Case Introduction
Tough times, always call for managers who can make tough decisions. This case analysis is dedicated to considering the same tough situations in which tough decisions are needed to be made in perspective on the case of Qantas Airline and its CEO Alan Joyce. The CEO of the airline company is facing difficult times due to the weak financial condition of the airline. The CEO is facing challenges in making tough decisions to improve the financial position of the company. The slow world economy and the increasing fuel costs have made the airline lose its profits.
The CEO is now considering selling its Frequent Flyer program which has over 10 million users (Sydney, 2014). This flyer program is one of the most valuable assets of the company. It is not just any reward program. The frequent flyer reward program has the data on the most loyal customers of the company. The data from this source can be used by any airline for its gain on the market. It can become a very serious problem for Qantas if used. More than 10 million Australian including the business and first-class passengers of the Qantas airline is part of the reward program. It is roughly half the population of Australia.
The CEO is facing this difficulty of deciding on whether to sell the frequent flyer reward program or not. The sale of the frequent flyer program can help the company to make its financial position better from the proceeds of the program (Kelly, 2014). The following case analysis gives the insight into the most beneficial decision-making process for this situation in light of the concepts of the strategic decision-making process.
1- Is the decision whether or not to sell Qantas’ frequent flyer program a strategic or operational decision? Is it a programmed or non-programmed decision? Explain your answer using references to Moshal (2009) or Kourdi (2003).
As per the author Kourdi, the decision of whether or not to go forward with the sale of frequent flyer program of Qantas is a strategic decision. Strategic decisions according to him can usually be catered by using the combination of best approaches; the best approaches devised to cater to the changing business environment (Kourdi, 2011). Strategic decisions are recognized as current activities which are conducted with the aim of achieving long-term goals set for an organization. Strategic decision making can be described as the group of ideas and concepts which aid the organizations in guiding for gaining the competitive advantage over its competitors and for achieving goals. Strategic decision making is linked with an advanced sense of the changing environments, the requirement of thinking out of the box, skipping the traps built with the perception of having all needed knowledge of the process of decision making.
The decision of selling the reward program is a non-programmed decision which came up after facing financial problems in Qantas. The CEO felt that the frequent flyer program if sold can aid in the financial problems of the airline.
2- Suppose Alan Joyce decides to take a rational approach to the decision whether or not to sell the frequent flyer program. List a step-by-step approach you would recommend, and include specifics regarding what kind of information or choices should be considered at each step. Do not just list the steps, give detail at each step and use material both from your research on Qantas and from Moshal (2009) or Kourdi (2003) to come up with these steps.
Kourdi has proposed seven steps towards making an effective decision in the decision-making process. These steps include;
Step 1
Defining the problem is considered as the first step towards understanding the problem. The problem faced by Qantas is needed to be defined. As shown, Qantas is facing challenges of varying nature (Moshal, 2009). The main problem is the increase in the fuel costs, which is challenging the profit-making ability of Qantas. Slower economic growth of the world economy is another challenge. So, on the ground, the main problem is not with the frequent flyer program but in high costs and slow growth of the economy.
Step 2
The next step as defined by Kuordi is defining goals. Step involves the defining of goals for the organization to know where Qantas intends to reach. In the situation of the Qantas airline, the main goal for the airline is to make a decision which will make the company safe from the current problems which are the slowdown in economic growth and high fuel costs impact on the company. The main aim is to prevent the company from losing its profits and make sure that the operations will remain stable in the future. Like any other decision-making process, this will guide the CEO to make decisions which are aimed at achieving the goal. The CEO has the responsibility of making well informed and correct decisions for the company. Thus, the expected aims of the decision would be listed down and realized regarding its benefits and consequences. It will provide the basis for coming up with an effective decision (Moshal, 2009).
Step 3
The next step after setting goals is to look for alternatives. It is a crucial step in which the decision maker needs to evaluate all the available alternatives regarding its pros and cons. It is crucial because decision makers spent the most time during this step only to come up with a wrong alternative. The most important thing to be considered in this step is to look for the options which provide more benefits than its costs. It is more of a cost-benefit analysis.
In light of this, Qantas has two alternatives available, first, to sell the frequent flyer program and second to keep it. Selling the frequent flyer program will solve the financial aspects of the problem. However, it can cost, long-term losses, making the sale of the program unbearable. In this scenario, Qantas might face the situation of losing its entire market share (Ironside, 2014). Thus, the cost benefit analysis related to both alternatives is impertinent to be sorted out first.
