Business Case study Dot Points – IKEA/QANTAS/TAMBURLAINE

OPERATIONSRole of operations management:

Cost leadership – price competitive – reduce floor staff, honeycomb cardboard reducing material costs and transportation costs – aim to price minimum 20% cheaper than competitors at all time, 50% goal – due to vertically integrated supply chain (IKEA controls everything)

G/S differentiation – mostly through price, some variation – more accessible and easier to assemble/transport – 9500 in product range

G/S in different industries – customisable options but mostly mass-produced uniform quality, assembly line style

Interdependence with key business functions:o Human resources – technology reduced staff assistance needed in store, change in skill

marketo Finance – cost of production minimised may impact quality – honeycomb wood tables for

$10o Marketing – marketed as the markets cheapest designed products for wide market

Influences: Globalisation – major international competitor through global supply chain, made in multiple

countries, stores located in multiple countries Technology – utilised through customisable iPad trials, store feedback electronic, VR in store, leading

edge development of Aledia – LED’s that are 25% cheaper than existing LED chips Quality expectations – fit for purpose with well thought out design, is not durable ie. $19 Bekvam step

adder Cost-based competition – economies of scale used throughout, standardised flatpack system,

minimum 20% cheaper than competitors Government policies – taxation – transnational corporation subject to always changing policy –

decentralised structure where governments are split into many subsidiaries all over the world – e.g. Indian governments Foreign-Direct-Investment rules (2011) enabled IKEA to access 1 billion potential customers whilst retaining 100% ownership of operations (previous to this they could only have 51% ownership

Legal regulation – fair work, anti-discrimination, health and safety measures in place Environmental sustainability – recycling system being introduced, recyclable materials, economies of

scale decreases environmental impact of transportation, use 1% of the worlds commercially harvested word and 0.7% of cotton (100% organic achieved 2015) – 2015 IKEA ranked equal third in taking the lead in addressing climate change as a business – goal to be completely energy independent by 2020

CSRo Legal compliance vs ethical responsibility – labour law & tax’s vs environmento Environmental sustainability – IKEA foundation committed to 300 million pounds towards

climate actiono Social responsibility – smalland, IKEA Foundation – raised 30.8 million pounds towards

United Nations Refugee agencyOperations Processes:

Inputs – o Transformed resources:

Materials – international supply chain, 100% organic cotton sourcing – IKEA food turnover was 1.6 billion euros in 2015

Information – supplier portal – web tool to communicate with suppliers regarding ideas, quality, and availability

Customers – 2018 - 957 million IKEA store visits, 38.8 billion euros of IKEA retail sales

o Transforming resources: Human resources – high reliance on computer aided engineering, manufacture,

numerical control, and store retrieval – 208 000 IKEA workers,

Facilities - 422 IKEA stores, Transformation process

o 4 V’s – Volume and variety – economies of scale, 9500 different products but 50 000 as

certain products come in different colours and patterns Variation in demand – seasonal fluctuations – Christmas trees are dropped to 1 euro

8 days before Christmas as 1200 units required selling in 2010 Visibility (customer contact) – customers shop with minimal worker assistance

o Sequencing and scheduling – Kronos computer program to schedule staffing – takes employee preferences and availability, trade hours, and predicted sales into account

o Technology - utilised through customisable iPad trials, store feedback electronic, VR – process layout for max visibility

o Task design – do it yourself – minimal worker assistance – self serve warehouse, flat pack ready to assemble furniture

o Process layout – standardised – improves efficiency Offices – minimal walls – openness and transparency – hot desking Factories – assembly layout Stores – entrance – smaland – showroom – restaurant – markethall – self serve

warehouse – registers – Swedish food market – bistro - exito Monitoring, control and improvement – Key performance indicators – target, establish

strategy, revise and improve – achieve results Outputs

o Customer service – introduction into new global markets require increased customer service, minimal

o Warranty – 5, 10, 15, and 25 year guarantees

Operations strategies: Performance objectives:

o Speed – efficiency, store layout, automated technology, efficient transportationo Quality – Total Quality management KPI’s determine customer satisfaction – although low

price tag the lenient warranty o Cost – minimised through efficiency – chemical leasing (pay for amount of output not input

minimises costs and assists environment) – flat packs enable reduced transport costso Customisation – 9500 products – customisation increases range to 50 000 – mix and match

furnitureo Flexibility – decentralised logistics and factories from the IKEA Group – sold to Inter IKEA

