Jetstar airway is a leading low cost carrier and the third largest airline in Australia.(Jetstar 2019)It is part of the dual brand strategy of Qantas airway. Strategic management is the key factor for the success of Qantas group. Qantas is using portfolio and diversification strategy and focus on premium Business market while Jetstar is focusing on leisure market. (Qantas 2019) Jetstar is using cost leadership strategy where the business trying have the lowest cost in the industry to compete in broad market. (Coulter 2013 pp.133-134 ) The mission of Jetstar airline is to provide the low air fares to the customers which will enable them to fly more often to more destinations.(Jetstar 2019) In order to achieve the goals of organisation, Jetstar’s business strategy needs to align with other important strategic functions such as the Leadership, organisational culture, organisational structure and human resource policies.
Good leadership is one of the most important key factors to determine the success and future of the organisation. DuBrin 2001 defines leadership as the ability to inspire, influence and motivate the people to achieve the goals of the organisation. Effectiveness of leadership style depends on matching the style of leadership and the situation of the organisation. Hersey and Blanchard’s Situational Leadership theory explains there are two dimension of leadership behaviour which are relationship behaviour and task behaviour. Relationship behaviour is the extent to which the leader engages in communication with the followers by means of listening, providing personal encouragement, recognition, and coaching. Task behaviour is the extent to which the leaders provide the direction, structure, duties and responsibilities to individual or the team. (DuBrin 2001 p.159) Leadership can be Charismatic, Transformational or Transactional. Charismatic leaders have grand visions for the organisation and they have a motivating effect on people which makes them able to unify the people toward their visions, trust and follow them. Transformational leaders are the ones inspire change and innovation. They are visionary like charismatic leaders but they stay for and provide energy and support during the change process. Transactional leaders sticks with rules and regulation of the organisation and are strong on planning, budgeting and meeting targets. They do all the necessary and critical management functions such as role clarification and task requirements and they know how to allocate and provide rewards and punishment. (Clegg, Kornberger and Pitsis 2015 pp.132-134) The trait of transformational leadership behaviour can be found in Gareth Even, CEO of the Jetstar group. Even has the vision to grow and innovate the airline through four key areas: more collaboration with Qantas Airways, improving technology, customer service and expanding international routes. He works closely with his managers at his Melbourne office where he moves around his desk and sit with different teams showing his support and providing energy to motivate them at the same time which is also a high relationship task behaviour. (Whyte,J 2018) Although transactional leadership will cost less and is suitable for the cost leadership strategy, Jetstar with the support of strong financial back up from Qantas group has the strength to focus on their innovation to grow the business.
In order to implement the successful strategy, leaders need to manage the organisational culture correctly. Organisation culture is the set of key values hold by the people in the organisation on what the organisation stands for, and what is important for the organisation and how operations works. (Barney &Griffin 1992 p.366) Managers can use organisational culture as a control by influencing the kind of values and norms which specify the right behaviours for the people in organisation. (Hill & Jones 2015 p.417) To become an effective organisation, the corporate culture must be aligned with their business strategy and the requirements of their external environment. The adaptability culture is about how company can react and adapt the environment by responding in new behaviour. An achievement culture focuses on results and encourage competitiveness, individual success. Involvement culture values equity and cooperation among employees and put the priority in meeting their needs. A consistency culture is for stable environment where following the rules is valued and encourages to work in rational and systematic way. (Samson, Donnet & Daft 2017 pp.125-127) Jetstar mention their organisational culture as safe and responsible but adventurous, can-do attitude and energetically efficient, working as one team, caring and passionate about enjoyment while operating in fast-paced and ever-changing environment.
