Business Studies Finance- Qantas

Topics: Debt, Airline, Ethics Pages: 5 (1886 words) Published: July 28, 2013
1. Explain the strategies that Qantas and other businesses can use to control cash flow Cash flow is the measure of money flowing in and out of your business at any given time. In an ideal business cycle, you will always have more cash flowing in than flowing out. The reality is however, that most businesses have to produce or deliver goods/services to their customers while also paying their staff and suppliers before they get paid themselves. The task of managing cash flow is increased in complexity as the number of transactions and amounts of money involved grows, also resulting in greater impacts for the business if it is not managed well. To effectively manage the businesses cash flow the business owner may introduce a cash flow management plan which is a strategic strategy that could keep the business running. This plan could list a series of steps in order to prevent the business reaching a cash crisis – meaning that they may not have the funds to pay all of their expenses such as wages. These steps could include; staying on top of the businesses bills and paying them immediately, asking for extended credit terms with suppliers, order less stock but more often to avoid stock wastage, chase debts promptly and firmly and finally review the profitability of the businesses selling prices. These small steps could be what prevents hardships for the business and keeps it successful. Qantas and every other business could also develop a strategic cash flow management plan to avoid cash crisis. Qantas could also introduce discounted tickets frequently to attract more customers more often and to compete with other airlines. If Qantas lowers the cost of their tickets, it would force the other airlines into lowering their prices or coming up with a better deal to stop Qantas from having the upper hand of the market place. Although lowering ticket prices means that Qantas won’t make as much profit on that ticket as they usually would, it is likely that they will gain more customers with their low prices which would, in turn, make up for the cheaper flights. Another financial strategy Qantas has used is introducing ‘Jet star’, their subsidiary airline. Qantas has gained a large profit from this airline domestically has it appeals to those who cannot necessarily afford to fly with the more expensive airlines. It has also gained Qantas a competitive advantage over the other airlines as they have to lower their prices to compete with Jet star’s incredibly low prices. 2. Discuss the reasons why a business may act unethically and protect the financial interests of internal stakeholders. All businesses should act ethically for the wellbeing of people in either the internal (staff, stakeholders) or external (customers) business environment. Ethics is defined as an individual’s personal beliefs about what constitutes right and wrong behavior. Although there is certain laws put in place to stop businesses from doing the wrong thing, acting unethically may be things that are seen as morally wrong that the law doesn’t cover. The way a business acts, whether it is ethical or unethical will influence employees, customers, suppliers and stakeholders. However, it is common for a business to act unethically in order to compete with other businesses in the market place and to appeal to customers so they gain more sales. An example of this is a company creating a similar accreditation logo (such as the heart foundation tick) to state that the product is healthy and trustworthy to gain customers, however this is misleading advertising and is in fact illegal. Deceptive and misleading marketing practices are considered morally wrong and therefore unethical, but the Australian Consumer Law is in place to protect consumers from deceptive practices. An example of this is seen in the following case; ‘The Federal Court has fined TPG $2 million for using fine print to mislead customers about the minimum cost of its broadband service. The court declared...
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