Name: Michael BeiserStudent-ID: w13034743 Degree: International Business Management (Hons) Doing Business Globally and Internationally SM0380 Module Tutor: Dr. Alison Pearce Word Count: 3300 1 W13034743 T ABLE OF CONTENTS GLOSSARY .......................................................................................................................... 3 List of Figures ....................................................................................................................... 4 List of Tables ........................................................................................................................ 4 1. Partner Selection .............................................................................................................. 5 1.1 PESTEL- Analysis ....................................................................................................... 5 1.2 Porter- Analysis ........................................................................................................... 5 1.3 Synergies .................................................................................................................... 6 1.4 Benefits ....................................................................................................................... 7 2. Risks ................................................................................................................................. 7 2.1 Choice of Strategy ....................................................................................................... 7 2.2 Why is it not a merger? ................................................................................................ 8 2.3 Relational Risk............................................................................................................. 8 2.4 Performance Risk ........................................................................................................ 9 3. Culture ............................................................................................................................ 10 3.1 National Culture ......................................................................................................... 10 3.1.1 Potential impact .................................................................................................. 10 3.2 Corporate Culture ...................................................................................................... 10 3.2.1 Emirates Airline ................................................................................................... 10 3.2.2 Qantas Airways ................................................................................................... 11 3.2.3 Potential Impact .................................................................................................. 11 3.3 Extent of impacts ....................................................................................................... 12 4. Exchange Rate Movements ............................................................................................ 12 4.1 Operational Exposure ................................................................................................ 13 4.2 Transaction Exposure ................................................................................................ 13 4.3 Translation Exposure ................................................................................................. 14 4.4 Conclusion................................................................................................................. 14 5. Learning Outcome of the Module ................................................................................... 14 5.1 Knowledge about global business ............................................................................. 14 5.2 Expert Lectures ......................................................................................................... 15 5.3 International collaboration .......................................................................................... 15 6. Reference List ................................................................................................................. 16 7. Appendices ..................................................................................................................... 20 Appendix A ...................................................................................................................... 20 Appendix B ...................................................................................................................... 21 2 W13034743 GLOSSARY UAE United Arabian Emirates NC National Culture CC Corporate Culture IDV Individualism UAI Uncertainty Avoidance PDI Power Distance XR Exchange Rate SA Strategic Alliance 3 W13034743 . 2: Trompenaars model of corporate culture Figure 4.1: Ansoff’s Model of Product Diversification Figure 2.2: Currency Chart of USD – AUD exchange rate movements LIST OF TABLES Table 1: PESTEL-analysis of Australia and the UAE Table 2: Porter-analysis of the high-cost airlines Industry 4 W13034743 .LIST OF FIGURES Figure 1.1: National Culture of Australia compared with UAE Figure 3.2: Classification of foreign market entries Figure 3. 