HSC topic: Operations - aceh.b-cdn.net



Business Case study Dot Points – IKEA/QANTAS/TAMBURLAINEOPERATIONSRole of operations management: Cost leadership – price competitive – reduce floor staff, honeycomb cardboard reducing material costs and transportation costs – aim to price minimum 20% cheaper than competitors at all time, 50% goal – due to vertically integrated supply chain (IKEA controls everything)G/S differentiation – mostly through price, some variation – more accessible and easier to assemble/transport – 9500 in product rangeG/S in different industries – customisable options but mostly mass-produced uniform quality, assembly line styleInterdependence with key business functions:Human resources – technology reduced staff assistance needed in store, change in skill marketFinance – cost of production minimised may impact quality – honeycomb wood tables for $10Marketing – marketed as the markets cheapest designed products for wide marketInfluences:Globalisation – major international competitor through global supply chain, made in multiple countries, stores located in multiple countriesTechnology – utilised through customisable iPad trials, store feedback electronic, VR in store, leading edge development of Aledia – LED’s that are 25% cheaper than existing LED chipsQuality expectations – fit for purpose with well thought out design, is not durable ie. $19 Bekvam step adderCost-based competition – economies of scale used throughout, standardised flatpack system, minimum 20% cheaper than competitorsGovernment policies – taxation – transnational corporation subject to always changing policy – decentralised structure where governments are split into many subsidiaries all over the world – e.g. Indian governments Foreign-Direct-Investment rules (2011) enabled IKEA to access 1 billion potential customers whilst retaining 100% ownership of operations (previous to this they could only have 51% ownershipLegal regulation – fair work, anti-discrimination, health and safety measures in placeEnvironmental sustainability – recycling system being introduced, recyclable materials, economies of scale decreases environmental impact of transportation, use 1% of the worlds commercially harvested word and 0.7% of cotton (100% organic achieved 2015) – 2015 IKEA ranked equal third in taking the lead in addressing climate change as a business – goal to be completely energy independent by 2020CSRLegal compliance vs ethical responsibility – labour law & tax’s vs environmentEnvironmental sustainability – IKEA foundation committed to 300 million pounds towards climate actionSocial responsibility – smalland, IKEA Foundation – raised 30.8 million pounds towards United Nations Refugee agencyOperations Processes:Inputs – Transformed resources:Materials – international supply chain, 100% organic cotton sourcing – IKEA food turnover was 1.6 billion euros in 2015Information – supplier portal – web tool to communicate with suppliers regarding ideas, quality, and availabilityCustomers – 2018 - 957 million IKEA store visits, 38.8 billion euros of IKEA retail salesTransforming resources:Human resources – high reliance on computer aided engineering, manufacture, numerical control, and store retrieval – 208 000 IKEA workers, Facilities - 422 IKEA stores, Transformation process4 V’s – Volume and variety – economies of scale, 9500 different products but 50 000 as certain products come in different colours and patternsVariation in demand – seasonal fluctuations – Christmas trees are dropped to 1 euro 8 days before Christmas as 1200 units required selling in 2010 Visibility (customer contact) – customers shop with minimal worker assistanceSequencing and scheduling – Kronos computer program to schedule staffing – takes employee preferences and availability, trade hours, and predicted sales into accountTechnology - utilised through customisable iPad trials, store feedback electronic, VR – process layout for max visibility Task design – do it yourself – minimal worker assistance – self serve warehouse, flat pack ready to assemble furnitureProcess layout – standardised – improves efficiencyOffices – minimal walls – openness and transparency – hot deskingFactories – assembly layoutStores – entrance – smaland – showroom – restaurant – markethall – self serve warehouse – registers – Swedish food market – bistro - exitMonitoring, control and improvement – Key performance indicators – target, establish strategy, revise and improve – achieve resultsOutputsCustomer service – introduction into new global markets require increased customer service, minimal Warranty – 5, 10, 15, and 25 year guaranteesOperations strategies:Performance objectives:Speed – efficiency, store layout, automated technology, efficient transportationQuality – Total Quality management KPI’s determine customer satisfaction – although low price tag the lenient warranty Cost – minimised through efficiency – chemical leasing (pay for amount of output not input minimises costs and assists environment) – flat packs enable reduced transport costsCustomisation – 9500 products – customisation increases range to 50 000 – mix and match furnitureFlexibility – decentralised logistics and factories from the IKEA Group – sold to Inter IKEA Systems – allow focus on retail Dependability – functional purchases, fulfil large orders rapidly – improved for suppliers due to vertically integrated supply chain New product development – product development takes 3 years on average – sold in least expensive colour pigments