Facing immense challenges, the world-famous Australian airline Qantas is at an important crossroads in its strategic development. With a 65 % market share in its backyard, Qantas faces financial instability caused by skyrocketing fuel prices and a sluggish global economy. This decision, whether or not to sell Qantas’ hallowed frequent flyer system has been at the core of Chief Executive Officer Alan Joyce’s dilemma. Beyond traditional airline rewards, this program has become a comprehensive loyalty strategy. With more than 10 million members, a number nearly equal to the population of Australia itself, it is Qantas’ most precious asset. A fateful choice This is no ordinary operational decision, but one that touches on strategy and will profoundly affect the airline’s future. Joyce’s consideration reflects the need for a strategy that will protect the interests of this enormous empire and many loyal customers besides guiding Qantas through its current financial woes.
Nature of the Decision
Understanding the motivation behind Qantas ‘move to sell its frequent flyer program combines strategic and operational perspectives. Strategic decisions have a more extensive scope and are major choices that affect the organization’s overall direction. In contrast, operational decisions have to do with the day-to-day operations of your company and are more mundane. The decision to sell its frequent flyer program, in the case of Qantas alone. Make it human Because this decision will affect the airline’s competitive posture, income structure, and even customer relationships. Buhler (2001) notes that strategic decisions require an in-depth examination of the external environment and need to take a longer view that helps match up with Qantas ‘complexity.
The decision of Qantas is subject to yet another landscape, the programmed or non-programmed nature of any given choice. What is the difference between programmed and non-programmed decisions? The former tend to be routine, following set procedures. Take Qantas as an example; its frequent flyer program is closer to the former. This is an unprecedented decision for the airline, and it makes a lot of technical considerations. Kourdi (2003) emphasizes that such unplanned choices require imagination and adaptability, qualities needed to carry Qantas through the difficult external circumstances of holding its own in a contested market while remaining financially sound. The novelty of this decision heightens its strategic importance and, therefore, calls for a more careful and creative approach.
Rational Approach to Decision-making
When dealing with such a pivotal decision, Qantas chief executive Alan Joyce must extremely diligently follow the proven rational decision-making system given by Buhler (2001) and Kourdi (2003). In the initial stage, Step 1: The Decision Problem, Joyce must thoroughly examine Qantas’s financial difficulties. This means examining how rising fuel prices and a sagging worldwide economy affected the airline’s bottom line. He must also face the profound questions raised by selling a frequent flyer program. What impacts, for example, will this have on customer loyalty and market positioning? How does it fit with Qantas ‘long-term direction?
Moving to Step 2: Define Decision Items, Joyce must clearly outline the factors impacting any decision, from financial returns to customer loyalty and competition. Most importantly, attaching weight to these criteria means that the issue must be considered holistically, balancing financial considerations against those of retaining customer loyalty and maintaining competitive advantage. In Step 3: Weigh the criteria. Buhler (2001) states that you must weigh various considerations based on their relative importance. Joyce has no choice but to prioritize financial stability, strategic fit, and long-term survival prospects. The weighting must be based on long-term strategic considerations aligned with Qantas’s future objectives and direction.
Step 4: Sell the frequent flyers. Joyce must develop creativity with Generation Alternatives in order to get a grip on Qantas’s financial emergence. This could mean looking at reducing expenditures, initiating strategic alliances, or seeking additional markets. He has to simultaneously carefully weigh the advantages and disadvantages, not just in terms of immediate economic short-termism, but also longer-term strategic gains or losses. Continuing to Step 5: Joyce needs to do a thorough evaluation that considers multiple factors, including quantitative indicators like financial forecasts and qualitative ones such as consumer and market sentiment. This evaluation must go beyond short-term benefits and consider long-term effects on Qantas ‘market positioning and brand image.
Advancing to Step 6: Weights and Measures But selection should be based on a comprehensive assessment of overall strategic fit that incorporates short- and long-term considerations. What option best maximizes both financial and sustainable recovery and smoothly integrates with Qantas’ overall strategic plan? This is a choice Joyce must make. In Step 7: With the Decision in hand, Joyce’s job is to create a concrete execution plan spelling out exactly how and at what pace the selected alternative will be implemented. The reasons for the decision and their expected influence on the future of Qantas should be communicated clearly to those most affected: its employees, customers, and shareholders. Transparency in communication is essential. Through this careful process of rational decision-making, Joyce increases the chances that their choice concerning how Qantas handles its frequent flyer program will be consistently excellent and strategic.
CEO’s Decision-making Approach
Taking Alan Joyce’s six years at the head of Qantas as an example, we can see that this kind of decision-making must be subtle. After so many years in the airline business, Joyce has a wealth of institutional wisdom. However, drawing from this experience, the ideal approach would be a combination of rational and intuitive methods. Striking a balance: Rationality is essential to methodically assess the financial impact and the positive or negative roles of decisions concerning strategic objectives. However, accumulated experience in the market can provide clues into the unique features that distinguish Qantas’s problem from others’. Joyce can combine rational consideration and intuitive insight, which will help him pick his way through this briar patch as he makes a reasoned and industry-savvy decision.
When a new CEO, coming in from outside the industry, takes over Qantas, it comes down to understanding how an industrial corporation approaches decision-making. It would be better for advisers first to take a more level-headed approach. However, intuitive decision-making is only helpful if you have an excellent grasp of the operation systems in the airline industry. A new head might only come to understand this slowly. Thus, being guided by reason means the new executive can carefully assess all aspects of such a decision. Nevertheless, as the chief executive gains industry-related experience, having intuitive elements to assist is quite helpful. Laying stress on the need to use analytical thinking explains why decisions are based not only on vague logical rules but also take into consideration concrete learnings of aviation industry competitive pressure.
Conclusion
In conclusion, the most significant decision about selling Qantas ‘frequent flyer program requires a careful balance of strategy and operational skills. With six years in control of the company, CEO Alan Joyce must utilize a robust decision-making model such as that suggested by Buhler (2001) and Kourdi (2003). As a strategic decision, the issue must be approached analytically, and financial questions concerning customer loyalty and competitive position must be thoroughly considered. Joyce can achieve this by methodically defining the decision problem, identifying essential criteria, and applying strict evaluation methods to select alternatives that align with Qantas ‘overarching objectives. In addition, the call for a synthesis of reason and feeling indicates that you should have some understanding of airline industry economics. Thus, fundamental rationalism and the determination to quickly understand industry matters constitute primary conditions for any new Chief Executive who is arriving from outside our ranks. Ultimately, Qantas’s decision must reflect a judicious strategic choice that strikes an appropriate balance between immediate business recovery and long-term development.
References
Bushell, J. R. (2001). Mind the Gap: Non-Collaboration in Passenger Transport Ecosystems and Partial Network Formation (Doctoral dissertation).
Frishammar, J. (2003). Information used in strategic decision-making. Management Decision, 41(4), 318-326. https://doi.org/10.1108/00251740310468090
Gilder, P. (2014, Mar 29). Loyalty future is cloudy. The Gold Coast Bulletin [Proquest]
Ironside, R. (2014, Aug 15). Qantas warned to ground plans to sell frequent flyer program. The Gold Coast Bulletin [Proquest]
Ross, K. (2014, Aug 27). Qantas CEO faces tough choices. Wall Street Journal [Proquest]
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