Qantas Case Study

Qantas Case Study

Executive Summary

This report will aim to evaluate Qantas' organisational structures and management practices as well as how the implementation of these strategies and business models allow Qantas to increase and maintain a competitive advantage within the aviation industry and thus remain profitable. This report will also identify and examine Qantas' stakeholders and the problems, objectives and concerns of these stakeholders whilst providing an analysis of recommended solutions for these issues. Qantas’ strategic management is examined to identify how the strategies used by the company increase its competitive advantage and profitability. As identified, the unique position Qantas has as Australia's largest and long standing airline has not been enough to sustain its competitive advantage within the market. As discussed, Qantas faces stakeholder issues due to its limited success within the last 10 years in achieving optimal returns on investment and creating greater shareholder value due to numerous failures in merger and acquisition attempts. These failures can be attributed to a lack of realisation of synergies, poor due diligence and limited integration success (Mason, M. 2014). Therefore, to enhance value creation for stakeholders Qantas must consider numerous disinvestments. Due to the economic pressures surrounding the post global financial crisis, Qantas has focused on strengthening consumer loyalty and reducing product imitations through differentiation as well as stategise based off a cost leadership framework. However, these attempts to remain competitive have created concern for employee unions. Therefore, it is recommended that the company move to further stabilize union relations to contain workforce costs.  

Introduction

The Qantas group five major segments include Qantas Domestic, Qantas International, Jetstar Group Qantas Loyalty and Qantas Freight, generating over $15.8 billion (White, L, 2018). Since its privatisation in 1995 Qantas has maintained a company wide goal of delivering sustainable returns to its shareholders and ensuring the safety of their customers as a first priority (Jones, G, & Butler, J, 1988). However, in order to continuously satisfy its number one business objective especially since the global financial crisis of 2008, the firm has had to adapt to many changes in the external environment, which has in turn impacted the internal operational environment of the company (White, L, 2018). As will be further discussed, these changes in business model and strategy have impacted stakeholders of the company. This can be seen through the concerns and problems of shareholders and unions which has developed due to the businesses failures in multiple merger and acquisition attempts and the outsourcing of suppliers to enhance cost leadership. This report examines the competitive and diverse strategies used by the company to establish the current strategic business models and management structures of Qantas. The report presents recommendations based the current context of Qantas to identify appropriate management practices which the company can implement to maintain a competitive advantage and achieve profit targets.

Short summary of Qantas

Qantas, which is one of Australia's biggest airline companies, has approximately 30 airline partners and operates in over 1000 destinations across the world (Lecocq L P X, 2015). Since its initial conception in 1920's Queensland, when on the 19th of November Lt Hudson and Lt McGinness registered the “Queensland and Northern Territory Aerial Services,Qantas has flourished into the leading company in global aviation, later changing their name in 1959 and taking over Australian Airlines in 1992 (Jones, G, & Butler, J, 1988). Through sectors of regional, international and domestic operations, Qantas has some of the industry's leading innovators in areas of passenger, freight, catering and operations through  Qantas, Qantas Defense Services, Qantas freight,Q- Catering, Jetstar, Qantas Frequent flyer,, Qantas Link, Qantas Holidays, and Express Ground Handling (‘Qantas Airways Limited SWOT Analysis’, 2015). Qantas is regarded as an "employer of choice" and has a working force of over 35,000 speaking over 55 languages and operating across over 90 different countries (‘Qantas Airways Limited SWOT Analysis’, 2015).

Discussion of the current business model and the history of changes in structure and strategy

Historically, Qantas’ business model has undergone drastic structural changes, most notably with the company's transition from a Government owned business in 1947 to being privatised in 1995 (White, L, 2018). The company was previously run with a autocratic style of management with various hierarchical authority levels to a more participative and flat level management structure (Nandakumar, M.K., Ghobadian, A. & O’Regan, N. 2010). Broad bridge identified that, under government ownership, the structure of management was mainly centralised around the executives and was very bureaucratic in nature with decision-making  primarily done by upper management (Campbell, A, Goold, M & Alexander, M, 1995). This meant that there was very much a top-down administrative chain, offering little to no contact between workers and top end management. Qantas now operates under a much more lateral organisational structure, with shorter administrative chains of command and a more regulated divide of control (Nandakumar, M.K., Ghobadian, A. & O’Regan, N. 2010). Alan Joyce, Qantas' Chief Executive Officer, states that the restructuring of the organisation into eight business units has streamlined the managerial process and reduced excess numbers and layers of management (‘Qantas Airways Limited SWOT Analysis’, 2015). This has, however, lead to thousands of employees being made redundant in order to streamline this managerial process (Gaughan, PA, 2010). Qantas aims to have a more lateral business structure, with greater focus on human resource management and better communication channels (Gaughan, PA, 2010). Greater levels of efficiency have been proven when employees feel more connected to the decision making process and a more democratic style of business is evident. Through the indepth exploration of the organisational structure of Qantas, it is prevalent that the company have benefited greatly by transitioning to a matrix-type structure (Mason, M. 2014). The company has further gained a competitive advantage through the integration of both a cost leadership and differentiation strategy. This can be seen through Qantas’ ability to remain one of the leading airlines of the world and unique position in the marketplace (Whyte, R, Lohmann, G, 2015). This is especially reflected in the ability of the business to use a segmentation strategy which enables the company to differentiate the service level they provide based on its effectiveness in order to reduce operational costs and provide greater business results through increased profit and sustained cost reduction (Whyte, R, Lohmann, G, 2015).