Analysis of Qatar Airways Strategic Management

Qatar Airways: Strategic Management

Qatar government owns Qatar Airways, which is one of the world's 5-star airlines operating on both international and domestic destinations. The airline provides amongst the most reliable and best comfort to passengers in the industry. The services offered by the airline are excellent both on ground and in air. The airline target groups are corporate, middle and upper middle classes. With the its latest expansion efforts, Qatar Airways has been re-iterating the airline's commitment to a wide range of growth opportunities by adding service to different points across the globe.

Qatar Airways is Qatar's national carrier and one of the industry's huge success stories. Operations started in 1994 as a tiny regional carrier operating in a few of routes. In 1997, the airline was re-launched under the directive of His Highness The Father Emir, Sheikh Hamad bin Khalifa Al Thani, who defined a vision for turning Qatar Airways into one of the leading international airlines with high standards of service. Since then, Qatar Airways has been one of the strongest growing airlines in the world characterised by unprecedented growth averaging double digit every year. The airline developed under His Excellency Mr. Akbar Al Baker, the Group Chief Executive appointed in 1997, has proved instrumental in changing Qatar Airways to be an award winning airline and among the best in aviation industry. Mr. Al Baker's leadership saw Qatar Airways mature as a leader in both global and regional aviation, earning the airline many admirers worldwide because of its high excellence in service (THE QATAR AIRWAYS STORY, 2016).

PEST analysis

1. Political Factor

Government norms as well as other political matters influenced Qatar airways' evolution as a success story. The national carrier had to deal with conflict from European airlines that used winging tactics because there were fears about the safety of Qatar Airways' fleet. Two factors facilitated alliances:

• Indirect Taxes reported by the European Airlines

• Political barrier to inhibit the taxation procedures (QATAR report, n.d)

2. Economic Factor

During the economic crisis, some factors that were likely to affect Qatar Airways were:

• GDP

• Rise in the international trade

• Globalization,

GDP rate within the Middle East using the current statistics was shown to surpass 3.6% and passenger traffic increased by 5.5%. Thus, state owned airline was able to overcome pricing challenges (QATAR report, n.d).

3. Social factor

It is essential to look into the social factors which ensures that both the business and community are not adversely affected. Qatar airways, in considering this issue, has indicated positive response toward the community through reducing its carbon footprint in the environment since it controls air-traffic which minimizes carbon emissions (QATAR report, n.d).

4. Technological Factor

Qatar Airways strategic partnership with "Qtel" indicates a long-term technological connection that has been useful in crafting the aviation's base for technological advances. Technological development in the airline positively affects areas such as routing and Internet booking. The technological alliance assists in bettering operations and improving the airline's operations. Moreover, development in Global distribution system plays an essential role in contributing service to Qatar Airways (QATAR report, n.d).

Case Analysis 1

"Qatar airways" is the subject for this paper. Following are some important pointers about Qatar Airways:

The company is owned by the State of Qatar and bears its flag.

The Headquarters of Qatar Airways is their name-bearing tower in Doha.

The airways network is based on the "hub-and-spoke model." The base in Doha manages and connects over 100 international destinations, utilizing a fleet of over 100 aircrafts.

Qatar Airways operates across Africa, Central Asia, Europe, Far East, South Asia, Middle East, North America, South America and Oceania.

The Skytrax World Airline Awards named Qatar Airways the best in the Year 2011.

Qatar Airways started out as a small, regional carrier in 1994. Initially the airline serviced very few routes.

It became the crown jewel after the airline was relaunched by the Qatari Emir "Hamad bin Khalifa Al-Thani." His vision of turning Qatar Airways into a leading brand with quality standards and service excellence have since borne fruit. (QATAR report, n.d).

Apart from being the national carrier of Qatar, it is also one of the top airlines in the Middle East.

"Qatar airways" is one of the four elite airlines that have been given five star statuses.

Emirates and Qatar airways are quite similar in their origin stories. "Qatar airways" was born on November 22, 1993 but starting its operations on 20 Jan 1994. Looking at the way emirates succeeded, Qatar too joined the ranks of world class flight system and earned similar success.

