Business Strategy Report

Order Description

Business strategy report
For this assessment it is required to conduct an analysis of the Etihad Airways organisation’s internal and external environments, then make recommendations as to how the organisation might maintain or improve its competitive advantage.
Specific instructions
You should adopt the mind-set of a business strategist for the Etihad Airways organisation to base your report on.
Executive summary
An executive summary of a report is just that, a summary (and is not included in your total word count for this assessment). It contains a statement of report purpose and an overview of the actual and specific findings.
Introduction
This is a brief statement of the purpose of the report, what its objectives are, and an overview of how the report is structured.
Recommended strategic direction
The purpose of this section is for you to make recommendations regarding the strategic direction of the organisation. That is, are the organisation’s current strategies prudent? And, should the organisation change its strategies?
You must make recommendations for both business-level strategy and corporate-level strategy in this section:
a) Make recommendations regarding business-level strategy by discussing the organisation’s generic strategy (i.e. cost leadership, differentiation, focus, or combination of the strategies). You should discuss why the organisation should retain or change its current generic strategy in order to maintain or improve its competitive advantage.
b) Make recommendations regarding corporate-level strategy by discussing whether the organisation could create additional value through any of the corporate-level strategies
You should critically discuss why different strategic approaches may or may not work. For example, if you recommend that the organisation changes to a ‘focused differentiation’ strategy, then you should discuss the benefits and pitfalls of a focused differentiation strategy, and also discuss how a focused differentiation strategy will enable the organisation to maintain or increase its competitive advantage.
It is important that you use applied (i.e. newspaper, trade journal articles etc.) and/or academic literature to support your recommendations in this section.
Conclusion
Within this section restate the purpose of the report, then provide an overview of main points covered in your analysis. Ensure that you do not include any new information, only that which has been discussed within the main body of the report.
Reference list
All works cited must be included in your reference list.
Appendices
This is an optional section in which you are able to place relevant material which would have otherwise disrupted the logical flow of your report e.g. business data reports.
Material included in this section will not count towards the overall word count for this assessment. Be conservative with the volume of information you include in your appendix. Inserting vast volumes of material here will not necessarily earn you extra marks.

Executive Summary
The main purpose of this report was to write a business strategy report based on one of two real hospitality based organisations. The Queensland and Northern Territory Aerial Services (QANTAS) AIRWAYS was chosen as the main focus of the report. The report was split in to three main sections which were internal environment, external environment and recommended strategic direction. Each of these sections were critically discussed and analysed along with applied and academic literature incorporated within the report.
The internal environment are elements that are happening within an organization. The internal environment of Qantas was analyzed in order to find out how they used their resources, capabilities and distinctive competencies to create competitive advantage. The tangible resources of Qantas were its fuel efficient aircraft such as the A380, B787 and Q400. Its other tangible resource is Jetstar Airways which is a low cost airline owned by Qantas. The intangible reources of Qantas was its reputation and customer service. The strengths and weaknesses of their resources were identified and linked with competitive advantage. The unique capabilities of Qantas was its ability to manage risks and ensure that its flights were safe and on time due to their excellent engineering and maintenance capabilities. Qantas also had the ability to provide great customer service because they were able meet specific customer demand and expectations which gave them competitive advantage. Qantas distinctive competency is its unbeaten safety record which has also lead to their overall competitive advantage because of the outstanding research and development by Qantas.
The external environment are elements that are happening outside the organization. The external environment of Qantas was analyzed by identifying two macro-environmental trends pertinent to the domestic airline industry and by doing an industry analysis based on Porter’s Five Forces model. A political trend which was the Qantas Sale Act 1992 and Air Navigation Act 1920 was identified because it had a significant effect on Qantas revenue. An environmental trend mentioned was climate change because it was found that many airlines are now trying to be environmentally friendly. An industry analysis of Qantas was applied using the five forces model which was entry risk, supplier power, buyer power, substitution threat and competitive rivalry. Entry risk referred to the numerous conditions Qantas faced with new competitors. Supplier power linked with Qantas needing to find the best suppliers in the market. Buyer power is about Qantas buying supplies at the best price. Substitution threat connected with other transport options people have instead of flying. Competitive rivalry speaks about the main competitors of Qantas which is Virgin.
Recommended strategic directions were made about the business and corporate level strategies of Qantas. The recommended cost leadership strategy for Qantas was Jetstar and its existing fuel saving fleet because it gave them competitive advantage. Qantas was not advised to use a differentiation strategy. The current focus strategy of Qantas regarding customer service was recommended because it assists Qantas in getting a bigger market share. The recommendations given in Qantas corporate level strategy was to implement programs and further training that will improve their customer service and uphold their reputation as a great domestic airline.

