Business Intelligence Systems Project - Essay Example

Introduction General Environment Analysis Industry Environment Analysis Competitors Environment Analysis Internal Environment Analysis Recommendations Conclusion References Introduction General Environment Analysis The general environmental analysis looks towards analyzing the different factors which changes the face of the Australian airline industry and identifies the manner in which the airline industry is changing. This aspect thereby looks into different factors like economic, social, cultural, technological, environmental, legal, demographics and so on. The different factors will help to understand the manner in which the entire industry revolves and will help the different players to understand the strategies which they need to adopt with the changing business environment. Social-cultural forces have an effect on the manner in which decisions are taken and impact the number of customers using airlines. For example, the break of swine flu affected the number of customers willing to travel to Australia. This had an adverse impact on the airline industry as it reduced the number of people using airlines to travel to the country (Wilson, 2009). The same can be seen when the outbreak of SARS in 2003 affected the Australian airline industry as it reduced the number of people choosing airlines to travel to the country (Harcourt, 2009). The different social cultural factors which are short lived thereby has an impact on the airlines and brings about the change in consumer profile looking towards using the services. The economic condition of Australia also has an impact on the airline industry. The Australian economy has fallen under recession and is slowly recovering which has affected the airline industry as the number of customer using the services of airline is slowly falling. This is seen from a drop in first class passenger using airlines as there has been a sharp drop in the commuters using business and first class category in the airlines (Platt, 2009). The impact of the economic recession has been so strong that it has also led towards reducing the number of employees by laying them off. This has also resulted in the reduction of airlines contract which has been finalized and will have an impact on the airline industry. The economic condition thereby has impacted the airline industry and has brought widespread changes in which the airline performs. Technological advancements have also contributed and brought the required changes based on which the airline performs. The growth in the technological advancement can be seen from the advancement which the different fleets have seen as A380 is widely used and enables to commute more passengers at a time. This has been added by the fact that the new aircraft helps to improve fuel consumption and helps to multiply the effectiveness through which services are provided (George, 2006). In addition to it the airline industry has also witnessed changes in which the demographics have undergone changes. This can be visualized by the fact that over a billion people look to use airlines for the purpose of commuting. The business sector continuously rely on using airlines as their services as using the services ensure that people can commute over long distance quickly and will also ensure that maximum facilities and services are achieved. In addition to it the airline industry also looks towards attracting the travelers which is continuously increasing. This has enabled the airline industry to ensure that different section of the society is eyed at and has helped to improve the manner in which the airline sector performs (Bamber, 2006). The legal aspect has undergone changes especially after the terrorist attack and has made the airlines look into the safety aspect of passengers seriously. This has brought the required changes in the airline sector as the industry has become proactive and looks towards increased safety standard. In addition to it the government regulations with regard to the entry and exit of players has completely transformed the airline sector and brought widespread changes which ensures that the airlines witnessed different changes. Thus, the manner in which the general environment has changed and is evolving highlights different benefits and demerits for the airline industry. This requires that the airline industry looks towards dealing with the changing environment and develops rules and process which helps to improve the overall performance of the airline industry. The different factors further highlights that the airline sector has to look towards working on the different section and improve their overall process of doing things. Along with it, airlines that are able to create a brand name are able to ensure that customers can be attracted at higher price which will thereby further increase the chance of a new player entering the industry. This requires that the general environment is considered and strategies are developed which helps the airline sector to keep with the changes which the airline industry is witnessing. Industry Environment Analysis The industry environment analysis looks towards highlighting the different characteristics which the industry reveals and the manner in which the industry looks attractive. The industry environmental analysis that Qantas Airways has to face has been presented using the Porter’s Five Force Model which will lay relevance on industry rivalry, threat of new entrant, substitutes available, and bargaining power that suppliers and buyers have. Firstly, the degree of industry rivalry in the airline sector is very high. In the past, the Australian economy was regulated by the government but the opening up of the economy and deregulation which took plane in 1990 made Qantas acquire a local Australian airline and became a market leader (Flight Global, 2010). Deregulation increased the level of competition as the emergence of other players like Virgin Blue & Jetstar Airlines reduced the market share. The degree of competition further becomes tougher due to the fact that the rate of return is low and the investment cost is very high. At times it results in the airlines facing an economic crisis which thereby impacts the future potential of airlines (Thomas, 2010). The industry rivalry is therefore very high and will continue in the near future as the presence of international airlines which functions as low cost airline is continuously increasing. Secondly, the potential