Stakeholders and Communication Audit: Qantas Airlines - Case Study Example

Stakeholders and Communication audit: Qantas Airlines 2007 Background Qantas Airlines, established in 1920, is the second oldest independent airline that is still in operation. Qantas (the name being the short form of Queensland and Northern Territorial Airlines Service, as it was originally called) is now the largest airline company in Australia and has services from Sydney and New South Wales. The main domestic and international hubs of Qantas are the Sydney, Melbourne and Brisbane airports. Qantas was privatized in 1992 after the Australian government sold Australian Airlines to the company. In December 2006, a private equity consortium led by Macquarie Bank, Airlines Partner Australia, announced a takeover bid for $11.1 billion. Although the memorandum of Qantas does not allow a foreign entity to hold more than 49 percent, individual shareholders not more than 15 percent and a foreign airline not more than 25 percent, the consortium members that are not of uniform nationality have bid for the maximum of 25 percent individually (Thomas, 2006). Once the Qantas shareholders ratify the bid that has already been accepted by the board, the company would once again become an unlisted one as it was previous to 1992. In the domestic market, Qantas’ main competitor has been Virgin Blue, a low-cost carrier, after Ansett Airlines shut down in 2001. Qantas’ market share rose 90 percent largely as a result of Ansett’s collapse as well as the September 11, 2001 terrorist attack in New York, which resulted in a downward spiral in the United States aviation and tourism industry and converted tourism flow to other parts of the world. Qantas ordered for a Boeing 737-800 aircraft in 2001 and took delivery in three months, reflecting the lack of demand for aircrafts in the US. However, Virgin Blues also stepped up its aggressive business operations and eventually Qantas’ market share in domestic aviation came down to 60 percent. In 2004, Qantas too joined the bandwagon of discount aviation and launched the Jetstar Asia Airways, in which it owns 44 percent share. This marked Qantas’ foray into the Asian aviation routes. This followed from Qantas’ failed attempt to buy a majority share in Air New Zealand in 2003 and entering the trans-Tasman routes with Jetstar’s flight routes to New Zealand (wikipedia). Introduction There are a number of stakeholders that affect an organization and are also affected in turn. Collectively, the stakeholders decide the specific direction that the organization and industry adopts. The stakeholder theory was first suggested by Freeman (1984), who defined a stakeholder of an organization as “any group or individual who can affect or is affected by the achievement of the organization’s objectives” (quoted in Jonker, 2004). The organization needs to manage the stakeholders effectively for a collective development process through proper identification of stakeholders, set up processes to organize relationships with the stakeholders as well as the transactions with them. In this paper, stakeholder grouping for Qantas Airlines will be undertaken, taking into consideration the particular nature of the aviation industry in the country as well as the organizational nature of the company. Thereafter, Qantas’ communication strategy will be analyzed to see whether it successfully addresses the stakeholders’ concerns. Identification of stakeholders In order to identify the main stakeholders of Qantas, it should be remembered that the composition and interaction of stakeholders is a complex process and not necessarily independent of stakeholder grouping for organizations other than Qantas. For example, a trade union leader may represent the employees of Qantas but he is also a political activist representing a large set of commitments in the country. Legal, political, cultural, social and economic factors influence stakeholder relationships for any organization. Qantas’ main stakeholders are the customers, the board, the senior management, tour operators, alliance partners, outsourced agencies, investors, government, employees, airport operators, suppliers and the media. Stakeholder map The stakeholder map may be constructed as follows: The main element of the stakeholder map is the recognition that the action of each stakeholder affects the other. Also, the stakeholder map is not static but may change over time with changes in the business as well as the political and social structure (Donaldson and Preston, 1995). For example, the strategic decisions of Qantas’ board of directors and senior employees determine the financial and organizational performance of the company. This in turn has a direct effect on the share value of the company since Qantas is a publicly traded company. Not only is the stock market value of the company a direct concern of the shareholders, it also determines the attractiveness of the company for the potential buyers of its shares. This is evident in the fact that a major market share of Qantas in the aviation industry in Australia has prompted a takeover bid by the Airlines Partner Australia consortium. However, the takeover mechanism is limited by the government regulations that limit the ownership of any Australian airlines company by a foreign individual or company. The government, in turn, is concerned with maintaining competition in the industry that would promote efficiency while at the same time not allowing the domestic industry being taken over by a foreign entity. Further, the $11 billion takeover bid has been recommended by Qantas board on the grounds that the price of $5.6 a share is a good deal for the shareholders of the company giving them a 33 percent premium (Creedy and Norington, 2006). However, the government is the stakeholder in not only Qantas’ performance but that of the economy as well. The huge deal will over time increase the level of debt in the economy and affect the banking system. For an airlines, the most prominent stakeholders are perhaps the customers and employees. In response to falling market share as a result of budget offerings by the main competitor, Virgin Blues, Qantas too began offering large discounts to customers beginning from 2003 (wikipedia). Customer needs and preferences as well as the industry competition, thus, influence the organizations policies and strategy orientations. Advertisement campaigns by Qantas affects the local media directly while at the same time the approach of the media towards the company affects its business prospects. An airline performance depends crucially on the technology, availability of aircrafts and airport access as well as the employees. Hence, Qantas’ performance in the marketplace depends largely on its employees. At the same time, the employees too have a