Mission Statement

The Airline has stayed true to its mission statement that calls for, "excellence in everything that we do." Along the years the airline has ensured, high standards, state of the art security and serve their passengers with a five-star excellence that has come to be associated with Qatar Airways. Their staff is well-trained, polite and culturally aware. (QATAR report, n.d).

Vision

according to their vision statement Qatar Airways' aim is, "to become a world class carrier and cargo service provider with global reach" their forward thinking and their growth scale has not faltered. To maintain a steady growth towards this goal, the airline focuses on three key points,

Quality of the product.

Reliability of their product.

World-class network reach.

These aims are not unrealistic, considering how their 122 aircrafts are progressively serving over 120 destinations across all the continents (QATAR report, n.d).

Aims and Objectives

The airline's main focus is to increase their brand awareness on a global scale. They have tried to create awareness of airline safety, products, services and convenience, highlighting the benefits of choosing air travel with their company. Luxury is the keystone of the airline, using creativity and innovation to reach their objectives (QATAR report, n.d).

Strategic Goal

Since everything related to Qatar Airways speaks of "excellence" the organization is always a step ahead of their customers' needs, exceeding passenger expectations when it comes to service and client satisfaction (QATAR report, n.d).

Strategic Administration

The reason behind the success of Qatar Airways and their steady rise lies in the following points

Acquisition of new ventures

Experimentation

Social and environmental awareness

Strong strategic capabilities

A well oriented and streamline corporate governance

People oriented organization

Resilient hierarchical structure

High level priority towards customer satisfaction

Product and service standards are not only maintained but improved locally as well as internationally.

Qatar Airways continues to grow its strategic partners and strike new alliances to help them flourish.

A well-founded reputation is the pride of the company (QATAR report, n.d).

The growth rate of the airline is borderline utopic, their revenues and expansion doubles annually. At this stage, the airline can be assessed as follows,

Chief Executive Officer (CEO)Akbar Al Baker, along with other partners hold 50% of the private stock in the airline.

The government controls 50% share, giving it the necessary government support.

Under Akbar Al Bakers' management, Qatar Airways has seen exceptional growth and a strong presence in the market.

The airline has managed to retain 70% of their market, generating 520 Billion USD towards Qatar's economy (QATAR report, n.d).

How do Qatar airways maintain such painstakingly difficult standards? The airline works in close collaboration with the following partners and alliances that gives them the edge to succeed in the market,

Rolls- Royce-supplies and manufactures fleet engines for Qatar Airways.

Q-tel -- A high-tech company that provides the necessary routes for sales and marketing. They also work closely with the airline in the management of tickets and promotions.

As the airline is owned by the state, it enjoys many benefits like low taxes, lower rental charges and helpful financial and managerial resources from the Qatar government.

Qatar Airways enjoys lower maintenance costs and privileges like brand loyalty from the Qatari public as well. As a national carrier Qatar Airways has its own niche market.

Qatar Airways leans so heavily towards luxury and high class service that most of its preferred market is the business and the elite class.

The airline attracts the nouveau rich, baby boomers and yuppies as these customers can pay the higher costs airline demands in return for their excellent services. However, there are frequent economic travellers of the airline as well.

Qatar Airways has engaged in market segmentation strategically to their benefit; the airline remains expensive and yet just enough within each of the economy-class traveller to be affordable.

In a competitive environment, the airline has a sustainable and progressive approach to sustain their market share locally and globally. This "sustained market penetration strategy" has assured the airline a very secure future.

Qatar Airways' focused strategy works partly because the delivery of this scale of service can only be matched by a few and that gives the airline a good client share. Their aesthetics are appealing and they continue exceeding the average flyer's expectations (QATAR report, n.d).

Qatar Airways Assets

Tangible and Intangible

The flying clientele is demanding and the competition is only increasing in the airline sector. It is of the utmost import to have some advantage over a rival. Being a national carrier, the airline enjoys a series of benefits that gives them a competitive edge their competitors. Their dealings and operations are managed intelligently. This augments the unique selling position of Qatar Airways against their opponents, their unique set of resources have a considerable role in giving them the required support to expand geographically and network wise.