Systems – allow focus on retail o Dependability – functional purchases, fulfil large orders rapidly – improved for suppliers due

to vertically integrated supply chain New product development – product development takes 3 years on average – sold in least expensive

colour pigments of white and blue – 85% of IKEAs range is common internationally – mistakes in design leads to financial losses – China Test lab tests 100 000 products a year

Supply chain management – IKEA – vertically integratedo Logistics – 33 distribution centres – new stores in new markets (India) requires increased

shipping – flat packing important o E-commerce – slow to act – redesigning website – 3% of global saleso Global sourcing – 89% of production come from independently owned factories and 11%

IKEA factories (2015) – 25% of goods sourced from China – 67% sourced from Europe – decrease in suppliers due to vertically integrated supply chains

Outsourcing – o Pros: source cheaper inputs by taking advantages of exchange rates, cost savings and better-

quality outputs through specialists, greater access to technology, focus on other projects, shift responsibility through quotas

o Cons: costly transportation, loss of control, loss of privacy, loss in quality, language barriers Technology

o Leading edge – virtual reality system – DyeCoo Textiles Systems 2013 (environmentally friendly dyeing technique which substitutes water for recycled carbon dioxide

o Established – barcoding and iPad feedback – Board-on-board or BoBoard uses honeycomb structured carboard within furniture – cost effective, lighter, recycled wood saving 15% $ and 21300 trees

Inventory managemento JIT – products enter store just in time for sale – stock keeping units drive inventory

management providing origin, composition, and date of manufacture – accounted for at 6 points prior to sale ensuring accuracy

o Holding stock Pros – meet new customer demand, reduce lead time, improve cash flow Cons – become obsolete, storage costs money

Quality managemento IKEA Supplier Quality Standards – GO/NOGO Requirements: documentation of production

process through 5 steps to ensure quality, Special Processes Appendices: 7 appendices entail special processes for certain product development

o Quality control, assurance and improvement Based on quality of design, durability/functionality, customer friendliness, safe

usability Product development – bad quality risk reduced by risk assessments by IKEA’s

‘Material Risk Council’ – product testing: climate chamber tests, fire tests, assembly tests, strength tests, washing tests

o Total Quality management Production/suppliers – quality centres allow remote monitoring of product quality

which is highly beneficial for high output systems Post-sale/customers – items designed and displayed to mimic customer homes – 3-6

product recalls occur yearly at IKEA Overcoming resistance to change

o Purchasing new equipment – paper based corrugated cardboard pallets – reduce transport costs by 10% as they were 90% lighter

o Financial costs and retraining – move to paper pallets meant 140 million Euro saving yearly – 90 million initial re-investment for new forklifts and 6% of workers required new retraining

o Redundancy payments – offer to pay costs associated with vocational training for redundant workers + professional job seeking coaching and training

o Plant layout – 2013 IKEA lent $3 million USD to a Belgium textile factory so they could install equipment required to produce flex yarn an alternative to cotton

o Inertia – Better Cotton Initiative – Pakistan and India farmers were trained to reduce water, fertiliser and pesticide to use cotton crops through better management – premium prices for sustainable cotton

Global Factorso Global sourcing – India market – lifts on FDI – goal to double sourcing from India by 2020o Economies of scale – bulk buy to reduce unit costs – IKEA China has made 54% price

reductions in over 100 product areas – Billy Bookcase 1985 cost $82 and 2015 cost $60o Scanning and learning –

Japanese market – broadened services of assembly, installation, and home delivery due to poor receival of DIY culture

US market – lacking in customisation and kitchens didn’t fit US applianceso Research and Development – 2010 opened first test laboratory outside Sweden, leading edge

technologyHSC topic: Operations

Role of operations management strategic role of operations management – cost leadership, good/service differentiation

Organic - differentiate goods and/or services in different industries

Wine Making Industry - higher SES - Tesla chargers, Estate higher class interdependence with other key business functions

Sales to China - Marketing and Op must work together with colour. wording, language,

HRM - 6 different jobs within the business - tour guide, educational programs, background in PR, works at Cellar Door, picking, warehouse, 4 years

less than 60 total employeesInfluences

globalisation Selling overseas to China is a huge market Taxation within export countries - New Zealand sells to many countries e.g. Finland

technology Wine making process involved large equipment , Integrate the WeChat to the

China market quality expectations, cost-based competition,

High priced compared to competitors government policies,

Taxation within export countries - New Zealand 4% below 14% alc, above 14% $50 dollars a litre

legal regulation wearing of safety vests,

environmental sustainability Biodynamic growing methods, solar panels, recycling water, Tesla power station

corporate social responsibility organic - develops own fruits - appease health conscious wine market - using

less pesticides, locals happier. wine glasses utilises 6x more carbon than boxed or tetra packs

the difference between legal compliance and ethical responsibility Organic certification - ACO

environmental sustainability and social responsibility - Tesla charging station reduced use of pesticides Environment Management System – water and solid waste management – 60 solar

panels on warehouse roof, grey recycle water using aerobic bacteria – re used in vineyards through drip irrigation