Step 4
Development of an action plan, this is the next step in which after choosing a suitable alternative, an action plan is formulated. Qantas and its CEO Alan need to devise a plan which is implementable and will result in a better future for the company by achieving the goals set in the decision-making process. Alan should choose the alternative which best serves the company in achieving the target set at the start of the decision-making process (Gilder, 2014).
Step 5
Once the action plan is formulated, the next step is to find the people who will implement the plan. Forming a team which will be given the authority and the responsibility to implement the plan and solves the problems is a crucial step. Right people with the right capabilities and intentions can do wonders for the company. Similarly, wrong fits in the team can hurt (Kourdi, 2011).
Step 6
After the selection of the most suitable team for the job, Alan needs to communicate constantly with the team, for providing them support and leadership throughout the solving process. Furthermore, after the problem is being solved, the results of the activity to all the employees of Qantas should be communicated as well to make them aware of the situation (Moshal, 2009).
Step 7
Like any other process, the decision should be revisited, monitored, and reviewed for its consequences to prevent and control any deviations from the planned decision. It provides an opportunity to control any unexpected changes in the decision and to monitor if the decision is being implemented as decided by the team.
3- Joyce has been the CEO of Qantas for six years and is an experienced airline executive. Given his experience, do you recommend Joyce use a rational or intuitive approach to this decision? If there is a new CEO who comes from another industry and does not have this airline experience, would you recommend they use a rational or intuitive approach? Explain your reasoning, and make references to Moshal (2009) or Kourdi (2003) as appropriate.
For the current CEO of the Qantas Airlines, Alan Joyce with her six years of experience baggage, my recommendation would be to use the intuitive decision. It is suggested because of the reason that while having the experience that the CEO has, Alan can make a better decision because of her understanding of the nature of the company industry and its troubles. Intuitive decision works better for people who have the adequate knowledge that is needed to make a decision. And certainly, Alan has that experience. However, for a new CEO, a more rational decision making would be better as the new CEO would lack the understanding, knowledge and adequate information which are needed to make an intuitive decision. The new CEO can make use of analytical tools, support from the subordinates, and team to evaluate all the alternatives available and make a rational decision for tackling this problem. As Kourdi has shown, step by step process of ration decision making should be followed by the newly appointed CEO rather than her or her intuition (Kourdi, 2011).
Conclusion
Summing up, the whole case study shows the problem faced by Qantas airline and the tough situation faced by the CEO Alan Joyce to make a difficult decision on selling or not selling the frequent flyer program. The analysis shows that Alan should use the experience she had as CEO for making an intuitive decision. However, if she is confused, she can take the road of ration decision making by following the steps suggested by Kourdi. In both situations, the best decision would be which aims at solving the main underlying problem of the company. Thus, all alternatives should be evaluated by Alan regarding their associated long-term and short-term costs and benefits. It also implies to consider all cost and not just the financial costs to better evaluate the alternatives. It will aid the company to make an informed decision which will benefit the company in getting rid of this problem effectively.
References
Gilder, P. (2014, March 29). Loyalty future cloudy. Retrieved from The Gold Coast Bulletin: https://www.pressreader.com/australia/weekend-gold-coast-bulletin/20140329/282394102409597
Ironside, R. (2014, August 15). Qantas warned to ground plans to sell frequent flyer program. Retrieved April 13, 2018, from The Gold Coast Bulletin: https://www.pressreader.com/australia/the-gold-coast-bulletin/20140815/282235188817339
Kelly, R. (2014, August 26). Qantas CEO Alan Joyce to Face Tough Choices. Retrieved April 12, 2018, from https://www.wsj.com/articles/ailing-qantas-confronts-tough-choices-1409043591
Kourdi, J. (2011). Chapter 2: Assessing your decision-making style. In Effective Decision Making: 10 Steps to Better Decision Making and Problem Solving. London: Marshall Cavendish International (Asia) Pte Ltd.
Moshal, B. (2009). Chapter 7: Decision making in an organization. In Principles of Management. New Delhi: Global Professional Publishing Ltd.
Sydney. (2014, June 2). Qantas Frequent Flyer hits 10 million member mark. Retrieved April 12, 2018, from https://www.qantasnewsroom.com.au/media-releases/qantas-frequent-flyer-hits-10-million-member-mark/
+447462439809