Part A
1 Environmental analysis -> Porter’s, SWOT, PESTLE
Benefits/synergies of acquisition (both companies)
With reference to the academic literature and using your analysis of relevant external environmental factors, critically discuss the reasons why Qantas and Emirates identified each other as potential partners. In which areas are the expected internal benefits and synergies for both companies involved?
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3
4
Appendices
1. Porter’s Five Forces – Qantas
Rivalry – Medium to High
Currently the main competitor for Qantas is represented by its long time rivalry with Virgin Australia (Creedy, 2013) further emphasized by its’ partnership with Etihad.
Threat of Substitutes – Low
The threat of substitutes is low as a service that offers poorer quality/service may lead customers not to switch from using airline services. Furthermore, product differentiation is significant as other means of transport (i.e. ships) are slower which means that customers’ needs are met differently. Although, an indirect substitute like conferencing through online measures can increase the substitute threat as they lower costs and save time (Gillen & Gados, 2008).
Threat of New Competitors – Low
As a strong distribution system is required it results in high fixed initial costs along with meeting government legislation and furthermore, when entering a new market the learning curve is high which requires competition to allocate resources to study the market in order to be efficient. Poor distribution systems result in expensive costs. Additionally, loyal customers are unlikely to change to a new competitor as they would lose their loyalty points offered by Qantas (Porter, 2008).
Bargaining Power of Suppliers – Medium
Qantas uses aircrafts supplied b...
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... in the world
• It has nearly 20 international as well as domestic destinations
• Good grand building exercises through advertising and sponsorship
Weaknesses
• Too much concentration around Australasia
• Issues among employees caused an issue
Opportunities
• Australia market has been so far less tapped. So it can ensure that no other airline can ever get a chance by gaining a major marketshare
• More international destinations specially in Asia
• Tie-ups with international airlines for a combined service offering to customers
Threats
• Increasing fuel prices affects operations
• Rising labour costs
• Increasing competition in Australian market for new start-ups and SE airlines
Competitors
• Singapore Airlines
• Air New Zealand
Reference list
Enright, M. J. (2003). Buyer-supplier relationships. Case HKU257, University of Hong Kong, Centre for Asian Business Cases.
Geographic As the nature of air travel is largely logistical, it is hard to talk about the industry without addressing geography. Airlines don't just have to market to customers in terms of geographics, the airline industry is geographic; getting a customer from where they are to where they want to be. Internationally speaking, Australia is a slight disadvantage because of its location compared to other developed nations. The majority of global travellers do not typically pass through Australia on-route to another destination; Australia is the end of the line. Cities such as Singapore, Kuala Lumpur and Dubai are known as ‘hubs’ because they have large numbers of travellers who must pass through them in order to progress to another leg of their journey.
... everybody and me that companies merge to cut down costs and increase market share. However, it is very interesting and surprising on the direction which the American Airline decided to take. The focus on targeting corporate clients through widening their operation networks is something each manager or management student should take note of. The airline industry is very competitive and thus high cutting edge ideals are inevitably needed to survive the competition. This is what the new American Airline is exhibiting and I truly like the move.
... amid nations (Gerber 2002, p. 29). Although there has been a major decrease of barriers to trade liberalisation concerning flight amenities in the last century, there are imperative uncontrollable external factors a business must assess and weigh before entering international borders and becoming a prosperous globally identified firm (Ramamurti & Sarathy 1997). Qantas, a highly esteemed patriotic and iconic Australian brand has demonstrated accomplishment intercontinentally. The ultimate success of their business, in order to sustain competitiveness in their global market, will rely heavily on their continuous assessment of combined political and legal reforms, economic dynamics, sociocultural influences, technological modifications and environmental concerns and their interlocking marketing strategies to gain the most beneficial opportunities that come their way.
General environment was the most environment need to cover up and adapt to doing business, which is the business is stable or not. To determine the general business environment for Qantas Airways Limited company, there need to know a several factor which is the economy, social cultural, global, technological, political-legal and demographic factors.