Operations processes inputs

transformed resources (materials, information, customers) Materials:

Every raw material that they use - grapes, water, air - sustainable. Bottles (Glass - high amounts of carbon utilised) and screw caps, corks for China - traditional

Information: Since 1966, Organic since 2003

Customers: Part of the process - purchase at Cellar Door, Tours,

Membership - clear link between customers and the product. Relationship with customers provides transparency, customers more confidence in what they are doing. Chinese market wants different things, colours/numbers/tastes

transforming resources (human resources, facilities) HR - 3% of grapes are hand picked - increased person hours, 97% machine picked saving

money on wages Facilities - Owned Pokolbin (14 hec) and Orange (250 hec)- outsource their bottling - to

reduce costs, lease 40-50ha (cost effective), 3 warehouses the influence of volume, variety, variation in demand and visibility (customer contact)

Volumes - climate and how much is grown. Has an impact on production. - 9th largest producer of organic wine in Australia - could produce 47 tonnes a day at peak vintage - usually 1-2 tonnes a day

Variety - Type of grapes grown - affects the type of wine produced. Cab Shiraz - most pop red wine in Australia.

Variation in demand - What the market wants - trending wine. Visibility - Cust contact - website, cellar door, membership, sold at independent

markets, social media (e.g. FB - vegan noticeboard), perceived quality is higher sequencing and scheduling

Gantt charts critical path analysis

technology, task design and process layout technology - Juicers, forklifts, huge vats, air compressors (increase the juice) , chilling

rooms due to hot summer seasons (Pokolbin - Hungarian “From Hell” above 50C in summer)

task design Process layout- Fixed position layout - Machines are not moveable - elements cooling

towers monitoring, control and improvement outputs

customer service - Membership programs (case of wine personalised to consumers taste delivered to the door). Cellar Door one 2 one customer service

warranties

Operations strategies performance objectives

quality - Big bins of corked wines - throwing all of the corked product, Reserve Wines most expensive, Wine Lovers, mark Davidson

speed dependability - Climate has a bearing flexibility customisation - member program - customised wine delivered to your door,

Export market to Finland, China. Wine types cost (directed by marketing) (taxes in individual countries)

new product or service design and development (directed by marketing) supply chain management – logistics, e-commerce, global sourcing

Logistics - Distribution to New Zealand within 5 days, warehouses within China, and other primary exporters

E-commerce - WeChat allows the business to reach out to retailers and individual customers to increase sales. 45% B2B, 35% B2C, 20% exported. Website link between marketing and purchasing

Global sourcing - Corks outsourcing – advantages and disadvantages

creation of their corks - not organic - cheaper and easier technology

leading edge - established- wine making process

inventory management advantages and disadvantages of holding stock, VALUATION METHODS

LIFO (last-in-first-out) FIFO (first-in-first-out) JIT (just-in-time) economies of scale

quality management control - Wine bins - some process of QC before they are boxed.

assurance - ACO (Aust Cert Organic) approved - some testing of the process/product

improvement - gradual transition to organic (ha by ha, tried different things), continued environmental sustainability

overcoming resistance to change financial costs, purchasing new equipment, redundancy payments, retraining,

reorganising plant layout, inertia global factors

global sourcing - Target market - OS - economies of scale - Fruit making - large scale on two wineries, send box sets

not individual bottles. scanning and learning - Tetra pak - juice box wine - Not going down that, looks

like goon bag -> undesirable to higher SES consumers. research and development - Looking at foreign markets - attractive to other

win growers, number 8 on wines (lucky in China), South American wines

MARKETING

role of marketing strategic role of marketing goods and services 0.01% of Australian wine market fulfilled – 2 million bottles per year interdependence with other key business functions production, selling, marketing approachesMarketing approach – highly customer orientated – tours of the winery and development of relationship marketing by forming a ‘personal’ customer bond - membership program types of markets – resource, industrial, intermediate, consumer, mass, niche

Intermediate – sold to secondary retailers Consumer – bought at winery directly from source, markets Hunter Farmers Market Niche – organic wine, hunter-based Resource - produce their own fruit - sell to other producers - smaller more independent companies

produce organic wine - more cost-effective smaller bottlers

influences on marketing factors influencing customer choice – psychological, sociocultural, economic, government

psychological - Better product, healthier, health, less sulfur (helps some migraines) sociocultural - organic product appeals to cultured wine enthusiasts (tend to be richer people)