threat of new players entering the airline industry is low. This is primarily due to the fact that huge investment cost and low returns increases the risk for the new players looking to enter the market. This will thereby reduce the desire of new investors to invest in this direction. Despite, the high investment cost deregulation has ensured that airlines working in some other part of the globe an enter Australia and continue with their services. This would translate into increased competition as other players performing over the rest of the world might enter, thereby increasing the potential of a new player entering the market. Along with it, airlines that are able to create a brand name are able to ensure that customers can be attracted at higher price which will thereby further increase the chance of a new player entering the industry. Thirdly, the availability of substitute depends on different factor which helps to understand whether Qantas airways face high or low risk of substitution. For example, a person travelling with the domestic border of the country might use rail or road as a mean of communication. This would increase the level of substitution and would make the degree of substitution for Qantas Airways to be high. In a similar manner if a traveler wishes to travel abroad the passenger will have little option apart from choosing airlines which will thereby reduce the degree of substitution. Thus, the degree of substitution depends on the requirement of a customer which is backed by convenience, budget and time. Fourthly, the bargaining power of suppliers is very high due to the presence of very few suppliers within the industry. It is seen that most of the airlines are either supplied by Airbus or Boeing which thereby results in increasing bargaining power for the suppliers. A look at the different fleet of airline that Qantas Airways shows that most of the airlines which Qantas Airways have includes Boeing 747s, 767s,737s and 717s, Airbus A380s, A330s and A320s, Bombardier Dash 8s and Bombardier Q400s (Qantas Airways Limited, 2010). The number of fleet shows that Qantas Airways had little option but to purchase their fleet from either Boeing or Airbus showing that the bargaining power of suppliers is very high. Lastly, the bargaining power of buyer is very high due to the different options that buyers has. Qantas Airways look to perform as a premium, full service in flight serving both the domestic and the international players (Qantas Annual Review, 2010). The company had focused on service as the main factor which look towards attracting customers. Customers still have an option to move to other airlines as per the requirements. Along with it, he customers can purchase their tickets either directly through the travel agent or website which provides an opportunity to choose airlines based on price, service and quality. This thereby highlights that the bargaining power of buyer is high. A further breakdown of the industry analysis based on different factors is as Economic Factors Economic Factors Market Size Ease of Entry/Exit $ 15 billion Easy due to opeoning of economies Scope of competitive rivalry Technology/innovation High as all players offer similar products High as the industry uses latest developments Market Growth Rate Product Characteristics 2.50% Services Stage of Life Cycle Scale Economies Long High as industry look towards having cost effective ways Number of Companies in the industry Learning & Experience effect 88 Increases the business as past experiences help to design better services Number of Customers Capacity Utilization Over a billion High Degree of Vertical Integration Industry Profitability Low High The overall industry analysis shows that there are different areas and directions which makes the industry look attractive but the high cost associated with entering the industry has ensured that few players enter the industry and has helped companies to differentiate their services from others. Competitors Environment Analysis Qantas Airways faces direct competition from other players within the industry who looks to perform in the same sector and satisfies the need to customers to commute from one destination to another. The degree of competition is very high in the airline industry as all the players have developed similar strategy leaving little differentiation between their offerings. The only difference which makes customer avail services of different airlines is the degree to which the airline is able to differentiate their quality of service from others. The other concern in the airline industry is that any new strategy is copied by the other players which lead towards duplicity and no point through which long term advantage can be garnered. Qantas Airways has to face competition from Virgin Blue and Jetstar Airlines which perform in the same sector and aims at the same segment of customers (Luther, 2011). A breakdown of the competitor environment analysis through the competitive strategy which has been adopted by Qantas in comparison to other players like Virgin Blue and Jetstar Airlines highlights the following Key Success Factors Company Qantas Virgin Swiss Jetstar Services 1 2 4 3 Leg Space 1 4 2 3 Flights tp different Destinations 2 1 3 4 Timely Service 1 4 3 2 Cost Effective 2 1 4 3 Differentiator 1 4 2 3 A further look at the competitive strength will further help to understand the manner in which competition is having an impact on the performance of Qantas Airways which is as follows Key Success Factors Weight Company Qantas Virgin Swiss Jetstar Services 10 1 2 4 3 Leg Space 1 1 4 2 3 Flights to different Destinations 2 2 1 3 4 Timely Service 8 1 4 3 2 Cost Effective 6 2 1 4 3 Differentiator 4 1 4 2 3 The overall competitive analysis shows that Qantas Airways is better placed than other players as based on the different factors like services, leg space, service and cost effectiveness shows that Qantas Airways has been able to develop better services for their customers. This has helped Qantas Airways to differentiate the services and has been able to bring the required transformation through which customers have been attracted towards the airlines (Ireland, Hoskisson and Hitt, 2007). Thus, the degree of competition that Qantas Airways is very high and the presence of different airlines like Virgin Blue and Jetstar Airlines have further intensified the degree of competition that the airline has to deal with. Internal Environment Analysis Businesses have to develop their