Formulation of Strategic Options to Address Future Scenarios (Two Alternate Scenarios)
Introduction
The first scenario: Planning for a return to normalcy in approximately 3-6 months.
Second scenario: Where Australia enters a recession in the next 12 months.
The Black Swan theory describes events or incidents that are highly improbable but have significant impacts when they occur. One of the recent examples is Covid-19 pandemic, which has affected the global economy. The pandemic has adversely crippled the global airline industry by an overall reduction of air passengers, loss of vast amounts of airport revenues, loss of millions of job opportunities within airports, and a reduction of international merchandise trade volumes. In Australia, Qantas, just like any other airline organization around the world, has been negatively affected by the Covid-19 outbreak.
Formulation of Strategic Options to Address the Future Scenario
A good strategic plan will give the Qantas Board of management an appropriate roadmap that will put in line the functional activities to accomplish projected objectives. In both future scenarios, the laid strategic options will provide the administration with guidelines to discuss and make an appropriate decision in line with operations and budgeting needed to achieve set goals for increased efficiency.
There are some resources as well as capabilities that need to compete successfully in each future scenario. In the first scenario where there is a need to make a quick return to normalcy by Qantas airline, the management team should take advantage of Cargo transportation as soon as production returns to normal and make use of airfreight. There is reduced health scare of the Covid-19 pandemic concerning cargo transportation hence the need to maximize on airfreight. Also, Qantas should consider returning its packed aircraft to operations as soon as other nations open up international travels. The airline by March 2020 had a project which they called ”Project Sunrise Initiative”, which was an order for the purchase of up to 12 Airbus A350 – 1000 (CAPA, 2020, 1). They also had planned to replace its narrow-body and regional jet-fleets within the year.
If Australia enters recession in 12 months, the Australian government, through the federal reserve, must ensure the continuity of the Job-Keeper and the mortgage repayment holiday schemes so that businesses do not experience a bankruptcy and people don’t embark to selling their homes. The global Covid-19 pandemic has sparked debates in different countries on the mechanisms required to respond to the pandemic as well as whether nations should have foreseen the coming of this pandemic in the first place.
– What strategic initiatives should we put in place to respond to each respective scenario?
In the plan for a quick return to normalcy, the Qantas management team must adopt better management oversight to help to sustain airlines such as Qantas survive Covid-19 pandemic by considering government bailouts programs. The board must, therefore, skill up on viable risk identification and acquire the significant technical knowledge on identifying and giving reports on risks and strategies that are fit for improvement amid the Covid-19 pandemic.
In the second scenario, the government ought to enable the reserve bank to offer support to the essential sectors of the economy by providing quantitative easing. AMP Capital economist confirms that the government has a supplementary $60 from Job-Keeper savings ready for usage. Such government support can be directed to support local industries such as airlines like Qantas and Virgin Australia as long as other countries still close their borders.
– How can we shape our expected future environment (concerning each respective scenario)?
Based on future scenarios, there are ways in which the Australian government can adopt to ensure they shape the expected future environment. First, on the assumption that should Australia face a recession in the next 12 months, Australian Economic expert Ben Udy has projected that the country’s GDP is likely to drop by 9% in the second quarter (BBC News, 2020). There is a need to implement a strategic plan that will see the country’s GDP revive.
The Qantas board of management should have a more profound understanding of the airline values and make a strategic plan for its future in line with the Covid-19 pandemic. Our team resolved the management team should develop new health strategies such as social distancing within the airplanes, mandatory use of facemasks, proper fumigation of the airports and the planes before and after flights are made.
Conclusion
Regardless of the adverse economic impacts of the Covid-19 pandemic not only in Australia but also in other nations around the globe, the infection rates in Australia are declining; hence the country is easing some of the restrictions it put in place. The government has also pledged billions of dollars to help businesses get back to their feet. Airlines such as Qantas and Virgin Australia are significant sources of government revenues and are likely to benefit from the scheme. Having fallen into recession and economy shrinking, Australia must make use of the above strategic plan to return to normalcy.
References
CAPA Center for Aviation. (2020, March 21). Qantas cuts deep, but well placed to weather COVID- Retrieved from https://centreforaviation.com/analysis/reports/qantas-cuts-deep-but-well-placed-to-weather-covid-19-518552
“Coronavirus: Australia set for the first recession in three decades.” (2020, June 7). BBC News. Retrieved from https://www.bbc.com/news/business-52901560