Pricing leads to higher SES consumers. Weddings economic government - export taxation raises prices - less likely to purchase Export to NZ unlikely due to high cost of exporting

consumer laws – deceptive and misleading advertising – must be organic and comply with Australian Certified Organic

audits– price discrimination– implied conditions – organic– warranties

ethical – truth, accuracy and good taste in advertising, products that may damage health, engaging in fair competition, sugging must be fully organic – organic fruits, no pesticides, herbicides, fungicides, or synthetic fertilisers

marketing process situational analysis – SWOT, product life cycle

strengths – organic, CSR, popular niche product, loyal customers ($288 loyalty program), vertically integrated supply chain, niche and vegan

Opportunities – new technology (temperature, new bottling processes), economy in decline – Marginal propensity to consume and expenditure on unnecessary organic wine limited, interest rates are low – increase spending, globalisation, organic and vegan cultural movement

Weaknesses – middle of hunter, not commercially accessible, facilities may require upgrade due to acidic nature of wines produced, expensive, more environmentally sustainable options of ‘goon’ bags or tetra pack

Threats – global economic weakness, increasing domestic and international competitors, Product lifestyle – introduce new flavours/lines each season – introduced first to members – intro

to general population – repurchase – sells – made permanent or onto next seasons flavour market research

organic and vegan food groups stationed close to winery’s in hunter valley area sales data reviewed – most popular recreated in different variations

establishing market objectives – increase market share in organic vegan wines. Marketing mis for wine growth

identifying target markets – niche organic wine, overseas Chinese wine market developing marketing strategies

marketing mix – focus on high quality product, affordability promotion – lack of public advertising distribution – warehouses and logistic centres in China

implementation, monitoring and controlling – developing a financial forecast; comparing actual and planned results, revising the marketing strategy

marketing strategies market segmentation, product/service differentiation and positioning – niche, organic, vegan, low sulfur,

Hunter based products – goods and/or services

– branding – black and white – knight riding horse – regal, expensive, simplistic, timeless– packaging -higher punt – thinner glass – necessary for structural integrity – increasing price of bottle

different for different global markets – China is 20% of their export market – use red and gold, hidden number 8’s – only export 6 styles of wine

bottle colour – light blue – show its not water, clear – Rose – natural wine colour, dark – oak barrel – white wine in dark glass means its been on oak

price including pricing methods – cost, market, competition-based – market influenced and cost based – pricing strategies – skimming, penetration, loss leaders, price points – price and quality interaction – accurate as expensive but high cost of creating all organic wine and

fruit promotion

– elements of the promotion mix – advertising, personal selling and relationship marketing, sales promotions, publicity and public relations seasonal – digital portals, reatailers, business partners advertising: social media vegan boards, personal selling in tours, relationship marketing

through ongoing membership program, publicity – weddings and school tours– the communication process – opinion leaders, word of mouth

word of mouth – weddings, hunter valley visiting, wine circles place/distribution

– distribution channels – B2B wholesale 45%, B2C online direct 35%, export 20%– channel choice – intensive, selective, exclusive – internet marketing, selective distribution– physical distribution issues – transport, warehousing, inventory

leases some area – not an estate winery solar panels on warehouses

people, processes and physical evidence wedding, tours, membership – all interaction between producer and customer

e-marketing vegan message boards, organic wine boards, web page

global marketing– global branding – not exactly – goes under the name – Warrior Prince and The Horse Yard labels – standardisation– customisation – for export markets and each individual flavour – packaging, flavours, brand– global pricing – customised pricing – considered a luxury in China, high wine tax in New Zealand –

must reflect cost of import and inelastic pricing demand model– competitive positioning – organic wine and fruit, highly personal service

FINANCE

role of financial management strategic role of financial management – sales grew by 4.5% 2018, total retail of 38.8 billion euros, 12.4

billion euros profit,Influences internal sources of finance – retained profits – franchise fee of 3% net sales external sources of finance

– debt – short-term borrowing (overdraft, commercial bills, factoring), long-term borrowing (mortgage, debentures, unsecured notes, leasing) – 7068 million euros of non-current and 6538 million euros of current liabilities