2012). but especially governmental regulations of international air transportation in Australia complicate an independent market entry and effective operations (Duval. In order to advance the strategy. taxes (Sundaram & Al-Ali.ANALYSIS With the usage of Porter’s five forces (Appendix B) the competitive environment (Lynch. PARTNER SELECTION 1. 2007). 2013). 2008). Nowadays. Furthermore. Particularly. 2004). Qantas has lost market shares in its unprofitable international business (Qantas. 5 W13034743 . 2011).2 PORTER. Nataranja & Al-Ali. Thus. Modern and fuel-efficient aircraft technologies mostly provided by Airbus and Boeing are important assets of premium airlines (Lufthansa. Emirates receives high price deduction as priority client (O’Connell. In contrast. most countries have mutual agreements and open sky policies. In addition. Emirates is supported by the government and throughout its strong hub dominance.1. 2010). the Australian domestic market is predominated by Qantas. 2011). Otherwise. 2008). 2013). which makes an SA feasible (Sarina & Lansbury. 2007). the UAE’s geographic location enables fast connections to six continents (Sundaram & Al-Ali. Australia and New Zealand have an isolated geopolitical position and the government supports opportunities to ameliorate connections to key markets as Europe (Kleymann & Seristoe. expenses for fuel supply are rising (Doganis. because of the high demand for oil at booming emerging countries and political unrest in oil producing countries (Tagesschau. the airline seeks to expand its network in order to enforce their role as a global connector (Kleymann & Seristoe. 2004. 2006) or competitors with similar standards and due to easier internet research.1 PESTEL.340) and possesses one of the youngest and most modern fleets in the market (Nataranja & Al-Ali. 1. the government aspires to provide a worldwide reachability (O’Connel. premium airlines are threatened of losing customers to low-cost carriers (Hunter. Dubai’s low labour costs.ANALYSIS With use of the PESTEL-framework (Appendix A) the reasons for Emirates are that the government of the UAE prepares the Gulf region for an elementary economic change towards an economic centre and a tourist region (Elbanna. Currently. 2011). This cost intensive industry can be ranged in a level of stagnating demand with a defined number of premium airlines (Kleymann & Seristoe. 2007). 2011) and the proximity to oil production can lower operational costs (O’Connel. both air carriers can provide a developed infrastructure. the buyers developed higher price sensitivity (Fleisher & Bensoussan. Otherwise. In this competitive market. p. 2011). Besides. 2011). 2004). 2012) of premium and high-cost airlines will be analysed. Reasons for the stagnation are the impact of technological developments like video communication and financial crises (Fleisher & Bensoussan. 2005). Cost of labour force can be a relevant disadvantage depending on the main operating location (Hanlon. 1987) the potential effects of these strategic decisions are a higher penetration in the current markets and the intention to develop new markets in order to achieve economic growth. 2004). Figure 1. Park & Zhang. which can be summarized in economies of density (Kleymann & Seristoe. they can market these features in joint promotion activities (Kleymann & Seristoe.1: Ansoffs modell of diversification (Ansoff et al. As a result. Park & Zhang. Moliner. According to Ansoff framework (Figure 1.1. This performance aims to enforce the loyalty of customers (Forgas. 2004). This is demonstrated by a higher amount of destinations and flights in a certain interval without an input of additional labor force and fuel. Kang & Sakai. 6 W13034743 . 2000). the companies agreed to mutual crediting of frequent flyer points (Qantas. 2012. Sánchez & Palau. 2010) and to attract new passengers in order to increase the worldwide market share and to gain competitive advantage (Oum. 2012). In addition. 1987) Though. 2000).3 SYNERGIES Both companies agreed to adapt each other’s schedules and combine prices by sharing their flight codes to consolidate the complementary networks to achieve economies of scope in order to raise the companies’ value and to operate worldwide (Qantas. the companies agreed to combine facilities and harmonize processes within their networks (Qantas.. 2000). 2012) as well as they might conduct common procurement of basic material as fuel and catering to attain economies of scale by reducing labor force and increasing cost efficiency (Oum. 2004). Kang and Sakai (2000) state that the collaboration can be seen as flexible. 2013). Qantas cancels it loss making routes in Europe. which is reflected in considerable time savings (Qantas. 2. RISKS 2.4 BENEFITS For Qantas. McDonnell. Qantas can reduce capacity in Europe without losing market presence (Kleymann & Seristoe. In this context. Emirates gains new costumers for the European destinations and expects a touristic upswing (Qantas. these airlines seem to be feasible partners. 2012). Moreover. Northern Africa or the Middle East (Qantas.1 CHOICE OF STRATEGY Figure 2. because of the expectation of increasing sales revenue. Emirates can expand their network with more connections and direct flights to Australia and New Zealand (Emirates. 2013). but eases the possibility to dissolve the partnership (Kang & Sakai.1. Altogether. which are now served by Emirates and profits by its restructured Asian network (Qantas. 