Internal and External Stakeholder Analysis

INTERNAL AND EXTERNAL STAKEHOLDER ANALYSIS

Executive Summary

  • Stakeholder analysis refers to a range of tools and techniques used for identifying expectations and needs of the major interests both inside and outside of the project environment.
  • Qantas Airways is one of the leading Australian-based aviation organisations that believe in building strong relationships with stakeholders.
  • Ground operations, customer services, communication, HR, and analytics are some of the key functional areas of Qantas Airways.
  • Management, employees, Board of directors, and shareholders are the internal stakeholders of this aviation industry.
  • Customers, lenders, government, community, and suppliers are the external stakeholders.
  • Finally, a brief stakeholder’s comparison between Telstra Corporation and Qantas Airways is provided in this report. Stakeholder’s nature and their influence need validation for both the telecommunication and aviation industries for fostering continued services.

Introduction

Stakeholder analysis can be referred to as a business methodology used for promoting policy reform and institutional processes by accounting for and incorporating needs of those “members” having an interest or stake in the given reforms under consideration. Having information on stakeholders’ needs, interests, and capacity to oppose such reforms, often reform advocates on how to best accommodate or modify them, assuring that the given policies are fully adopted and are politically sustainable and realistic. This report will detail down stakeholders’ analysis of an Australian-based aviation company, Qantas Airways. Finally, the stakeholders’ influence on both Qantas Airways and Telstra Corporation will be discussed critically that might allow their management to take strategic actions both satisfying their needs and ensuring market sustainability.

Background of Qantas Airways

Qantas Airways Limited happens to be the flag Australian carrier and is considered the largest airline by fleet size, international destinations, and international flights. After Avianca and KLM, Qantas Airways is the third oldest airline fleet in Australia. The revenue and operating income of Qantas Airways were A$17.96 billion and A$1.64 billion in 2019 respectively (Qantas, 2020). The aviation company organisation employs around 30,179 employees and has total equity of A$3.43 billion as of 2019 (Qantas, 2020). Originally serving Northern Territory and Queensland, Qantas is nicknamed “The Flying Kangaroo” and is the founding member of “Oneworld” airline alliance.

Analysing functional areas

For larger aviation companies like Qantas, it is easier to identify its functional areas since they are different and varying people work in each department. Kasaev, Petrovskaya & Kasaev (2019) suggested that one of the basic reasons for separating business operations into different functional areas is to ensure that each department operates within its areas of expertise thereby building effectiveness and efficiency across the business environment. The functional areas of Qantas Airways could be classified into two main groups-

  • Operations
  • Corporate

The operational functional area of Qantas is the department that deals with its core operating functions including product or service delivery to the customer. On the other hand, the corporate functional area is the department concerned with supporting the core operational functions and thus, ensuring optimal management of firm’s resources in meeting organisational vision and mission.

Functional operational areas of Qantas are as follows-

Flight operations and Pilots- This functional department controls dispatch, flight watch, flight planning, and other operational controls like ground-to-air communication, weather data provision, and flight schedules. Slot and gate allocation along with airport management are also covered in this functional area. Zhang (2017) opined that for proper management of irregular flight operations, increased use of expert systems and simulations are used for ensuring customers’ safety.

Customer services- This functional area in Qantas Airways deals with providing customer support to customers both before and during a flight. As opined by Jiang & Zhang (2016), complexities and difficulties during air travel can create a major challenge to the customer’s safety, thus, improving such services would manifest effective services, better travel experience, and happy customers.

Ground operations- This area handles servicing of an aircraft around the aerodrome. Unloading of unused food items and drinks from the aircraft along with loading fresh drinks and foods for crew members and passengers are all catalysed by this department.

Maintenance and engineering- This specific area ensures continued airworthiness of an aircraft part or an entire aircraft including its inspection, overhaul, defect rectification along with an embodiment of modifications and repair.

The Corporate functional area of Qantas are discussed as follows-

Commercial planning- This department helps to address disruptive changes by accumulating siloed functions into a flawless practice. Zhang (2017) suggested that in the aviation industry, strategic commercial planning could help a firm in achieving a profitable business thus, creating a sustainable model that would exponentially change the ongoing business model.

Communications and Brand marketing- This department deals with marketing a specific brand as in this case, Qantas through effective use of promotion, sales, advertising, and campaigning. Through proper online sales promotion and creative ideas, brand marketing could be ensured.

HR- This area is mainly responsible for selecting candidates by checking their backgrounds and hiring airline staff members and flight crew. Further, interfacing with specific insurance companies and communicating with the union representatives are some other functions catalysed by this department.

Analytics- Data analytics ensures helping the airline industry for understanding the preferences and needs of passengers and solving maintenance issues.

These above-mentioned functional areas need to be considered by Qantas Airways for promoting their business development and maintaining high profitability within the aviation industry.

Analysing internal and external stakeholders

Mastilo, Zakić&Popović (2017) opined that a stakeholder involves a group or any individual that can influence organisational functioning or can be affected by organisational operations. Internal stakeholders are those individuals or groups directly influencing an organisation’s performance and are innately involved within its operations. On the contrary, those individuals or groups who indirectly influence the operations and functioning of an organisation without directly being a part of it are called external stakeholders.