stake in the organization structure as well as the policies adopted by the senior management and the board. That explains why a group of 2500 Qantas pilots decided to form a union to campaign against the takeover bid by Australian Airlines Partners (2006). The employees fear that the takeover would result in a change of the organization structure, reducing jobs, outsourcing of activities and sale of assets to tide over the growing debt (Creedy and Norington, 2006). Similarly, suppliers, tour operators and channel partners like the outsource agents, alliance partners and airport operators are the other stakeholders for Qantas. Suppliers to Qantas includes the aircraft and parts suppliers as well as a horde of other suppliers including vendors of stationary, food caterer, etc. The tour operators in Asia, New Zealand and also Asia are intricately linked with the routes that Qantas flies. At the same time, the mechanism of relationships with suppliers also impacts the performance of Qantas. In fact, Qantas’ launching of Jetstar Asia has boosted the business of tour operators who promote Australian tourism towards Asia. Over the recent past, some of the non-core operations of Qantas like call centers have been outsourced to low cost destinations in Asia. While the employees fear that the takeover of Qantas will result in more outsourcing, hampering their job security, the organizations that offer such outsourcing services are likely to benefit from the move. Communication audit Qantas has conducted a series of marketing campaigns, including the television advertisements with children’s choirs of Peter Allen’s “I Stall Call Australia Home” set against eye-catching scenery (wikipedia). Qantas’ television campaigns have over the years become legendary. An earlier commercial “Spirit of Australia” featured 1,200 children gathered in the shape of a huge kangaroo at the Bledisloe Club Rugby Union match stadium. In 1998, a television campaign was developed with filming the Australian Girls Choir on exotic locations in Australia. Initially, 150 girls in the age group of 8 to 18 years were filmed in many global destinations like Argentina glaciers, temples in Thailand as well as in the Kings Canyon in the Northern Territory. Media launches of the campaign were organized in Los Angeles, Hong Kong, Manila, Tokyo and Jakarta. The campaign was re-done in 2000 and 2003. The 2000 film highlighted a Masai village in Africa, the Taj Mahal of India and the Statue of Liberty in the United States. The filming of the 2000 campaign itself was the subject of a television documentary, ‘Wandering Spirits’ (Australian Girls Choir). In 2002, Qantas inducted John Travolta, actor and a trained pilot, as the company’s “ambassador-at-large” to develop on the “Spirit of Australia” slogan. Travolta’s image was used to promote the brand as well as employee initiative through a global tour. Ogilvy Public Relations Worldwide Australia managed Travolta’s global tour and the campaign through the “Spirit of Friendship” slogan, particularly focusing the American market. Travolta’s passion for aviation was put to use in the campaign. The agency concentrated on press conferences in Los Angeles and New York, thereby guaranteeing a large media presence. The invitations were sent out exclusively in Travolta’s name, hinting at “a global initiative” that was certain to raise the media’s curiosity. The press conference itself was a dramatic event, held at the abandoned Imperial Terminal at the Los Angeles Airport done up as the First Class Lounge of Qantas Airways, Sydney. The media was provided with a photography package with Travolta dresses as a 1964 pilot as well as one-one interview and photo opportunities along the tarmac. The campaign resulted in Qantas achieving global markets. Nearly 300 local and national slots highlighted the “Spirit of Friendship” Global Tour on the segments, “Entertainment Tonight”, “Access Hollywood”, “Live with Regis and Kelly” and “CNN Headline News”. Nearly 450 print articles were published in the United States, including those in Time, Los Angeles Times and Chicago Tribune besides 2,000 articles in global newspapers including The Sunday Telegraph in Australia and Sunday Times in London. About 900 television slots included HBO Asia in Hong Kong, BBC News in London and RA1 in Rome were taken. While more than 50 million audience was reached in United States alone, the campaign also raised employee morale within Qantas (Ogilvy). Conclusion Qantas Airlines of Australia is one of the largest airlines of the world as well as one of the most efficient ones. This has resulted from strong stakeholder organization in which both shareholders, employees and customers have benefited. The airline has evolved over time, from an unlisted company to a highly valuable one over a span of 12 years. It has maintained its market share through intense global media campaigns that focus on the exceptional features of the island country as well as offering aggressive discounts on its domestic sectors. It has taken advantage of the position of its main hubs and has increased business with new routes to Asia (through subsidiary companies) and New Zealand. The recent issue of the takeover bid and its acceptance by the board has created a debate in the country over its fallout over stakeholders, most particularly on the employees. There are fears that the step will have a rebounding effect with job losses, outsourcing, sale of assets and growing financial debt in the economy. However, even if there are adverse affects on some stakeholders, there would be others to benefit out of it. Over the long run, however, the organization will continue to organize its stakeholder structures according to the needs of the markets. Works Cited Creedy, S and B Norington, Pilots to fight for Qantas, December 18, 2006, http://www.theaustralian.news.com.au/story/0,20867,20943853-23349,00.html Speedy, Blair, Qantas hits back at sell-off ‘hysteria’, December 21, 2006, http://www.theaustralian.news.com.au/story/0,20867,20960257-23349,00.html World Airlines News, Australian Domestic Competition causes Airlines’ Profits to Slump, March 30, 2001, http://www.findarticles.com/p/articles/mi_m0ZCK/is_13_11/ai_72614534 http://en.wikipedia.org/wiki/Qantas Jonker, J A , Destination Strategic Direction and Positioning, PhD Thesis, University of Pretoria, 2004, upetd.up.ac.za/thesis/available/etd-07022004-130908/unrestricted/00front.pdf Freeman, Strategic Management: A Stakeholder Approach, Boston, Pitman, 1984 Donaldson, T and L Preston, The Stakeholder Theory of Corporations: Concepts, evidence and implications, Academy of Management Review, 1995 Ogilvy P R, Case Studies: Qantas Airways, http://www.ogilvypr.com/case-studies/qantas-2.cfm Australian Girls Choir, http://www.ausgirlschoir.com.au/highlights_qantas.htm Read More