2013). they seek to enforce the home market dominance with more inbound travel (Kleymann & Seristoe. At the same time. 2012). 7 W13034743 .1 shows 3 different kinds of market entry strategies. 2000). collaboration without an equity involvement includes a moderate risk. In this particular case Emirates and Qantas signed a long-term cooperative agreement without equity contribution (Qantas. but especially Qantas is in a position to benefits of the high standards and reputation of Emirates airlines. Moreover. 2013). this cross-border SA enlarges the operating distance in Europe. However. Qantas raises their offer of one-stop flights. 1987). & HarveyJones. 2004). the decreasing costs and risk for their operations and the savings of investments by common performance (Ansoff. Otherwise. According to Preece’s (1995) framework a motivation for the companies is to achieve economics of learning. In summary. because the companies are able to react fast to changing external factors. Another point can be the awareness of different cultures (Thomas.2 WHY IS IT NOT A MERGER? There is a development towards an oligopolistic market with a high concentration of premium airlines (Hanlon. but both companies stayed independent. Especially in a SA with competitors involves the risk of losing unique resources like knowledge. Furthermore. because each independent company unavoidably has their private goals. but with the intention of retaining flexible. 2000.d. 2001). the new entity could lose certain traffic rights and international aviation agreements could expire. for this SA without a mutual equity involvement. 2008). that manager in a strategic cooperation need to be aware of the special relational risk. because these agreements were concluded between states (Kleymann & Seristoe. Furthermore. 2. In this case. In this case. a lack of focus in the commitment can accrue and increase the possibility of opportunistic behaviour (Das & Teng. 2001). because of the beforehand mentioned national strategy and the Qantas Sales act forbids a majoritarian foreign ownership (Qantas. 2007) and an equity investment could increase the potential synergies with a higher level of integration. both airlines can be seen as “national flag carriers” with national interests (Kang & Sakai. Emirates might stay a governmental owned company.).29). conflicts can arise and the SA is threatened to lose its effectiveness (Das & Teng. n. because Emirates has cost intense aircraft orders and Qantas needs to restructure the unprofitable international business. which makes it difficult for managers to balance the degree of cooperation (Das & Teng. 2001). 2011) faces the challenge of 8 W13034743 .Figure 2.3 RELATIONAL RISK Das and Teng (2001) state. 2004). p. Emirates as one of the leading airlines in service and technology (O’Connel. Besides. the high costs of a merger could be a barrier for both parties. If the companies act opportunistic or exploit the partnership with a hidden agenda.1: Classification of foreign market entries 2. 2001). who want to utilize an Emirates flight. 2013). 1987).4 PERFORMANCE RISK Even if the partners manifest high commitment in the SA. if one party benefits more than the other (Das & Teng. In this case. but Qantas pursues the aim to reconstruct their international business and to achieve savings (Qantas. there is the risk of choosing the wrong partner. there are general external environmental risks of performance. parts of the Qantas staff could resist the collaboration. which might cannot offer an accordingly high standards. if the Emirates airline forces many changes (Ansoff et al.protecting the own know-how and simultaneously contributing it to create synergies (Das & Teng. recession and internal frictions between the companies (Das & Teng. but the combined market and product knowledge reduces the risk of failure. 2001). In summary. but will be referred to a code-shared Qantas flight. (1987) the airlines follow a market development strategy. Thus. which disables the creation of value (Das & Teng. That can arise because of a missing fit of strategy as Emirates might expect to keep the standards high or even ameliorate them.. 2001). Emirates risks of displeasing costumers. the choice of a SA is combined with heightened risk because of the restricted ability of implementation control and increased coordination for joint decisions (Das & Teng. 2001). A conflict between the two partners can arise. One reason can be a missing fit of resources. According to Ansoff et al. According to Das and Teng (2001) a SA between a strong with a weaker company tends more to fail as with an equal partner. 2. which can affect its success like new governmental policies. 2001). 9 W13034743 . because of the unequal power structure between the companies. Regarding the antidromic financial situations in 2012. 1998).) might reinforce Qantas concentration to achieve more individual objectives. CULTURE 3. the validity of the national analysis and affects the CC (Federal Foreign Office. Therefore. 2005). which might influences. As an example Emirates takes more risks with its innovative and offensive strategy than other competitors (O’Connel. Australian managers are more direct and dominant. which contradicts the high UAI ranking. According to Trompenaars (1997) framework.2.) Both countries have different approaches of solving problems and finding decisions (Buda & Elsayed-Elkhouly. Tim Clark states in an interview with Bloomberg (2012) that the UAE executed a one-time payment with the premise to establish an innovative world class airline without state intervention.1: National Culture Australia in comparison with the UAE (Hofstede.3.d.2 CORPORATE CULTURE 3. which might lead to tensions and communication problems. 