Internal stakeholders of Qantas Airways

Stakeholders Role Expectation
Management The management committee of Qantas Airways is a board of 12 senior executives in charge of planning and executing strategies with approval of the board of directors. They bring about an extensive range of experiences spanning customer experience, loyalty, marketing, and other disciplines from different countries and try to strategically incorporate them within the airline operations. Their main role is ensuring effective operations of Qantas and enforcing their values. The team expects to meet the needs and preferences of various other stakeholders aligning their role to company goals and mission.
Employees Pilots, engineers, and hostess ensure that passenger’s needs are properly met and satisfied. While other employees like accountants, finance officers. HR and IT specialists ensure that proper recruitment, sales, and marketing as well as promotional measures are carefully carried out. They expect proper remuneration, delegation of tasks and a safe working environment.
Board of directors In Qantas, they are tasked with enhancing accountability, judgment and independence to the management as well as decision-making thus, ensuring maximum benefits to customers, shareholders, employees, and suppliers. They make organisation their philanthropic priority and expect to see their organisation soar high effectively meeting the demands of people.
Shareholders Their main role is to provide capital in the form of share capital as and when required while voting on important matters like approving mergers and electing directors They expect to maximise their shares and get optimum profit out of their investments.

Table 1: Internal Stakeholders

(Source: Qantas, 2020)

External stakeholders

Goldsby et al. (2018) opined that since external stakeholders are not linked to an organisation, their influence has a long-term impact that lingers with the organisation affecting their operations and branding. The following PESTLE analysis will provide a detailed insight into the type and extent of influence these external stakeholders have on Qantas-

Political- This factor mostly indicates the governmental influence over an organisation’s operations and functioning. In respect of Qantas, such a political analysis indicates that this fleet of Australian airlines faced governmental actions across varied regions. For instance, the high level of political instability around the Middle East region and political unrest in Bangkok has adversely impacted Qantas operations.

Economic- Australia has a relatively low inflation rate, around 1.80% in 2019 in comparison to 1.92% in the year 2018 (Trading Economics, 2020). This indirectly has a positive impact on Qantas as negative inflation indicates that the company did not require to change its pricing structure. [Refer to Appendix 1]

Social- Ongoing social trends in Australia has a direct influence on Qantas Airlines. Recently, there has been a high level of acceptance of low-cost airline services. Qantas is relatively popular for offering its customers with premium-class airline experience. Thus, a changed social preference of the customers adversely impacts airline services.

Technological- This factor also has an impact on airline servicing as the entire procedure of airline ticket booking has shifted to online reservation systems. Considering the Qantas Airline operations, this aviation organisation happens to be the first of its kind to apply satellite technology on its landing which is entirely based on advanced global landing systems.

Legal- For Qantas Airlines, the legal factors affect in terms of carbon tax which needs to be borne by the organisation from its operations. For successful continuation of airline operations, Qantas needed to abide by the legal formalities applicable for lower carbon emission and such an analysis indicates that Qantas needs to upgrade its policies and systems.

Environmental- Qantas has taken an initiative to cut down its emission rate by 50% by 2050. However, almost 95% of its emissions come from Jet Fuel (Qantas, 2020). This clearly shows that Qantas needs to immediately take action regarding its emissions rate based on the current environmental legislative structure and contributing to environmental sustainability.

Some other external stakeholders of Qantas Airlines are as follows-

Stakeholders Role Expectations
Customers They are the most important external stakeholders since the operations catalysed by Qantas Airways are designed for serving customers in return for their revenues. Their main role is paying Qantas for their services while the firm should ensure that every customers’ needs are properly fulfilled at the highest quality. Frequent rescheduling and flight delays refrain customers from availing airline services from any specific brand.
Lenders Bondholders or banks provide capital to Qantas Airways and their role is to lend funds to the organisation to cater to growth and foster continued operations. They expect to get back their capital within the stipulated time frame.
Government Their role is to provide a stable political and business environment such as infrastructure, taxation law, and employment legislation. They expect Qantas to abide by the laws and provisions such as employment, tax collection, and on-time payment.
Community Qantas does not operate in isolation rather in a community who are equally affected like other stakeholders. They enjoy benefits like employment opportunities and infrastructure They expect fewer emissions and noise pollution.
Suppliers Their role is to provide Qantas with required services and vital products so that the firm can continue its operations without grounding due to a lack of inventories They expect proper cooperation and maintaining relationships with management.

