Projected Impacts of ABEF Application in Qantas Airline Company
Introduction
Businesses examine financial reports to ascertain their sustainability in the competitive business environment. In the last decade, Qantas Airline business company has experienced a significant decline in market share, profitability, turnover, size of employees, customers, and henceforth. Most of the business economic challenges facing Qantas business organization are attributed to stiff competition from its competitors, decrease in the market due to world pandemic, for instance, Covid-19, and other crippling economic issues. The world pandemic covid-19 has made the Company to suspend all domestic and international flights indefinitely until the world pandemic is controlled. The Company has deployed survival tactics to minimize fixed and variable costs (Soundaian, 2019). These have compelled the Company to retrench two-thirds of its employee to ensure the Company is able to meet its short term and long term financial obligations. In the 2011 fiscal year, Qantas made $ 209 million financial losses, in 2012 was $ 245 million, and in 2014 was $ 2.84 billion financial loses. The trend is alarming as the management teams are required to evaluate the systems and processes to curb the negative trend. There is an urgency to investigate the implemented strategies to rectify the negative deviation. The use of The Australian Business Excellence Framework (ABEF) would assist the Company in minimizing the occurrence of losses and improving profitability
Overview of The Australian Business Excellence Framework
The model was developed to assist business organizations and government institutions in integrating leadership, people, management systems and processes to work together to improve the business performance. The framework can be applied in small, large business organizations, and multinational companies to deliver improved business results (Lu et al., 2011). To begin with, the framework combines many successive models that are used in business organizations to deliver the set standards. It shows the significance of a business enterprise in society and to the investors. The shareholders in Qantas Airline company limited have also strived to understand the causes of the company losses in the last decade (Mickhail, G2012). They have always recommended their books of accounts to be audited using the private independent auditing firms to verify the true and fairness of the financial reports presented during the annual general meeting. These have led to the credibility questions of the audit committee and the independent audit function in the Company. The Australian Business Excellence Framework also provide from a roadmap formulating the successful strategies, right placement of employees, processing information, extracting short term achievable plans, and quality management of the Company (Khoo & Tan, 2002).
Australian Business Excellent Framework Structure
The Australian Business Excellent Framework incorporates other models and organization principles to create value for an enterprise. Application of the ABEF helps organization leaders to evaluate the operational systems and process, measure actual results against the set standards. Statistical measures, for instance, the central measures of tendency mean, mode, and median, are used to analyze the data (“Measures of central tendency,” 2019). Frequency distribution tables, standard deviation bar charts, range and percentiles are also used to measure the deviations of the actual results (“of central tendency,” 2019). Financial tools, for example, the substantive tests, control checks, profitability ratios, Measures liquidity ratios, and insolvent ratios are used to indicate the gaps in revenue deviation in an organization (Ittelson, 2020).
Australian Business Excellence Framework advocates the use of 9 principles that guides a company to succeed. It also uses the ABEF categories and subcategories in determining the company operation. ADRI learning cycle helps an organization audit its performance (Khoo & Tan, 2002). As the business monitors its operations, ADRI cycle provides detailed assessment information that is used to investigate systems, processes, leadership styles, product designs, quality analysis and henceforth (Khoo & Tan, 2002). The ABEF categories used in interpreting a business include assessing the quality of products and services, aligning customer specification and market segmentation, people, data reports and processing skills, planning and strategy formulation, and leadership and creativity (Khoo & Tan, 2002). Also, the assessment matrix is used in comparing the actual company principles against the nine principles of the Australian Business Excellence Framework. The deviations are descried and mitigated for a positive financial performance in the future (Khoo & Tan, 2002). Assessment matrix defines the implementation of the ABEF principles, calculates deviations of actual and set standards, and evaluates the performance appraisal of a company.
Significance of the Australian Business Excellence framework
Most companies have integrated the Australian Business Excellence frameworks to realize their vision. Implementation of ABEF in a business organization has extrapolated innovation and creativity has the most sector in the economy have adopted the principles to improve quality and service delivery. The marketing and research teams in business organizations can collect primary data which is significant for decision making (Soundaian, 2019). The fundamental aspect of the Company is to increase profitability and market share while adhering to enacted ethical values. The ABEF framework provides details on the best methodology to use to meet customer specification (Khoo & Tan, 2002). A business maintains loyal customers and persuades potential customers to purchase their products. Satisfied customers provide referrals to firms that give standard services. The impacts of ABEF principles have led to the development of improved service delivery initiatives, for example, lean Six Sigma, modification of corporate governance, business risk management, and balanced enterprise resource planning systems (Khoo & Tan, 2002).
Financial reports of top-performing companies listed in the Australia Stock Exchange market shows that enterprises that have adopted the ABEF principles in their operations are excelling in turnover, reduction of purchase expenditures, and minimization of the company overhead costs. SIRCA a top financial research firm investigated top companies that won rewards due to their exemplary performance in the stock exchange market (Badrick et al., 2019). It also examined those companies that have not adopted the ABEF principles in operation and decision making. Results of the report indicate that companies that have adopted the ABEF structure had an average of 169% return on investment compared to 113% return on investment of companies that used the general market to benchmark its activities (Badrick et al., 2019). Massey University in New Zealand conducted qualitative research on what are the impacts of adopting the ABEF structure and principles in a company. Results indicate that 62% of the respondents attributed a positive change in business operation. The business profits, sales, and market share were increasing with an increasing rate (Khoo & Tan, 2002). Companies that had adopted the ABEF structure over ten years recommended it has a vital tool in business management.
