Qantas Business Report

Qantas Executive Statement:

Established in 1920, Qantas is the world's 11th largest airline and the 2nd oldest. It was founded in the Queensland outback as the Queensland and Northern territory Aerial Service (QANTAS) Limited, by pioneer aviators Hudson Fysh, Paul McGinness and Fergus McMaster. Qantas was a former government owned business; it did not view profits or efficiency as its prime goal. In 1993 a 25% stake was sold to British Airways. Qantas was privatised in 1995 and has had to adopt management practices to overcome both internal and external influences and had to change its narrow-minded culture. Although Qantas is primarily a passenger airline, air freight is also an integral part of its core business. Other Qantas operations include catering, tourism and E-commerce devoted to transport and air travel.

Qantas has undertaken significant changes over the last decade to cope with internal and external factors such as the terrorist attacks on September 11, 2001 which effectively reduced the demand for international travel. Qantas initially reduced its international travel flying capacity by 11%. Fortunately, the collapse of Ansett which halted domestic competition in the Australian aviation industry which had dropped the bidding price war for consumer finances, softened the blow on September 12, 2001.

The source of change:

The factors that had caused Qantas to change were that Qantas had to become:

• A more competitive, efficient and profitable business with less competition in the domestic markets.

•Qantas had to pay taxes and levies paid by other business in Australia

• Qantas had to make an increased profit and pay a dividend to its shareholders which increased over the years of management

The main factors, which caused Qantas to change was that, the business was under government ownership until 1995, with a classical/scientific management structure. Meaning the business maintained a:

• A strict hierarchical organizational structure

• Clear lines of communication and responsibility

• Jobs broken down into simple tasks; division of labor and specialization

• Strict rules and procedures

• Impersonal evaluation of employee performance to avoid favoritism and bias

• Formal record keeping

Also Qantas was running with an autocratic leadership style meaning autocratic managers like to make all the important decisions and closely supervise and control workers. Managers do not trust workers and simply give orders (one-way communication) that they expect to be obeyed. This approach derives from the views of Taylor as to how to motivate workers and relates to McGregor’s theory X view of workers. This approach has limitations but it can be effective in certain situations. For example:

• When quick decisions are needed in a company (e.g. in a time of crises)

• When controlling large numbers of low skilled workers.

Qantas also possessed a long chain of command, lack of financial accountability to it government owners, and had a top down communication style.

The nature of change:

As a result Qantas had to change management practices, be more efficient, competitive and profitable.

Qantas changed management practices following domestic airline regulation in 1991 and privatisation in 1995. The aim was to become more: competitive, efficient and profitable. Major changes were initiated that led to:

• Flattened management structure to create a more worker friendly environment and establish a shorter and more efficient line/s of communication and a wider span of control within the organization.

• Increased flexibility and communication

• Increased training, multiskilling and the development of work teams

• Participative approach to change and employment relations

• Eradication of inefficient work practices

• Placement of executives on performance contracts

• Introduction of new technology

The following page displays the new flatter management structure:

(Source from Qantas.com.au)

Qantas management now exhibits elements of a range of modern management theories such as:

Behavioural:

• Greater emphasis on human resource management

• A more democratic style of management where employees have more input into decision making.

• A stronger sense of leadership who possesses directorial characteristics

Political:

• Focus on managers using power and influence to achieve their goals.

• Balancing the interests of competing stakeholder groups.

Contingency:

• Management practices at Qantas are more flexible and adapted to suit challenges in society such as the reaction to terrorism, the introduction of viral disease and the ever changing market and customer requirements.

The outcomes of the changes saw a more effective/ more efficient management structure, allowing Qantas to deal with changes in the internal and external business environment more effectively.

How the change was managed:

Challenges that required managers to react and ensure that changed occurred was the event of September 11, which caused:

• A catastrophic industry crisis as 200 000 staff were cut in the world aviation industry.

• Qantas had lost 11% of its international air traffic and profits fell