of white and blue – 85% of IKEAs range is common internationally – mistakes in design leads to financial losses – China Test lab tests 100 000 products a yearSupply chain management – IKEA – vertically integratedLogistics – 33 distribution centres – new stores in new markets (India) requires increased shipping – flat packing important E-commerce – slow to act – redesigning website – 3% of global salesGlobal sourcing – 89% of production come from independently owned factories and 11% IKEA factories (2015) – 25% of goods sourced from China – 67% sourced from Europe – decrease in suppliers due to vertically integrated supply chainsOutsourcing – Pros: source cheaper inputs by taking advantages of exchange rates, cost savings and better-quality outputs through specialists, greater access to technology, focus on other projects, shift responsibility through quotasCons: costly transportation, loss of control, loss of privacy, loss in quality, language barriersTechnologyLeading edge – virtual reality system – DyeCoo Textiles Systems 2013 (environmentally friendly dyeing technique which substitutes water for recycled carbon dioxideEstablished – barcoding and iPad feedback – Board-on-board or BoBoard uses honeycomb structured carboard within furniture – cost effective, lighter, recycled wood saving 15% $ and 21300 treesInventory managementJIT – products enter store just in time for sale – stock keeping units drive inventory management providing origin, composition, and date of manufacture – accounted for at 6 points prior to sale ensuring accuracyHolding stockPros – meet new customer demand, reduce lead time, improve cash flowCons – become obsolete, storage costs moneyQuality managementIKEA Supplier Quality Standards – GO/NOGO Requirements: documentation of production process through 5 steps to ensure quality, Special Processes Appendices: 7 appendices entail special processes for certain product developmentQuality control, assurance and improvementBased on quality of design, durability/functionality, customer friendliness, safe usabilityProduct development – bad quality risk reduced by risk assessments by IKEA’s ‘Material Risk Council’ – product testing: climate chamber tests, fire tests, assembly tests, strength tests, washing testsTotal Quality managementProduction/suppliers – quality centres allow remote monitoring of product quality which is highly beneficial for high output systems Post-sale/customers – items designed and displayed to mimic customer homes – 3-6 product recalls occur yearly at IKEAOvercoming resistance to changePurchasing new equipment – paper based corrugated cardboard pallets – reduce transport costs by 10% as they were 90% lighterFinancial costs and retraining – move to paper pallets meant 140 million Euro saving yearly – 90 million initial re-investment for new forklifts and 6% of workers required new retrainingRedundancy payments – offer to pay costs associated with vocational training for redundant workers + professional job seeking coaching and trainingPlant layout – 2013 IKEA lent $3 million USD to a Belgium textile factory so they could install equipment required to produce flex yarn an alternative to cotton Inertia – Better Cotton Initiative – Pakistan and India farmers were trained to reduce water, fertiliser and pesticide to use cotton crops through better management – premium prices for sustainable cotton Global FactorsGlobal sourcing – India market – lifts on FDI – goal to double sourcing from India by 2020Economies of scale – bulk buy to reduce unit costs – IKEA China has made 54% price reductions in over 100 product areas – Billy Bookcase 1985 cost $82 and 2015 cost $60Scanning and learning – Japanese market – broadened services of assembly, installation, and home delivery due to poor receival of DIY cultureUS market – lacking in customisation and kitchens didn’t fit US appliancesResearch and Development – 2010 opened first test laboratory outside Sweden, leading edge technologyHSC topic: Operations ? ? Role of operations management?strategic role of operations management – cost leadership, good/service differentiationOrganic - differentiategoods and/or services in different industriesWine Making Industry - higher SES - Tesla chargers, Estate higher classinterdependence with other key business functionsSales to China - Marketing and Op must work together with colour. wording, language,?HRM - 6 different jobs within the business - tour guide, educational programs, background in PR, works at Cellar Door, picking, warehouse, 4 yearsless than 60 total employeesInfluences??globalisationSelling overseas to China is a huge marketTaxation within export countries - New Zealandsells to many countries e.g. FinlandtechnologyWine making process involved large equipment , Integrate the WeChat to the China marketquality expectations,?cost-based competition,?High priced compared to competitorsgovernment policies,?Taxation within export countries - New Zealand? 