Government funding plays an important role; The Emir of the UAE has a direct channel, providing government resources to the airline. The management process is a perfect balance of the private and the government stakeholders, setting it up for success in various ways. The CEO is trusted and that makes it easier for the Qatari government to handover complete power and authority as far as marketing, expansion, financial aspects and decision-making are concerned. This creates a matrix and a well-functioning chain of command, which makes governance very easy (QATAR report, n.d).

1. Financial resources

According to the IATA annual report of 2011, despite an overall global economic recession in 2010 that saw other airline lose profits, the middle eastern airline gained profits, making the largest share of profits in that year. While the Qatari government funds the airline, figures are never disclosed. According to the CEO of Qatar Airways,

The airline profited 7.5 billion USD in the year 2010 till March 2012

70% of Market Expansion was attributed to the economy (QATAR report, n.d)

2. Physical Resources

Qatar airways has successfully spread, managed and enhanced their network by establishing headquarters in regions all around the world. The various geographical locations of their headquarters are located strategically and sets them up for success almost immediately. The airline has specifically targeted locations with higher resource capabilities and access. The centre of this vast network is in Doha, from where almost a 100 routes are managed globally and the ease of operations in Doha makes things run even more smoothly for the company (QATAR report, n.d).

3. Human resource

The compulsory cultural training of the staff makes the airline so popular; it has the warmth of Arabic touch. Their human resource management is different, creative and popular in the airline industry. The airline is famous for providing one of the best inflight services by their personnel. They are working tirelessly to standardize this service quality in each of their flights. Qatar Airways aims to ensure that their service is standardized globally. The experience of the staff and thorough training keeps the airline steady at the top of the competition (QATAR report, n.d).

4. Technological Assets

Qatar Airways deploy both Airbus and Boeing aircrafts, leading machines in their concerned industries. The airlines alliance with Rolls Royce has helped them make a firm reputation for the airline as a pinnacle of safety and modern technology in their fleet engines. This alliance has made the Qatar airways a leading name in A-grade machinery, consumer safety and management procedures. It is not surprising that the airline has been awarded the "best flight service" and "innovative approach awards" for their safety, security, inflight technological experience and accessibility (QATAR report, n.d).

5. Brand Awareness

Qatar Airways has a very direct and simple, yet effective approach towards branding. Since the airline is all about people, their needs and comfort, the airline markets itself as a harbinger of all this and more in their flights. Their superior customer service, approach and live data collection from their passengers keeps them ahead in their marketing approach and brand awareness. (QATAR report, n.d).

6. VRIN Measurement

The nature of the company makes it very difficult to duplicate and/or maintain even if such an endeavour is successful. The structure of the airline is supported privately and by the government whereby they have access to resources without any issues, making the standards too difficult to achieve for the competition.

The government backing is not the only element, clear patent rights over the fleets, design and in-flight aesthetics makes it very hard for anyone to copy or even come close to doing so with the airline. The Doha base is massive advantage for the airline; the action plan and the network management is on another level of efficiency when pit against a private airline (QATAR report, n.d).

Corporate Social Responsibility

As an enlightened and self-aware corporate entity, the company likes to market and brand itself as such too. The environmental awareness really put Qatar in a very small elite list of aware corporate entities; this is excellent for PR as well. The company follows a five-point system when it comes to social responsibility, they are as follows:

Change Management

Communication

Environment

Integrated Fuel Management

Sustainable Development (QATAR report, n.d).

It's hard not to admire a corporate brand that is willing to spare the ecosystem, instead of depleting it dry.

Stakeholder and Investor Expectations

Sustainable long-term relationships and alliances based on profit-sharing and capital gains have attracted an abundance of investors towards Qatar Airways.

Investors have increased level of interest in this organization as they concentrate on capital profits as well as long-term participation. The shareholders have repeatedly shown significant interest in the airline due to their financial approach; they look at excellent profits and growth in trading. The Qatari government holds a stake in the airline as the funding is after all state provided. The corporate funds of Qatar Airways are controlled by their government.

As far as suppliers and community interest is vested, it is not such a high stake. Their concerns are mainly of the brand loyalty variety and the pricing the company is not directly affected by these interests (QATAR report, n.d).

