The purpose of this report is to provide a strategic analysis of Qantas change process in order to survive in both global and domestic airline industry. There are some external factors can be affected to Qantas changes. They are the downturn of the international market due to the global financial crisis and the changes in the nature of the international market. To have a good analysis on the affect of these factors, the report would be based on the some financial information of Qantas and other useful resources.
This report also provides the change model and change indicator analysis which will be analysed how the Qantas executive board improve their quality of management during its organizational change process. The Kotter's model was the ideal model Qantas have used. By using effectively this model, Qantas have been improved their development strategies to survive during the business downturn era. In addition, some of the changes Qantas executive board have made include sacking employees including top managers of the company as they want to reduce costs as well as restructuring their management programs.
Critically, these changes was seems to be harsh but they have helped to improve the performance of the whole company. In the Australian aviation industry history, Qantas is the oldest and largest airlines and it is the second oldest in the international market. According to the Skytrax (2011), Qantas has ranked the 8th position in top ten airline companies around the world. In addition, it still remains as the best and dominant airlines in Australia aviation industry. It is an achievement despite experiencing a difficult period and having intensified competition in the global aviation industry.
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Qantas was founded and established in November 1920 by Hudson Fysh, Paul McGinness and Fergus McMaster in the Queensland outback as the Queensland and Northern territory Aerial Service (QANTAS) Limited (Qantas, 2011). Qantas was a former government owned business and in 1993 a 25% stake of it was sold to British Airways. Qantas was privatised in 1995 and had adopted new management practices to overcome its former difficulties in order to make a best success for the company in the future (Qantas, 2011). Presently, Qantas Group is the undisputable market leader in the domestic airline industry.
The flying businesses are grouped under two major brands. They are Qantas and Jetstar. Both of brands has a wide operating network, as well as several competencies in the other related businesses they are operating, such as freight, travel ; tour, flight catering, defence services, and engineering ; maintenance services (Qantas, 2011)Facing with more challenges for competitive advantages in current aviation businesses in both international and domestic markets, the Qantas managers should make some changes in their management strategies in order to survive and achieve their objectives.
As Waddell, Cummings, and Worley (2007, p. 318) stated that 'organisation transformations can occur in response to, or in anticipation of, major changes in the organisation's environment or technology. In addition, these changes are often associated with significant alterations in the firm's business strategy which, in turn, may require modifying corporate culture as well as the internal structures and processes in order to support the new direction.
' Therefore, this report would analyse the key organisational change and change strategies Qantas executive board implemented to differentiate from competitors and remain competitive in the volatile aviation industry. In addition, this report will also analyse the background of Qantas and its environment, the change indicators that had been undertaken and the likely impact on the Qantas change processes. The international and Australian aviation industry has been under the downturn era caused by the current troubles from swine influenza and global financial crisis.
During these causes, all of the economic activities within Australia and throughout the world had been under a strong impact on all kinds of business. Obviously, the economic downturn has made a disadvantage affect to the operations of Qantas Ltd. and its profitability. According to Alan Joyce in his announcement in 2008, five months after he became the CEO of Qantas Ltd. , he emphasized that the company could not obtain its objective profits for the year. Qantas was significantly impacted upon by the downturn in the international aviation industry as a result of missing the profit target by over 60% to 80% (Mathieson, 2009).
At first the objective profit was to be $500 million, but it was been to a deep cut between $100 and $200 million due to the effects of the global downturn. The company had already reported profits worth $288 million for the first six months implying that the company would have reported losses during the other half of the year if the original target would not be revised. In addition, the global aviation business has been strongly impacted with the decrease of customer demands, price pressures and extensive sales being encountered by discount carriers who have cut down their costs by over 50%.
For example, most of the premium classes of the airlines have been experienced a slump. The reason is that most of the customers are preferring to choose the economic class instead of the first and the business classes. It has forced the airlines to lower its target profits in the international market and also make changes in order to survive the downturn. The international aviation industry has been turning to the new era of globalisation. It caused by the rapid development of new technologies on a consistent level of the international market.
At the current situation, the competition of groups of international airlines in the global market has been increasing strongly. Most of international airlines were trying to lower their costs and increasing their capacity in order to grapple a large share of the international market and Qantas is one of them (Sydney Morning Herald, 2009). It has affected to the demand of the airline's services, the profitability and the market share. In the 2010 annual report, Qantas (2010) stated that the international market share of the company has fallen from 42% to 23%.
This is the strongest fall of it since 1993. In the international market, Qantas has faced with the bad result of dropping demands on the overseas routes due to the strong development of low fare airlines. Otherwise, Qantas is now facing a greater competition from international competitors such as Tiger Airways and Virgin Blue. The company has been trying to lower its flying rates in the international market as well as the domestic and eliminating the business class in its flights in a bid to remain competitive in the market and survive through the competition.
It has also been renewing its fleets and reducing the long terms costs as well as forming strong alliances with investors and other partners in the market to spread the risks and the market opportunities. Other measures that the company needs to adopt include improving the satisfaction levels of its customers and its services in order to improve the revenue levels and face off with the competition. Strong promotional campaigns can also help to develop the image of the company and the airline in the eyes of the customers and the public.
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