4% below 14% alc, above 14% $50 dollars a litrelegal regulation?wearing of safety vests,?environmental sustainabilityBiodynamic growing methods, solar panels, recycling water, Tesla power stationcorporate social responsibility?organic - develops own fruits - appease health conscious wine market - using less pesticides, locals happier.wine glasses utilises 6x more carbon than boxed or tetra packsthe difference between legal compliance and ethical responsibilityOrganic certification - ACO?environmental sustainability and social responsibility -?Tesla charging stationreduced use of pesticidesEnvironment Management System – water and solid waste management – 60 solar panels on warehouse roof, grey recycle water using aerobic bacteria – re used in vineyards through drip irrigationOperations processesinputstransformed resources (materials, information, customers)Materials:?Every raw material that they use - grapes, water, air - sustainable. Bottles (Glass - high amounts of carbon utilised) and screw caps, corks for China - traditional?Information:?Since 1966, Organic since 2003?Customers:?Part of the process - purchase at Cellar Door, Tours, Membership - clear link between customers and the product. Relationship with customers provides transparency, customers more confidence in what they are doing. Chinese market wants different things, colours/numbers/tastestransforming resources (human resources, facilities)HR - 3% of grapes are hand picked - increased person hours, 97% machine picked saving money on wagesFacilities - Owned Pokolbin (14 hec) and Orange (250 hec)- outsource their bottling - to reduce costs, lease 40-50ha (cost effective), 3 warehouses?the influence of volume, variety, variation in demand and visibility (customer contact)Volumes - climate and how much is grown. Has an impact on production. - 9th largest producer of organic wine in Australia - could produce 47 tonnes a day at peak vintage - usually 1-2 tonnes a dayVariety - Type of grapes grown - affects the type of wine produced. Cab Shiraz - most pop red wine in Australia.?Variation in demand - What the market wants - trending wine.Visibility - Cust contact - website, cellar door, membership, sold at independent markets, social media (e.g. FB - vegan noticeboard), perceived quality is highersequencing and schedulingGantt chartscritical path analysistechnology, task design and process layouttechnology - Juicers, forklifts, huge vats, air compressors (increase the juice) , chilling rooms due to hot summer seasons (Pokolbin - Hungarian “From Hell” above 50C in summer)task design?Process layout- Fixed position layout - Machines are not moveable - elements cooling towers?monitoring, control and improvementoutputscustomer service - Membership programs (case of wine personalised to consumers taste delivered to the door). Cellar Door one 2 one customer service??warrantiesOperations strategiesperformance objectivesquality - Big bins of corked wines - throwing all of the corked product, Reserve Wines most expensive, Wine Lovers, mark Davidsonspeeddependability - Climate has a bearingflexibilitycustomisation - member program - customised wine delivered to your door, Export market to Finland, China. Wine typescost (directed by marketing) (taxes in individual countries)new product or service design and development? (directed by marketing)supply chain management – logistics, e-commerce, global sourcingLogistics - Distribution to New Zealand within 5 days, warehouses within China, and other primary exportersE-commerce - WeChat allows the business to reach out to retailers and individual customers to increase sales. 45% B2B, 35% B2C, 20% exported. Website link between marketing and purchasingGlobal sourcing - Corksoutsourcing – advantages and disadvantagescreation of their corks - not organic - cheaper and easiertechnologyleading edge -?established- wine making processinventory managementadvantages and disadvantages of holding stock,?VALUATION METHODSLIFO (last-in-first-out)FIFO (first-in-first-out)JIT (just-in-time)?economies of scale?quality managementcontrol - Wine bins - some process of QC before they are boxed.?assurance - ACO (Aust Cert Organic) approved - some testing of the process/product?improvement - gradual transition to organic (ha by ha, tried different things), continued environmental sustainabilityovercoming resistance to changefinancial costs, purchasing new equipment, redundancy payments, retraining, reorganising plant layout, inertiaglobal factors?global sourcing - Target market - OS -?economies of scale - Fruit making - large scale on two wineries, send box sets not individual bottles.scanning and learning - Tetra pak - juice box wine - Not going down that, looks like goon bag -> undesirable to higher SES consumers.research and development - Looking at foreign markets - attractive to other win growers, number 8 on wines (lucky in China), South American winesMARKETINGrole of marketingstrategic role of marketing goods and services0.01% of Australian wine market fulfilled – 2 million bottles per yearinterdependence with other key business functionsproduction, selling, marketing approachesMarketing approach – highly customer orientated – tours of the winery and development of relationship marketing by forming a ‘personal’ customer bond - membership programtypes of markets – resource, industrial, intermediate, consumer, mass, nicheIntermediate – sold to secondary retailersConsumer – bought at winery directly from source, markets Hunter Farmers MarketNiche – organic wine, hunter-basedResource - produce their own fruit - sell to other producers - smaller more independent companies produce organic wine - more cost-effective smaller bottlersinfluences on marketingfactors influencing customer choice – psychological, sociocultural, economic, governmentpsychological - Better product, healthier, health, less sulfur (helps some migraines)sociocultural - organic product appeals to cultured wine enthusiasts (tend to be richer people) Pricing leads to higher SES consumers. Weddings?economicgovernment - export taxation