Air Australia serves both domestic and international leisure destinations. International destinations are such as Honolulu, Phuket and Bali whilst, domestic destinations consist of Derby, Melbourne, Port Hedland, Perth and Brisbane. Air Australia continues to face numerous challenges in its operation. An excellent illustration here is the budget airline which was found in Brisbane; after being in service for barely four months, it decided to go into a voluntary management. This was a day after five hundred job cuts were announced by Qantas. Air Australia is not only the airline facing challenges. Some airlines such as the American Airlines, Hungarian Airline, Spain’s Spanair Airline and Maley being recognized as the long-established carriers have greatly collapsed.
Additionally, the Kingfisher Airline in India since its operations in 2005 has not been able to record any profits. However, it incurred a loss of ninety million dollars. Despite the challenges being faced by this airline models, the airliners in the Middle East continues to expand and increase in profits. This is attributed to their location geographically and their immigration policy review. By and large, the airline business is faced with a variety of challenges such as rising fuel expenses, stiff competition, huge and soaring cost of doing business. The Australian Airline operations are affected by the rising dollar. This essay aims to answer the following question” what approach should be employed by Qantas in regaining strategic competitiveness in light of competition from airlines from Persian Gulf?”.
Strategic competitiveness and strategic Management
The successfully designed and formulated value-creating outcome strategy is what is known as strategic competitiveness. When a company achieves strategic competitiveness and consequently exploits its competitive advantage successfully, then it is in a position to achieve its principal objective (Hanson & Hitt 2011). On the other hand, strategic management is the illustration of why some companies perform better than others as in the case of Australian Airlines and the Persian Gulf Airlines. In many industries, the nature of competition is undergoing some changes. This is as a result of the technological rapid change, the enormous size of investments needed for world business, the business environment, financial crisis and hyper-competition. Qantas is experiencing hyper competition from the Middle East. This is as a result of the rapidly increasing competition emerging from innovative and global combatants’ strategic maneuvering. The competition among these Airlines is based on positioning on price, quality, first-mover, merits, exhibiting products that are invading and protected and, technological know-how. This competition has resulted in Qantas earning average returns whilst Middle East earns above average returns.
Role of External Environment on A firm performance
A firm’s performance involves the identification of all factors that influence all the activities taking place in an organization (Florea & Florea 2009). These activities are grouped according to their external and internal origins. External environment comprises all elements that are external such as regulations, institutions, organizations, customers, business partners and competitors. The analysis of Qantas external environment aims to identify all factors that impacts on the activity of the firm, its risks and opportunities and the environment which the company interacts with. External environment can be grouped into two groups: direct and general environment. The direct environment consists of the company’s stakeholders such as non-governmental organizations and media, suppliers, shareholders, employees, competitors and customers. The general environment designs how the firms and industries operate within a society. Under general environment, we have segments such as global, demographic, technological, economic, socio-cultural and political segments.
General environment is of great significance to Qantas. This is because it affects Qantas in an indirect and uniform way. As a result of international and national factors, the general environment constitutes of variables that can be categorized based on technological, socio-cultural, legal and economic factors. Qantas should understand that verifying and selecting of information is vital, if it intends to successfully complete global environmental diagnosis that is true and relevant. In reference to this, Qantas specialists need to channel all their attention to the process of analyzing and collecting information, selecting of information sources and verifying their accuracy.
Role of Internal Environment on A firm performance
Both external and outside environment can have a control on the performance of an organization. As a matter of fact, the internal operations of an organization need to be inspired and guided by the management. This is done with an aim of ensuring the market competitive position is maintained. Qantas market share can only be attained via innovation and adaptability. This will enable Qantas to stay flexible in climates characterized by fluctuating economies (Tucker 2012). The internal environment crucial elements, when it comes to the performance of Qantas are the operational efficiency, innovation and marketability. For Qantas being highly competitive in the global market, it has to produce products and services that are innovative accompanied with a perfect marketing plan and fair pricing (UUSI-RAUVA & NURKKA, 2010). In this case, it is paramount for Qantas to have a dynamic leadership which has the capability of running a profitable business during periods that are challenging such as the rise of a dollar and increased competition. When it comes to innovation and marketing, Qantas need to comprehend that, value is expected by its consumers. Current customers are in need of effective and innovative service. With the emergence of technology, customers are now able to search and compare prices online among various airline operations. Therefore, the Qantas ability to market its services and products will help in determining its failure or success.
Business level strategy and its influence on competitiveness
Strategy plays a significant role in aligning various organization businesses with its internal and external environment (Andrews 1971; Ginsberg& Venkatraman 1985). Therefore, the Qantas principal competitiveness should be directed towards satisfying the needs and preferences of its customers. This should be done with an objective of achieving above average returns. All these can only be achieved via the use of Business-level strategies. Business level strategy helps an organization in providing value to consumers and also in gaining a competitive advantage via exploiting key specific competencies (Roth & Morrison, 1992, p.473). The competences are specific to individual service or product market. Through understanding of its customers, Qantas can obtain and sustain its competitive advantage. Qantas uses the four generic strategies for it to remain competitive in the airline industry. The generic strategic consists of being cost leadership in the industry, differentiating of products from those of the competitors, focusing on low cost and product differentiation and the use of a differentiation strategy.
In conclusion, it is clearly illustrated by the industrial organization model that, in comparison to the choices of managers, the performance stronger influence, is within the industries in which an organization competes. The firms’ performance is determined by factors such as market entry barriers, economies of scale, the level of concentration of firms, differentiation of products and diversification. Furthermore, constraints and pressures imposed by the external environment determine the strategies applied by the firm in order to achieve above average returns.
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