| Introduction | | | | 4. Generating new markets |
| Qantas Airline is the oldest Airline in Australia and | | | | This stage is characterized by new strategies that |
| comes in second in the world. It was started in the | | | | expand the current market of the Airline in a given |
| year 1920 by some pilots from Australia; these were | | | | international market segment. (United Nations, 2001) |
| Paul McGinness and Hudson Fysh. The Company was | | | | Improving operating procedures |
| registered as Queensland and Northern Territory | | | | For example purchase of engines in case they need |
| Services Limited. This was on the sixth day of the | | | | modification, upgrades in interior parts of aircrafts and |
| month of November. Initially, the Company started | | | | also in purchase of the actual product. |
| by giving joyrides and two years it began scheduling | | | | Capital expenditure is also required for incorporation |
| its passengers. (Davies, 1964) | | | | of other services that come with the airline industry. |
| More than eighty years later, the Company has gone | | | | This mostly refers to hospitality services like Porsche |
| global and operates more than fifty flights daily to | | | | seats, video watching and recruitment of members |
| various destinations throughout the world. It has a | | | | of staff like pilots, aeronautical engineers, cabin crew |
| total of five hundred and sixty flights daily. (Jackson | | | | members and others. All these are issues that have |
| 2000) the Airline has about fifty five destinations | | | | to be re examined by Qantas so that the Company |
| regionally. And in the year 2000, the Company | | | | can expand its market base by attracting new clients |
| transported thirteen million passengers on routes | | | | (Doganis, 2001) |
| based regionally and about seven million passengers | | | | Keeping up with technological advancements |
| for its international routes.a) Internal and external | | | | The Company has appealed to some customers |
| triggers that led Qantas Airline to develop markets | | | | through introduction of compartments where laptops |
| internationally at various stages of their development | | | | can be placed in its business class section thus |
| There are four stages that the Airline Company had | | | | appealing to a new IT- conscious clientele. The |
| to undergo before and during entry into international | | | | Company has also kept up with technological |
| markets. These stages are as follows; | | | | advancement through introduction of the Qantas |
| 1. Market entry | | | | Telstra visa card. Besides this, the Company has |
| 2. Product specialization and value chain aggregation | | | | provisions for online booking and has conducted a |
| 3. Value chain reengineering | | | | number of marketing activities online. All these are |
| 4. Generating new markets | | | | geared towards attracting new consumers to the |
| (Robert & Minnow, 1995) | | | | market. (Travel and Tourism home page, 2007)b) |
| 1. Market entry stage | | | | Benefits of internationalization to Qantas in various |
| This stage is characterized y introduction of services | | | | stages of development |
| to a new international market. During market entry | | | | Internalization has mostly been beneficial to the |
| stage, there were a number of factors that | | | | Airline. These are the reasons why; |
| prompted the Company to enter into some countries. | | | | Utilization of capital at ‘market entry' stage |
| These shall be examined below | | | | Qantas as an airline company is in serious need of |
| Competitors in the Industry | | | | capital for its products. The main resource in the |
| The Company had to consider who were the | | | | aviation industry is aircrafts. Entry o the Airline into |
| competitors in the respective countries of choice and | | | | certain countries have helped the Company to |
| what advantages did this potential competitors have | | | | minimize costs on capital due to the fact that the |
| over them. For example in entry in the American | | | | Company can be able to acquire fleets locally I those |
| market, Qantas had to consider other Airline | | | | countries it has entered. This mean expenditure is |
| Companies that offered low budget tickets and in | | | | greatly reduced and consequently profits are |
| this regard, charges in the country of entry had to | | | | consequently increased. (Butler and Keller, 2000) |
| be readjusted to deal with that competition in the | | | | Increased sales in the ‘value chain engineering' |
| market. (Smith, 2002) | | | | stage |
| Economic climate | | | | Changes in strategies during the value chain |
| One major reason that prompted the Airline to enter | | | | engineering stage have brought about increased sales. |
| into other countries was because of the introduction | | | | This was especially witnessed in the year 2000 when |
| of the General agreement on trade and tariffs by | | | | the Company saw an increase in international sales by |
| the World Trade Organization. This agreement | | | | twenty six percent. It gained revenues of 374.8 |
| ensured that the Airline was protected against | | | | million Australian dollars in the international flights |
| barriers to trade. Before Qantas could enter certain | | | | sector as compared to the local flights that |
| countries, it had to examine the economic conditions | | | | generation income of 272 million Australian dollars. |
| prevailing in those respective countries. It scrutinized | | | | These increased sales were due to improves safety |
| the stability of their currency in relation to the | | | | measures, adequate maintenance of aircrafts and |
| Australian dollar. Besides this, Qantas had to make | | | | reliability from the Airline |
| sure that the countries it targeted were feasible for | | | | Cheap labor costs in ‘product specialization' stage |
| trade. | | | | Operation of the Companies services in some |
| Political/legal factors | | | | countries is cost effective because the Company has |
| Some countries had passed rules and regulations that | | | | recruited staff members from those respective |
| encouraged foreign investment. These countries | | | | countries and these members require low amounts |
| prompted Qantas to consider them first. The Airline | | | | during their enumeration. This has been applicable in |
| had to choose politically stable countries like the USA | | | | some Asian countries like India, where the Australian |