strategies based on their competitive strength and the manner in which the different resources are being used to maximize productivity (Matt, 2010). Core competencies determine the point at which the business will be able make strategies which inclines with the overall objective of the business (Value Based Management, 2010). The core competencies has enabled Qantas Airways to develop their end product which consist of abilities of acquaintance, production process, customer relationships and staff which will help to accomplish the goals of the business (Vitez, 2009). This has enabled Qantas Airways to develop the required strategic architecture which will help the company develop their future and will help to achieve the core competencies of the business and will provide the benefits effectively (Hamel & Prahalad, 1994). The core competency which Qantas Airways highlights is that it is a premium airline with full range of services. The core competency for Qantas Airways has been inclined with their firms’ resources which has enabled them to take competitive advantage. Qantas Airways has also identified the generic strategies which have provided competitive advantage by concentrating on cost leadership, differentiation and niche strategy (Matt, 2009). Qantas Airways on this front has give relevance to differentiation and cost advantage to get the required competitive advantage. Qantas Airways with the availability of A380s and B787 Dreamliners has differentiated their services from their competitors by having a fleet of aircraft which has helped to differentiate their services. Qantas Airways has also developed a frequent flier program which has helped to ensure customer loyalty and added towards being a market leader through differentiation. The customers who use the frequent flier program get points whenever they use Qantas Airways. These points can de redeemed to upgrade their seats, or purchase goods from designated stores, or upgrade the weight on baggage and carry extra luggage at no extra cost (Hoffman, 2010). Qantas Airways as a result has been able to achieve competitive advantage in their services. Qantas has pursued a strategy of cost advantage by working as premium airlines which provide full range of services at a price which is competitive. This has developed their brand image and has helped them to compete with other players. The policy of cost advantage is strengthened by the different frequent flier program which the airways pursue and looks towards attaining better services for its customers (Coley, 2001). To maximize customer services Qantas Airways has tied up with different stores, groceries store and banks which look to provide additional services to the customers. This has been facilitated by the frequent flier program that is able to get something extra and additional apart from using the services of the airlines. This has enabled to improve the overall working aspect and has helped to get a pool of loyal customers which has multiplied the opportunity for Qantas Airways to perform as one of the most successful airlines. With regard to the firm resources Qantas Airways has looked towards using the firms’ resources in the most productive manner. The company has made it staff to undergo rigorous training program and has developed a code of conduct based on which the employees have to perform (Creedy, 2009). This has helped to maximize customer satisfaction and has ensured that the resources provide maximum benefits. Qantas Airways has also adhered to the safety standards by developing policies which ensure that safety of employees and customers are taken care of (Skyes, 2010). The overall process has thereby looked towards developing both the inbound and outbound logistics and has thereby determined the process through which the resources have been used in the most productive manner. Recommendations Conclusion References Bamber, T. 2006. Market analysis of Qantas Airlines and Virgin Blue Airlines, Business Category, OPPaper.com, page 6 Coley, A. 2001. Qantas Airways Fire sale wreaks havoc online. Business News, CBS Interactive, A CBS Company Creedy, S. 2009. Qantas aims for better customer service with $10m training centre, Retrieved March 27, 2013, from http://www.news.com.au/back-to-school-for-battered-qantas-staff/story-0-1111118695362 Flight Global. 2010. Airline Profile: Qantas, Retrieved March 27, 2013, from http://www.flightglobal.com/landingpage/qantas.html George, T. 2006. New Corporate Plus Fare Delivers Significant Cost Savings to Corporate. News & Press Release, Qantas Airlines Pty Ltd Harcourt, T. 2009. Pigs can fly – The economic implication of swine flu, Australian Trade Commission Hamel, G. & Prahalad, C.K., 1994. Competing For The Future. United States of America: The Harvard Business School Press Hoffman, B. 2010. Qantas Announces 7 Million Frequent Flyer Members Milestone, Retrieved March 27, 2013, from http://biztravelguru.com/blogs/airline-hotel-news/archive/2010/04/28/qantas-announces-7-million-frequent-flyer-members-milestone.aspx Ireland, R. D, Hoskisson, R. E, and Hitt, M. A, 2007. Competing for advantage, Cengage Learning Luther, W. 2011. The Marketing Plan: How to Prepare and Implement It, Fourth edition, AMACOM Div American Mgmt Assn Matt. C. 2010. Core Competence by Hamel And Prahalad, Retrieved March 28, 2013, from http://www.sayeconomy.com/core-competence-by-hamel-and-prahalad Platt, C. 2009. Price war erupts on Sydney Melbourne route, Brisbane Times, 20th August, p. 21 Qantas Airways Limited. 2010. Qantas Fact File, Retrieved March 27, 2013, from http://www.qantas.com.au/infodetail/about/FactFiles.pdf Qantas Annual Review. 2010. The Sum of Us, Retrieved March 27, 2013, from http://www.thesumofus.qantas.com/pdf/Full_Annual_Review.pdf Sykes, W. 2010. Qantas chief apologises for ‘major disruption’, Retrieved March 27, 2013, from http://www.eglobaltravelnews.com.au/airline/qantas-chief-apologises-for-%E2%80%98major-disruptions%E2%80%99.html Thomas, D. 2010. Qantas Unit, Asia to form non-equity alliance, Retrieved March 27, 2013, from http://www.reuters.com/article/idUSSYU00922120100105 Value Based Management. 2010. Core Competencies, Retrieved March 27, 2013, from http://www.valuebasedmanagement.net/methods_corecompetence.html Vitez, O. 2009, Definition of Core Competencies. Retrieved March 28, 2013, from http://www.ehow.com/facts_5485883_definition-core-competencies.html Wilson, L. 2009. Melbourne the swine flu capital of the world, The Australian, 6th June, p. 9 Read More