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Qantas Airways International Strategic Management Case Study

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Updated: Aug 2nd, 2021

‘SWOT Analysis’ on QANTAS

SWOT is an acronym of “Strengths, Weaknesses, Opportunities and Threats” (Bohm, 2009). Using SWOT analysis technique to assess a business environment is beneficial to any organization. This technique helps in understanding both the strengths and weaknesses of a business venture as well as recognizing opportunities and threats faced by the concerned business. Therefore SWOT analysis act as a support tool to assist an individual or an organization in the business evaluation. The fact that SWOT analysis can help in revealing opportunities makes it an influential tool for periodic evaluation of businesses. In addition, if the management of a given business enterprise can comprehend the faults and threats facing the business, it is possible to eliminate them promptly. SWOT analysis will help Qantas airlines to formulate a viable business strategy, which is helpful in outdoing other competitors within the same industry (Mckeown, 2012).

Qantas Airways Limited is one of the most popular airline organizations worldwide. Concurrently, it is among the companies that started the ‘One World’ alliance. Qantas execute its operations in several countries. For instance, they operate in twenty nations with more than eighty destinations. Essentially, it is the only Australian airline associating with the international airline alliance (Hierling, 2007). Qantas has numerous local networks. In addition, they also have checkpoints in different continents such as Africa, North and South America. These check points can also be found in the south pacific, Europe, and Asia. In analyzing Qantas Airways using SWOT technique, its various aspects ranging from strengths to threats are discernible.

The strengths of Qantas are based on a number of factors. Firstly, it is a well-established airline company with business operations spread all over the world (Bremner, 1994). They also operate both locally and internationally. This implies that the company is in a better position to get lots of profits from its operations. This will enhance its global expansion. Another strength of Qantas Airways as an airline organization is the strong government support it enjoys. The Australian government is supporting the organization massively in the realms of business structures. For instance, when Qantas faced unfair competition from its competitor, Etihad, it received support from the national senate. Barnaby Joyce supports the idea that an enterprise belonging to the government should be checked so that they do not create an unfair competition in an industry. This idea supports Qantas airlines. This is a critical provision when considered critically in the context of SWOT analysis. It is important to recognize that Qantas Airlines has survived in the aviation industry due to numerous efforts made by the organization.

Qantas also experiences some weaknesses. The first weakness is poor management. The management is unable to develop viable business strategies to address the current competition and other operational challenges. For example, Qantas airlines can collapse easily if its competitor (Etihad) is permitted to purchase much of the Virgin Australia shares. The Qantas Company should have a clear strategy to counter the activities of its core competitors, rather than lobbying for the support of the government and the opposition against Etihad’s move to buy more shares from Virgin Australia. In addition, since it has a number of local networks, it should be at the top for the competition over the most profitable domestic routes. Another indication of poor management is the predetermined dismissal of engineers who work for the company. Barely a month after terminating 535 engineering jobs, a further 36 engineering jobs were again terminated to merge the maintenance services for their aircrafts at Melbourne. This indicates that there are no clear policies and strategies towards organizing for the maintenance services at different locations.

Additionally, Qantas experience weaknesses in its competition tactics. The company can be easily affected by the activities of its competitors. For instance, if Etihad supports the local businesses of virgin Australia, it can incapacitate Qantas. Qantas believe that the partnership between Virgin and Etihad would deluge the available market due to their business capabilities. This could force Qantas to considerably minimize most of its operations locally and internationally. It can affect the company adversely. Other competitors such as Singapore airlines, Etihad, and Emirates among others have enhanced their competitiveness in the aviation industry. Just recently, the value of Qantas shares reduced much due to losses it estimates on operating transnational routes. The concerned losses might emerge from the competition experienced from other rivals in the industry. This shows that Qantas is not able to withstand stiff competition offered by other contenders. It is crucial to recognize various provisions of SWOT analysis based on its viability in analyzing the operations of a given company in a particular business environment.

Finally, Qantas has limited business options. Its policies governing sales have hindered the company’s foreign investments. Actually, Qantas seeks the help of Foreign Investment Review Board to prevent Etihad from buying Virgin as indicated earlier. Even though buying Virgin Australia by Etihad could cause Qantas to collapse, the company can still survives globally.