raises prices - less likely to purchaseExport to NZ unlikely due to high cost of exportingconsumer laws deceptive and misleading advertising – must be organic and comply with Australian Certified Organic auditsprice discriminationimplied conditions – organicwarrantiesethical – truth, accuracy and good taste in advertising, products that may damage health, engaging in fair competition, suggingmust be fully organic – organic fruits, no pesticides, herbicides, fungicides, or synthetic fertilisersmarketing processsituational analysis – SWOT, product life cycle strengths – organic, CSR, popular niche product, loyal customers ($288 loyalty program), vertically integrated supply chain, niche and veganOpportunities – new technology (temperature, new bottling processes), economy in decline – Marginal propensity to consume and expenditure on unnecessary organic wine limited, interest rates are low – increase spending, globalisation, organic and vegan cultural movementWeaknesses – middle of hunter, not commercially accessible, facilities may require upgrade due to acidic nature of wines produced, expensive, more environmentally sustainable options of ‘goon’ bags or tetra packThreats – global economic weakness, increasing domestic and international competitors,Product lifestyle – introduce new flavours/lines each season – introduced first to members – intro to general population – repurchase – sells – made permanent or onto next seasons flavourmarket research organic and vegan food groupsstationed close to winery’s in hunter valley areasales data reviewed – most popular recreated in different variationsestablishing market objectives – increase market share in organic vegan wines. Marketing mis for wine growthidentifying target markets – niche organic wine, overseas Chinese wine marketdeveloping marketing strategiesmarketing mix – focus on high quality product, affordabilitypromotion – lack of public advertisingdistribution – warehouses and logistic centres in Chinaimplementation, monitoring and controlling – developing a financial forecast; comparing actual and planned results, revising the marketing strategymarketing strategies market segmentation, product/service differentiation and positioning – niche, organic, vegan, low sulfur, Hunter basedproducts – goods and/or servicesbranding – black and white – knight riding horse – regal, expensive, simplistic, timelesspackaging -higher punt – thinner glass – necessary for structural integrity – increasing price of bottledifferent for different global markets – China is 20% of their export market – use red and gold, hidden number 8’s – only export 6 styles of wine bottle colour – light blue – show its not water, clear – Rose – natural wine colour, dark – oak barrel – white wine in dark glass means its been on oakprice including pricing methods – cost, market, competition-based – market influenced and cost based pricing strategies – skimming, penetration, loss leaders, price points price and quality interaction – accurate as expensive but high cost of creating all organic wine and fruitpromotionelements of the promotion mix – advertising, personal selling and relationship marketing, sales promotions, publicity and public relationsseasonal – digital portals, reatailers, business partnersadvertising: social media vegan boards, personal selling in tours, relationship marketing through ongoing membership program, publicity – weddings and school toursthe communication process – opinion leaders, word of mouthword of mouth – weddings, hunter valley visiting, wine circlesplace/distributiondistribution channels – B2B wholesale 45%, B2C online direct 35%, export 20%channel choice – intensive, selective, exclusive – internet marketing, selective distributionphysical distribution issues – transport, warehousing, inventoryleases some area – not an estate winerysolar panels on warehousespeople, processes and physical evidencewedding, tours, membership – all interaction between producer and customere-marketingvegan message boards, organic wine boards, web pageglobal marketingglobal branding – not exactly – goes under the name – Warrior Prince and The Horse Yard labels standardisationcustomisation – for export markets and each individual flavour – packaging, flavours, brandglobal pricing – customised pricing – considered a luxury in China, high wine tax in New Zealand – must reflect cost of import and inelastic pricing demand modelcompetitive positioning – organic wine and fruit, highly personal serviceFINANCErole of financial managementstrategic role of financial management – sales grew by 4.5% 2018, total retail of 38.8 billion euros, 12.4 billion euros profit,Influencesinternal sources of finance – retained profits – franchise fee of 3% net salesexternal sources of finance debt – short-term borrowing (overdraft, commercial bills, factoring), long-term borrowing (mortgage, debentures, unsecured notes, leasing) – 7068 million euros of non-current and 6538 million euros of current liabilitiesequity – ordinary shares (new issues, rights issues, placements, share purchase plans), private equity – group equity of 7298 billion eurosfinancial institutions – banks, investment banks, finance companies, superannuation funds, life insurance companies, unit trusts and the Australian Securities Exchangeinfluence of government – Australian Securities and Investments Commission, company?taxationcompany tax – IKEA Aus gained negative publicity in 2015 when accused of paying company tax rate of 3% instead of 30%overall