This report is conducted on the basis of the anticipated implementation of a Strategic Plan of recommendation at Qantas that incorporates the survival of the firm in a competitive market. At Qantas, most of the problems associated with the current strateg

This mission statement expresses the character, identity and scope of operations of the organization. It also addresses the importance of earning a profit while meeting the firm’s social responsibility.

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SWOT Analysis

Qantas’ SWOT Analysis suggested that the company’s strengths fixates on its renowned reputation, the quality of its services and products, the large client base it holds in both domestic and global markets, and importantly safety and reliability awareness of the business. These factors contribute to the basis of Qantas’ competitive advantages, placing the company at the top of the national market as a leader.

However, the weaknesses recognized the lack of sound strategic plans in the case of unexpected problems arising. It also indicates lack of competitive pricing when compared with its rivals and simply translated into customer disloyalty. Hence, reducing the company’s competitive advantages listed first.

Opportunities can be seen as what the future holds for the business. The SWOT analysis suggests that Qantas can improve on reaching customers through competitive pricing, updating information technology to decrease delay times and being able to compete with new and current rivalries.

Lastly, the threats to Qantas in this case are adversely numerous as discussed earlier. Some of them are competitors entering the market with competitive prices, an economic slowdown, keeping up to date with technological advances and virus outbreaks.

The key is to turn these weaknesses into strengths and threats into opportunities.

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Key Success Factors

In order to determine how to move from the current state to the envisioned state, the SWOT was carried out to take advantage of the strengths, capitalise on opportunities, eliminate current weaknesses and proactively reduce the negative impacts of threats. Subsequent to the construction of the SWOT analysis of Qantas, the company’s Key Success Factors below were derived.

Key Success Factors:

Quality: Service and Product Quality provided by Qantas are very high in standard which incorporates customer satisfaction and comfort.

Customer Service: Providing internal and external customers with increased levels of quality output, and maintaining a competitive edge no matter what level of class.

Resource Management: Effective management of inventory, high emphasis on periodic maintenance of equipment and aircrafts, ensuring all resources are capitalized effectively.

Cost: Reformed cost strategies will enable the firm to compete with competitive prices from rivals and hence assisting in future decision making.

Flexibility: Qantas has managed to maintain market share in the industry despite tough conditions that the firm has been through.

Qantas should focus its efforts on maximising these key success factors so that they can achieve market advantages over their competitors. It can gain a competitive advantage by identifying and manipulating these variables appropriately and correctly.

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Competitor Analysis

The objective of a competitive analysis is to avoid any surprises of new strategies and tactics from existing competitors, to identify if there any potential new competitors on the scene and improving the time taken to react to competitor’s actions. Another purpose of this analysis is to anticipate our rival’s next strategic move to establish strategies to counter their moves.

From analysing our competitors, we have found that Qantas is in the centre with competitors coming from both the domestic and international markets. The analysis shows that a low cost rival, Virgin Blue can offer lower prices to customers on routes that are most profitable to Qantas. While Qantas is waiting for the regulatory approval to take a 22.5% stake in another rival, Air New Zealand, Virgin Blue also has made a pledge to increase their market share to 50% by taking the extra 22 points from Qantas. Cost cuttings from competitors are making it more difficult for Qantas to compete. This can be seen through United Airlines, which is one of a number of full service airlines that are under bankruptcy protection. This is able to allow them to reduce their costs by billions of dollars and hence reduce their prices. Because United is a competitor on the Pacific route, this will affect Qantas by and large.

On top of that, the industry at present is at the point of overcapacity. There were the collapse of airlines such as Ansnett Australia and a major airline company in America however there were also many new entrants into the market. With the prow of existing and new competitors on our shoulder, Qantas will need to come up with objectives and strategies that will sustain them in surviving in the competitive market.

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Goals and Objectives

The goals and objectives below are established in order to produce a set of comprehensive strategies. This will give the firm a target to aim for and provide a basis for evaluating its performance which is discussed later on in Controls using the Balance Scorecard.

Goals:

Financial

• Improve profitability via usage of appropriate budgets (sales, production, selling and administration, financial budgets, capital investment budgets).

• Recognition of EVA.

Internal Business

• Improve the quality of products and services provided to customers
• Improve on delay times and diminish wastage levels where possible
• Improve production processes
• Innovation

Customers

• Increased customer satisfaction
• Increased customer base
• Market expansion
• Satisfaction relating to customer service, sales, marketing and public relations.

Learning and Growth

• Developing the skills of employees to cater for the rapid changes in technology
• Increasing safety awareness in all levels of the company
• Expanding employees’ awareness of company goals and relating their duties to these goals
• Improved co-operation between departments

Objectives:

• To return the Qantas Group to a position where it generates a positive spread to its cost of capital.
• Improve overall returns for Qantas Airlines International
• Continue to profitably grow route network for Australian Airlines
• Retain customer loyalty for Qantas Airlines Domestic
• Achieve permanent unit cost efficiencies
• Compete profitably in price sensitive leisure segment of market for Jetstar
• Jetstar, Qantas and QantasLink will have a combined market share of around 65%

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Strategic Options and Action Plans

Now that the goals and objectives are established, strategies can be formulated in relation to achieving each of them. In the process of formulating these strategies, many alternatives or options will have arisen. Some of them may not have been useful or effective and that is why the next step is to select the most appropriate strategies.

