Principles of Management - Case Study Example

Principles of management (MNGT 201) Name Course Tutor Date Principles of management (MNGT 201) Introduction Marketing strategies and new goals have become very important for modern managers and companies in general. This is because new and unique strategies and goals combined with internal capabilities enable them to win the hearts of customers and also to gain competitive world markets (Jordana & Ritson, 2010, p.179). Qantas is one the largest global needs new strategies to attract after registering poor results in the recent years. According to Nensel (2014) its poor results are attributed to stiff competition, high cost of fuel and economic difficulties. However, if the company reviews its internal strengths and work to achieve its proposed objectives, it will not only solidify its position in the market but will also improve its revenues. This paper will therefore focus on the marketing strategies of Qantas Airline Company. Under this topic, the report discusses the mission of this company, the overall objectives, specific strategies used by the company and analyze the organizational structure used by Qantas. Overview of company Qantas is an Australian national airline established in 1920 (Qantas 2014). According to Tay (2013), the Airline Company is ranked as the largest in Australia with a market share of 65% in the domestic market. Qantas (2014) contends that in 1935, the company started its international services and has since grown in the number of destinations to 65 local and 28 international destinations. Over the years, the company has faced very stiff competition from other established domestic and international airlines such as Virgin Australia, Virgin Blue, JetStar Airways, Singapore Airlines, Singapore Airlines, Etihad airlines, Air New Zealand and Emirates among others (Fickling & Wang 2012). The company has been forced to re-strategize so as to sustain change. In 2011, Qantas Airlines therefore announced that it would conduct key structural changes owing to its financial losses and the declining share of the market. The mission of the company The company mission is actually in line with the structural changes and objectives. According to Qantas annual reports (2014), the company mission states that ‘Qantas is to create a viable business which will deliver sustainable shareholder returns while providing exceptional customer experience. The mission continues to say that the aim of the company is to meet customers’ expectations whenever they fly and therefore they often invest in their business and always endeavor to offer customers with excellent services’ (Qantas 2014). This mission statement will guide the company’s expands into the Asian market. In a bid to fulfill this mission, the company has outlined various strategic objectives, including restructuring its businesses, put in place cost reductions and efficiency measures, effective financial management, global outsourcing, job cutting and expanding strategic alliances staring with Emirates Airlines (Mules, 2013, p.3). Business restructuring would entail separating of the domestic and international management arms of Qantas Airlines Corporate objectives that will enable the organization evaluate if the goals are achieved within the stipulated time. The SMART Objectives are outlines as follows: The organization aims at mintaining stable growth of 20 percent in the next five years, from 2014 through to 2018 (Qantas 2014). The company intends to reduce their debt ratio by 5 percent annually within a period of the next five years so as to stabilize the growth . Increase services in business class segment and its market share by 30 percent. Increase the company’s general market shares both in Australia by 7% and 12 percent inetrnationally by 2020 (Qantas 2014). To increase its brand awareness and differentiated positioningin the carribean by 2018. To marlket Australian tourism across continent and in freturn increase it profit To raise the number of booking offices and distribution channels across the globe by 15 percent by 2018. Qantas Airline Company aims at increasing sales revenue by 25 from available products by in Melbourne by 2016. Generate 14 percent sales increase from from Europan markets in the next five years To partner with Emirates Airline Company so as to increasefrequency of flight and to access emirates lounges for the next ten years; from 2012 to 2022 (Qantas 2014). To be the best premium airline Company in the world To reduce number of employees by 5000 from 32000 to 27000 across the globe. Strategies Over the years managers have used strategy as a tool to meet the objectives of the firm and also to maintain competitive advantage. In the recent years, Qantas has faced fierce competition particularly at the international arena (Pearl, 2011). Mules (2013, p.2) pines that after two years of dismal performances particularly in 2009 and 2010, Qantas management devised new strategies in 2011 to attract customers and increase profits. Some of the strategies that will be used by