Understanding Organisation Theory and Practice - Essay Example

Report: Understanding Organisation Theory and Practice Report: Understanding Organisation Theory and Practice Executive Summary Internal and external factors have significantly affected the operations of Qantas and Virgin airline companies. The report, therefore, examined the management of these two airlines when confronted with crisis by illuminating the theories they employ as remedy to the situations. The report analysed the contingency management theory and how the airlines employed the approaches of the theory. The method of data collection incorporated was the use of questionnaire, observation, and interview while the analysis method encompassed the use of qualitative descriptive method. The findings of the report highlighted issues related to operations and structures of Qantas and Virgin airlines, economic factors, and the role of the government. In addition, the report also gave several recommendations that were geared towards optimizing the bottom line of the companies and dealing with hurdles that surface in the cause of operations. INTRODUCTION Background Qantas and Virgin airlines have encountered several challenges that stem from their internal and external environment. The challenges can be attributed to impacts of globalisation and advancement of technology. The management approach that they have often employed depending on the prevailing situation is the use of contingency theory approach. Aim This report examines the management of Qantas and Virgin airlines during crisis that is driven by external environmental factors. Scope The report focuses only on the contingency management approaches of the Qantas and Virgin airlines. It does not incorporate other management theories that the two airlines (Qantas and Virgin) employ in their operations. Virgin Airline The significant continual growth of Virgin brand across borders is a reflection of the success of the airlines’ success in its management approaches. The unique structure of the airline makes it difficult to designate a specific/particular management approaches in its operations. However, the contingency management approach is perceived to be the main approach for the success of the operations of the airline. Its management is usually reorganised to commensurate with arising contemporary situations hence decision making being based on situational analysis. Virgin’s current model of contingency planning explores both internal and external factors, ensuring employee morale and motivation are not neglected in times of external contingencies. The models of management are integrated to align with the market trends aimed at mitigating risks and changes, and ultimate optimisation of profit. The business has not only grown beyond the borders and gained competitive leverage inclusive of the diversification of its operations but has also been an innovative and profitable venture. This is attributed to the management’s ability to refocus its efforts from practices that are rigid with the aim of tackling emerging issues. Qantas Airline The airline has undertaken significant changes that have been aimed at tackling the impacts of changes in its internal and external environment especially those impacts perceived to be detrimental to the airline industry. The political environment has significantly impacted in the airline industry though the management of Qantas has always swayed the government’s opinion in a bid to protect its pacific routes, receive tax concession, and ease rules related foreign tenure. However, in 1991, Qantas was faced with several factors which stemmed for the deregulation of the domestic airline industry, as well as its privatisation. These implications resulted in increased competitions, increased taxes, less efficiency, and effects on the dividends. The contingency approach was employed as a remedy to the situation. The approach encompassed the incorporation of the behavioural management. In this case, more emphasis was laid in human resource management and the adaptation of organisational structures that are flat. The main theories for the analysis Contingency theory The theory claims that there is no ideal single model or way of organising an organisation/company. Instead, the cause of optimal action is dependent on the environment of the organisation and its exposure to internal and external changes. The approaches which crop up from such exposures are adapted towards the practices of the management. Due to the continuous evolution of organisations, they encounter various contingencies thus significant importance being placed on suitability of the situation in question. It ensures that the effectiveness of organisations are confined to the way in which the situations at hand are tackled. The contingency theory has been vital in the management of the airline industry. It provides not only the understanding but also denotes significance to crisis management in an attempt to effectively protect the brand. Brand management is an important factor in air transport (Grundy, 2013). It creates differentiation and customer loyalty in an otherwise significantly homogenous industry. An outline of the reports structure Background Aim and scope of the report Theory of analysis Methods of data collection and analysis Finding Conclusion Recommendation Methods of data collection & analysis Method of data collection The methods of data collection entailed the use of questionnaires, interviews and observation. The questionnaires used were open and closed ended where the open ended questionnaires were aimed at obtaining detailed information concerning the management of Qantas and Virgin airline companies while the closed ended were aimed at obtaining specific details. Methods of Analysis The main analysis method that was employed was mainly descriptive qualitative and comparative method. The comparative method entailed the comparison on management between Qantas and Virgin airlines in the airline industry. Findings The strategic operations or structure of the airline industry is mainly driven by the cost of fuel and servicing. It often results into budgeting reductions in other areas of the operations such as the extras on customer service. The operation of the airline industry as a form of public transport is principally on a large scale. It is an integral function of the modern economy. However, at the onset, this industry was not structured with the aim of optimization of the bottom line, but rather as a vital service to the public at costs that were relatively lower and driven by the cost of fuel, heavy requirements in terms of maintenance, and aircraft technology. Typically, companies in the airline industry operate at a loss thus prompting the need for heavy subsidy from the government in reference to funding. Interestingly, Qantas is unique in this regard since it is one of the few profitable airline organizations in the market and leading competitor. Recent trends have seen greater trends in private ownership, re-shaping the market toward a more profit driven and competitive strategy. This has presented new multifaceted challenges in restructuring of market leaders such as Qantas and Virgin raising further issues of their impact on social, political and economic domains. Government funding in Qantas is based on a dual strategy as follows: -It provides guarantee in sense of national security as a Government backed airline limits ownership by foreign bodies/ nations which presents a higher risk during unstable/ dubious economic or political climates. -It preserves a national icon in the interest of identity with the Australian public secures Australian base service. -In the interest of the government to sustain the airline as the industry represents fundamental point of connection with global markets and relations. This industry is crucial in supporting the performance of other major sectors of the Australian. Conclusion Contingency theory has been widely employed by companies such as those in the airline industry to streamline their operations and also respond to adversities that stem from the companies’ in internal and external environment. Globalisation and evolution of technology has consequently led to the exposure of organisations inclusive of the airline companies to environments that are volatile since the environment has been significantly expanded. The airline industry in comparison to other industries has been exposed to impacts of the business environment such as the economic, political, technological, and socio-cultural factors which has increased due to multi-national exposure. Qantas and Virgin airlines have often applied the contingency theory with the aim of not only dealing with the implications of their internal and external environment but also to gain competitive advantage over other companies in the same industry. Recommendations Due to the competitive nature of the airline industry in Australia and beyond the borders, the management of Qantas and Virgin should focus on other management approaches that can maximize their bottom line besides the contingency theory. Some of the management approaches that have proved significant in organisations are the system theory and chaos theory. The system theory will enable the management of the airlines to comprehend how the employees are affected by different systems and they also affect the system that surrounds them. In addition, it allows the management to the events and patterns at the workplace. It aids in the coordination of programs to work holistically for the objectives of the company instead of the isolation of other departments. On the other hand, the chaos theory is cognizant to the fact that change is a constant phenomenon. It enables companies to increase their energy with the aim of maintaining the level of new complexities that surface during operations. More emphasis should be laid on customer focus and service to create customer loyalty and image of the companies. The human resource management of these airlines should aim at adapting effective employment relation plans that enhance employees’ commitment as it has the potential of impacting on their performance. Read More