How the Three Layers of Business System affect Qantas Business Operations in the Asia Pacific Region

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Executive Summary

While narrowing its scope on Qantas Airways, this report analyses how culture, security, sustainable development, corporate social responsibility (CSR), global and regional integration, and economic development affect the three layers of the Asia Pacific business system as they relate to Qantas operations in the region. The report also offers recommendations for strengthening Qantas market share in the Asia Pacific region.

The report finds that the Asia Pacific business system is friendly, in relative terms. It is friendly in the sense that its organisational, institutional and cultural layers work in concert with each other. Airlines operating in the region have strong, viable governance structures that for the optimisation of the opportunities availed by the receptive institutional and cultural structures manifested through the three Bogor resolutions of creating trade and investment liberalisation, business facilitation, and economic and technical cooperation.

Though the Asia Pacific region often experience devastating natural calamities and political wrangles, Qantas can exploit these opportunities if it diversifies its operations to target low income market segment as well as the long and short haul routes within the region.

Table of Contents

Executive Summary. 2

1.0 Introduction. 4

2.0 Background Information. 4

3.0 Discussion of the Issues. 5

3.1 Asia Pacific Sustainable development and CSR.. 5

3.2 Asia Pacific Socio-Cultural Situation. 6

3.3 Asia Pacific Economic Liberalisation. 6

3.4 Asia Pacific Regional Integration and Development 7

3.5 Asia Pacific Security Situation. 7

4.0 Recommendations. 8

5.0 Conclusion. 8

References. 9

1.0 Introduction

The Asia Pacific aviation industry is expected to realise tremendous growth in the next twenty years. According to a market outlook report prepared by Boeing for the period between 2013 and 2032, a half of the world air traffic will be accounted by airlines operating in the region. This phenomenon is attributable to the robust economic growth realised by countries such as China, India, Japan, Singapore, and Hong Kong. As a matter of fact, it is anticipated that most countries in this region will register an average growth of 4.5% per year in the next 20 years (Boeing, 2013). This makes Asia Pacific a lucrative market for legacy airlines such as Qantas, Singapore and Malaysian. This report narrows its scope on Qantas Airways, a leading Australian airline whose international business goals is to provide safe, reliable, efficient, and customer-sensitive aircraft engineering and maintenance, airfreight, and passenger services to its customers (Qantas, 2013b). Specifically, the report analyses how culture, security, sustainable development and corporate social responsibility (CSR), regional integration and development, and economic development affect the Asia Pacific business system as they relate to Qantas operations in the region. The report also offers recommendations for strengthening the airline’s market share in the Asia Pacific region.

2.0 Background Information

Qantas is absolutely a successful airline in the Australian domestic market. Currently, the airline controls as much as 65% of the Australian domestic air travel market, a feat that is attributable to its futuristic business strategies (Air Review, 2013). The fact that the airline has been in operation since 1920 (Qantas, 2013a), shows that it employs sustainable business practices. Actually, its group CEO, Alan Joyce acknowledges that the only way the airline can achieve its long-term goals of enhanced shareholder value and attaining optimum profitability is through developing a “strong, viable business … [based on] strong governance frameworks … world-class service to customers”, safe working conditions, and efficient utilisation of resources, and collaboration with neighbouring communities (Qantas, 2013b: 3). These sentiments are corroborated by the findings by Park and Amin (2013) that, despite operating in challenging environment, the airline plans to regain its position as one of the strongest brands in Asia Pacific particularly for the long haul routes through its main brand, Qantas, and short haul routes through its subsidiary brand, Jetstar. For instance, a recent tie-up with Emirates will increase its flights to major countries in the Asia Pacific region such as Singapore and Japan. According to Park and Amin (2013), this tie-up will allow Qantas passengers to European countries pass through Dubai, enhance the airlines ability to reschedule Asian bound flights as well as drop less lucrative European routes while giving more value to business-class travellers.