– equity – ordinary shares (new issues, rights issues, placements, share purchase plans), private equity – group equity of 7298 billion euros

financial institutions – banks, investment banks, finance companies, superannuation funds, life insurance companies, unit trusts and the Australian Securities Exchange

influence of government – Australian Securities and Investments Commission, company taxation company tax – IKEA Aus gained negative publicity in 2015 when accused of paying company tax rate

of 3% instead of 30% overall income tax: costs 256 million euros corporate governance – based in Luxemburg and company law is under Luxembourg Stock Exchange

global market influences – economic outlook, availability of funds, interest rates 2.5 billion website visits – 5% sales e

commerce World outlook – trade war, Brexit, hong

kong, Germany interest rates, hyper inflation in south America, decline in Australian economic strength – Global growth estimated at 3.7%

Availability of funds – decentralised corporate structure enables inter company loan systems instead of bank loans

957 million worldwide store visits – 19 stores worldwide

processes of financial management planning and implementing – financial needs,

budgets, record systems, financial risks, financial controls – debt and equity financing – advantages

and disadvantages of each– matching the terms and source of finance

to business purpose monitoring and controlling – cash flow

statement, income statement, balance sheet financial ratios

– liquidity – current ratio (current assets ÷ current liabilities) – current ratio is 1.36:1

– gearing – debt to equity ratio (total liabilities ÷ total equity) solvency/gearing ratio is 1.94:1– profitability – gross profit ratio (gross profit ÷ sales); net profit ratio (net profit ÷ sales); return on

equity ratio (net profit ÷ total equity) – gross profit ratio is 0.198, net profit ratio is 0.061, return on equity 0.20

– efficiency – expense ratio (total expenses ÷ sales), accounts receivable turnover ratio (sales ÷ accounts receivable) – expense ratio 0.137,

– comparative ratio analysis – over different time periods, against standards, with similar businesses limitations of financial reports – normalised earnings, capitalising expenses, valuing assets, timing issues,

debt repayments, notes to the financial statements ethical issues related to financial reports

PwC previously contracted now uses KPMG. 2015 financial statements audited by unqualified auditor Release of financial info not mandatory but done for transparency

financial management strategies cash flow management

– cash flow statements– distribution of payments, discounts for early payment, factoring

working capital management – control of current assets – cash, receivables, inventories – control of current liabilities – payables, loans, overdrafts– strategies – leasing, sale and lease back

profitability management– cost controls – fixed and variable, cost centres, expense minimisation– revenue controls – marketing objectives

global financial management– exchange rates

decentralisation – subsidiaries in different economic zones prevent risky foreign currency swaps with untrusted enterprises – can all be done within the brand

– interest rates unstable interest rates – Germany negative – 2002-2013 inter company loan - $114 million paid

in interest– methods of international payment – payment in advance, letter of credit, clean payment, bill of

exchange– hedging

vulnerable in foreign exchange fluctuations – 33% of sales external to Europe – non-euro investments can be hedged backed to back the Euro using foreign exchange swaps – reduces foreign exchange risk

– derivatives

HUMAN RESOURCES

role of human resource management strategic role of human resources

Qantas is one of Australia’s largest employers, employing over 28000 people (92% based in Australia) across 200 separate job categories - $980m full year profit – one flight taking off every 34 seconds – 14.9% of all passengers travelling in/out aus – 65% domestic share – 3rd oldest airline in the world – QANTAS AIRLINES LIMITED – Jetstar (subsidiary)

interdependence with other key business functions Operations – Staff need to be trained when new operations technology is adopted (e.g. new aircraft

and security systems). Operational changes such as cutting flights during the GFC changes size and type of workforce. This could include redundancies across staff as customers fly less or moving staff to the budget carrier Jetstar as customers change their preference for air travel due to less disposable income.

Marketing – The right staff must be employed and trained to create the service that satisfies Qantas’ consumers. People are an important part of marketing at Qantas.

Finance – Recent financial decisions at Qantas like outsourcing, cutting flights to some destinations, launching new airlines in Asia have affected staff levels and the levels of industrial disputes (e.g. industrial shut down in 2011). Staffing is Qantas’ biggest expense.

outsourcing– human resource functions– using contractors – domestic, global Human resource functions

o Qantas has increased looked to outsourcing to become more cost effective and to simplify its business.