However, Qantas has several opportunities. Most of the opportunities of Qantas are in its strengths as well as its weaknesses. Customers have increased in the recent past. Since the Qantas has a several profitable routes locally and internationally, it can be able to earn more profits than its competitors. Therefore, it is in a better position to make its services better and grow even more. Additionally, with the government support that Qantas has, the company is able to change its policies and strategies to suit its business environment. Qantas can also be able to lobby support from the Foreign Investment Review Board to look into Qantas sale act. If this act is reviewed, Qantas will have a good opportunity of fair competition within the industry.This can allow Qantas to purchase Virgin Australia and outdo other competitors. In addition, Qantas Company can also change its management. This will provide it with a better opportunity to develop good strategies and policies to enable its prosperity.

The major threat of Qantas Company is both established and emerging competition from numerous competitors. It faces a threat of collapsing if Etihad could purchase lots of virgin Australia’s shares. The company believes that this would reduce their operations on various routes. Due to this threat, the company opts to seek the government’s support to help in stopping this plan of Etihad. The competition faced by the company might also lead to a fall in the shares of the company. According to the company’s management, there could even be more serious consequences of these competitions. Precisely, SWOT analysis is a crucial provision when considered critically in various contexts. Its applicability in analyzing various provisions of Qantas Airways in the realms of business is important.

Porter’s Five Forces Applied to Global Crossing

Porter’s Five Forces (5Fs) are useful in determining the position of a business venture in a given industry. This is important since the concerned organization will be able to know its competitive strengths (Roy, 2011). Knowing business strengths is important in formulating viable strategies meant to enhance competitiveness. Besides, one can easily plan business strategies in a manner that evades losses (Schermerhorn, 2009). Usually, this tool is beneficial in understanding whether the new products and services can be profitable to the company. Porter,s 5Fs model is used to evaluate an industry where an organization operates. In using the Five Forces Tool analysis, it is assumed that there are five major factors governing the power of competition of a business within its industry. These factors include; suppliers’ power, buyers’ power, competitive rivalry, threat of substitution, and threat of new entrants (Griffin, 2011). In analyzing Global Crossing Company using porter’s five forces, numerous factors emerge.

In this context, ‘Global Crossing’ is a company that offers communication solutions to numerous clients globally. The services offered by the company include; sound, data, and collaboration services. The company operates in a number of continents such as Europe and North America. It also operates in Latin America as well as some parts of Asia. There are three main divisions of the company. First is the Global Crossing Telecommunications Limited together with its branches. The mentioned companies offer services to clients in the UK. Another division is the GC Impsat Holdings and its affiliates offering services majorly to clients in Latin America and GCL. Some of its affiliates operate in North America. GCL also operates in Asia, Latin America and Europe, though in small holdings.

The first component of the Porter’s 5Fs Analysis applicable in the Global Crossing’s context is the suppliers’ power. Suppliers’ power refers to the evaluation of how the company’s suppliers are vulnerable to hiking prices. Some of the factors that contribute to this include the total number of suppliers and the distinctiveness in the kind of products or services they offer. If a company has fewer suppliers, there is a higher chance of being controlled by the suppliers since it has fewer choices (Bard, 2008). British Telecom and Light Path were the main suppliers of backhaul to Global Crossing in the United Kingdom and United states respectively. The company reported remarkable increments in cost of its operations in Germany, UK, and the U.S. due to suppliers’ power. For instance, when they acquired Backhaul capacity operating from White Sands to London, clients could be forced to pay more by up to 2.25 million U.S dollars. Again, if the backhaul was purchased from Brookhaven to New York, the customer’s cost could hikes by 0.5 million U.S dollars. These high costs imply that these suppliers have more power over the company. Actually, to deal effectively with this crisis, Global Crossing felt the need to own private networks.

Another element of analyzing Global Crossing using Porter’s Five Forces is the ‘competitive rivalry’. In this context, both the quantity and ability of Global Crossing’s competitors are analyzed. Competition power depends on the number of competitors involved. Companies with more competitors who offer products and services that are similarly striking will certainly have lesser power. This is because; consumers and dealers would have more options to turn to in case they do not get a suitable deal from Global Crossing Company (Mascarenhas 2011). Global Crossing faced a number of competitors. Some of these competitors include; the Colombus-III, which formed a link between Florida and Spain. Actually, European Telco and WorldCom were to start their operations by 1999 December. The company also experienced competition from TAT-14, which commenced its operations by the year 2000. Their total capacity was 640Gbps. The final competitor of Global Crossing was FLAG project which was funded privately. It planned to start its operations by linking Europe to countries found in Middle East. This project was planned to start operating by 2001 with a total capacity of 2400Gbps. For Global Crossing to become the best service provider they have to develop good strategies, otherwise they will be less powerful.

