Internal Environment Analysis of Qantas Airways
Introduction
Qantas Airlines is rated as the 11th world’s largest airline, but the 2nd oldest. The airline was established in 1920 as the Queensland and Northern territory Aerial Service (QANTAS) Ltd, and has since operated as a government business, with no principle goal of making profits (Qantas Profile, 2013). In the wake of 1995, the airline undertook numerous organizational and strategic changes to adopt a less myopic business view, and appear as a market force in the airline industry. Other core businesses of Qantas include air freight, tourism, catering, and E-commerce (Qantas Profile, 2013). Being an international force, the airline faces real challenges in both its internal and external environment management, and this paper proceeds to reveal how effectively it has managed to adapt to internal pressure from suppliers, competitors, and customers.
Business Strategies to Manage Internal Environment
Qantas has been compelled by circumstances over the last decade to make strategic changes within its organizational culture, as well as on the external environment (Fenner, 2010). These changes have been brought by the need to increase the rate of dividends paid to shareholders; change from autocratic leadership by government officials heading the airline, to a more cordial and consultative leadership; and the need to compete ferociously with other market players. These changes that have been effected over time have brought tremendous alterations in the way Qantas handles its suppliers, competitors, and customers. Effective management of the internal environment, over which a business has exclusive control, is crucial to the success of any organization.
Suppliers
Suppliers constitute an important segment of the value chain in every organization, and they are important in the smooth running of business. Proper management of supply, through maintaining a cordial relationship with suppliers is one principle way of fulfilling company objectives. The Qantas Airlines has over the last decade put in place various strategic means of effectively dealing with suppliers to streamline operations towards ensuring sustainability and continued success. Timely delivery of goods and consignments is considered the leading priority in a company-supplier relationship, and Qantas has put in place measures to ensure that no unannounced delays occur along the supply chain, that could have far-reaching effects on value of service delivery. For instance, the organization has instituted a complete technological package that keeps the information of all suppliers in an integrated database, accessible by every authorized department at a single point of service. This implies that all details of a single supplier can be retrieved from a single source and service desk, which ensures speedy finalization of the supply delivery and authentication process (Wong, Lai & Cheng, 2011). With this kind of automation, the organization is able to reduce delays by up to half of the original magnitude.
In addition, in its last Annual Report, Qantas reported that it has organized a joint forum that incorporated all stakeholders including suppliers, customers, and representative competitors to come up with holistic strategies for furthering the success of the company (Fenner, 2010). Moreover, this forum among other forms of interactions, have enabled the company to develop better relationships and understanding with its suppliers (Wong, Lai & Cheng, 2011). In this regard, suppliers are not considered as just that, but rather as integral part of the value chain. With this strategy, Qantas has managed to win the loyalty and trust of suppliers, to an extent that they feel part of the company. The integrated database management system enables the company to pay its suppliers either promptly, or within a short time of waiting, as opposed to the past when payment would delay for over a month. Generally, the new style of procurement is instrumental in making the company mend some of its broken ties with its internal partners.
Competitors
Competitors are important partners in the success of every industry. Markets that are ruled by monopolies register poor service delivery, incompetent staff members, poor remuneration, and inefficient development of customer relationships. With competition, a company would learn to adapt through engaging in competitive fight of developing superior services and goods to meet the needs of the consumers (Tsai, Su & Chen, 2011). Competition can be done through defensive and offensive strategies. Qantas Airline, being an old company, has had to employ more of defensive than offensive strategies, since emerging players target to outwit it from the market (Yannopoulos, 2011). After the realization that the airline industry was becoming competitive, Qantas resorted to price wars, by strategically reducing its flight charges to attract customers to its business (Qantas Annual report, 2011). This is a defensive strategy that most of the time works well for companies, but it is not absolutely safe. For instance, slashing prices tool low has a danger of sustainability, especially when one is competing with an organization with a large capital base (Yannopoulos, 2011). The latter can afford to reduce its prices as well, to a level that the former cannot contend with. In the event that the former would want to raise its prices in order to stay in business, current customers would most certainly go away. In another instance, the reduction of prices could speak ill of the quality of an organization’s products and services (Tsai, Su & Chen, 2011). Thus, sensitive customers would strategically stay away, and prefer more expensive options. In the case of Qantas, its large capital base played a great role in the success of its price reduction strategy.
Besides, the airline used the strategy of product differentiation to compete with other industry players. As has been stated above, Qantas is not only engaged in the airline travel business alone, but it has diversified into other forms of related product lines such as catering, tourism, and freight (Fenner, 2010). This method of covering all bases is effective in barring potential market entries by competitors who would want to identify an existing gap. Additionally, the airline has integrated within its airline travel system a multicultural customer package that is devoid of cultural and social class discriminations. With this system, it offers a unique product in a market that is known to trade in the difference in social classes, thus attracting numerous customers.
