The Fundamental Dimensions of Strategy - Case Study Example

Case Study Analysis Name Institution Date Case Study Analysis: Qantas-Emirates alliance Introduction Qantas-Emirates alliance was put in place with an aim of enhancing the operations of two groups. Qantas group owns one of the most popular airline companies in Australia while Emirates group owns the most popular airline industry in the United Arab Emirates (Mules, 2013). The concepts of operations management are important in terms of promoting the growth and development of an organization. The strategies that are used by an organization are also useful to determine their level of competitiveness in the market. This is considering that there is no market that enjoys a total monopoly. Qantas group own Qantas Airline while Emirates group own Emirates airways. The airline industry is also one most the most competitive industries in the world and hence the alliance that was put in place as a strategy for increasing the competitive advantage (Borenstein & Rose, 2013). An analysis of the market is also important for an organization for the purposes of identifying the level of competition. This is also useful for an organization in terms of putting in place strategies to deal with competition. Strategic management is therefore important in terms of determining the success of an organization. The paper thus discusses the concepts of strategic management in relation to the case study of Qantas-Emirates alliance. Discussion Issue in the industry and competitor environment The airline industry is quite competitive due to the customer loyalty issues with regards to some brands in the market. The customer loyalty makes it difficult for a new entry to perform well in the market. A strategic alliance that was put in place by Qantas and Emirates was for the purposes on increasing the competitive advantage. A strategic alliance involves an agreement by two independent companies to join forces and achieve specific goals and objectives by taking advantage of economies of scale (Frery, 2006). The competition in the airline industry usually involves both the local and international companies. The strategic alliance is thus an important aspect of ensuring that the competitive advantage is gained. According to the chamberlain’s strategy theory, a strategy has a single coherent focus. In the case of Qantas-Emirates alliance, the focus of the strategy is to increase the competitive advantage of the two companies in the market. On the other hand, the theory also emphasizes that the various factors usually shape the strategies and they include internal, external and share holder. The strategy of the companies with regards to the issues facing the industry is influenced by competition which is an external factor. The approach that is used also plays an important role in terms of determining the mechanism in which the strategy can take effect. The issues of globalization is also affecting the airline industry and hence impacting negatively on the profitability and competitive environment. Globalization requires the airline companies to be innovative and adopt the use of technology in order to meet the needs of the global customers (Freeman, 2010). Five forces model Threat of new entrant There is no threat of new entrant in the market due to the barriers to entry. The airline industry requires a lot of capital and it may take a long period of time to gain the customer loyalty (Kumar, 2006). This is an advantage to Qantas as it faces no risk of a new entrant. Threat of substitute products The substitute product for the airline industry is the road, rail and water transport. However, the services of the airline companies are quite superior in terms of speed as compared to the substitute products (Keiningham, et al, 2014). This means that it is not easy to substitute the products of the industry and hence providing an advantage to the company. Bargaining powers of the customers The company has a higher bargaining power as compared to the customers. This is because it is usually responsible for determining the prices for the air tickets (Steven, 2013). However, in most case, the company usually considers the economic condition for the purpose of providing affordable fares to the customers. In some instances, offers are usually made to the customers. Bargaining power of suppliers The company usually requires various services and products from suppliers which include fuel and spare parts for the airplanes. Most of the suppliers have higher bargaining powers over the company. This usually affects the operations of the company as the suppliers may increase their rates from time to time (Young, et al, 2014). Intensity of competitive rivalry The level of competition in the market is high and the company has to compete with other top brands like Qatar Airways, Etihad Airways, British Airways and companies from America. This is due to globalization which enables the companies to operate throughout the globe. A lot of innovations will be required in order to compete effectively in the market (Gulati, et al, 2012). Issues in the internal environment Qantas Group is facing some internal challenges that affects it operations and ability to meet the needs of the customers. The issues of restructuring usually have impacts on the operations of the company. Challenges are usually faced during the process and this impact negatively on the ability of the company to meet the demands of the customers (Xu & Meyer, 2013). On the other hand, the demands of the stakeholders are usually high and hence putting a lot of pressure on the company. According to Chamberlain’s Theory of strategy, the shareholders can be considered as a force that shapes the strategies of the company (Wang & Ahmed, 2007). The managerial issues are also internal factors that affect the operations of the company. At times, the management is usually faced with difficulties in terms of putting in place cost reduction strategies. The process of customer satisfaction is also complicated in some instances due to the high demands of the customers. The process of satisfying the customers may require a company to commit a lot of resources in terms of human and financial. SWOT analysis Strengths Weaknesses Strong public image in the domestic market. Customer loyalty among the corporate and SMEs. Use of advanced technology. Presence of investment grade credit rating. Poor performance in the international market. Inconsistencies