Table 2: External stakeholders

(Source: Qantas, 2020)

Stakeholders’ nature and implications of conflicting interests

Maximova (2019) opined that stakeholders’ analysis can be regarded as a tool for generating ideas about actors or individuals to analyse and understand their intentions, behaviours, interests and relations; accessing the influence they bring on decision-making and implementation processes. Given capitalism theory, a stakeholder theory stresses the interconnectedness that exists between a customer and its business. Similarly, a relationship exists between employers, investors, suppliers and government which also needs analysis as determined by stakeholder theory (Bonnafous-Boucher & Rendtorff, 2016). Given Qantas Airlines, identifying stakeholder’s conflicting interests and their nature is essential for understanding their level of influence on organisation’s performance as discussed in the following segment-

Customers- Milner & Furnham (2017) suggested that measuring customer satisfaction is not just an indicator towards identifying customer loyalty and tracking down unhappy customers and increasing revenue, it is the main point of differentiation helping management to attract new potential customers in a competitive business environment. For Qantas Airlines, its operations are solely designed to satisfy the needs of customers along with other stakeholders. However, with changing global trends, customers’ preferences are ever-changing thus, creating a conflicting interest.

Government- Qantas Airways is significantly backed by the Federal government as evident from the government spending on this Flag Australian carrier. On account of COVID-19 pandemic, the government has funded $800 million to Qantas to keep staff on book and uninterrupted domestic and international operations (Financial Review, 2020). However, changing governmental structure could subject to major conflict that might hamper their overall services.

Employees- Kurdi, Alshurideh & Alnaser (2020) opined that employee satisfaction plays a pivotal role in ensuring continued business operations as in case they are offended, the entire business function would get impacted. Airline staff members, hostesses, pilots, and other employees’ needs must be well-handled and Qantas offers several employee discounts, perks, and allowance to keep them motivated and focused.

Level of stakeholders’ influence

De Alwis (2016) suggested that every stakeholder has a specific influence on organisational performance. In this case, both internal and external stakeholders have a definite influence on Qantas Airlines as explained in the following segment-

Customers- Rahim (2016) commented that the aviation industry specifically designs its operations aligning with the needs and preferences of customers. This is the first aviation company that launches premium-class airline services to customers. However, with changing trends, customers have now high acceptance towards low-cost airline services negatively influencing Qantas Airlines services.

Government- Although the Federal government provides funding to Qantas, a changing government would have a negative impact on airline services. Additionally, 95% of Qantas emissions come from its operations which also has a negative influence on their goals.

Employees- Their expectations need to be satisfied as demotivated employees will not be able to perform optimally affecting the overall performance rate. Kuvaas, Buch & Dysvik (2018) suggested that giving additional incentives and perks would inspire them to stay focused thus, positively influencing their performances.

Stakeholder matrix

The executives working for Qantas Airlines often find that varying stakeholders have different interests and influence leading to internal conflicts. Mendelow’s matrix is used by organizations to determine stakeholder’s power which is represented as follows-

Figure 1: Stakeholder matrix

(Source: Created by the author)

Industrial comparison

Stakeholders’ dissimilarities

Stakeholders Telecommunication industry (Telstra Corporation)  Aviation industry (Qantas Airline)
Customers The company has spread its wings worldwide by engaging in partnership with CSL New World for providing lucrative products and optimum services to customers This aviation company designs its operations to satisfy the needs of customers by launching premium segment airline services.
Community Telstra says they are a part of the community and provides them with easy access to communication and help indigenous Australians through active commitment (Telstra, 2020). Communities enjoy benefits from Qantas in terms of employment opportunities, infrastructure and economic development.
Employees Telstra provides incentives to employees and encourages flexibility to keep them focused Qantas also gives incentives and additional benefits at the same time, focusing on inclusion and diversity of workers.

Table 3: Stakeholders’ dissimilarities

(Source: Telstra,2020; Qantas, 2020)

Stakeholders interests

Telecommunication industries required fulfilling the needs and interests of communities and workers. Every stakeholder has varying interests, for instance, workers want safety and proper remuneration for their jobs, investors wish to get a feeling of belongingness with the company. Customers want effective communication services. Similarly, the stakeholders of Qantas Airways also need their interests to be fulfilled but their nature is different. Flight delay, rescheduling, and steep air ticketing prices refrain customers. Thus, a balance needs to be maintained by both these industries in terms satisfying stakeholders’ interests.

Stakeholders influence

Both internal and external stakeholders of both these industries have a definite influence on organisational performance. A changing political environment has an adverse influence on both the telecommunication and aviation industry. Both these companies need to abide by taxation laws, employment legislations and environmental provisions. A change in social trends affects both the telecommunication and aviation industry. However, such an impact is more likely to affect the aviation sector in comparison to the telecommunication industry.

Conclusion

Subjected to rapid technological advancements and changing social trends, stakeholders’ interest, and nature keep altering. This implies the increased need of the aviation sector to track down their interest to lower their influence on organisational operations. Qantas Airways operates in both freight cargo segments and passengers while having several subsidiaries like Jetstar, operating passenger’s services at a much lower cost. The firm believes that building a strong business relationship with its stakeholders would help the company to reach greater heights and achieve targets of market sustainability. Thus, the firm adopts several strategies to satisfy the needs and preferences of its stakeholders. Despite implementing changes, Qantas still requires upgrading its services and techniques to better satisfy stakeholder’s interests for ensuring sustainability in its marketplace.

Share this Post