Concurrently, buyers’ power is the third provision of the Porter’s 5Fs. In analyzing Global Crossing Company using this element, it is possible to observe how simple it can be for customers to lower the prices of products and services offered. For buyers to lower prices of products and services, several factors are considered. Some of these factors include; the total number of customers, the benefit that each and every buyer can bring into the business, and the cost that different customer can incur if they were to change from using the company’s products to services of a different company. For a company that deals with few customers only, they are more likely to influence the products offered. This makes the company less powerful. The major customers for Global Crossing are the Global Telecom Team Players and other considerable organizations. The Telecom Team Players then sell the products both to transnational corporations and individual users.

While selling AC-1 products, special sales agents are engaged. Initially, Global Crossing engaged Tyco Submarine Systems Ltd. This product could be accessed by everyone. This implies that the number of buyers were unlimited. This made Global Crossing to have control over the prices it offers in the market. Other products that increased the strength of Global Crossing Company are IRUs for a complete STM-1s and for minor product increases. In addition, there were leases provided in a short term basis. These special products made Global Crossing to have advantage over its competitors.

The 4th element is the ‘threat of substitution’. This element is based on the capability of clients of the company to access alternative products. If customers can successfully substitute the products or services of the company with a simpler and viable option, the business gets weaker. Since there is no any alternative to the network services offered by Global Crossing, it remains a very powerful business venture. More customers simply pay for the services offered by the company. When it released its IPO through Salomon Smith Barney, it rapidly raised money so fast that it started to advance its operations (Mckeown, 2012). This indicates the complete support for the services offered by the company. It is important to understand the implications of having competitive products in a given industry. This is a critical provision in various contexts. Contextually, Global Crossing is a critical venture in this milieu. The company has to strategize critically so as to remain relevant in the industry.

The last of the Porter’s 5Fs is the ‘threat from new entrants’. This element assumes that it is possible for other competitors to enter into the industry. The position of the company or business can deteriorate if it is very cheap and it takes a very short time for an individual get into the market and compete successfully. In addition, if there is little or no security provided for the technologies of the company then it would be easier for opponents to get into the market rapidly and cause lots competition. However, the business can maintain its position if it has tough and long lasting obstacles to entry (Henry, 2008). The strength of Global Crossing lies from the fact that it can raise lots on money from an IPO. It is not quite easy to get into the market since lots of capital is needed to venture into such businesses. This puts the company in a powerful position as there will be fewer competitors. Precisely, applicability of Porter’s 5Fs is important in establishing and understanding various aspects of the concerned industry. Numerous organizations are able to illuminate their fates in a particular industry based on the provisions offered by Porter’s 5Fs as indicated earlier.

Conclusion

SWOT and Porter’s 5Fs are useful tools for analyzing any business’ operations. SWOT focuses on the strengths, weaknesses, opportunities, and threats of any business in the realms of viability, profitability, and functionality. Porter’s Five Forces emphasizes on the nature of the concerned industry. In conclusion, these tools are very important as they enable an individual to identify the strengths and opportunities experienced in a given industry. This will help in planning and eradicating any poor decision that could lead to disastrous results.

References

Bard, T. (2008). DOEE Getters Venture Basics 101 ECoursebook. Berlin: Venture Basics.

Bohm, A. (2009). The SWOT Analysis. Munich: GRIN Verlag

Bremner, E. (1944). Front-line airline: the war story of Qantas Empire Airways Limited. London: Angus and Robertson ltd.,

Griffin, R. (2011). Fundamentals of Management. New York, NY: Cengage Learning

Henry, A. (2008). Understanding Strategic Management. New York, NY: Oxford University Press

Hierling, M. (2007). The Australian Airline Industry and the Case of Oz Jet – A Strategic Analysis Report: Case Study about Oz Jet and the Airline Industry in Australia. Munich: GRIN Verlag

Mascarenhas, O. (2011). Business Transformation Strategies: The Strategic Leader as Innovation Manager. California, CA: SAGE Publications Ltd

Mckeown, M, (2012). The Strategy Book. New York, NY: FT Press,

Roy, D. (2011). Strategic Foresight and Porter’s Five Forces: Towards a Synthesis. Munich: GRIN Verlag

Schermerhorn, J. (2009). Exploring Management. New Jersey, NJ: John Wiley & Sons

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