Qantas: Which Route Out of the Turbulence?

In May 2011, Alan Joyce, chief executive officer of Qantas Group, needed to think about the future strategy of the airline group. Over the past few years, it had launched a number of strategic initiatives to defend its current position and penetrate new markets and segments. Qantas had discontinued its first-class service on many flights, opting to bolster its business-class service instead. Its forays into the budget travel segment through Jetstar proved to be successful and contributed to the overall financial performance of the group. Qantas had also placed a bet on emerging economies such as China, despite experiencing adverse performance in its international routes. However, the financial performance of the company was far from healthy. Qantas was fighting hard to retain its Australian position in the face of attempts by Virgin Blue and Tiger Airways to compete aggressively and gain market share. Analysts wondered whether Qantas was trying to do too much and, in the process, spreading itself too thinly. Would the Qantas Group be better off simply prioritizing across its various alternatives, or did it have sufficient resources (financial as well as managerial) to pursue all the initiatives? And if a narrow focus was better, then which strategic alternatives should Qantas pursue aggressively?

This case can be used to discuss:<ul><li>The threats created by an evolving environment to an entrenched firm.</li><li>The appropriateness of strategic response in view of a firm’s competencies and strengths.</li><li>The pros and cons of strategic focus (narrower product line and customers served) versus breadth (broader product line and broader segments of customers served).</li><li>The pros and cons of focusing on traditional versus emerging markets.</ul></li><br>This case is appropriate for various undergraduate and graduate courses, including strategic management (to illustrate strategic decision making by conducting an industry and resource analysis), and international management (to illustrate the opportunities and challenges of operating in emerging markets). This case can be used in either the middle or late part of a strategy course. In an international management course, this case can be used to extensively discuss the challenges of operating in emerging markets, such as competition from local firms, support by governments of local firms, lack of knowledge related to emerging markets, the differences in customer profiles in developed and emerging markets, and the near-inevitability of engaging with emerging markets to exploit their growth.

• Business Policy
• Emerging Markets
• Environmental Analysis
• Growth Strategy
• Airline Industry
• Australia