2002). n.) framework to analyze NC.1 POTENTIAL IMPACT Figure 3. The strong national IDV and high short-term orientation of Australia (Hofstede. 1998). n. 3. 3. whereas Arabian executives tend to avoid direct interpersonal conflicts (Buda & Elsayed-Elkhouly. 2013). Emirates seems to be based on a family culture with a strong hierarchical thinking. 2011). but the company is finally controlled by Sheikh al Maktoum (Emirates. it is necessary to highlight the UAE’s share of 85 percent of foreign residents.d. Raynaud & Rodgers. the board of Emirates takes decision rather in a more personal and fluid 10 W13034743 . According to Hofstede’s (n. Nowadays. the main differences of the UAE and Australia are reflected in their attitude towards PDI. The NC of an individual is deep-rooted and influences the values and basic assumptions of each CC (Gancel.1. IDV and UAI.1 EMIRATES AIRLINE First of all.d. 2013). it is crucial to be aware of the particular culture (Hofstede and Hofstede. The differences in PDI can be reflected in different conflict producing leadership styles. Thus.1 NATIONAL CULTURE Before partners commit to a SA. the IDV differences can have high impact on the SA. the company pursues the goal to be a global connector with staff out of more than ninety countries and an international management board. cultural diversity can also ameliorate the skills of both companies in order to learn about the preferences 11 W13034743 . 1997). 3. than in a bureaucratic process. This cultural approach can reduce the ability to react for environmental changes. which increases the flexibility (Sull.3 POTENTIAL IMPACT According to Trompenaars and Hampden-Turners (1997) model both companies seem to have a strong CC wherefore conflicts can arise. Qantas could be associated with the Eiffel-Tower culture. the UAE seems to follow a long-term strategy towards an economic center as well as Emirates with high investments for future growth (O’Connel. The Arabian airline highlighted in an article its former independence (Ulijn. However. which nowadays could result in a dominant behaviour or missing ability to accept different approaches.2 QANTAS AIRWAYS In contrast. which features a bureaucratic and job-orientated structure with defined processes (Trompenaars & Hampden-Turner. Duysters and Fevre.2. One impact of the CC could be the fact that it is Emirates first SA. 2013). et al. 2010). A deep assumption according to Schein (2004) is Qantas’ presentation as a national airline with a main part of Australian employees (Qantas.2: Trompenaars Model of Corporate Culture (Trompenaars & Hampden-Turner. 2012). Goshal and Monteiro. Figure 3. confirms Emirates culture of a high context communication with high amount of personal relationship and face-to-face business (Sull. 2011). because of time-intense modification procedures (Trompenaars & Hampden-Turner. which might focuses on safety. risk management and international alliances and the vision to prepare the company for a profitable future (Qantas. The statement of Abdulaziz Al Ali.2. According to official reports Qantas espoused values seem to represent a more defensive strategy. 1997). 2005).strategy approach. 2005).. In contrast to Australia’s short-term orientation. 1997) 3. . However.of each other’s developed markets. In this context the Graph shows a relevant depreciation of the USD in comparison to the AUD. 4. 1987) a supporting argument. 1999). An analysis and comparison of the Qantas and Emirates home currencies is important to measure potential benefits and disadvantages. Figure 4. which are the relevant currencies in this SA as the Dirham is linked to the $-rate (Forsyth & Dwyer. to increase the creativity and problem solving process because of new perspectives and to enhance the ability to react on changing needs and environmental factors (Schneider & Barsoux. 2013) 12 W13034743 . 2010). because a large part of the financial transactions were realized with the home currency (Forsyth & Dwyer. 2003). that differences can be accepted as long as the companies are capable to imply the common and different cultural positions (Ulijn. because airlines deal with competitors worldwide and earn revenues in foreign currencies (Forsyth & Dwyer.3 EXTENT OF IMPACTS Both the national and CC differ in certain categories and conflicts can arise. et al. 2010). 2010). 3. the moderate intensity of this specific SA in comparison to Joint-Venture and mergers is (Ansoff.1: Currency Chart of USD – AUD exchange rate movements (XE. Duysters and Fevre. 2010). EXCHANGE R ATE MOVEMENTS The airline industry is highly affected by international trade. An important base is the mutual awareness of cultural differences in order to manage these features successful (Schein. 2003). Stonehill and Eiteman (2012) distinguish between transaction. 2003. 2010). 