income tax: costs 256 million euroscorporate governance – based in Luxemburg and company law is under Luxembourg Stock Exchangeglobal market influences – economic outlook, availability of funds, interest rates 2.5 billion website visits – 5% sales e commerce2768786-29400World outlook – trade war, Brexit, hong kong, Germany interest rates, hyper inflation in south America, decline in Australian economic strength – Global growth estimated at 3.7%Availability of funds – decentralised corporate structure enables inter company loan systems instead of bank loans957 million worldwide store visits – 19 stores worldwideprocesses of financial managementplanning and implementing – financial needs, budgets, record systems, financial risks, financial controls debt and equity financing – advantages and disadvantages of eachmatching the terms and source of finance to business purpose288798011303000monitoring and controlling – cash flow statement, income statement, balance sheetfinancial ratios liquidity – current ratio (current assets ÷ current liabilities) – current ratio is 1.36:1gearing – debt to equity ratio (total liabilities ÷ total equity) solvency/gearing ratio is 1.94:1profitability – gross profit ratio (gross profit ÷ sales); net profit ratio (net?profit?÷?sales); return on equity ratio (net profit ÷ total equity) – gross profit ratio is 0.198, net profit ratio is 0.061, return on equity 0.20efficiency – expense ratio (total expenses ÷ sales), accounts receivable turnover ratio (sales ÷ accounts receivable) – expense ratio 0.137, comparative ratio analysis – over different time periods, against standards, with similar businesseslimitations of financial reports – normalised earnings, capitalising expenses, valuing assets, timing issues, debt repayments, notes to the financial statementsethical issues related to financial reportsPwC previously contracted now uses KPMG. 2015 financial statements audited by unqualified auditorRelease of financial info not mandatory but done for transparencyfinancial management strategiescash flow managementcash flow statementsdistribution of payments, discounts for early payment, factoringworking capital management control of current assets – cash, receivables, inventories control of current liabilities – payables, loans, overdraftsstrategies – leasing, sale and lease backprofitability managementcost controls – fixed and variable, cost centres, expense minimisationrevenue controls – marketing objectivesglobal financial managementexchange ratesdecentralisation – subsidiaries in different economic zones prevent risky foreign currency swaps with untrusted enterprises – can all be done within the brandinterest ratesunstable interest rates – Germany negative – 2002-2013 inter company loan - $114 million paid in interestmethods of international payment – payment in advance, letter of credit, clean payment, bill of exchangehedgingvulnerable in foreign exchange fluctuations – 33% of sales external to Europe – non-euro investments can be hedged backed to back the Euro using foreign exchange swaps – reduces foreign exchange riskderivativesHUMAN RESOURCESrole of human resource managementstrategic role of human resourcesQantas is one of Australia’s largest employers, employing over 28000 people (92% based in Australia) across 200 separate job categories - $980m full year profit – one flight taking off every 34 seconds – 14.9% of all passengers travelling in/out aus – 65% domestic share – 3rd oldest airline in the world – QANTAS AIRLINES LIMITED – Jetstar (subsidiary)interdependence with other key business functionsOperations – Staff need to be trained when new operations technology is adopted (e.g. new aircraft and security systems). Operational changes such as cutting flights during the GFC changes size and type of workforce. This could include redundancies across staff as customers fly less or moving staff to the budget carrier Jetstar as customers change their preference for air travel due to less disposable income.Marketing – The right staff must be employed and trained to create the service that satisfies Qantas’ consumers. People are an important part of marketing at Qantas.Finance – Recent financial decisions at Qantas like outsourcing, cutting flights to some destinations, launching new airlines in Asia have affected staff levels and the levels of industrial disputes (e.g. industrial shut down in 2011). Staffing is Qantas’ biggest expense.outsourcinghuman resource functionsusing contractors – domestic, globalHuman resource functionsQantas has increased looked to outsourcing to become more cost effective and to simplify its business.Using contractors -domestic, globalQantas uses subcontractors to create cost savings, access greater expertise and improve its competitiveness. Domestic Jetstar has outsourced its entire call centre operations to Melbourne Operator Sales Force – projected $400m saving due to cost cutting in relation to outsourcing, technology, and innovation – initially work undermined dropped 9th to 11th best airline in the world – now increased to 8th best (Skytrax world airline awards)Outsources domestic voice, data and domestic services to TelstraOutsources data centres, its mainframe and mid-range computing operations and project management to IBMOnshore outsourcing larger planes from Alliance Airlines – due to frequent cancellations and delays on domestic routes and issues with aircraft and crew availability – QantasLink Chief Operating Officer Jenny Chamberlain admitted service is ‘disappointing’ – successful and resulted in Qantas buying 19.9%of alliance avation services – ultimately seeking GlobalContracts some maintenance jobs overseas to Singapore and New ZealandEstablished a base in London for about 400 of its international flight attendants saving them about $18 million through rostering efficiencies and reduced accommodation and allowance costsOutsources its IT applications support and maintenance to 2 companies in IndiaOutsources entire reservation system to a Munich based company called Amadeus, includes the moving of its inventory of fares, seats, departure control and boarding passes.Offshore Boeing 717s for heavy maintenance checks after Canberra unsustainable – current workers are domestic contractors – no redundancy no consultation – culture is problematic - Singaporekey influences stakeholders – employers, employees, employer associations, unions, government organisations, societyEmployersQantas has restructured its organisation, outsourced more functions, relocated staff overseas, launched discount airlines and hired more casual staff to cut costs and increase flexibility. They have taken a confrontational stance with unionsEmployeesQantas employs over 28000 full time employees. They are concerned with existing levels of pay, working conditions and job security. They have been angered by Qantas’s cost saving tacticsTrade unionsQantas has a highly unionised workforce. They are represented by 18 different unions. They have reacted angrily to Qantas’ drive to cut labour costs and have wages a political, community and industrial campaign against QantasEmployer AssociationsQantas is a member of the Australian International Airlines Operation Group. They make sure Qantas’ concerns are represented to the government at the federal level and to the communityGovernment organisationsThe government enacts employment relations legislation such as Fair work Act, Corporations Law, Work Health and Safety Act and Workers Compensation.Society Society want as few disputes as possible as they rely on the dependability of Qantas when travelling either domestically or internationally.legal – the current legal frameworkthe employment contract – common law (rights and obligations of employers and?employees), minimum employment standards, minimum wage rates, awards, enterprise agreements, other employment contractswork health and safety and workers compensation antidiscrimination and equal employment opportunity Qantas must follow the rules and regulation set out under the Fair Work Act, and other relevant HR legislationThe employment contract – common law (rights and obligations of employers and employees) minimum employment standards, minimum wage rates, awards, enterprise agreements, other employment contractsQantas have had to implement the 10 National Employment Standards into their practises.Qantas will face big penalties if it is proved they do not bargain in good faith when negotiating new enterprise agreements.Work health and safety and worker’s compensation Qantas WH&S program has increased safety awareness and led ti an 80% reduction in employee injuries since 2001They must take out worker’s compensation insurance Antidiscrimination and equal employment opportunityQantas investigates and takes seriously all claims of discriminationQantas ensures female employees are treated with fairness and equity. They have taken measures to increase the number of women in management (up by 11% since 2007) and on the Qantas Board (up by 15% since 2007) and support those in executive roles.2011 industrial dispute – enterprise bargaining dispute between pilot, engineers, transport union, and Qantas – precarious international market – 31 October Qantas intended to lock involved employees out (3000ppl) potentially effecting 70 000 international and domestic customers at the time – workplace relations minister terminated industrial action with Fair Work Australia to get planes up again – impacted public perception – further decrease in share price $3 mid 2011 $1.80 Nov 2011EconomicDue to the GFC in 2009, there was a fall in demand for Qantas’ services as well as an increase in competition as part of the new global economy (globalisation). Qantas therefore reduced staff and froze executive pay in order to cut costs. – annual profit dropped from $1b to $100m – cut 1750 jobs due to GFCA pick up in the economy in recent years has seen staff numbers increase. However, they announced in 2014 they would axe 5000 jobs as part of a cost reduction program to improve profitability.Contributes to 0.7% of Aus GDPTechnologicalTechnological change in Qantas includes:New security systems in response to terrorism threatsNew planes (Dreamliner and A380)New inflight entertainment systemsNew online check-in, self-service kiosks, etc.As a result, Qantas’ staff have had to learn new skills, or their jobs may have become redundant2018 $3.2b fuel bill – Sydney University partnered with Qantas – QuadraX flight planning algorithm – mass data (weather, flight paths, aircraft configurations – optimal efficiency) – help airline tailor its routes and the aircraft chosen to service those routes to achieve max return on investment social – changing work patterns, living standardsAbout 24% if staff at Qantas are now part-time or casual Female employees now comprise 41% of Qantas’ total workforce following an increase in the participation rate of women 3% pilots female (overall)Nancy Bird Walton initiative 2017 – committing to 20% intake of qualified