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MGT501 Business Environment

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MGT501 Business Environment

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Course Code: MGT501
University: Laureate International Universities

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Country: United States

a) Critically evaluate the effect of the external environment on firms
b) Select and apply appropriate frameworks to resolve the challenges faced by firms

The environment in which organizations have their operations is able to affect the revenues and policies. The organizations are thereby affected by different factors in the environment which include, the customers, the employees, management of the companies and needs of the consumers. The expectations of consumers in the industry are also influenced in a huge way by the business environment. The external factors of business environment are able to play a key part in the methods by which the organizations develop their own policies as well as regulations. The modern companies need to analyse the external environment in order to enter a country and develop their operations (Daspit et al., 2017).
The organization that has been considered for the analysis of the effects of business environment is Qantas Airways. The effect of the airlines industry of Australia on the operations of Qantas Airways will be analysed in the report. Qantas Airways was founded in the year 1920 and the organization has been able to show immense levels of growth in order to become an international airlines organization in Australia. The organization was mainly registered with the name of Queensland and Northern Territory Aerial Services Limited (Qantas.com, 2018). The firm has been able to develop its reputation in the industry for the levels of excellence in reliability based on operations, safety and providing customer services.
Discussion based on the relevant topics
PESTLE analysis of Qantas Airways
According to Daspit et al. (2017), the PESTLE framework can be used for analysing the different macro environmental factors which are able to affect the processes of Qantas Airways in different countries. The regulations and policies of Qantas Airways are thereby developed with the help of appropriate study of the external macro environmental factors.
Political factors – The political factors are mainly based on the influence which the government of Australia has on the performance of Qantas. The organization has faced many governmental actions based on its operations in Australia and in the international locations as well. The airlines organizations were recently affected by the political instability which had taken place in Bangkok. The operations of the company in Bangkok had not been able to generate effective levels of revenues in market (Barros, Hernangómez & Martin-Cruz, 2016).
Economic factors – As discussed by Demir, Wennberg and McKelvie (2017), the economic aspects of Australia are able to affect the levels of productivity and the revenues which have been gained by the company in the airlines industry. The decline which has been depicted by the Australian economy has been able to affect the levels of performance. The economy of the country had faced the negative effects of recession recently. This has further led to the lack of effective levels of demands for airlines based services. The effect of lower demands of the airlines services has been faced by Qantas in a huge manner. The decline in the revenues of Qantas is also based on the lower levels of economic condition of Australia.
Social factors – According to Durand, Grant and Madsen (2017), the trends and social conditions that prevail in the airlines based industry have been able to affect the performance levels of Qantas Airways. The analysis based on airlines industry has also depicted that social trends can suggest that the higher acceptance levels of budget airlines services have increased. The higher demands of budget airlines services have decreased the revenue levels of Qantas as it is known for offering premium services.
Technological factors – As discussed by Dyer et al. (2015), the airlines industry is affected in a huge manner by the different technological changes which have taken place. The bookings based process of airline tickets is based on the online reservations which are made by the customers. The effective analysis of Qantas has further depicted that the technological factors have been able to affect the different parts of operations of the company. The proper implementation of modern technologies is able to influence the levels of services which are offered by the company. Qantas was the first organization in Australian retail industry which had implemented the satellite based technology that is based on the system of global landing.
Legal factors – The legal institutions and frameworks are quite robust in nature and are able to protect the intellectual property based rights of the organizations. Qantas Airways thereby needs to analyse the country before it plans to enter the market. The legal aspects need to be considered by the leadership of Qantas in order to develop various policies. The different laws which are considered by the company in order to enter the market mainly include, discrimination laws, employment laws, safety and health laws (Engert, Rauter & Baumgartner, 2016).
Environmental factors – The different environmental values and norms are able to impact the levels of profitability and revenues of the firm. The environmental standards which have been developed by the Australian government are considered to be important for the ways by which Qantas is able to operate in the industry. The various environmental factors which are able to impact the policies of Qantas Airways need to be considered effectively by the organization. Waste management is considered to be an important factor which is able to impact the effective processes of the company (Ethiraj, Gambardella & Helfat, 2018).