| and Japan. Besides, it also examined employment | | | | economy is stronger and is therefore at an |
| regulations in those countries and realized that they | | | | advantage compared to the Indian economies.c) Key |
| were conducive for the operation of business. | | | | limitations of internalization to Qantas at every stage |
| Geographical factors | | | | of development |
| Initially, the Company had to choose destinations that | | | | Some limitations have arisen from this business |
| were frequently visited most air passengers. | | | | endeavor mostly because internationalization is a |
| Examples of such destinations include Britain and the | | | | business risk in itself and might not always bring |
| USA. This was because operation in countries of | | | | favorable results. |
| choice had to make business sense and they had to | | | | International disasters in the ‘generating new |
| ensure that those countries were geographically | | | | market' stage |
| accessible. | | | | The Airline industry is susceptible to disasters and |
| Cultural factors | | | | these can generate negative publicity for he affected |
| The brand image presented by the Airline in those | | | | Company in other countries that may be utilizing |
| respective countries had to coincide with the culture | | | | services offered by the Company. This scenario was |
| of the country of choice. This was the reason why | | | | observed in the year 1999 when a Qantas Airplane |
| Qantas first started with areas that were similar in | | | | was involved in an accident at Bangkok and serious |
| culture to Australia in order to ease its entry. This | | | | doubts arose as to the credibility of the Airline |
| was enforced when the Airline chose most of its | | | | Company in other parts of the world especially in its |
| European destinations. Marketing strategies did not | | | | core business area-Australia. (Jackson, 2000) The |
| have to differ to large extent. But when it entered | | | | Company had to spend numerous resources to |
| Asian countries like Japan, it had to adjust its | | | | investigate the cause of the accidents and to remold |
| marketing approach because the Japanese are | | | | its image. |
| generally known as a conservative lot. | | | | Capital costs during ‘market entry' stage |
| 2. Product differentiation and specialization and | | | | Qantas had to set aside numerous amounts of capital |
| aggregation stage | | | | because the purchase of aircrafts is no easy task. |
| This stage is characterized by focusing products in | | | | This meant that initially all the profits generated form |
| locations that are most favorable to the Company. | | | | those markets that had just been penetrated were |
| This means that a Company should not spread its | | | | used to offset initial capital costs. (Robert & |
| services equally in all the areas it has invested in. | | | | Minnow, 1995) |
| Instead, it should put most of its activities in areas | | | | Conclusion |
| that are favorable for business. | | | | Qantas has undergone numerous changes during its |
| Focusing international flights in certain regions | | | | development into the international market. The |
| This was the main reason why the Airline has | | | | Company has had to study foreign environments |
| majority of its international flights located in the USA, | | | | before it could enter them. While it has been trying |
| UK and Japan. The decision to concentrate most | | | | to establish itself in these new environments, it has |
| flights on these areas was because there were larger | | | | had to come up with different strategies that will |
| market segments in these areas and it was easier to | | | | ensure survival in those markets. Overly, the |
| conduct airline business in these areas than other | | | | Company has benefited from the venture despite |
| countries in the world. (Morrison and Winston, 1997) | | | | minor limitations here and there. (Richard, 1995) |
| 3. Value chain reengineering | | | | Reference: |
| This stage of development involves changing | | | | Jackson, M. (2000): Qantas Airways Limited: narration |
| strategies in service or product processes to suit a | | | | section of Chairman's Address; Report on the Annual |
| given market because international market present | | | | General Meeting of 2000 |
| different challenges from mother Companies. | | | | Travel and Tourism home page (2007): Qantas |
| Partnerships | | | | Airways Ltd; retrieved from accessed on 5th January |
| At this stage of its development, the Company | | | | Butler, G.F., Keller, M.R. (2000): Handbook of Airline |
| started engaging in partnerships and had to consider | | | | Operations. Aviation Week; |
| going into other parts of the world that it had not | | | | McGraw-Hill Companies |
| previously entered. An example was in the year 1995; | | | | Davies, R.E.G. (1964): A history of the world's |
| Qantas formed an alliance with British Airways called | | | | airlines, Oxford U.P |
| One World. This was to synchronize flights between | | | | Directory: (2007): World Airlines", Flight International, |
| the three continents of Europe, Asia and Australia. | | | | 2007-04-03, p. 77. |
| The Alliance prompted Qantas to expand its market | | | | Doganis, R. (2002): Flying off Course: The Economics |
| into other countries to facilitate services between | | | | of International Airlines, 3rd edition. Routledge, New |
| the two Companies. (Doganis, 2002) | | | | York. |
| Fleet development | | | | Doganis, R. (2001): The Airline Business in the 21st |
| The airline has been constantly growing since its | | | | Century. Routledge, New York, |
| inception as a result of increasing fleets. Qantas has | | | | Morrison S. and Winston C. (1997): The fare skies: air |
| been purchasing Boeing aircraft makes like the | | | | transportation and Middle America, Brookings Fall, |
| 747-400. The availability of more aircrafts meant that | | | | 1997; |
| the company can maintain schedules and meet | | | | Smith, M. J. (2002): The airline encyclopedia, |
| maintenance needs of the old aircrafts. This implies | | | | 1909-2000. Scarecrow Press |
| that it had the capability of expanding its operations | | | | Richard T. (1995): International Business Ethics and |
| into other countries and still maintains service delivery. | | | | culture, New Jersey: Prentice-Hall, Inc |
| (Directory, 2007) | | | | Robert A.G. |