Using contractors -domestic, globalQantas uses subcontractors to create cost savings, access greater expertise and improve its competitiveness. Domestic

o Jetstar has outsourced its entire call centre operations to Melbourne Operator Sales Force – projected $400m saving due to cost cutting in relation to outsourcing, technology, and innovation – initially work undermined dropped 9th to 11th best airline in the world – now increased to 8th best (Skytrax world airline awards)

o Outsources domestic voice, data and domestic services to Telstrao Outsources data centres, its mainframe and mid-range computing operations and project

management to IBMo Onshore outsourcing larger planes from Alliance Airlines – due to frequent cancellations and

delays on domestic routes and issues with aircraft and crew availability – QantasLink Chief Operating Officer Jenny Chamberlain admitted service is ‘disappointing’ – successful and resulted in Qantas buying 19.9%of alliance avation services – ultimately seeking

Globalo Contracts some maintenance jobs overseas to Singapore and New Zealando Established a base in London for about 400 of its international flight attendants saving them

about $18 million through rostering efficiencies and reduced accommodation and allowance costs

o Outsources its IT applications support and maintenance to 2 companies in Indiao Outsources entire reservation system to a Munich based company called Amadeus, includes

the moving of its inventory of fares, seats, departure control and boarding passes.o Offshore Boeing 717s for heavy maintenance checks after Canberra unsustainable – current

workers are domestic contractors – no redundancy no consultation – culture is problematic - Singapore

key influences stakeholders – employers, employees, employer associations, unions, government organisations, society

Employers Qantas has restructured its organisation, outsourced more functions, relocated staff overseas, launched discount airlines and hired more casual staff to cut costs and increase flexibility. They have taken a confrontational stance with unions

Employees Qantas employs over 28000 full time employees. They are concerned with existing levels of pay, working conditions and job security. They have been angered by Qantas’s cost saving tactics

Trade unions Qantas has a highly unionised workforce. They are represented by 18 different unions. They have reacted angrily to Qantas’ drive to cut labour costs and have wages a political, community and industrial campaign against Qantas

Employer Associations Qantas is a member of the Australian International

Airlines Operation Group. They make sure Qantas’ concerns are represented to the government at the federal level and to the community

Government organisations The government enacts employment relations legislation such as Fair work Act, Corporations Law, Work Health and Safety Act and Workers Compensation.

Society Society want as few disputes as possible as they rely on the dependability of Qantas when travelling either domestically or internationally.

legal – the current legal framework– the employment contract – common law (rights and obligations of employers and employees),

minimum employment standards, minimum wage rates, awards, enterprise agreements, other employment contracts

– work health and safety and workers compensation – antidiscrimination and equal employment opportunity

Qantas must follow the rules and regulation set out under the Fair Work Act, and other relevant HR legislation

The employment contract – common law (rights and obligations of employers and employees) minimum employment standards, minimum wage rates, awards, enterprise agreements, other employment contracts

o Qantas have had to implement the 10 National Employment Standards into their practises.

o Qantas will face big penalties if it is proved they do not bargain in good faith when negotiating new enterprise agreements.

Work health and safety and worker’s compensation o Qantas WH&S program has increased safety awareness and led ti an 80% reduction

in employee injuries since 2001o They must take out worker’s compensation insurance

Antidiscrimination and equal employment opportunityo Qantas investigates and takes seriously all claims of discriminationo Qantas ensures female employees are treated with fairness and equity. They have

taken measures to increase the number of women in management (up by 11% since 2007) and on the Qantas Board (up by 15% since 2007) and support those in executive roles.

2011 industrial dispute – enterprise bargaining dispute between pilot, engineers, transport union, and Qantas – precarious international market – 31 October Qantas intended to lock involved employees out (3000ppl) potentially effecting 70 000 international and domestic customers at the time – workplace relations minister terminated industrial action with Fair Work Australia to get planes up again – impacted public perception – further decrease in share price $3 mid 2011 $1.80 Nov 2011

Economic Due to the GFC in 2009, there was a fall in demand for Qantas’ services as well as an increase in

competition as part of the new global economy (globalisation). Qantas therefore reduced staff and froze executive pay in order to cut costs. – annual profit dropped from $1b to $100m – cut 1750 jobs due to GFC

A pick up in the economy in recent years has seen staff numbers increase. However, they announced in 2014 they would axe 5000 jobs as part of a cost reduction program to improve profitability.

Contributes to 0.7% of Aus GDP

TechnologicalTechnological change in Qantas includes:

New security systems in response to terrorism threats New planes (Dreamliner and A380) New inflight entertainment systems New online check-in, self-service kiosks, etc.