3.0 Discussion of the Issues

3.1 Asia Pacific Sustainable Development and CSR

Sustainable development and CSR requires organisations, institutions, and the society to employ sustainable practices in order to reduce environmental pollution and to support the welfare of the local communities (Witt & Redding, 2012). The Asia Pacific business system is conscious to the tenets of sustainable development and CSR. This environmentally friendly business system has created a friendly business climate for large airlines such as Qantas to grow their international operations. Specifically, the region’s institutional and cultural layers of its business system offer a friendly environment for these airlines to realise their profitability goals (Topham, 2012). According to the findings of a critical analysis of the global air travel industry by Pearce (2013), operating in friendly international markets offers long-term solutions to the many challenges faced by legacy airlines when fulfilling their stakeholder interests.

The APEC (Asia Pacific Economic Cooperation) has put in place structures for promoting sustainable business. These structures encourage personal development, equality of opportunity, fair income, security in the workplace, and the freedom to organise (Hasegawa & Noronha, 2009). Receptive organisational, institutional and cultural structures make it easy for airlines to embrace sustainable governance and CSR practices that ultimately contribute towards the generation of above average value for stakeholders (Witt & Redding, 2012). In the long run, this encourages sustainable development and respect to CSR ideologies as firms become more aware that their actions have a direct impact on the environment and also on the welfare of the communities they serve.

3.2 Asia Pacific Socio-Cultural Situation

Socio-cultural situation of a region covers the political, educational, demographic, cultural and other social undertakings that together form the region’s social fabric. A friendly socio-cultural climate makes it easy for international business to thrive.  Asia Pacific region socio-cultural climate can be described as relatively friendly for Qantas to carry out its operations with minimal disruptions (Hasegawa & Noronha, 2009). For instance, the region offers Qantas a large customer base, something that makes it easy to diversify operational risks. Large Asia Pacific countries such as China, India, Indonesia, Malaysia, the United States, Japan, and Russia share among them the largest portion of the global population (Boeing, 2013). Further, Hanna (2013) argues that the socioeconomic and political gains made in the region makes it possible for airlines to effectively compete with their rivals, realise the benefits of economies of scale, optimise the utility of their assets, and enhance their chances of entering into operational and strategic alliances with other airlines.

In this spirit, it is wise to insinuate that though Qantas has a remarkable presence in the Asia Pacific region; it stands a better chance to exploit business opportunities created by the APEC’s Bogor resolutions of creating trade and investment liberalisation, business facilitation, and economic and technical cooperation (Wilson & Taylor, 2008). Arguably, these opportunities manifest in the form of the ease of access to regional markets, the prevailing legal and political goodwill, prevailing peace and stability in most APEC member countries, the rich cultural dynamism that’s encourage healthy competition, successful integration of organisational, institutional and cultural layers of business system in the region, robust economic growth witnessed in the region, and the ample information communication technology infrastructure that favours the airline industry. As a matter of fact, Boeing (2013) reports that most member states will register a 4.5% annual growth in the next 20 years.

3.3 Asia Pacific Economic Liberalisation

Economic liberalisation entails the removal of economic barriers between and among members of a given economic bloc. Barriers such as nationalisation of industries and huge tariffs for goods from other countries hinder economic cooperation among countries. To this end, economic liberation is helpful to Qantas because it allows it to venture into all the member states of the Asia Pacific especially now that the APEC has liberalised most economic sectors including the airline industry (Hasegawa & Noronha, 2009). Legacy carriers operating in the APEC region have been privatised as a way of making them more efficient (Pearce, 2013). Further, these legacy carriers have been stripped of the near-perfect monopoly that they enjoyed in their respective domestic markets and are now forced to compete with other airlines from other nations even for domestic markets.

As a matter of fact, there has been an increase in cross-border direct investments in foreign carriers (Herdman, 2012). This has made it possible for legacy airlines such as Qantas to access new markets and low cost carriers such as Tiger Airways to gain a substantial market share in overseas markets. Actually, the liberalisation of the Asia Pacific airline industry has led to the emergence of strategically strong and futuristic low cost carriers, something that has kept the demand for air travel servic.............


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