2010). infrastructure usage fees and code-sharing flights to avoid transaction exposure caused losses (Dhanani. This affects the portion of profit participation of the other partner due to the code-share agreement between Emirates and Qantas. as well as it can reduce the attractiveness to book the combined product. Qantas can purchase fuel relatively cheaper. depreciation might ameliorate the cost competitiveness and enables the companies to attract customers with cheaper prices. 2003).1 OPERATIONAL EXPOSURE In an international view. With this in mind.42). Since the price of fuel is connected with the USD (Kaiser. 4. In this context. A strategic tool can be hedged XR agreements to reduce the influence of such movements (Forsyth & Dwyer. translation and operating exposure of international currency fluctuations. but can weaken efficiency in the long-run (Oum & Yu. 2010). because of Dubai’s role as a hub. the airline overall costs will rise and the international competitiveness decreases (Forsyth & Dwyer. operating exposure has the highest significance in relation to long-term effects of XR movements (Dhanani. Especially.2 TRANSACTION EXPOSURE A currency appreciation in the home market of an airline has the effect that national input supply prices increase relatively in comparison to competitors with another currency (Forsyth & Dwyer. 4. 13 W13034743 . fuel supply became one of the main portions of costs for airlines. 1998). 2010) for Emirates and the need to recalculate the offsetting of long-term contract as fuel supply. p. Otherwise. 2010). Furthermore. A potential decline of sales figures. whereas Qantas domestic outgoing flights are expected to increase (Forsyth & Dwyer. because of XR caused price adaptions of one partner would lead to relative higher prices. 2010). a strong appreciation of the USD connected with a lower demand (Forsyth & Dwyer. Even if in this term international transactions become relatively cheaper. Though.Moffett. 2010) could result in relevant disadvantage for the SA. the effects of XR fluctuations alter depending if the home currency enhances or depreciates (Madura & Fox. a strong Australian dollar can reduce the share of European costumers travelling to Australia. A permanently strong AUD might make Qantas a better strategic partner for Emirates in a long-term view. the appreciation of a currency can be accompanied with less inbound costumers and the negative effect of losing market share to foreign competitors in the long-term (Dhanani. 2007) and the AUD gained value towards the American currency. An appreciation of the Dirham would generate relative higher national input costs (Forsyth & Dwyer. because of potential cost reductions by joint fuel procurement. 2011) and if the focus lies on the home or international market (Forsyth & Dwyer. Qantas and Emirates recognized the need to enhance efficiency (Oum & Yu. less importance can be assigned to translational exposure. During this time. 5. Because of the missing equity involvement. 2009). 4. Through the examples how countries can affect the economic activities of companies. Another lecture I found highly useful was based on internationalisation strategies and the importance of selecting an appropriate partner to be successful.1 KNOWLEDGE ABOUT GLOBAL BUSINESS I especially remember the lecture about governmental intervention.4 CONCLUSION These fluctuations can have positive effects (Forsyth & Dwyer. While my internship at the logistics division for Audi. I was already studying Business Administration and Leadership. 2010). but unexpected occurrences as financial crises can have extensive impact in relation to XR movements (Fratzscher. 1998) by developing potential benefits and synergies in a cross-border SA. I am certain that this knowledge helped me to develop myself further on a professional level in order to transfer it into my future job.3 TRANSLATION EXPOSURE XR movements affect the value of assets bought or credits received in a different currency as soon as they are settled in the financial report in the own currency. LEARNING OUTCOME OF THE MODULE Prior to my time at Northumbria University. which imparted a deeper understanding of the different reasons and forms of intervention in international trade. which can work against negative effects of XR movements in order to strengthen their international competitiveness. 14 W13034743 . it became clear that large firms cooperate with international suppliers and serve the needs of customers worldwide as well as these companies have subsidiaries themselves in many countries. 5. I could get a first insight of the various kinds companies operate international. I was sure that studying International Business Management at Northumbria Business School would prepare me with the knowledge to be successful in a globalized world.4. The lecture transmitted important knowledge in order to cope with governmental intervention and even to benefit of favourable policies by developing the right strategy. Having these impressions in mind. I realized the need of being aware in which extent governments can influence business decisions. In this context. As a result. I was especially impressed by Dr.5. 