The strategies  that have been selected suggests that Qantas is focusing on returning back to its position, financially and socially, where it can generate a positive spread of its cost of capital and diversifying its earnings away from its core business. That means that Qantas will be concentrating on its subsidiaries such as travel, catering and freight. It also indicates improvement of operating performance of the airline. It can be seen that these strategies are appropriate and well formulated because they help achieve the organisation’s mission, goals and objectives.

The strategies are not complete without an action plan. It must now be converted into operating plans that the will guide the firm on the day-to-day operations and will play a visible and active role in the running of the business and accomplishing its objectives. However in order to ensure that the plans implemented are coordinated with actual events, there should be an appropriate method of control in place.

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Controls

Controlling the strategies plays an important part in the process of strategic planning. Planning without controls in place may cause actual results deviate from planned results and it’s important that everyone in the firm understands its value.

A method of control that is recommended and formulated in this report is called the Balanced Scorecard. It evaluates the effectiveness of strategies with a financial and operational perspective.

The Balanced Scorecard produced for Qantas is divided into four strategic areas: Financial; internal business processes; customer; and learning and growth. By implementing the strategic plan, the firm should improve in these strategic areas. In developing a Balanced Scorecard, it has been divided into four parts:

1. Objectives: objectives are mainly things that management sees as the basis for performance measurement. E.g. financial aspect, increased profitability.
2. Lag Indicators: are those appropriate measure management use to action those objectives. E.g. internal business aspect, output level and quality measurements.
3. Transformation process: modification process, ways of implementing these changes.
4. Lead indicators: where management obtain their desired outcome. E.g. customer aspect increased client base.

With the complexity of managing the firm’s operations, this will allow the several areas of performance measures to be seen simultaneously.

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Conclusion

Therefore the possible implementation of the recommended strategic plan will effectively help Qantas in achieving its mission, goals and performance improvement objectives. However, the strategic planning process should not end here as it is a continuous procedure. This will help the organisation to recognise and evaluate its performance compared to its competitors on a regular basis. Hence, it will ensure the survival of Qantas in this hostile and competitive market.

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Appendices

Appendix 1.1

The nine steps in the process of creating a Strategic Plan:

Step 1 - Develop a clear vision and translate it into a meaningful mission statement.

Step 2 - Assess the company’s strengths and weaknesses

Step 3 - Scan the environment for significant opportunities and threats facing the business

Step 4 - Identify the key factors for success in the business

Step 5 - Analyse the competition

Step 6 - Create company goals and objectives

Step 7 - Formulate strategic options and select the appropriate strategies

Step 8 - Translate strategic plans into action plans

Step 9 - Establish accurate controls

Appendix 2.1

Appendix 3.1

SWOT Analysis:

Strengths

• Qantas operates in the domestic market as well as the international market.
• Places a big emphasis on safety and reliability issues.
• Qantas operates a number of subsidiaries in addition to the core business which includes Qantas Link, Australian Airlines, Jetstar, Flight Catering, Holiday and Travel operations.
• The firm has launched a new television commercial that is very well known and acknowledged featuring children singing the airline’s signature song, Peter Allen’s ‘I Still Call Australia Home’.
• Peter Morrissey was chosen to design the new uniforms. The design brief was to provide a modern, attractive and functional uniform, suitable for a premium airline operating in both domestic and international arenas.
• International superstar John Travolta has joined Qantas and has become our ‘Ambassador-at-Large’.
• Maintains the highest level of corporate ethics and a good relationship with suppliers.

Weaknesses

• Qantas is in a business that is tied to a prodigious and enormous physical infrastructure and complex fleets of aircraft.
• Possesses old information systems that are not up to date with technological advances.
• Lack of sound strategic plans to overcome bad times.
• Product and service pricing are not competitive.
• Focused too much on the core business while subsidiary companies are focus on as much as they should be.

Opportunities

• Increasing in market share by reaching out to customer loyalty.
• Update with technology advances such as information systems, machinery and equipment.

Threats

• Low cost rivalries such Virgin Blue entering the market.
• Economic slowdown.
• Wars and terrorist activities dramatically affecting the international market.

• Virus outbreaks such SARS have ultimately affected the firm’s profits in the international market as well as domestic travel (15% of domestic market consists inbound traffic).

Appendix 4.1

Strategies and Objectives:

Appendix 5.1

Balanced Scorecard:

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Reference List

1. KAPLAN, R.S. AND NORTON, D.P., 1996. The Balance Scorecard. 1st Ed. Cambridge, Massachusetts: Harvard Business School Press.

2. LANGFIELD-SMITH, K., THORNE, H. AND HILTON, R.W., 2003. Management Accounting: An Australian Perspective. 3rd Ed. NSW: McGraw Hill.

3. SCARBOROUGH, N.M. AND ZIMMERER, T.W., 2003. Effective Small Business Management: An Entrepreneurial Approach. 7th Ed. Upper Saddle River, New Jersey: Pearson Education Ltd.

4. 2003. Qantas Annual Report

5. 2003. Qantas Financial Report

6. DIXON, G., 2004. 2003/04 Interim Results: Presentation to Investors

7. GREG, P., 2004. Australian Transport Conference

8. Qantas Fact File: Qantas At A Glance

9. 2004. Qantas Procurement

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