Competitor analysis

In terms of growth and similar stakes, the biggest competition of Qatar Airways is the Emirates Airline. Emirates shares similar goals, interests and background with Qatar Airways making it a tough competition for one of the fastest growing airlines in the world right now. Qatar Airways has a shared ownership of the government and private stakeholders, whereas Emirates in completely under the control of their government. The 24 years Old Emirati Airline has an envious networking hub and although the growth of Qatar Airways is impressive, they still lag behind Emirates when it comes to networking and connectivity compared to Emirates.

Qatar Airways has become major competition for Emirates due to their global expansion, rapid growth and excellent standards. Qatar Airways, in an effort to match and challenge Emirates' network has opened possible upcoming routes in developing countries to carve new niches in these markets which as an opportunity is being ignored by the Emirates Airlines. Another Airline that is coming up fast as good competition for the Qatari giant is Etihad Airways (QATAR report, n.d).

When we review these three competing airlines, it is obvious, that all of them are competing for the same market share and aspiring for similar standards. Following are their competing lines

They all aspire for the "airline of the year" title, trying to top each other's luxury and service standards.

Product development in terms of security and efficiency.

Market exploitation to the maximum for expansion and higher profit margins.

None of these airlines are a part of the major alliances (Star Alliance, One World Alliance and Sky Team).

All three companies have very strong alliances and ties around their international destination to maintain that world class approach. All three have kept up-to-date with technologies and focus on the maintenance and management of an excellent fleet.

Emirates, Etihad and Qatar are expected to increase their capacity and maintain fixed prices with other competition.

All three airlines offer great geographical spread and have a greater growth rate than other airlines in the world.

Emirates, Etihad and Qatar are all prestigious and legacy airlines possessing top-of-the-line technology, staff and advanced auxiliary services, pitting these three airlines against each other in a very tough competition.

These companies are aware of how they are neck-to-neck with each other in the race to the top and realize the importance and need for continuous innovations (Gulf based airlines ambitions and its implications on its customers and competitors in Europe and the United States, 2013).

Case Analysis 2

Five Forces Analysis - Qatar Airways

Fresh Competitors

The opening up of new routes and untapped markets, always creates a surge of new companies looking to carve a niche for themselves. A classic example of the "new entrant" phenomenon is the Asia Pacific, where the inbound tourism is an impressive 7.9% and growing. The outbound tourism is growing rapidly as well with a staggering 25% making all airlines within this region profit even in times of great financial crisis. Take for example Qantas Airways which profited U.S. $618 million and Cathay pacific profited a massive U.S. $905 million in the year 2007. How did Qatar, Emirates and Etihad airways profit in this scenario? They looked at high profitability in the fresh segment of the market and catered to a growing demand. (Gulf based airlines ambitions and its implications on its customers and competitors in Europe and the United States, 2013).

Additional or Substitute Products/Services

Other airline companies are increasingly offering similar products and services at lower rates than Emirate, Qatar and Etihad. In some regions, companies have managed to create the same level of excellence and quality coupled with a lower price tag. Naturally these companies are a threat to the growth of the giants. However, this type of competition is not much of a challenge at the moment due to their lack of a global network spread. However, once these airlines go global, the three giants will face a lot more competition than just each other for the prime market share.

For example, companies such as Virgin Atlantic, Virgin America, Virgin Australia and Virgin Nigeria are offering their passengers a similar class of service albeit at a much lower rate. Consumers prefer to pay less for the same nature of benefits. However, since operations and services by these companies are limited to certain regions presently, they will need a long time before they can offer global competition to the likes of Qatar, Emirates and Etihad (Gulf based airlines ambitions and its implications on its customers and competitors in Europe and the United States, 2013).

Supplier Bargaining Power

Their top-of-the-line suppliers' status provides a great edge to these airlines; it helps assure their consumer base the accuracy of their quality claims. The most dominant suppliers of the airline industry are

Boeing

Airbus

AJ Walter

Rolls-Royce

Rolls Royce has been associated and quite exclusive to Qatar Airways and as is the case with a single powerful and renowned supplier, the supplier gives the airline the necessary advantage to command higher rates and bargaining power (QATAR report, n.d).