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Table of Contents   Page
Executive Summary   ………………………………………………………………………………………………………………………………….i
Introduction   …………………………………………………………………………………………………………………………………………….ii
Recommended Strategic Direction   …………………………………………………………………………………………………………1
Corporate Level Strategy   …………………………………………………………………………………………………………………………2
Conclusion   ……………………………………………………………………………………………………………………………………………….3
List of References   …………………………………………………………………………………………………………………………………….4

Introduction
The purpose of this report is to make recommendations regarding business-level and corporate level strategies of Qantas. The generic strategies of Qantas will be discussed and recommendations will be made whether their current strategies should be changed or retained which will be based on the effectiveness of the current corporate level strategies of Qantas. The recommendations will be linked with prior research on Qantas internal and external environment then critically analysed as to why different strategic approaches may or may not work. Applied and academic literature have also been incorporated in order to make legible strategic recommendations for Qantas.

4. Recommended Strategic Direction: QANTAS AIRWAYS
4.1 Cost Leadership
Cost leadership is a generic strategy that delivers a lower cost structure than competitors (Lamont & Cairncross 2014). This strategy is often used by an organisation to reduce costs and maximise profits (Lamont & Cairncross 2014). Qantas cost leadership strategy is evident in its key resources which are its fuel saving fleet and Jetstar (Qantas Airways 2014). Qantas owns Jetstar which is a low cost domestic airline (Jetstar 2014). Jetstar is a part of Qantas cost leadership strategy because it offers lower airfares and helps Qantas expand its market to leisure travellers (Jetstar 2014). Qantas fuel saving fleet is the same because they are saving money each time they use less fuel per flight (The Economist 2012).
While there is fierce rivalry among other low cost domestic carriers, it is still recommended for Qantas to continue with its current cost leadership strategy. The main reason is that Frawley (2014) believes that Jetstar and Qantas fuel saving fleet is not only benefiting Qantas financially but it is also giving them competitive advantage. According to Hill and Jones (2013) competitive advantage has been achieved when an organization’s profitability is larger than that of other businesses in its industry. This is exactly why Qantas has invested on a cost leadership strategy like Jetstar because it is helping them compete for a bigger market share against its main rival Virgin which also owns a low cost carrier which is Tiger Airways (Tigerair 2014).
4.2 Differentiation
The use of a product different to competitors is a generic strategy known as differentiation (Hubbard, Rice & Beamish 2008). Differentiation can be a risky strategy and upon examining the internal and external environment of Qantas, differentiation is not currently used as one of the strategies. It is also not recommended for Qantas to take on focused differentiation because it will not give them competitive advantage. This has been based upon the industry analysis of Qantas that its main competitor Virgin does not differentiate its products or services to that of competitors in the domestic airline industry similarly because it does not make their organization more profitable (Virgin Australia 2014).
The competitive rivalry between the two domestic airlines has been identified in the macro environmental analysis of Qantas. Qantas and Virgin have been constantly following each other due to the fact that they are both vying for a bigger market share in the airline industry (Focus Magazine 2014). This is why Qantas does not have a differentiation strategy because they are aware that Virgin does not have this strategy either hence, it is better for Qantas to remain with its current strategies as Haines (2014) agrees that differentiation will not benefit them and Qantas current strategies is also helping them avoid substitution threats.
4.3 Focus
Another generic strategy used by Qantas is focus. Focus is a strategy based on targeting smaller markets generally in emerging or fragmented industries (Ormanidhi & Stringa 2008). Qantas focus strategy is now the core investment in customer service particularly within the domestic market (Qantas 2014). It is highly recommended for Qantas to continue with this focus strategy because not only does it lead to competitive advantage and a higher market share but it will also help Qantas establish itself again as the premium carrier of Australia (Qantas 2014). Haines (2014) is adamant that Qantas should not change its focus strategy or else Virgin might take over. Qantas is focusing on improving their customer service by investing more on staff training and resources because the current trend in the airline industry now is that travellers are not just expecting great service on international flights but also on domestic flights (Haines 2014). Furthermore, domestic travellers are more willing to fly with a domestic airline that can provide a high level of service regardless of cost compared to travelling with a domestic airline that is cheaper but does not necessarily provide great customer service (Focus Magazine 2014).
4.4 Corporate Level strategy
Corporate strategy refers to a direction that an organisation undertakes in order to achieve business goals (Suen 2002). The organisation can recognise its position in the market today and where it wants to be in the future if corporate strategy is developed and implemented wisely (Suen 2002). Corporate strategy is based on the vision of an organisation and also seen as a guideline to overlook risks that may arise within the industry (Raynor 2007). In Qantas case, it is crucial to have the right corporate strategy so its resources are used effectively. The vision of Qantas is to become one of the leading airlines offering the best services (Qantas: The Australian Way 2014). Qantas should plan to have programs that helps to achieve its vision. Each program should also have particular objectives so that it would be easier for staff to follow and for managers to control.
The internal environment of Qantas outlines that the airline is using its resources, capabilities and distinctive competencies aggressively because they are facing a strong battle with Virgin (O’Sullivan 2014). Virgin and Qantas are competing to provide on-time flight performance in the domestic market (O’Sullivan 2014). A training program therefore should be adapted in order to set flight standards throughout Qantas and to ensure its performance is always highly regarded. Some training strategies that Qantas can use includes a list of specific tasks provided to different departments, a new step-by-step procedures for pre-flight and/or after-flight, and faster luggage handling system. In addition, Qantas should have some programs that can support the development of new aircrafts and technologies. Fuel efficient aircraft is one of the key resources at Qantas as it not only protects the environment but also brings financial benefits (The Economist 2012). Hence, it is recommended that Qantas should also encourage its engineers by providing the best tools and sharing the knowledge needed to improve aircraft performance. This helps Qantas provide faster flights with lower fuel consumption and increase advantages for Qantas in terms of meeting customer satisfaction.
That is why these recommendations are being made because such programs uses what Qantas has done best in the domestic market. It can also help them not only improve customer service but also maintain the consistent brand image in customer minds which in turn prevents entry risk. It has been previously identified in Qantas external environment that they are vulnerable to entry risk as supported by Porter (2008) research that competitive industries such as aviation are easily beaten by inexpensive competitors. Ironside (2014) highlights that if Qantas wants to maintain competitive advantage they must uphold their reputation because not only is it a vital intangible resource but this will ensure stronger customer loyalty that will never be matched by any competitor within the domestic airline industry.