Porter’s five forces analysis of Qantas Airways
As discussed by Dobbs (2014), the micro environmental factors of the business environment can be analysed by implementing the Porter’s five forces framework. This framework is able to help the organizations to understand the different external factors which are able to affect the processes of Qantas Airways. The competitiveness of the airlines industry can be examined with the help of this framework.
Threats related to new entrants – According to Hill, Jones and Schilling (2014), the new entrants are able to implement innovation within the industry. The airlines industry is highly competitive in nature and is able to develop high levels of rivalry among the different organizations. The organization needs to manage different challenges which exist in the industry. Qantas Airways is thereby affected in a huge manner by the new organizations which enter the market. The innovations which are brought within the market by the new organizations need to be implemented by Qantas Airways.
Bargaining based power of the suppliers – As discussed by Hubbard, Rice and Galvin (2014), the bargaining power shown by the suppliers in the airlines industry is quite low. The airlines industry consists of huge number of suppliers who provide the similar types of products to the company. The suppliers thereby have low levels of power of influencing the prices which are set by the company. The prices which are paid by the customers for different services of Qantas are decided by the company itself without high levels intervention from the suppliers.
Bargaining related power of buyers – According to Hill, Jones and Schilling (2014), the power of the buyers or customers in the airlines based industry is quite high as they are provided with huge number of options. The premium services which are offered by Qantas Airways to the consumers in Australia are similarly provided by other organizations as well. The different service providers are able to offer their services to the consumers which is further capable of increasing the power of the buyers in an effective manner.
Threats based on substitute products – The threats based on the substitute products or services provided by Qantas Airways are quite low. The mode of air travelling is considered to be quite faster as compared to the other processes. This is considered to be a major factor that reduces the power of the substitutes. The longer distances are travelled by the consumers within less amounts of time. The threats based on substitute products is thereby considered to be quite low. The difficulty levels which are provided by the industry for new organizations is further able to reduce the threats that are provided by the substitutes (Ethiraj, Gambardella & Helfat, 2018).
Rivalry among existing players – According to Frynas and Mellahi (2015), the rivalry levels among the existing organizations within the airlines industry is considered to be quite crucial for Qantas Airways. The company has to face major competition and challenges from the new as well as the existing players in the highly competitive airlines industry. Qantas is provided with direct competition from Virgin Airline in domestic market. The competition sometimes turns out to be so severe that the companies start facing losses in their operations.
The report can be concluded by stating that the external business environment and different aspects related to the environment are able to play a key part in the effective operations of an organization like Qantas Airways. The company has faced huge levels of competition from different organizations which have their operations in the industry. The external macro factors and micro factors thereby play a key part in the operations of Qantas Airways. The macro environmental factors have been analysed with the help of PESTLE framework and micro environmental factors are examined by the Porter’s five forces framework in an effective manner. The analysis has depicted that both these aspects are able to affect the operations of Qantas Airways.
Barros, I., Hernangómez, J. & Martin-Cruz, N. (2016). A theoretical model of strategic management of family firms. A dynamic capabilities approach. Journal of Family Business Strategy, 7(3), pp.149-159.
Daspit, J.J., Chrisman, J.J., Sharma, P., Pearson, A.W. & Long, R.G. (2017). A strategic management perspective of the family firm: Past trends, new insights, and future directions. Journal of Managerial Issues, 29(1), p.6.
Demir, R., Wennberg, K. & McKelvie, A. (2017). The strategic management of high-growth firms: a review and theoretical conceptualization. Long Range Planning, 50(4), pp.431-456.
Dobbs, ME (2014), ‘Guidelines for applying Porter’s five forces framework: a set of industry analysis templates’, Competitiveness Review, vol. 24, no. 1, pp. 32–45.
Durand, R., Grant, R.M. & Madsen, T.L. (2017). The expanding domain of strategic management research and the quest for integration. Strategic Management Journal, 38(1), pp.4-16.
Dyer, J.H., Godfrey, P., Jensen, R. & Bryce, D. (2015). Strategic Management: Concepts and Cases. Wiley Global Education.
Engert, S., Rauter, R. & Baumgartner, R.J. (2016). Exploring the integration of corporate sustainability into strategic management: a literature review. Journal of cleaner production, 112, pp.2833-2850.
Ethiraj, S.K., Gambardella, A. & Helfat, C.E. (2018). Theory in strategic management. Strategic Management Journal, 39(6), pp.1529-1529.
Frynas, J.G. & Mellahi, K. (2015). Global strategic management. Oxford University Press, USA.
Hill, C.W., Jones, G.R. & Schilling, M.A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Hubbard, G., Rice, J. & Galvin, P. (2014). Strategic management. Pearson Australia.
Qantas.com (2018). Fly with Australia’s most popular airline | Qantas AU. [online] Qantas.com. Available at: https://www.qantas.com/au/en.html [Accessed 14 Oct. 2018].

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