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Assessment item 3 — Team Case Report Group Assignment Due date: Thursday of Week 10 ASSESSMENT Weighting: 35% Length: 3500 words 3 Objectives ‘This assessment item relates to the entire course learning outcomes as stated on Page 1 Assessment Details You are required to work with your team to produce a written ‘Team Case Report’ on Qantas: the high flyer of the airline industry (this case from Hill CWA, Jones GR, Galvin P & Haidar A 2007, Strategic Management: An integrated approach). Copies of the case are to be downloaded from the ‘Moodle LMS Refer to the instalment on case method in the Moodle LMS Requirements Prepare a strategic analysis of the case study provided. In your report you are to undertake the required analysis of the company, its current strategy, and identify any issues facing the company or likely to face the company in its bid to dominate in the airline industry. In your analysis, you are required to update this case study with recent information especially about what is happening to Qantas’ reputation, safety, trust and loyalty. You are expected explore recent media and other relevant sources to update this case study and discuss strategic direction and commitment for Qantas to regain its reputation and market. ‘Teams need to consider the besis upon which this company has established its competitive advantage, examine the nature of its value chain and corporate structure, Of particular importance to the analysis is a consideration of details pertinent to general environment, industry structure, and matters as to the sustainability of its competitive advantage. ‘Teams are reminded to consult the assessment criteria; in particular note that the report is graded out of 100% and rescaled. Assignment submission ‘On-campus students - Teams submit | (ONE) printed and signed copy of their completed Team Case Report through their particular campus submission system and also submit | (ONE) copy on- line in the Moodle LMS. Off-campus students ~ ‘Teams submit | (ONE) copy of their completed Team Case Report on-line in the Moodle LMS. Please sce Course Profile for assessment criteria of this assignment. Please see below for the case study. central Queensland BereeU NIVER SITY DIVISION OF. LIBRARY SERVICES Enhancing teaching, learning and research & ww. COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969 WARNING This material has been reproduced and communicated to you by or on behalf of Central Queensland University pursuant to Part VB of the Copyright Act 1968 (the Act). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by YOU may be the subject of copyright protection under the Act. Do not remove this notice. Following case is from from Hill CWA, Jones GR, Galvin P & Haidar A 2007, Strategic Management: ‘An integrated approach Qantas: the high flyer of the airline industry? By Steptiane Tywoniak, Queensland University of Technology, and Peter Galvin, Curtin University of Technology On 19 August 2004, Qamtas announced record net profits of $648.4 million for the year ended 30 June, an increase of 89 per cent over 2003, despite a decline of 0.2 per cent in consolidated revenues £0 $11.4 billion (exhibit 5). Commenting on the results, the CEO of Qantas, Geof Dixon, sad the record full-year result, achieved in dificule conditions, was a tibute to Qantas staff and management: ‘che group responded extremely well to the myriad chal lenges ic has faced over the past 12 months.” Qantas’ record profits for 2003-04 were in sharp conteast ‘with the financial performance of most airlines worldwide After losses in 2001 and 2002, airline finances were dealt further blows in 2003 by the Iraq war, and the severe acute respiratory syndrome (SARS) epidemic, particularly in the Asia-Pacific region."* Estimates of consolidaved losses in 2003 for the industry ranged between USS5.5 billion (Air Transport World) and USS6.5 billion (International Civil Aviation Organization) The Australian airline industry "The market for air transport in Australia is disproportion ately large: with a population of just under 20 million people, i has the world’s fourth-largest market for domestic traffic, and the world’s seventh-largest market overall. This situation is a reflection of the vast expanse of the Australian continent, the long distances between its major cities and the lack of alternative modes of trans- portation. The domestic Australian market is concentrated around a core network of highlensity routes between its major cities: the ten busiest routes in 2003 accounted for 61.5 per cent of domestic traffic (measured in revenue passenger kilometres (RPKS). From the 1950s to the early 1990s, the Australian ailine industry was heavily regulated: domestic traffic was reserved to privately held Ansett Airlines and government ‘owned Australian Aislines, while Qantas (also government ‘owned) operated internationally 28 Australia's ‘lag:carrier airline, The domestic market was roughly equally shared between Ansett and Australian Airlines, though observers commented that the private operator was more efficient.” Deregulation was introduced in two stages. Deregulation of domestic services: 1990-92 "Yhe domestic segment of the Australian market was defined by the Airline Agreement Act 1981 as consisting of the trunk routes linking 18 major airports (other repional air services, representing a small fraction of the market, were regulated by separate legislation)." in 1990, domestic air services were liberalised, although Qantas and foreign ed to international flights. The Australian government expected that increased compe tition in the domestic market would increase customer choice and lower air fares* ‘The first new entrant -was Compass Airlines, based in Brisbane. It offered a‘no fills, single class service between Adelaide, Brisbane, Cairns, Melbourne, Sydney and Perth Focusing on the city-pairs whose traffic density was highest allowed Compass to gain access to 2 large share of the market with a limited offering. The entrant sought to undercut the incumbents: its reduced infrastructure, ‘no fills’ service and focused operations gave it an oper- ating cost advantage of around 40 per cent over Ansett and ‘Australian. Compass set its fares 20 per cent below the full economy fare of the established operators, and quickly gained a 12 per cent market share.* But this was not suff cient for the new entrant to operate profitably: i registered a loss of $16.5 million in the year to November 1991 and ceased operations in December 1991 carriers were still rest Deregulation of international services and airline privatisation: 1992-95 Farther deregulation occurred in 1992 when the Australian government privatised both Australian Airlines and Qantas, and opened up the domestic and international markets for competition. In 1990, the Australian government announced plans to sell 49 per cent of Qantas and 100 per cent of Australian Airlines. "To maximise the proceeds, the government decided to sell Australian to Qantas, and then privatise the combined group.’ In its bid for Australian, (Qantas had argued that combining the two airines would lead to savings of at Jeast $100 million a year for the combined group? ‘The privatisation of Qantas proceeded in three stages. First, in December 1992, the government (ase 3. Gana: he igh fier ofthe tine industry? C28