholdershave definitiveinfluences ontheorganisationalperformanceandbrandimage ofQantas(WUR,2012).Tosucceedinahostile environment,Qantasshouldstrivetobalancetheinterestsofbothinternalandexternalstakeholders. Furthermore,itsabilitytoabidetoexternalinfluences,suchasgovernmentdirectives,inoperational and marketing functions (i.e., pricing and advertising policies, and health and safety legislations) illustratesapositivebrandimagetoconsumerswhichmayresultinconsumerloyaltyandconfidence. Outofallthestakeholders,the customers’interestsintegratemostcloselywithQantas’sobjectives, as,theairline’soperationsandmarketingstrategiesaredesignedtoservetheminreturnforrevenue (WUR,2012).Despitetheirinterestbeingmoderately lowonthematrix, intandem withQantas’s large domestic market presence (70%), their influence on the business’s success is very high. 6 

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Moreover, the positioning of employees on the grid in relation to the high (6,000) involuntary job lossesatQantas,itcanbeimpliedthatQantasvaluestheiremployeesaslessinfluentialtooperations andmarketingfunctions.Arguably,thismaybean invalidreasoningasstaffinteractmorewiththe consumersandarebetterinformedonconsumersatisfactiontrendsandpatterns, thusgivingthem highinfluentialpower.

Evaluationthecriteria Marketing Competitiveness Thecriteriaofcompetitivenessdeterminetheextent towhichabusinesshasoffered servicesthat exceedmarketstandards(Adams,2019).Thecurrentmarketingstrategyusedisbroadcastadvertising while an alternative is social media. Social media is a cost‐efficient (shown in Appendix F) digital marketingtoolthatcangenerateimmenseexposureforQantas.Themarketingtoolcanalsoprovide the airline the ability to engage with a broader consumer audience, and thus increase its inbound traffic (BFM, 2020). While broadcast advertisements clearly communicate Qantas’ value to consumers, the marketing strategy poses a greater risk of not reaching a broader consumer base (Goorevich,2019).Currenttrendsillustratedin AppendixGdemonstratethat71%ofconsumersare more likely to purchase products and services based on social media referrals (Barysevich, 2020). Therefore, through a strong online presence, Qantas has the ability to gain stronger social media dominance,similartothatofitsinternational competitor, Emirates, whichranksfifth invisibilityon socialmedia(Żyłka,2018).

Stakeholdersatisfaction Thecriteriaforstakeholdersatisfactiondeterminethedegreetowhichabusinesshasconsideredand managedstakeholderexpectationsinachievinggoals(Adams,2019).Thecurrentmarketingstrategy usesbroadcastingadvertisement,andit efficientlypromotesQantastoallconsumerdemographics, while visually evoking an individualised personal connection with viewers (Lowery, 2019). Alternatively,socialmediacreatesavoicefortheairlinethatestablishesapositiveimpressionthrough a‘humanisingfactor’(BFM,2020).ItprovidesQantastheabilitytorelationshipmarket,usingone‐on‐ one customer interactions, which, thus, strengthens customer communication and resultingly, increasesconsumerloyalty.While, evidently, bothstrategiesevokeasenseofconnectednesswith consumers,itcanbearguedthateachchannelhasadifferenteffectonconsumersatisfactionbased ontheviewer’sdemographic.

Operations Competitiveness Thecurrenthygienicoperationalstrategy–usingtotal quality management(TQM)isthe enhanced cleaningofaircraftsusingoutsourced manual labourandaCOVID‐19 effectivedisinfectant(Qantas, 2021);thealternativeisdisinfectingrobotssuchasthoseproducedbyHoneywell.Disinfectingrobots are innovative technologies that  autonomously use ultraviolet beams to disinfect aircrafts. They efficientlyandeffectivelykillandeliminateviruses andbacteriaincabins(Asaf,Business Traveller, 2020);thus,minimisingpotentialthreatsthatmaybecausedbyhumanerror.However,theserobots canbequitecostlyandmaytaketimetoimplement.OutsourcinglabouriscostefficientforQantasas couldsavethecompanyanestimated$100milliondollarsannually(Khadem,ABC, 2020),whichcan thenbeinvestedinfurtherinnovationofoperationalandmarketingstrategiesthatmaycontributeto maintaining Qantas’ (70%) domination in the domestic market and thus maintain its competitive advantage. However, outsourcing possesses a risk in the maintenance of Qantas’s high‐quality 7 

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assuranceandcontrol.Whiletheroboticstrategycanilluminate...