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Conclusion
The report was about making recommendations for both business-level strategy and corporate level strategy of Qantas and discussing why these different approaches will work or not based on the current internal and external analysis of Qantas. The cost leadership strategy of Qantas is Jetstar and their fuel saving aircraft. Qantas does not have a differentiation strategy. Customer Service is the focus strategy of Qantas. The recommended corporate level strategy for Qantas is to implement new programs and further training in order to sustain competitive advantage. Academic and industry sources were used in critically discussing the recommended strategic direction for Qantas.

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List of References
Lamont, M & Cairncross, G 2014, Strategic Management for Tourism and Hospitality Enterprises Study Guide, The Hotel School Sydney, SCU, Lismore, Australia.
The Economist 2012, Turbo Aversion, Turbo Reversion, viewed 17 December 2014, <http://www.economist.com/blogs/gulliver/2012/02/air-travel-and-turboprop-revival>.
Frawley, G 2014, Qantas, Jetstar domestic “in all likelihood” only profitable Australian domestic airlines, Australian Aviation, viewed 17 December 2014, <http://australianaviation.com.au/2014/08/qantas-jetstar-domestic-in-all-likelihood-only-profitable-australian-domestic-airlines/>.
Hill, C W & Jones, G R 2013, Strategic Management: An Integrated Approach, 10th edn, South-Western Cengage Learning, United States of America.
Hubbard, G, Rice, J & Beamish, P 2008, Strategic Management: Thinking, analysis, action, 3rd edn, Prentice Hall, Frenchs Forest.
Haines, G 2014, What Qantas Needs To Do To Get Out Of Trouble, viewed 17 December, <http://www.planstoreality.com.au/resource-centre/2-1-4-what-qantas-needs-to-do-to-get-out-of-trouble.html>.
Focus Magazine 2014, ‘The Fierce Rivalry between Qantas and Virgin’, 26 June, p.11.
Ormanidhi, O & Stringa, O 2008, ‘Porter’s Model of Generic Competitive Strategies’, Business Economics, vol. 43, no. 3, pp. 55-64.
Raynor, M E 2007, What is corporate strategy, really?, Ivey Business Journal, viewed 18 December 2014, <http://iveybusinessjournal.com/topics/strategy/what-is-corporate-strategy-really#.VJINvyuUd8E>.
Qantas: The Australian Way 2014, ‘Qantas Core Commitments’, 16 November, p. 80.
O’Sullivan, M 2014, ‘Qantas Questions: What You Need to Know’, The Sydney Morning Herald, 4 March, viewed 22 December 2014, <http://www.smh.com.au/business/aviation/qantas-questions-what-you-need-to-know-20140304-341o0.html>.
Porter, ME 2008, ‘ The Five Competitive Forces that Shape Strategy’, Harvard Business Review, vol. 86, no. 1, pp. 78-93.
Suen, WW 2002, ‘Alliance Strategy and The Fall Of Swissair’, Journal of Air Transport Management, vol. 8, no. 5, p. 355.
Ironside, R 2014, ‘Qantas to Wind Back Overseas Routes as Jetstar set to become Australia’s Main International Airline’, Herald Sun, viewed 22 December 2014, <http://www.heraldsun.com.au/travel/travel-news/qantas-to-wind-back-overseas-routes-as-jetstar-set-to-become-australias-main-international-airline/story-fnjjv9zn-1227032287405>.

Qantas 2014, Qantas Group Strategy Update, viewed 17 December 2014, <http://www.qantasnewsroom.com.au/media-releases/qantas-group-strategy-update-2>.
Jetstar 2014, Jetstar Airways, viewed 15 November 2014, <http://www.jetstar.com/au/en/about-us/our-company/jetstar-airways>.
Qantas Airways 2014, Our Company, viewed 15 December 2014, <http://www.qantas.com.au/travel/airlines/company/global/en>.
Tigerair 2014, About Us, viewed 17 December 2014, <http://www.tigerair.com/au/en/about_us.php>.
Virgin Australia 2014, Company Overview, viewed 17 December 2014, <http://www.virginaustralia.com/au/en/about-us/company-overview/>.