Case Study Report
The following report examines the organisational environment for the Australian Airline industry with particular emphasis on the task and general environment followed by analysis Jetstar Airways’ business-level strategy focusing on the airline’s competitive advantage.
Upon concluding the research for the task environment, the main forces shaping the Australian Airline industry was the cost of fuel, this being such a key factor because it make s up such a big bulk of the expenses incurred by airlines and the subsequent increased competition since it deregulation in the 1990’s.The main general environment factors were that of the swine flu pandemic, being that people did not want to travel unless it was absolutely necessary, others factors being related to financial issues in the mist of the GFC.
Jetstar Airways’ competitive advantage is discussed through the use Porter’s five forces model and a SWOT analysis. Both these analyses have resulted in the findings that Jetstar has succeeded in their attempt to become a market leader in the airline industry, in particular the low-cost carrier category. Although both investigations found positives and negatives about the organisation, the positives adversely outweigh the negatives.
Since its deregulation in 1990 the Australian airline industry has had many forces in play and conditions imposed upon it from both the task and general environment. These forces and conditions have played a significant part in the formation of the airline industry that we see today. In recent years the Australian airline industry has seen two new airlines enter the market, one a low cost carrier, Tiger Airlines, which is in direct competition with existing low cost carriers Virgin Blue and Jetstar. In addition Lion Air, previously an Indonesian based airline but now 51% Australian owned and based out of Brisbane, operates services to Indonesia but does not operate in the Australian domestic market. The following report will analyse the general and task environment of the Australian airline industry and provide a SWOT analysis of Jetstar, with the ultimate aim of evaluating the airline’s business level strategy. Finally, the report makes recommendations on how the airline can gain further competitive advantage over its competition. Upon the completion of the research it was found that in the current state of the Australian airline industry low cost carriers rained supreme in light of recent general and task condition forced upon the airline industry. In particular the effects off the global financial crisis compounded by the world wide pandemic of swine flu, customers only see it reasonable to fly when it is absolutely necessary reducing demand for services such business and first class.
1. Environmental Analysis
The set of forces and conditions that an organization operates under is known as the organisational environment, these forces and conditions are foreign to the organisations but still affect the manager’s ability to identify opportunities and threats and respond to them accordingly. These forces and conditions are further segmented into two distinct groups, task and general environment, both of which will be discussed in detail below. 1.1 Task Analysis
The task environment includes the forces and conditions that have an immediate impact on the manager of an organisation. The price of oil and consequent petrol prices are an obvious force for the airline industry, with such turbulent times in the Middle East the main source of the world’s crude oil has seen a jump in oil prices unseen since the oil embargo in 1973. In July of 2008 Qantas axed 1300 staff as a direct result of the increasing fuel cost. In addition to Virgin Blue CEO going on record as saying the rise in global oil prices “are doing more damage to the aviation industry than SARS’s or the September 11th terrorist attacks”(Fuel prices worse than SARS, 9/11:...
References: 5. Platt, C 2009, ‘Price war erupts on Sydney-Melbourne route’, Brisbane Times, 20, August, 2009, <http://www.brisbanetimes.com.au/travel/travel-news/price-war-erupts-on-sydneymelbourne-route-20090820-erga.html>
15. 2008, Fuel prices worse than SARS, 9/11: Virgin, ABC News, retrieved September 7th 2009, <http://www.abc.net.au/news/stories/2008/07/23/2311772.htm>
21. O’Sullivan, M, 2009, Battling Qantas cancels orders for Dreamliner, The Age, 27 June, Business Section pg. 3
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