One of the apprentice engineers at Jetstar, Alice mention that there is a family-like culture where people are being accepted as who they really are. (Jetstar 2019) This type of culture fall into the category of involvement culture but at the same time, Jetstar is using adaptability culture to respond the fast-changing environment by encouraging team members to utilize their different skills and experience and be innovative and adventurous. (Jetstar 2019)
Another important factor for strategic management which has a significant effect on cultural norms and value of the organisation is the organisational structure. Pearce and Robinson (2011) define organisational structure as the official arrangement of interaction between responsibilities, people, and resources in an organisation. One of the effective organisational structures for cost cutting is Geographic structure where the employees are grouped into different geographic regions to fulfil the customers’ needs in different geographic locations. This allow the company to expend by location and be responsive to the diverse needs of the customers from different regions or countries. Geographic structure provides good coordination and control since several regional hierarchies are formed to take over the work which make the organisational structure short and flat where bureaucracy is less and productivity is more efficient. By using geographic structure, the organisation can attain economies of scale in buying, distribution and selling, while lowing the cost structure and actively responsive to customer needs at the same time. (Hill & Jones 2015 pp.445-446) Jetstar group is made up of Jetstar Airways in Australia and New Zealand which is wholly owned by the Qantas Group, Jetstar Asia Airways which is based in Singapore and run by a local company, Newstar Holdings (51% share) together with Qantas group (49% share), Jetstar Pacific Airline ,based in Vietnam which is 30% owned by Qantas and majority shareholder is Vietnam Airlines and Jetstar Japan which is run by partnership agreement between Qantas group, Tokyo Century Corporation and the Japan Airlines. These subsidiary airlines are run by their own regional CEOs and Gareth Even is the CEO of the whole Jetstar group. (Jetstar 2019) This organisational structure is made up of geographic structure which is suitable for Jetstar’s cost leadership strategy.
Clegg, Kornberger and Pitsis (2015) mentions when the organisation’s strategic goals align with human resource strategies, the overall performance of the organisation improves including increasing human productivity and higher financial results. Human resource management (HRM) is the process and practise of management where the HR managers advise and manage on the recruitment, selection, retention development of staffs by using complex laws and regulations in order to achieve the goals of the organisation. According to Harvard and Michigan models, there are two characteristics of HRM: soft model of HRM and hard model of HRM. In soft model of HRM, manager takes a humanistic approach where the work life balance is valued and made invested in people with training and developments, empowering them with positive experience and treated them as valuable assets so that people will be motivated and stay in job that invested in them for a long term. The hard model of HRM focus more on task and monitoring and control are important part of the management process. This model assume people are not intrinsically motivated and like to be told what to do. Training and development is provided and reward people who goes beyond the requirement. Company attract people by good salary, clear job objectives and duties.(Clegg, Kornberger & Pitsis 2015 p.165) According to Michael Porter, the common organisational requirements for overall cost leadership in HRM should be tight cost control, frequent and detailed control reports, structured organisation and responsibilities and incentives based on meeting strict quantitative targets. (Anthony, Perrewe & Kacmar 1999 p.664) There was a controversial issue of Jetstarusing foreign cabin crews on domestic routes and paying them with lower rate. (McGhee 2018) Bamber et al. 2006 mention “Jetstar also takes advantage of broad job classifications for its own employees and the companies to which it outsources processes. It also minimizes costs through operational efficiency by allowing freestyle seating and a thirty-minute flight “close out” to get the maximum efficiency of aircraft and labour by optimising efficiency in check-in and boarding.” These information does not align with Jetstar’s value for wellbeing of their employees as they mention on their website. Being a low-cost subsidiary, Jetstar needs to create a low-cost employment system which will be very different from that of Qantas. (Harvey & Turnbull 2010) Compare to Qantas, full service carrier, rewards would be lower in Jetstar, the low-cost carrier, such as extended working hours, less basic pay and fewer vacation and leave arrangements.(Hunter 2006) The benefit and reward system at Jetstar include access to a range of finance, health and wellbeing programs for balancing and managing stress, fatigue and finances. And discounted travel benefits for the Jetstar employee and their nominated partner which include airfares discounts, deals for accommodation and car hire and travel insurance for both domestic and international travel which can be used within the Qantas Group and other partner airlines.(Jetstar 2019) This shows Jetstar is using a mix of soft and hard model of HRM to achieve the good employee relationship and lowest cost possible for their business strategy.
According to Qantas annual report FY2018, Jetstar Group reported underlying EBIT of $461 million, a record result in an increasing fuel price environment and Jetstar Domestic delivered record earnings of $311 million which shows Jetstar is achieving its financial goals and having improvements. (Qantas 2019) By applying the management theories to test Jetstar’s strategy success, it can be concluded that the strategy implementations are aligned with their Leadership, organisational culture, organisational structure and human resource policies and it is the integral element of success in organisation.
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