As a result, Qantas’ staff have had to learn new skills, or their jobs may have become redundant2018 $3.2b fuel bill – Sydney University partnered with Qantas – QuadraX flight planning algorithm – mass data (weather, flight paths, aircraft configurations – optimal efficiency) – help airline tailor its routes and the aircraft chosen to service those routes to achieve max return on investment

social – changing work patterns, living standards About 24% if staff at Qantas are now part-time or casual Female employees now comprise 41% of Qantas’ total workforce following an increase in the

participation rate of women o 3% pilots female (overall)o Nancy Bird Walton initiative 2017 – committing to 20% intake of qualified women or 2018

Future Pilot’s Program – 2017-18 Qanatas almost doubled the number of female pilots in the pipeline. Across all of Qantas airlines 5% female pilots

o Qantas partnered with The Australian Financial Review to create the 100 Women of Influence awards (2018+) – recognise and highlight important contributions of Australia in creating a bold and diverse Australia

Qantas have adopted more family friendly practises such as building new child care facilities and a keep in touch program for staff on maternity leave

The number of women accepted into its graduate intake and leadership program has increased Population shifts have created a more ethnically and culturally diverse workforce at Qantas requiring

more cultural awareness

ethics and corporate social responsibilityModern society expects more form Qantas than just making profits. Example of HR programs implemented by Qantas are:

Working life – a health surveillance program, including flexible work practises Cultural diversity – Reconciliation Action Plan focusing on employing Indigenous Australians

Environment – targets:

o 1.5% average fuel efficiency improvement 2009-2020 – 2018 had 7.5% improvement compared to 2009

o Stabilise net international aviation emissions through carbon neutral industry growth from 2020

o 50% reduction in net emissions by 2050o 35% electricity consumption reduction from 2009-2020 – 2018 had 25.1%o 20% reduction in water consumption 2009-2020 – 2018 11.6%o 30% reduction in waste to Landfill by 2020 - 2018 25.7%

processes of human resource management Acquisition

Acquisition Identifying staffing needs – Qantas will conduct a job analysis to produce a job description

which defines the scope of job activities, major responsibilities and positioning of the job at Qantas

Recruitment – Sources or recruitment for Qantas are internal and external. Due to high recruitment costs (advertising), these methods are constantly evaluated

Employee selection – Qantas conducts interviews, personality tests, background checks, selection decisions, physical examinations which ends in a job offer and contract of employment. The wrong choice can be costly for Qantas

Development Development

Training and development at Qantas is about a $275 million a year investment. Its objectives include: Increased efficiency Improved quality of service Fewer accidents and damage to equipment Personal growth of employees Make employees more flexible and adaptable to change Reduce absenteeism and staff turnover

Training includes: On the job (apprenticeships, coaching, job rotation, mentoring, etc.) Off the job (simulation, Qantas College Online, day and block release at Qantas’ Centre of

Service Excellence)

Maintenance Maintenance

Remuneration – used to increase job satisfaction, reward peak performance and reduce staff turnover, Qantas has aimed to keep increasing pay by about 3% per year.

Work environment – excellent staff facilities help motivate and retain staff Flexible working conditions – Increasing maternity leave from 10 to 12 weeks, up to 10 days’

carers leave, a keep in touch program for staff on maternity leave, new child care facilities in Sydney, Melbourne and Brisbane

Increasing parental leave for primary care givers from 52 to 104 weeks Complying with existing legislation regarding human resource

Separation Separation

Qantas has had to downsize their staff over recent years due to the GFC, international competition, changes in technology and falls in profits

They have just downsized by 5000 staff over the last 3 years – involuntary separation

strategies in human resource management leadership style

Leadership style Qantas has adopted a democratic leadership style since privatisation occurred in 1995 Qantas employees now have much more input into decision making Use both centralized and decentralized organisational structure – differs based on domestic

or international; – top management authoritative due to culture clash of shareholders vs employees – visionary

o Alan Joyce (CEO) Vision – management understand for optimal effectiveness need vision Encourages questions Strong leaders – collaborative, honest, open

job design – general or specific tasks There is a wide variety of tasks required in Qantas from baggage handling to flying the A380 Qantas uses strategies such as job rotation, job enlargement and job sharing

Job design is an ongoing process at Qantas aimed at allowing employee input, giving employees a sense of accomplishment, balances static and dynamic work and provides feedback about their performance

recruitment – internal or external, general or specific skillsQantas uses a mix of internal and external recruitment

Alan Joyce (CEO) was an internal appointment, formally in charge of Jetstar Types of external recruitment include advertisements (online), contractors, head hunters, competitors

training and development – current or future skills Qantas has invested more than $275 million over the last 5 years Training is crucial due to rapid technological change and global competition Recent training has included new security procedures, international business class,

engineering and maintenance, leadership and culture, customer service, people and safety and informational technology procedures

