Case Study Description of Northwest Airlines Confronts Change
Describes the leadership role of Northwest Airlines' chairman and his key organizational development "lieutenant" during five years of major change and pressure--1985-89. During this time the airline was confronted with major customer service problems, the merger with Republic, and the crash of one of its planes. Highlights the roles, responsibilities, and tactics of Steve Rothmeier and Ken Myers during this turbulent period. Can be used to evaluate leadership in times of difficult pressures, the different styles of change that each embodies and advocates, and the results of their actions.
Swot Analysis of "Northwest Airlines Confronts Change" written by Todd D. Jick, Susan Rosegrant includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Northwest Rothmeier facing as an external strategic factors. Some of the topics covered in Northwest Airlines Confronts Change case study are - Strategic Management Strategies, Leadership and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Northwest Airlines Confronts Change casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, increasing government debt because of Covid-19 spendings, increasing commodity prices, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs,
increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Northwest Airlines Confronts Change
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Northwest Airlines Confronts Change case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Northwest Rothmeier, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Northwest Rothmeier operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Northwest Airlines Confronts Change can be done for the following purposes –
1. Strategic planning using facts provided in Northwest Airlines Confronts Change case study
2. Improving business portfolio management of Northwest Rothmeier
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Northwest Rothmeier
Strengths Northwest Airlines Confronts Change | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Northwest Rothmeier in Northwest Airlines Confronts Change Harvard Business Review case study are -
Effective Research and Development (R&D)
– Northwest Rothmeier has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Northwest Airlines Confronts Change - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Northwest Airlines Confronts Change Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Northwest Rothmeier has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Northwest Airlines Confronts Change Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Northwest Rothmeier in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Northwest Rothmeier has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Northwest Rothmeier is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Todd D. Jick, Susan Rosegrant can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Northwest Rothmeier in the sector have low bargaining power. Northwest Airlines Confronts Change has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Northwest Rothmeier to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Leadership & Managing People industry
– Northwest Airlines Confronts Change firm has clearly differentiated products in the market place. This has enabled Northwest Rothmeier to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Northwest Rothmeier to invest into research and development (R&D) and innovation.
Organizational Resilience of Northwest Rothmeier
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Northwest Rothmeier does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Northwest Rothmeier has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Northwest Rothmeier to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Leadership & Managing People field
– Northwest Rothmeier is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Northwest Rothmeier in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Northwest Rothmeier are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Northwest Airlines Confronts Change | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Northwest Airlines Confronts Change are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Northwest Airlines Confronts Change, it seems that the employees of Northwest Rothmeier don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Northwest Rothmeier products
– To increase the profitability and margins on the products, Northwest Rothmeier needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Northwest Airlines Confronts Change, in the dynamic environment Northwest Rothmeier has struggled to respond to the nimble upstart competition. Northwest Rothmeier has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Northwest Rothmeier supply chain. Even after few cautionary changes mentioned in the HBR case study - Northwest Airlines Confronts Change, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Northwest Rothmeier vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Northwest Rothmeier has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Products dominated business model
– Even though Northwest Rothmeier has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Northwest Airlines Confronts Change should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Northwest Rothmeier is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Northwest Rothmeier needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Northwest Rothmeier to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Northwest Rothmeier has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Aligning sales with marketing
– It come across in the case study Northwest Airlines Confronts Change that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Northwest Airlines Confronts Change can leverage the sales team experience to cultivate customer relationships as Northwest Rothmeier is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Northwest Rothmeier is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Northwest Airlines Confronts Change can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Northwest Rothmeier has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Northwest Rothmeier even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities Northwest Airlines Confronts Change | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Northwest Airlines Confronts Change are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Northwest Rothmeier can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Northwest Airlines Confronts Change, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Northwest Rothmeier to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Northwest Rothmeier to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Northwest Rothmeier in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Northwest Rothmeier can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Northwest Rothmeier to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Northwest Rothmeier can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Northwest Rothmeier has opened avenues for new revenue streams for the organization in the industry. This can help Northwest Rothmeier to build a more holistic ecosystem as suggested in the Northwest Airlines Confronts Change case study. Northwest Rothmeier can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Northwest Rothmeier to increase its market reach. Northwest Rothmeier will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Northwest Rothmeier can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Northwest Rothmeier can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Northwest Rothmeier can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Northwest Airlines Confronts Change suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Northwest Rothmeier has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Northwest Airlines Confronts Change - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Northwest Rothmeier to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Northwest Rothmeier can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Northwest Rothmeier in the consumer business. Now Northwest Rothmeier can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Northwest Airlines Confronts Change External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Northwest Airlines Confronts Change are -
Consumer confidence and its impact on Northwest Rothmeier demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Stagnating economy with rate increase
– Northwest Rothmeier can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Northwest Rothmeier in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Northwest Rothmeier in the Leadership & Managing People sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Northwest Airlines Confronts Change, Northwest Rothmeier may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Northwest Rothmeier.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Northwest Rothmeier with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Northwest Rothmeier will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Northwest Rothmeier
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Northwest Rothmeier.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Northwest Rothmeier can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Northwest Airlines Confronts Change .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Northwest Rothmeier business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Northwest Airlines Confronts Change Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Northwest Airlines Confronts Change needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Northwest Airlines Confronts Change is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Northwest Airlines Confronts Change is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Northwest Airlines Confronts Change is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Northwest Rothmeier needs to make to build a sustainable competitive advantage.