Qantas Airways PESTEL Analysis - Case Study Example

Qantas Airways Name: College: Course; Tutor: Date; Table of Contents Executive Summary…………………………………………………………………..3 1.0 Introduction……………………………………………………………………….4 2.0 Internal Factors……………………………………………………………………4 2.1 Strengths…………………………………………………………………..4 2.2 Weaknesses……………………………………………………………6 3.0 External Factors…………………………………………………………………...7 3.1 Economic Factors………………………………………………………….7 3.2 Political Factors……………………………………………………………7 3.3 Technological Factors……………………………………………………...8 4.0 Conclusion……………………………………………………………………….....8 References………………………………………………………………………… 10 Executive Summary Qantas Airways is affected by various internal and external factors which influence human resource planning and future job design. Internal factors which strengthen the organization include strong market positioning, diversified product portfolio and increased revenues and profits. In order to maintain its strength, the airline needs to recruit more qualified employees, embrace continuous training of employees as well as enriching jobs. Internal factors which weaken the airline include overdependence on domestic sales and declining cash positioning. Massive investment in international markets which calls for increased recruitment and job enrichment will be of help in addressing the overdependence on domestic markets issue. Moreover, job reengineering will be an effective measure in addressing the issue of declining cash positioning. Human resource planning and job designing will also be influenced by three external factors notably economical, political and technological. Poor economic situation in major markets calls for recruitment of employees on renewable contractual terms or temporary terms in order to cut cost of operations. Rapid change of technology calls for recruitment of more research and development employees as well as motivation of employees through provision favorable working conditions and flattening of organizational structure to encourage innovativeness and creativity. More stringent security regulations put across by United States can be addressed by recruiting high qualified security employees and investing in continuous training. 1.0 Introduction Qantas Airways is one of the airline companies of Australia. The company provides both international and national air transport services as well as time-definite services of freight. Primarily, the group operates in Australia and has its headquarters in New South Wales, Australia. Qantas was founded in the year 1920 and has become the largest Australian Airline and second oldest continuously operating airline across the world. Moreover, the company has employed 33, 670 individuals as at January 1, 2009. The company recorded increased revenue of 7.5% during the financial year 2008 thus attaining A$ 16,191.9 million mark. However, its gross profit increased by 33.4% in the financial year 2008 in relation to 2007 financial year. Some of the internal and external factors of the airline influence its human resource planning and job designs (Qantas Airways 2009). . 2.0 Internal Factors Internal factors analysis of the airline can be carried out effectively by critical analysis of the strengths and weaknesses of the company. Some of these strengths and weaknesses affect the human resource planning as well as job designing of the airline (Dess 2004, p.12). 2.1 Strengths Strong market positioning is one of the strengths of the company which influence job designing and human resource planning of the airline (Jay 1986). Qantas Airline is ranked among the leading airline in the global market with a market share of 30%. Besides, the group has more than 65% market share of the domestic market. The company operates in 38 countries with more that 146 destinations thus having access to huge customer base (Data Monitor 2009). High qualified and motivated employees are required in order for the company to maintain or enhance its strength in market positioning. In order to maintain the strong market positioning in future, the company will have to recruit high qualified employees who will meet the needs of customers effectively. Besides, continuous training of employees will lead to enhanced motivation and increased creativity thus improving the quality of products and services of the airline (Noe 2000, p.114). Moreover, the airline has a well diversified product portfolio. Apart from operating in both international and domestic markets, the group offers various freight business services such as mail, cargo and express services. Besides, the airline offers domestic and international holiday tours and other related activities such as catering, information technology, ground handling, and engineering and maintenance services. In addition, the airline offers other services such as leases and charters of aircraft and Qantas club membership (Data Monitor 2009). This diversified product portfolio reduces the risk of operation and provides cross selling opportunities to the group (Macmillan 2008, 59). Such strength influences human resource planning as well as future job designs of the airline. The diversified portfolio requires diversified employees in order for the organization to be successful. As a result, the company will have to recruit professionally diversified employees to maintain its strength of diversified portfolio (Noe 2000, p.114). Strong increase in revenues and profits is also strength of the organization. For the past few years, the airline has been recording increased revenue and profitability. The compound annual growth rate of the company as from financial year 2006 to 2008 was 9%. The revenue of the company increased from A$13,660 million to A$16,191.9 million. The operating profitability of the company increased by 40% compound rate as from financial year 2006 to 2008 while it net profit increased by 42% the same period (Data Monitor 2009). The increase in revenue and profits in particular portrays the financial stability of the airline. The increased revenue is likely to influence future human resource planning and job design within the airline. Due to increased revenue and profitability, the company will have to expand its operations or enrich its operations. In case of expansion, the company will be required to high more employees in order to provide services effectively. However, incase of operation enrichment the airline will be required to invest more on employees training and invest in advanced technology which will result to job enrichment (Noe 2000, p.117). 