Despite of the stiff competition that exists in the airline industry, Qantas assumes a unique relationship with its rivals, by holding accessional joint forums with them to talk about healthy market fights. While this may be seen as a sign of goodwill, the company uses it to get ideas from various players in the industry which it uses to bolster its performance. The airline maintains a perpetual advantage over its competitors based on the punctuality of its performance. Slashing of unnecessary delays is important especially in the airline industry where swiftness defines the course of actions; and Qantas achieves this through its sophisticated technological installation, and by efficient management of the value chain (Qantas Annual report, 2011).
Customers
Customers are considered the greatest asset of every organization; therefore, their satisfaction and loyalty are paramount to success. The customer relationship management (CRM) appreciates the significance of both current and potential customers (Bolton & Tarasi, 2006). Maintaining, developing, and enhancing cordial relationship with customers brings about increased profits, revenues, and return on investments (shareholder value) of a company. However, these activities require a comprehensive understanding of all underlying factors that define customer satisfaction.
Building customer loyalty is the central and integral role of every company, which ensures adequate market share. This requires maintaining a high level of interaction by including customers in decision-making process, and listening to their complaints (Senn, Thoma & Yip, 2013). Just as indicated in the previous segments, Qantas has a system that brings all stakeholders, including customers, together to discuss how change should be adopted in the organization (Qantas Annual report, 2011). Maintaining customer relationships goes beyond occasional meetings, to include frequent one-one-one interactions. This kind of customer management enables a company to develop an insight of what customers really want, and developing products that exceed their expectations (Jimenez & Sanchez, 2013). Besides, when customers are involved in the value chain, they feel part of the organization, and work towards promoting its products and services. As Porter once said, customers can act as marketing evangelists, or excessively badmouth a company’s products (Bolton & Tarasi, 2006). Satisfied customers will always talk well about a given brand, while grumbling and unsatisfied customers can effectively discourage others from using a given company brand (Buttle, 2009). It is this power that customers have in their hands that Qantas has utilized to market its products and increase its consumer base.
In addition, Qantas has also developed a comprehensive customer benefits package, which helps consumers understand the value and functionality of products and services offered to them. The CBP is also enables employees to interact effectively with the customers, through explaining the features of a given product of service being offered by the airline (Fenner, 2010). Besides the CPB, Qantas has not been left behind in the adoption of current system of online sales and promotions. Currently, customers do not have to go to the airport to book for flight tickets, but this can be done at the comfort of one’s home through the internet (Qantas Annual report, 2011). This package has brought a great deal of flexibility and convenience for customers, who more often than not, have very tight schedules (Bolton & Tarasi, 2006). In a nutshell, the company has managed to keep pace with rapidly shifting customer demands through intensive market research and frequent customer interactions that has enabled it to invent innovative ways to maintain their loyalty.
Conclusion
Effective management of internal business environment is important for the success of every organization. Strategic decisions need to be made by the top management to cultivate new ways of relating with suppliers, competitors, and customers, as the above three players among others (organizational culture, employees etc.) form an integral part of an organization’s ability to adapt to harsh external factors. Qantas has resorted to technological advancement, frequent interactions, and bettering its organizational culture to effectively meet the demands of a competitive market.
List of References
Bolton, N. R. & Tarasi, O. C., 2006. Managing customer relationships. Retrieved from http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&ved=0CEkQFjAE&url=http%3A%2F%2Fwww.ruthnbolton.com%2FPublications%2F01Malhotra-
Qantas Annual report, 2011. Building a stronger Qantas: A strong performance in challenging conditions. Retrieved from http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&ved=0CDMQFjAB&url=http%3A%2F%2Fwww.qantas.com.au%2Finfodetail%2Fabout%2Finvestors%2F2011AnnualReport.pdf&ei.
Qantas Profile, 2013. Company profile, history, and procurement. Retrieved from http://www.qantas.com.au/travel/airlines/purchasing-policy/global/en.
Fenner, R 2010, ‘Qantas’ Strategy to Reboard Passengers’, Bloomberg Businessweek, 4207, pp. 26-27, Business Source Complete, EBSCOhost,
Wong, C, Lai, K, & Cheng, T 2011, ‘Value of Information Integration to Supply Chain Management: Roles of Internal and External Contingencies’, Journal Of Management Information Systems, 28, 3, pp. 161-200
Jimenez-Castillo, D, & Sanchez-Perez, M 2013, ‘Integrated market-related internal communication: development of the construct’, International Journal Of Market Research, 55, 4, pp. 2-19
Senn, C, Thoma, A, & Yip, G 2013, ‘Customer-Centric Leadership: How to manage strategic customers as assets in b2b markets’, California Management Review, 55, 3, pp. 27-59
Tsai, W, Su, K, & Chen, M 2011, ‘Seeing through the eyes of a rival: competitor acumen based on rival-centric perceptions’, Academy Of Management Journal, 54, 4, pp. 761-778
Yannopoulos, P 2011, ‘Defensive and Offensive Strategies for Market Success’, International Journal Of Business & Social Science, 2, 13, pp. 1-12, Business Source Complete
Buttle, F 2009, Customer Relationship Management : Concepts And Technologies, Amsterdam: Elsevier/Butterworth-Heinemann, eBook Collection (EBSCOhost)
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