Qantas uses online learning (Qantas College Online) Qantas’ 2000 pilots do vast amounts if training yearly in aircraft simulators, benefits of these

activities to Qantas include:o Enhanced organisational productivity because employees can do their jobs more

effectively o Improved quality for outputs. A highly trained employee is aware of the significance

of their actionso Enhanced ability to cope with change because employees have a variety of skillso A more committed workforce

performance management – developmental or administrative Qantas uses performance management as a tool to encourage string performers to maintain

their high level of performance and to motivate poor performers to do better. The objectives of performance management at Qantas include:

o To provide a rational basis for pay and promotion decisionso To assess the training and development needs of employeeso To help clarify strategic goals and performance expectationso To provide individual feedback to aid performance improvement

rewards – monetary and non-monetary, individual or group, performance pay- Monetary – Qantas offer competitive wages and salaries, uses performance based pay for some

employees – this means that direct remuneration is tied to individual, team and company performance. Cash bonuses based on profit

o Indirect monetary – staff travel program- siblings, step-parents, parents, partners, children – after leave after 5yrs (duration there)

- Non-monetary – Qantas offers interesting and challenging work, job recognition, job performance feedback, promotion, autonomy in the job, good relationships with co-workers and a safe and healthy environment

global – costs, skills, supply The Qantas workforce is made up of 99 nationalities, speaking 51 different languages Employing a global workforce is challenging because of differences in culture, levels of economic

development and legal systems Global costs – Qantas has outsourced some functions such as IT, maintenance and call centre operations

to reduce labour costs. This can however lead to a reduction in standard of work and result in negative publicity (e.g. stapled wiring discovered on a plane serviced in Singapore

Global skills – Overseas workers may need to be trained to become familiar with the Qantas business culture and practises. Qantas will use global staff for maintenance, IT and reservations due to their great expertise

Global supply – Asia’s share of the global labour market will reach 65% by 2025. Qantas can take advantage of this through outsourcing. Qantas provides good working conditions which helps prevent a shortage of skilled labour.

Global staffing approach – Qantas uses a polycentric and ethnocentric approach to staffing. Generally, tries to hire host country nationals instead of transferring its domestic staff to work in senior management positions in their foreign operations

workplace disputes – resolution – negotiation, mediation, grievance procedures, involvement of courts and tribunals

Resolution – negotiation, mediation, grievance procedures, involvement of courts and tribunals

Qantas has workplace dispute strategies in place to overcome disputes with minimal disruption. This hasn’t always worked to plan particularly in 2011-2913, however over the last 2 years workplace disputes have been dealt with much more amicably and successfully for Qantas

effectiveness of human resource management

Effectiveness of human resource managementIndicators

Corporate culture More emphasis on stronger Communication systems due to GFC. Some included flatter

management structures- meaning there is fewer layers of middle management and widening span of control allowing flexibility and adaptability for its employees. Also more emphasis on the process to resolve work conflicts in employment contracts and etc.

More emphasis on Training and Development used to improve productivity, quality of outputs and Qantas specifically uses online or electronic learning to train staff offering a database, email system, discussion system and much more.

Emphasis on much more flexible working conditions, increased paid maternity leave from 6-10 weeks, up to 10 days career's leave per year and building of Family-Friendly services such as child care facilities in large Australian hubs such as Sydney, Melbourne and Brisbane.

Benchmarking key variables Qantas benchmarks the following indicators internally (previous year) or externally

(different organisations typically in their industry) Changes in staff turnover

Staff turnover as increased from 4.6% in 2014 to 4.7% in 2015, however these are both quite an improvement on the 2013 figure of 5.5% and the 2009 figure of 8.7%.

Absenteeism Qantas absenteeism rates decreased in 2013 and 2014 – 9.1 and 9 days respectively

(from 9.6 days in 2012). This shows HRM is effective and reflects employee health and wellbeing, the level of staff engagement and productivity.

Accidents Qantas uses 2 indicators – TRIFR (total recordable injury frequency rate) and LWCFR (lost

work case frequency rate). These have both increased in 2015, indicating a deterioration in Qantas’ injury prevention performance.

Levels of disputation

Qantas has been plagued by recent industrial issues (2011 – 2013) with engineers, baggage handlers, flight attendants and even pilots. This historical high number of disputes has affected the reliability of the network and harmed Qantas’ brand. However, 2013 – 2015 has seen negotiations between Qantas and unions become more amicable, with 18 EBAs (Enterprise Bargaining Agreements) being agreed upon with little or no disputation.

Worker satisfaction Qantas sees worker satisfaction as being important as it directly effects motivation and

productivity. It is difficult to measure. Qantas uses measures such as surveys, invitation for employee feedback and external consultants