In lights of the PESTLE model, the political factors bring both opportunities and threats to Jetstar’s new proposal. Since this proposal focus on the Australia-India low price airline market, the analysis conducts involving Australia and India political environments. There are two potential opportunities in this political environment. Firstly, the Australian government has the incentive to boost the development of tourism between the two countries (Tourism Australia 2012). With the support of government, the start of the new route could be easier. For example, American government erects legislation to increase competition of the airport ‘by forcing these airports to increase the availability of scarce facilities’ (Williams 2015). Such legislations and regulations as well as financing investment or subsidies from government could directly help the airline company cut the cost. Similarly, Australian government could also have powerful intervention to influence aviation market. Thus, it is a big opportunity for Jetstar to the new route expansion if it acquires the
...leader. Certainly, it has to take into account the implications of completion from both the direct and the indirect competitors. That is why EasyJet centers on the cost management strategy and the differentiation strategy (Hanlon, 2007). Through an analysis of EasyJet Airplane company strategies and performance, it is clear that they are ambitious and strive for the best. They not only survive in an industry that is intensely competitive, as shown through the analysis by Porter's Five Forces, but also succeed in terms of offering their customers the best that they have to offer in terms of value for money. The advantage this airline gains over its oligopolistic competitors stems from flexible ticketing and complete access to all primary routes. However, in keeping airline industry, there is room for improvement and growth as the analysis using Ansoff Matrix reveals.
Before to select the proper alternative, three alternatives were analysed and evaluated under four decisions criteria: customer experience, cost, growth rate / market penetration and ease to implementation (See Exhibit 2: Factor Analysis). Between all the alternatives, it was suggested that Southwest Airlines enters to New York City by bidding the slots and gates at the LGA (See Exhibit 3: Alternatives Analysis). This alternative sustains the challenge of changing the customer experience which means adding more flights from and to the East; furthermore, entering to new markets will reinforce “the power of the network” through LGA. At the same time, this decision will allow signing more code-sharing agreements with other airlines flying to international destinations and offer new products and services to LUV customers as loyalty rewards, in-flight internet, onboard duty-free purchases, etc.; as a result of this, it will increase passenger’s insights and experiences by flying with Southwest Airlines. Nevertheless, there is potential risk by selecting this alternative, in the recent years the energy prices has had a huge increase affecting costs, fares and even capacity needed, however Southwest Airlines has been able to hedge fuel for decad...
In my discussion I will use the Australian airline industry to present how oligopolies operate, and to show the different behaviours and strategies that arise from the interdependence of firms. I will mainly concentrate on the domestic airline market in Australia. The domestic airline market consists of a duopoly of two firms, Qantas and Virgin Blue. Since Qantas and Virgin are the only two Airlines supplying domestically in Australia, they account for all of the profits in the market and consequently they are in direct competition with each other. Because only two firms are competing, each firm must carefully consider how its actions will affect the other, and how its rival is likely to react. Thus, strategic considerations regarding the behaviour of competitors in this duopoly are essential in order for Qantas and Virgin to set prices.
Albers, S. B. (2009, March 13). crisis of Qantas. Retrieved May 14, 2014, from Qantas crisis: http://wenku.baidu.com/view/31572f48cf84b9d528ea7a56
The new entry is likely from rich Gulf nations, China, and India of low budget planes around the globe. The airlines from the Gulf nations have placed orders with Airbus and Boeing that are valued in the billions. The deliveries are expected in the next decade. The demand will grow in the production of advanced narrow-body airplanes, such as Airbus, A321 and Boeing, B737 Max. The growth that is expected in the next decade, more consumers will be flying to their destinations. The airlines in the United States are expected to have a profit margin over the next decade. Resulting, from economic growth, and the demand for aircraft service. Buyers are expected to have a lot of power in the next decade, resulting in bargain prices for buyers. The competition will increase with intense rivalry in the aviation industry. The contracts for the aircrafts are totally from airplane
Government Support: - Boeing might seek government intervention in preventing Airbus from being able to sell to American airline companies thereby reducing the market availability for Airbus. But this could prove counter productive for Boeing as EC governments may retaliate in a similar manner
Global competition- As more companies are coming into this airline market so there can be a threat to Air Canada from these
Buyer-supplier relationship established since human beings started to trade goods and services. The relationship developed naturally over time after buyer and supplier developed trust and friendship which was supported by quality of product and services (Wilson. D.T, 1995). The relational development is accelerated as firms attempt to improve their relationship to achieve company goals. At the same time, the expectations in the performance have increased, and this has making the satisfactory relationship became more difficult.
Porter stated; “for an airline to succeed in the marketplace, it must have a sustainable competitive advantage” (Porter M. E., 2008). The airline industry is the highest competitive industry, and I believe a sustainable completive advantage is essential to succeed in the future of the aviation industry. The competitive advantages that an airline embrace, needs to be based on the airlines strategy and differentiation to competitors. Emirates displays how it has a strategy and how the airline gets ahead of its competitors through how unique it is.
The Singapore Airlines needs to thoroughly understand the plans being pursued by the British Airways, Cathay Pacific, and Virign Atlantic in improving the comfort and quality of service it provides to its customers. The Singapore Airlines needs to continue differentiate itself by examining the strengths/weaknesses, and key points of these and other competitive airlines.