The Qantas Airline of Australia is the most prominent airline in the country as far as fleet size, international flights, and worldwide destinations are concerned. It is also the 3rd oldest airline company in the industry after Avianca and the KLM. It was established in 1920, and its headquarters are based in the Sydney suburb of Mascot (Buhler, 2001). Its center of operation is at the Sydney airport. As far as the market share is concerned, Qantas airline holds a majority of the Australian domestic markets and carries a substantial percentage of all the passengers traveling in and out of Australia (Gilder, 2014). Even though it has a substantially higher market share, it experiences challenges. As a result, increasing fuel prices and slow world economy have both compelled the airline company to lose money.
The CEO Alan Joyce is faced with callous decisions to make. He is contemplating whether or not to sell Qantas’s frequent flyer program. He regrets that it would be an awkward move for the airline to sell its frequent airline flyer, yet it is the Airline’s reward program. The flyers’ sale will ensure that the company avoids these financial uncertainties (Australia, 2014). On the other hand, the frequent flyer program’s deal would permit other firms to access the companies’ most loyal customers that comprise both business and first-class customers. Therefore, the management will need to conduct extensive brainstorming sessions in order to get an appropriate solution.
Decision-Making Process
Decision-making requires a structured cognitive method of developing a strategic plan from a collection of alternatives that yield outcomes which are commendable. Kourdi (2011) claims that management is bound to make several decisions, which might comprise programmed and non-programmed decisions, routine and strategic decisions, and tactical or operational decisions (Buhler, 2001). The decision to sell Qantas Frequent Flyers to solve its financial problems is a strategic decision. These decisions are essential and necessary for any organization because they affect the company’s objectives and goals and all significant policy matters, and involve excellent investments.
Kourdi (2011) notes that critical choices are non-repetitive, dynamic, and multifaceted in nature, and thus appear to influence the long-term activity of an organization. Nonetheless, Kourdi (2011) argues that strategic choices are taken following careful analysis and evaluation of several alternatives, and they are applied by the higher-level management. When Alan Joyce backs the decision to sell the frequent flyer program, it will affect Qantas airline goals, objectives, and the policies that govern the operation of the corporation in the airline industry.
Therefore, after deliberations, the resolution arrived at is non-programmed because it came after the airline company had faced some financial challenges that made the CEO think of selling its frequent flyer program. These are choices which are unexpected and lack explicit steps for a solution to be found. Ultimately, the multi-dimensional nature of the decision will also affect the airline’s capital abilities, customers, competitors, and workers together with both the income and the economies of scale received from the operations (Ross, 2014). Notably, the decision to sell a frequent flyer program comes from the upper-level management and would have a long-term effect which is non-repetitive.
Recommendation on the Approach Which Should Be Considered
A rational approach to decision-making involves the usage of data analysis and facts together with an effective process of reaching a resolution. The functional decision-making method assumes that the one making the choice possesses comprehensive information about options and has the cognitive ability and resource to evaluate every choice against others (Kourdi, 2011). The steps that Alan Joyce will follow in his search for a solution include identifying and defining the Qantas airline problems, gathering information, analyzing situations, developing options, and alternatives. He will also have to contact an evaluation of any other issues within the company, choose the preferred possibilities, and finally act on the resolution.
It is significant for Alan Joyce, the CEO of Qantas airline company, to begin his rational approach to the process of finding a solution by identifying and defining the issue that the company is experiencing. The Australian Carrier is being faced with financial problems in its operations and activities which have emerged due to the increasing cost of fuel and slow growth of the world economy. This has made the Qantas commercial airline to lose money in the recent past.
The next step to be followed by the CEO, is gathering information and identifying the decision-making criteria. A collection of data comprises the procedures and activities taken into consideration to amass information which Qantas Chief Executive Officer needs to be aware of during the whole process. For instance, the benefits that Australian airline will get by managing their frequent flyer program and the impacts that the corporation will face when it decides to sell the program (Ironside, 2014).
For example, focusing on the customers, the competitors and the workers. Additionally, analyzing the situation involves evaluating the course of actions which are available and the types of data interpretation present. The CEO could use problem-solving activity that uses structured questions to encourage broad and in-depth analysis of the airline situation, while at the same time putting more emphasis criteria to be used (Buhler, 2001). For instance, find out what the company’s effect would be, and which corporation dimensions will be affected by the decision. It is an exercise that will need time, patience and a deeper understanding of company operations.
The next step is developing options together with alternatives to solve the problem., which could be conducted through brainstorming activities. This stage will involve the generation of solutions to be taken into consideration to mitigate Qantas airline’s financial crisis.
Evaluation of alternatives involves activities to determine the feasibility of options in the airline’s situation (Buhler, 2001). Apart from the assessment deciding the acceptability and desirability of the choice, it will also do the crosschecking, which will realize the objective of solving the Airline’s financial problem (Kourdi, 2011). Selection of the preferred option comprises the exploration of the provisional options for the potential outcomes. This step will explore the issues which are likely to emerge and affect the ongoing decision-making process. The last step of implementing the decision would involve the resources being allocated and the airline workers being guided in the direction of the accepted decision.
A Recommendation as to whether Joyce Should Use a Rational or Intuitive Approach
Due to the fact that the CEO has been working with the company for six years, I would recommend him to utilize the rational decision-making approach. Kourdi (2011) argues that sound decisions are reached at by following facts and reasoning founded on the thorough analysis of the facts. Therefore, the boss ought to adopt the usage of rational decision-making, which will involve systematically selecting the choice based on the Qantas airline executive’s experience to develop the solution to the financial challenges (Kourdi, 2011). The boss will implement and review several logical steps or actions. He will evaluate the reliable facts together with observations of the trends and developing potential results which can be grounded on the long-term services as the Chief executive officer.
Hence, if a new CEO comes from a different industry and does not have airline experience, I would recommend to him to use an intuitive decision-making approach. This is due to the fact that he may be lacking the capability that the current boss has. The conditions for intuitive decision-making are highlighted by Buhler (2001), which include the circumstance where the experience in solution-searching process and rapid response are called for.
The rational decision-making process relies on logic and quantitative analysis of data collection to decide whether to or not sell Qantas frequent flyer programs, and consciously embrace the assessing of the alternatives. Alan Joyce will also have the opportunity to formulate the main criteria for judging the projected results and weights of reflecting their relative significance. In contrast, the new CEO will be required to use an intuitive decision-making approach to solve the financial challenges that Qantas is facing.
Conclusion
The above case scenario has demonstrated the importance of decision-making process in business. Alan Joyce, the CEO of the Australian Largest Airliner was faced by a huge and complex issue of deciding whether to sell one of the carrier’s frequent and successful flyer program. The issue was resolved through conducting compressive brainstorming sessions, where the management had to assess and evaluate all the available options. In the end, it will be a relief for the outgoing CEO, because he will now retire knowing that he left the company in a good shape.
References
Australia: Qantas frequent flyer hits 10-million-member mark. (2014). MENA Report.
Buhler, P. M. (2001). Decision-making: A key to successful management. SuperVision, 62(2), 13-15.
Gilder, P. (2014). Loyalty future cloudy. The Gold Coast Bulletin.
Ironside, R. (2014). Qantas warned to ground plans to sell frequent flyer program. The Gold Coast Bulletin.
Kourdi, J. (2011). Assessing your decision-making style. In J. Kourdi, Effective Decision Making: 10 Steps to Better Decision Making and Problem Solving. Marshall Cavendish International [Asia] Pte Ltd.
Ross, K. (2014). Qantas CEO faces tough choices. Wall Street Journal.