Analysis of how Qantas company can integrate ABEF structure
Qantas company has experienced financial difficulties that have made the Company to minimize part of their corporate social responsibility. The Company used to make significant profits that made it to be one of the largest airlines in the world (Lu et al., 2011). The airline has provided an accessible channel of transport to most customers worldwide. The tourism industry in Australia reports high profits as most domestic tourists prefer using air as a means of transport. The Company charges affordable prices that enabled tourists from all over the world to travel to Australia. The Company also has an enlightened society on equality and other social matters that affect the community. The current CEO, Alan Joyce, stresses that companies should not engage in employment discrimination in terms of race, colour, divorced, and other social matters that women are championing for (Mickhail, G2012). These maintain a good reputation in the society.
The Company has also participated in promotional and sponsorship of various sports activities in the country. Sporting activities that the company sponsors include the Australian National Cricket team, Australia National Football team, and the Australia National Rugby Union team (Mickhail, G2012). These depict how the Company was registering huge profits in a performing global economy. Due to stiff competition from other airlines, internal operation friction, and reduction in Sales, the Company needs to integrate the ABEF principles to increase profitability and expand the market share (Mickhail, G2012). These will result in achieving a promising financial performance, increase market penetration to different parts of the word, confirm the specification of customers, and minimize the operational costs.
Use of ABEF principles in preparing and analyzing financial statements
The comprehensive income statement, the cash flow statement, balance sheet, and financial ratio analysis are prepared to show the business performance at a given trading period. The independent audit body audits the management reports to ensure whether there is any material misstatement, fraud and error, and the credibility of the internal control system in an organization (Ittelson, 2020). The assessment matrix is used to evaluate all the business transactions to award the score in terms of performance. The Approach, deployment, results, and improvement learning cycle will help Qantas company to improve its revenue activities. The Company should educate its leaders to accept the new strategies deployed to increase the customer base (Lasrado, 2018). Some of the strategies the Company has implemented is to increase sales include, investing in innovation and product design, developing of new Flight routes, increasing the number of fleets, and determining the cost of business financing.
Qantas company has entered into business alliances and mergers to expand its shareholding and customer base. Some of the companies that have entered the joint venture with Qantas company include China Eastern Airlines, Emirates Airlines, and American Airlines (Mickhail, G2012). The mergers with these companies resulted in loss of jobs. Over 3,000 employees in Qantas company were reduced to cut the variable costs. These have led to new market development as the Qantas Flight will access market to most parts of the world (“Fysh, sir (Wilmot) Hudson, (7 January7 January 1895–6 April 1974), chairman Qantas empire airways Ltd, 1947–66 (Chairman and managing director, 1947–55; Managing director Qantas Ltd, 1922–34, and Qantas empire airways Ltd, 1934–47); Past member executive committee, IATA (President, 1961); Fellow British interplanetary society,” 2007). The ABEF components are adopted to analyze the outcomes of these consolidated businesses.
Use of ABEF categories to analyze Qantas company operation
The ABEF categories are broadly classified into drivers, enablers, and result. The drivers are the people who ensure that the Company realizes its vision. Drivers can be Qantas leadership, customers, and other relevant stakeholders who influence business operation. The Company should select leaders who are in alignment with the company vision (Lasrado, 2018). The leaders should restrain from the application of threats and coercion for employees to deliver results. Some leaders engage in unethical activities that have resulted in both financial loss and loss of life. In the United States, the gas-producing Company (Enron company) engaged in fraudulent activities resulted in financial loss and conviction of its top management leadership (V. Siskos, 2014). The owner of the Company and the management team offered poor leadership as they were selling share amongst the employees. The Company engaged in bribery as it could bribe independent audit firms to verify their fake and non-existence books of accounts (V. Siskos, 2014). The Company had not prepared any financial statement reports, but it will fake rising profits to appeal to the investors. Finally, the Company was declared bankrupt, and its assets were frozen.
The enablers are the strategies, plans, methods that Qantas company will integrate to increase its goodwill and revenues. Some of the strategies used include cooperating with their competitors, signing mergers deals with other airlines and participating in community business development programs (Lu et al., 2011). The Company has diversified its business portfolios as it also engages in domestic buses business. Qantas company should adhere to ethical issues to avoid engaging in Unethical practices, for instance, the Boeing 737 airways. Increased profitability and availability of market motivated Boeing company to produce more planes than its manufacturing capacity on a monthly basis (Chen et al.,201). These lead the Company to force workers to work more extra hours than the recommended one in the international employee act (Chen et al.,201). Unrealistic performance appraisal methods were administered to discriminate employees who worked normal hours alone. Most employees were forced to work on tasks that they were not trained to do (“Boeing 737 MAX crisis: An opinionated guide to the perplexed,” 2019). The Company retrenched the whistleblower, who recommended that the production department is not adhering to set standards. Recently, two Boeing companies got accidents, and everything on board got destroyed (“Boeing 737 MAX crisis: An opinionated guide to the perplexed,” 2019). Qantas companies should formulate achievable plans and targets that are feasible. The Company should ensure improvement in product quality.
Limitations of the Australian Business Excellence Framework
Despite many benefits accrued to the ABEF model, it has also limitations. The payback period of the model takes over five years to achieve its benefits (Grigg & Mann, 2008). Investors with high revenues generating short-term projects fail to adopt it. It also appears to be more of a theory as it does not have a structured approach on which matters are more significance compared to others (Grigg & Mann, 2008). Moreover, it is based on assumptions that are unrealistic to achieve in practical applications.
Conclusion
Australian Business Excellence Framework has helped companies to dictate their business performance. The category principles of enablers, drivers and motivators determine the internal and external business environment. It assists top managers to determine capital budgeting decisions, cost of capital, business risk and organization leadership. Australian Business Excellence Framework principles also assist in providing knowledge on how to confirm customer expectation and other relevant stakeholders. Companies that have adopted the ABEF model have experienced improved profitability and reduction in operational costs.
References
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