2.2 Weaknesses The airline company has two weaknesses which can influence its human resource planning and job designs in future. One of the weaknesses of the company is overdependence on domestic sales (Deshpande & Quelch 2004, p.21). Though the airline has expanded its operations to international markets, it’s evident that a large percentage of its revenue emanates from domestic sales. Such a weakness exposes the airline to Australian specific factors such as economic, competition and labor strikes factors (Data Monitor 2009). As a result, the company will be required to carry out job enrichment in international subsidiaries. Such a move will enable the company to provide high quality services and products at a lower cost in international markets thus enhancing its revenues (Noe 2000, p.118). Besides, the airline is experiencing declining cash positioning. A substantial decline of cash and cash equivalents is an indication of inefficient cost management and poor decision making within the organization. Such a weakness could reduce resources for growth plans (Data Monitor 2009). In order to address this issue, job reengineering is one of the major strategies which can be utilized by the airline. Job reengineering should include radical redesign and fundamental rethinking of business operations to attain dramatic improvement in certain measures of performance such as cost, quality and speed. This calls for recruitment of high qualified employees and investment in efficient operational and production technology (Noe 2000, p.121). 3.0 External Factors 3.1 Economic Factors Economic situation in major markets of the airline is likely to influence human resource planning and job design of the airline (Barney, 1991, p.102). The airways derives a large portion of its revenues from Australian, European and United States markets. However, according to IMF world economy outlook, the economies of these three markets are likely to slow down. The GDP growth rate of Australia, United States and Europe is expected to decline to 2.2%, 0.1% and 0.2% respectively (Data Monitor 2009). Due to weak economic outlook of the three major markets, the demand for services and products of the company is likely to decline. This calls for cost cutting which involves dismissal of employees. However, since the economy is not expected to keep declining for eternity, recruiting employees on renewable contractual basis or temporary basis will be the major strategy for the organization (Noe 2000, p.147). 3.2 Political Factors Authorities of some of the major markets of Qantas Airline have established strict policies which must be adhered to by airlines. For instance, the US government enacted The Aviation and Transportation Security Act after the 9/11 bombing to avoid more catastrophes and restore faith in airline industry. Most of the measures introduced by the new Act are very costly to airline organizations thus cutting profit margins substantially. The airline has no option than to invest more resources in improving screening apparatus such as x-ray and explosive trace detection technology as well as cabin baggage security (Data Monitor 2009). As a result, the airline will be required to employ more qualified employees who can operate the new security equipments effectively. Moreover, existing security employees will have to undergo training in order to operate the new security equipments effectively (Cook 2006). 3.3 Technological Factors Apart from new security technology, the company will have to invest immensely in advanced operating technology in order to maintain its competitiveness in the market. The technology in the airline industry is changing at a high rate thus calling for strategic measures (Data Monitor 2009). In order to address this issue effectively, the company will have to invest in continuous research and development. As a result, more qualified research and development personnel need to be recruited. Moreover, creativity and innovativeness within the organization need to be embraced (Johnson 2006, p.81). To attain this, employees need to be motivated through providing above average wage rates, flattening organizational structure and generally improving the working conditions of the workers (Aadesh 2009). 4.0 Conclusion Though Qantas Airline is among the leading airlines in the airline industry, effective human resource planning and job design need to be carried out for the organization to remain competitive. Strong market positioning, high profitability and diversified product portfolio calls for more recruitment of highly qualified employees as well as continuous training of existing employees. However, weaknesses such as overdependence on domestic market and declining cash engineering calls for job enrichment and job engineering in both domestic and international markets. Declining economy in the major markets calls for recruitment of employees on renewable contractual or temporary basis. Moreover, strict security policies in United States market calls for recruitment of high qualified security personnel and continuous training of existing security personnel. To address rapid changes of technology, the airline need to motivate its employees through improvement of working conditions and flattening of organizational structure to encourage creativity and innovativeness. Moreover, recruitment of high qualified research and development staffs is necessary. Generally, effective human resource planning and job design need to be carried out in order to address the issues and opportunities posed by internal and external factors effectively. References Aadesh, G 2009, ‘The game plan for HR professionals’, Business Today, vol.18. no.9, pp. 84-84. Barney, J 1991, ‘Firm resources and sustained competitive advantage’ Journal of Management, vol.17, no.1, pp.99-120. Cook, M 2006, Personnel selection: adding value through people, 4th ed, John Wiley & Sons, Chichester. Data Monitor 2009, ‘Qantas Airways’, Datamonitor, vol.13, no.1-9. Deshpande, R & Quelch, J 2004, The global market: developing a strategy to manage across borders, John Wiley & Sons, New York. Dess, G 2004, Strategic management creating competitive advantages, McGraw-Hill Professional, New York. Jay, B 1986, ‘Organizational culture: Can it be a source of sustained competitive Advantage’, Academy of Management Review, vol.11, no.1, pp.656-665. Johnson, C 2006, Ethics in the workplace: tools and tactics for organizational transformation, SAGE, Oxford. Macmillan, P 2008, Global strategic management, Palgrave Macmillan, New York. Noe, R 2000, Human Resource Management: gaining competitive advantage, McGraw- Hill, New York. Qantas Airways 2009, Qantas Spirit of Australia, viewed on 21 August 2009, . Read More