women or 2018 Future Pilot’s Program – 2017-18 Qanatas almost doubled the number of female pilots in the pipeline. Across all of Qantas airlines 5% female pilotsQantas partnered with The Australian Financial Review to create the 100 Women of Influence awards (2018+) – recognise and highlight important contributions of Australia in creating a bold and diverse AustraliaQantas have adopted more family friendly practises such as building new child care facilities and a keep in touch program for staff on maternity leaveThe number of women accepted into its graduate intake and leadership program has increasedPopulation shifts have created a more ethnically and culturally diverse workforce at Qantas requiring more cultural awarenessethics and corporate social responsibilityModern society expects more form Qantas than just making profits. Example of HR programs implemented by Qantas are:Working life – a health surveillance program, including flexible work practisesCultural diversity – Reconciliation Action Plan focusing on employing Indigenous Australians Environment – targets:1.5% average fuel efficiency improvement 2009-2020 – 2018 had 7.5% improvement compared to 2009Stabilise net international aviation emissions through carbon neutral industry growth from 202050% reduction in net emissions by 205035% electricity consumption reduction from 2009-2020 – 2018 had 25.1%20% reduction in water consumption 2009-2020 – 2018 11.6%30% reduction in waste to Landfill by 2020 - 2018 25.7%processes of human resource management AcquisitionAcquisition Identifying staffing needs – Qantas will conduct a job analysis to produce a job description which defines the scope of job activities, major responsibilities and positioning of the job at QantasRecruitment – Sources or recruitment for Qantas are internal and external. Due to high recruitment costs (advertising), these methods are constantly evaluatedEmployee selection – Qantas conducts interviews, personality tests, background checks, selection decisions, physical examinations which ends in a job offer and contract of employment. The wrong choice can be costly for QantasDevelopmentDevelopmentTraining and development at Qantas is about a $275 million a year investment. Its objectives include:Increased efficiencyImproved quality of serviceFewer accidents and damage to equipmentPersonal growth of employeesMake employees more flexible and adaptable to changeReduce absenteeism and staff turnoverTraining includes:On the job (apprenticeships, coaching, job rotation, mentoring, etc.)Off the job (simulation, Qantas College Online, day and block release at Qantas’ Centre of Service Excellence)MaintenanceMaintenanceRemuneration – used to increase job satisfaction, reward peak performance and reduce staff turnover, Qantas has aimed to keep increasing pay by about 3% per year.Work environment – excellent staff facilities help motivate and retain staffFlexible working conditions – Increasing maternity leave from 10 to 12 weeks, up to 10 days’ carers leave, a keep in touch program for staff on maternity leave, new child care facilities in Sydney, Melbourne and BrisbaneIncreasing parental leave for primary care givers from 52 to 104 weeksComplying with existing legislation regarding human resourceSeparationSeparation Qantas has had to downsize their staff over recent years due to the GFC, international competition, changes in technology and falls in profitsThey have just downsized by 5000 staff over the last 3 years – involuntary separationstrategies in human resource management leadership styleLeadership styleQantas has adopted a democratic leadership style since privatisation occurred in 1995Qantas employees now have much more input into decision makingUse both centralized and decentralized organisational structure – differs based on domestic or international; – top management authoritative due to culture clash of shareholders vs employees – visionaryAlan Joyce (CEO)Vision – management understand for optimal effectiveness need vision Encourages questionsStrong leaders – collaborative, honest, openjob design – general or specific tasksThere is a wide variety of tasks required in Qantas from baggage handling to flying the A380Qantas uses strategies such as job rotation, job enlargement and job sharingJob design is an ongoing process at Qantas aimed at allowing employee input, giving employees a sense of accomplishment, balances static and dynamic work and provides feedback about their performance recruitment – internal or external, general or specific skillsQantas uses a mix of internal and external recruitmentAlan Joyce (CEO) was an internal appointment, formally in charge of JetstarTypes of external recruitment include advertisements (online), contractors, head hunters, competitorstraining and development – current or future skillsQantas has invested more than $275 million over the last 5 yearsTraining is crucial due to rapid technological change and global competition Recent training has included new security procedures, international business class, engineering and maintenance, leadership and culture, customer service, people and safety and informational technology proceduresQantas uses online learning (Qantas College Online)Qantas’ 2000 pilots do vast amounts if training yearly in aircraft simulators, benefits of these activities to Qantas include:Enhanced organisational productivity because employees can do their jobs more effectively Improved quality for outputs. A highly trained employee is aware