the company include market penetration and downsizing. Market penetration Market penetration is the level of brand awareness and number consumers who purchase you products of product category (Farris et al., 2010). It takes place when a company enters a market where similar products and services already exists and gains the competitors’ customers. In UAE market, there are many companies which are already offering air travel services such as Emirates Airlines, Dubai Air, Air Arabia and Etihad among others. Mules (2013, p.3) claims that Qantas entered into strategic partnership with Emirates in which it will use the latter’s resource to enter into Middle East market. The argument is that Qantas is intending to gain some of Emirates customers and increase its customer base in the region. The Middle East is growing rapidly especially the AUE due to presence of many businesses across the globe. In fact, UAE is the second leading economy among the gulf cooperation council countries with a gross domestic product of $377 billion (Fickling & Wang, 2012). Dubai is also considered one of the lucrative tourism destinations in the world. According to IBISWorld (2014) the growth in the region has also led to increase in population of the middle class and above, hence, high disposable which most is the most target for airline industry. Today, Dubai the target destination for Qantas is ranked 7th as the most toured city across the globe on the basis of air travel (Fickling & Wang, 2012). This is an indication the tourism is significantly growing. Dubai is projected to host more than 20 million tourists in 2016. Downsizing In the recent years, Qantas Airline has been making loses because of operation inefficiency. For instance, in 2014, Qantas Airline Company registered worth A$235 in its first financial year. One of the reasons for making loss is high cost of operation (Nensel, 2014). Therefore, the management resolved to downsize the number of its employees so as to reduce the costs of operations. ABS News (2012) states that this is one cost-reduction measures put in place to save A$2 billion. The company prepares to lower its workforce by 5000 by 2017. By 2014 alone, Qantas plans to lay-off 2200 including 100 pilots (Nensel, 2014). Normally employee wage turns out to be a liability on the balance sheet, especially when the company makes loses. Actually, the retained earnings are affected mostly be the salaries it remunerates its employees yet they do not work for positive results. Organizational structure Figure 1: Qantas organization chart Source: (Qantas website, 2014) Qantas Airline Company uses divisional organizational structure. Here, the company is broken down it division with each division managing various functions (Lim, Griffiths& Sambrook, 2010). Managers are also obligated with certain functions hence performance is measured based on division. For example Qantas has international division and domestic division. Conclusion From the research, it is evident that Qantas and other companies facing many challenges each and every single day of their operations. Fuel prices are increasing, competition is growing and operational costs are getting high. The company has put in place various changes that they would progressively make as they continue to maintain their dominance of an Australian Airline industry. Some of the changes include downsizing and penetration of Middle East airline market. References ABS News. (2012). Why airlines have trouble turning profit.  ABC News  Farris, P.W., Neil, T. B., Pfeifer, P.E., & Reibstein, D.J. (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. Fickling, D & Wang. (2012). Qantas, China Eastern Plan Cheap Flights for Asia Middle. Bloomberg IBISWorld. (2014).  IBISWorld Industry Report I4902: Domestic Airlines in Australia. IBISWorld. Retrieved on 17th December 2014 from http://clients1.IBISWorld.com.au.ezproxy.lib.uts.edu.au/reports/au/industry/majorcompanies.aspx?entid=472#MP32 Jordana, S., & Ritson, B. (2010). Rewarding and recognizing excellence at Qantas. Journal of Operations Management, 27 (3),178-182. Lim, M., Griffiths, G., & Sambrook. S (2010). Organizational structure for the twenty-first century. Presented the annual meeting of The Institute for Operations Research and The Management Sciences. Austin. Nensel, M. (2014). Qantas Group reports $208 million loss for FY14 first half. Air Transport World Mules, R. (2013). The Long Haul: The QANTAS – Emirates Alliance, Warringal Publication, 2- 8. Pearl, Z. (2011). What's the top three competitive advantages to make Qantas the most profitable airline in the world? Harvard Business Review, 20 (6), 2-76  Qantas. (2014). Qantas Official Website. Qantas. Retrieved on 17th December 2014 from http://www.qantas.com.au/travel/airlines/home/za/en Tay, L. (2013). In Detail, Here's Why Alan Joyce Says Qantas Must Defend Its 65% Market Share, Business Insider (Australia). Retrieved on 17th December 2014 from http://www.businessinsider.com.au/in-detail-heres-why-alan-joyce-says-qantas-must-defend-its-65-market-share-2014-3 Read More