The Australian domestic airlines industry operations usually consist of transportation of freight and passengers domestically (IBISWORLD, 2010). The industry has been experiencing slightly negative annual revenue growth of negative 0.4% for the past five years (IBISWorld, 2010). The domestic airlines industry consist of two major players such as Qantas Airways and Virgin Blue, and three minor players such as Regional Express, Skywest and Tiger Airways (IBISWorld, 2010). 2.0 External Analysis
External analysis is used to analyze the external environment of an organization to identify any threats and opportunities, which is part of SWOT (Hill, Jones Galvin & Haidar, 2007). This part of the essay will be looking at what challenges Qantas faces in the 21st century. 2.1 Macro Environmental Analysis
Macro environmental analysis is used to evaluate what variables around Qantas have potential affect on Qantas’s strategies and once identified how Qantas can develop strategies to gain comparative advantage 2.1.1 Political Forces
Political forces refer to any changes in government legislation that may effect the organization. 22.214.171.124 Security Measures
In light of the 9/11 attack on the World Trade Centre in the US, the US government issued “The Aviation and Transportation Security Act” which included new safety measures which could make traveling harder (Datamonitor, 2007). With roughly 9% of Qantas’s revenue coming from their flights to US/Canada it may affect the company’s future revenue (Datamonitor, 2007). The Australian government have introduce tighter control due to the 9/11 attack, which has “brought about dramatic drop in passenger volume” and thus one of the many challenges Qantas faces (Quamrul, 2007). 126.96.36.199 Deregulation
According to the Australian Government (2010) the “deregulation of the domestic aviation in 1990 meant the end of the Two Airline Policy”, thus allowing and reducing entry barriers for other airline carriers to enter Australia. Despite the government effort to deregulate, oligopoly in the mature airline industry was present with “Qantas and Ansett in pre 2001” and “Qantas and Virgin Blue in post 2001” after the fall of Ansett (Quanmrul, 2007). With the government trying to reduce Qantas’s market share it can be said Qantas has to be prepared for future actions and legislation that may be disadvantages to Qantas, this is another challenge Qantas faces. 2.1.2 Economic Forces
In the 2008 global economic crisis, it has caused a prices spike of the crude oil from 2007-2008. For example in January 2007 the price of crude oil is roughly US$54.63 but in July 2008 the price is US$137.11 (EIA, 2010). According to Wastnage, J. (2007) even in recent years the oil prices have dropped lower compared to the 2007-2008 spike, the prices of crude oil aren’t going any lower to it once was in 2005, this was due to the OPEC unwillingness to produce more oil for the Chinese demand resulting in higher oil prices. Thus the introduction of a higher fuel surcharge by various airline carriers, which may impact the volume of passenger in an already shrinking airline industry (Quamrul, 2007). 2.1.3 Socio-cultural
Consumer attitude towards environment and a global trend towards sustainability have become important in the eyes of consumers. With social media and technological communication, an organization actions and doings travels fast thus a threat Qantas faces, thus the firm needs to have a more corporate social responsible stance on their action. According to Oneworld (2009) Qantas offer options to “fly carbon neutral” to offset your carbon emission.
3.0 Internal Analysis
Internal Analysis is to identify an organization’s strengths and weaknesses and where a company’s strength means superiority in those areas and weakness relates to inferior performance (Hills et al, 2007). 3.1 Strength
Qantas holds a large percentage of the domestic and international airlines industry thus a strong market...