of the significance of their actionsEnhanced ability to cope with change because employees have a variety of skillsA more committed workforceperformance management – developmental or administrativeQantas uses performance management as a tool to encourage string performers to maintain their high level of performance and to motivate poor performers to do better.The objectives of performance management at Qantas include:To provide a rational basis for pay and promotion decisionsTo assess the training and development needs of employeesTo help clarify strategic goals and performance expectationsTo provide individual feedback to aid performance improvementrewards – monetary and non-monetary, individual or group, performance payMonetary – Qantas offer competitive wages and salaries, uses performance based pay for some employees – this means that direct remuneration is tied to individual, team and company performance. Cash bonuses based on profit Indirect monetary – staff travel program- siblings, step-parents, parents, partners, children – after leave after 5yrs (duration there)Non-monetary – Qantas offers interesting and challenging work, job recognition, job performance feedback, promotion, autonomy in the job, good relationships with co-workers and a safe and healthy environmentglobal – costs, skills, supplyThe Qantas workforce is made up of 99 nationalities, speaking 51 different languagesEmploying a global workforce is challenging because of differences in culture, levels of economic development and legal systemsGlobal costs – Qantas has outsourced some functions such as IT, maintenance and call centre operations to reduce labour costs. This can however lead to a reduction in standard of work and result in negative publicity (e.g. stapled wiring discovered on a plane serviced in SingaporeGlobal skills – Overseas workers may need to be trained to become familiar with the Qantas business culture and practises. Qantas will use global staff for maintenance, IT and reservations due to their great expertise Global supply – Asia’s share of the global labour market will reach 65% by 2025. Qantas can take advantage of this through outsourcing. Qantas provides good working conditions which helps prevent a shortage of skilled labour.Global staffing approach – Qantas uses a polycentric and ethnocentric approach to staffing. Generally, tries to hire host country nationals instead of transferring its domestic staff to work in senior management positions in their foreign operationsworkplace disputes resolution – negotiation, mediation, grievance procedures, involvement of courts and?tribunalsResolution – negotiation, mediation, grievance procedures, involvement of courts and tribunalsQantas has workplace dispute strategies in place to overcome disputes with minimal disruption. This hasn’t always worked to plan particularly in 2011-2913, however over the last 2 years workplace disputes have been dealt with much more amicably and successfully for Qantaseffectiveness of human resource managementEffectiveness of human resource managementIndicatorsCorporate cultureMore emphasis on stronger Communication systems due to GFC. Some included flatter management structures- meaning there is fewer layers of middle management and widening span of control allowing flexibility and adaptability for its employees. Also more emphasis on the process to resolve work conflicts in employment contracts and etc.More emphasis on Training and Development used to improve productivity, quality of outputs and Qantas specifically uses online or electronic learning to train staff offering a database, email system, discussion system and much more.Emphasis on much more flexible working conditions, increased paid maternity leave from 6-10 weeks, up to 10 days career's leave per year and building of Family-Friendly services such as child care facilities in large Australian hubs such as Sydney, Melbourne and Brisbane.Benchmarking key variablesQantas benchmarks the following indicators internally (previous year) or externally (different organisations typically in their industry)Changes in staff turnoverStaff turnover as increased from 4.6% in 2014 to 4.7% in 2015, however these are both quite an improvement on the 2013 figure of 5.5% and the 2009 figure of 8.7%.AbsenteeismQantas absenteeism rates decreased in 2013 and 2014 – 9.1 and 9 days respectively (from 9.6 days in 2012). This shows HRM is effective and reflects employee health and wellbeing, the level of staff engagement and productivity.AccidentsQantas uses 2 indicators – TRIFR (total recordable injury frequency rate) and LWCFR (lost work case frequency rate). These have both increased in 2015, indicating a deterioration in Qantas’ injury prevention performance.Levels of disputationQantas has been plagued by recent industrial issues (2011 – 2013) with engineers, baggage handlers, flight attendants and even pilots. This historical high number of disputes has affected the reliability of the network and harmed Qantas’ brand. However, 2013 – 2015 has seen negotiations between Qantas and unions become more amicable, with 18 EBAs (Enterprise Bargaining Agreements) being agreed upon with little or no disputation.Worker satisfactionQantas sees worker satisfaction as being important as it directly effects motivation and productivity. It is difficult to measure. Qantas uses measures such as surveys, invitation for employee feedback and external consultants ................
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