in the product offering. Industrial relations disputes. High operational costs. Opportunities Threats Strength of the Australian dollar. Good geographical positioning. Emerging market in the online retail. High prices of fuel. Changing routes and schedules. Economic uncertainties. Increase in competition in the market. Corporate strategies in relation to the strategy theory The corporate strategies usually play an important role in turning a business from loss making to profit making by ensuring that it has a competitive advantage in the market (Hitt, Ireland & Hoskisson, 2012). The company has been involved in a transformation strategy for the purposes of ensuring that it is able to meet the demands of the customers and make profits. A five year transformation plan was put in place as part of the strategy to improve on the profitability of the company. Restructuring the business to separate the international and domestic management is one of the important strategies of the company. The plan also includes the encouraging global outsourcing, cost reduction, efficiency measures and broadening strategic alliances. According to the strategy theory, strategy operates in a bounded domain and hence the separation of the different activities in the strategy of the company (Clegg, et al, 2011). A basic direction or path is also required in a strategy. This is has been achieved by the company by providing a timeframe for the operations of the strategy. Some elements of a strategy are usually formed either deliberately or in response to an emergency. The strategies of the company were formed as a result of responding to an emergency as the company was facing declining profits. Improving on the long term share holder value is also part of the corporate strategy of the company. Improving the shareholder value has a positive impact on the corporate image of the company (Mak, et al, 2010). Creating efficiencies in terms of using the human and financial resources is one of the important goals of the strategies of the company. The focus of the customers is also one of the strategies that were put in place by the company. Strengthening the alliances for the purposes of ensuring that it targets the global gateway and it is also a strategy of the company that is aimed at improving on its position in the international market. This is considering that the performance of the company in the international market was not good enough. According to the strategy theory, the strategies of the company are usually shaped by different professionals (Eden & Ackermann, 2013). The executives and administrators were mainly involved in the development of the strategies. It is for this reason that the strategies lack an entrepreneur approach. An entreprenual approach is usually faced on innovations and exploitations of new opportunities. The strategies that have been developed by entrepreneurs are likely to produce short term results and profitability (Johnson, et al, 2011). Acquisitions, mergers and alliances are important strategies that can lead to competitive advantage for a company in a new market environment (Heimeriks & Duysters, 2007). Qantas Group has formed a strategic alliance with Emirates group that will be run for 10 years. However, ACCC has approved the alliance for only 5 years. The alliance is aimed at ensuring that the best airline services are provided to the customers in both the local and international market. The alliance with Emirates group is due to the good public image of Emirates group and its ability to provide high quality services in the aviation industry. The alliance will also lead to an increase in the baggage allowance from 20 to 30kg. A broad range of travel options will also be provided to the customers based on the alliance. A good strategy should also consider the needs of the customers and the stakeholders (Watson, 2013). Business improvements will be made through the alliance and hence impacting positively on the global branding of the company. According to the strategic theory, the channel of influence is important in terms of developing a strategy (Judge & Dooley, 2006). The company has considered the channel of influence by entering into an alliance with Emirates group which is one of the most popular companies in the world. A combination of different aspects of a strategy has been utilized for the purposes of ensuring that the strategy developed is successful. All the strategies have a future implication according to the theory. The company is likely to make gains in future due to the strategic alliance. Recommendations and conclusion It is recommended that more focus should be put in increasing the competitive advantage of the company. This will play an essential role improving on the competitiveness in the international scene. To add on that, the effects of globalization should be considered in order to ensure that the strategies of the company are in line with the modern concepts like globalization. This will play an essential role in ensuring that the company is able to meet the demands of the customers. It is also recommended that the strategic alliance should be strengthened in order to increase on its potential of competing with the top brands in the market. In conclusion, it is evident that the main issue affecting the industry is competition. Companies need to gain competitive advantage in the industry in order to survive. It is evident that Qantas has made different strategies for the purpose of improving on its ability to compete in the market. A five year transformation plan has been established for the purposes of ensuring that the company is able to progress. The strategic alliance that the company ha entered is for the purpose of improving on the international image of the company. It is also evident that the company is set to benefit from the strategic alliance as Emirates airline is an international company with a good reputation. References Mules, R. (2013). Тhе Lоng Наul: Тhе Qаntаs – Еmirаtеs Аlliаnсе. Busidate Vol 21 No.3. Frery, F. (2006). The Fundamental Dimensions of Strategy. MIT Sloan Management Review, 48(1): 71-5. Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press. Wang, C.L. & Ahmed, P.K. (2007). ‘Dynamic Capabilities’. International Journal of Management Review, 9(1): 31-52. Hitt, M., Ireland, R. D., & Hoskisson, R. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning. Kumar, N. 2006. 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