5. I am sure that applying this new knowledge will be a significant benefit for my future career. The country’s young population with a high affinity for technology could arouse the interest of companies for more investments in this viable market. which was a good a simulation of international business meetings in order to find a joint solution. Emerging markets are less saturated and offer various potential opportunities and ways for economic growth. during the seminars I appreciated the possibility to work in small. It gave me the chance to cooperate with people from all over the world and to learn about different approaches of finding solutions in business issues. Within these groups. my professional future will be in self-employment and with this in mind these lectures equipped me with the relevant business conditions of many countries as well as the knowledge about key capabilities of a successful company in order to be provided for future elementary decisions. The seminars improved my capability to cooperate respectful with other cultures as a consolidation of theoretical and practical experiences. international groups. Especially.3 INTERNATIONAL COLLABORATION After my first lectures I was overwhelmed of the international diversity in this course.2 EXPERT LECTURES These lectures gave me a valuable insight into the opportunities and challenges of emerging markets. we could collaborate and discuss challenging exercises. Shokri’s lecture about Iran. 15 W13034743 . Maybe. (2002). doi: http://dx. E. & Dwyer.. 12-17. R. C. 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Riding the waves of culture: understanding cultural diversity in business (2nd ed. long-distance journeys just flying effective way • Online era: chat. 2013. 2013. video instead of travelling • Fast technical developement. 2000. 2004. Kleymann & Seristoe.d.d. 2011. Qantas 2012.7. Hanlon. Sarina & Lansbury. Sundaram & Al-Ali. Park & Zhang. Duval. labour law forbid's strikes and trade unions •UAE: generous immigration law • Australia •high percentage of Australian staff. 2008. Australian politics. Oum. Emirates. 2005. high wage level. APPENDICES APPENDIX A Political Economic Social Technological Environmental • UAE •Emirates governmental owned + supported (Int. O’Connel.) 20 W13034743 . criticism) •UAE change to economic + touristic centre (low fees. 2010.. aim to develop network •UAE close to oil production •Political crises in Arabian countries • Australia •Australian government prohibits foreign majority ownership + regulates international traffic •British Westminster system of government •Strong democracy • Deregulated aviation market. open sky agreements • Role of national carriers very political • High security policies since 9/11 • UAE •Dubai high economic growth + capita per person •government seeks to generate new business connections •Good reachability of 6 continents. Qantas. important for MNE •Emirates Airline as a symbol of UAE's growth •UAE: current wealth from oil • Australia •remote geopolitical location as a national disadvantage • UAE •high percentage of foreign inhabitants + Emirates very international staff + cheap workers for work intense job's. Qantas. 2007. n. 2007.1: PESTEL – analysis of Australia and the UAE (Elbanna. n. 2011. Qantas. Doganis. Fleisher & Bensoussan. 2000. n. 2012. strike's nearly leaded to bankruptcy •Australia very popular for travellers • Both airlines national flag carrier • many ways to travel for short journeys. but any real alternative to oil • Increasing oil price • Companies need for environmental engagement • Airbus + Boeing new and more fuel-efficient planes • UAE •Desert state Table 1. phone. 2013. Australian Government. Kang & Sakai. labour costs).d. quality and reputation Table 1.2: Porter. 2008. more A380 orders than whole industry. Air France. Hunter. Turkish Airlines • Differentiation by service. Qantas. Qatar) • International competitors: Lufthansa.analysis of the high-cost airline industry (Lufthansa. 2006.APPENDIX B Threat of new high-cost entrants: low • very cost intensive (infrastructure. 2004. 2007. 2005. Doganis. 2012. oil consumption emerging countries • Labor cost: high country differences. Park & Zhang. UAE: low/ employer friendly labour law. Sarina & Lansbury. Qantas. open sky. aircrafts etc. many Alliances • Pricing competition with low cost carriers • Industry stagnation --> less travellig on premium fares • In own industry many carriers with similar standards • Qantas dominates domestic market • Regional competitors for Emirates with similar standards (Etihad. Qantas. 2013. 2011. one world agreement. high discounts for bulk orders • Gasoline supply: Fuel price increases (war. need for sales figuers. Tagesschau. n. 2008. Fleisher & Bensoussan. 2013. 2011.) • Existing airlines very experienced • Brand awareness of costumers Bargain power of suplliers: high • Aircraft: Boeing + Airbus quasi duopoly. Kang & Sakai. 2013. Hanlon. technical differences not very big. 2000. 2013. 21 W13034743 . Qantas 2012. British Airways. 2000. Sundaram & Al-Ali. Duval. Kleymann & Seristoe. Oum. 2007. lot of cancellations . Australia: expensive/ unions Bargain power of buyers: high • Undifferentiated product: need to specialize in premium industry • private buyers + travel agencies most important buyers • Costumer with high price sensitivity because of high availability of online information Threat of substitutes in other industry: moderate Extent of competitive rivalary: very high • Flying only efficient way of traveling • Video conferencing + online communication • Very competitive market --> deregulation.). O’Connel. Singapore Airlines. political unrest. Emirates.d. high competitions between both manufacturers • Emirates priority costumer.