Scandinavian Airlines: The Green Engine Decision SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Scandinavian Airlines: The Green Engine Decision
Scandinavian Airlines (SAS) is an innovator of strategic environmental management in the airline industry. Being a first-mover can have both its advantages and disadvantages. This case looks at the airline's decision of whether they should invest in the best available environmental technology for a fleet of new aircraft that would serve them for the next 25 years. While the technology for these low-emission engines had been around since the 1970s, it had never really been commercialized. SAS was feeling pressure from the regulatory authorities with regards to potential new charges and taxes that could affect the future operating costs of the fleet. Despite these anticipated future costs, at the time of the decision, the director of aircraft and engine analysis for SAS could not make an economic case for the more expensive engines. The challenge was for the fleet development team to try to convince the SAS management team to spend the extra kr5 million (Swedish Kronor) per aircraft for the dual combustor engine. Given that corporations are faced with increasing pressure with regards to greenhouse gas emissions and climate change, this case study presents an opportunity for discussion and analysis of various environmental concepts including strategic environmental management, adoption of best available environmental technologies, the role of internal environmental leadership in a large corporation and the effect of market-based mechanisms to improve a sector's environmental performance. The case illustrates the complexities of environmental decisions in striking a balance between meeting ambitious commitments and dealing with real capabilities of companies and external pressures.
Swot Analysis of "Scandinavian Airlines: The Green Engine Decision" written by Jennifer Lynes includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Environmental Sas facing as an external strategic factors. Some of the topics covered in Scandinavian Airlines: The Green Engine Decision case study are - Strategic Management Strategies, Decision making, Government, International business, Organizational culture, Sustainability and Organizational Development.
Some of the macro environment factors that can be used to understand the Scandinavian Airlines: The Green Engine Decision casestudy better are - – central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, talent flight as more people leaving formal jobs, increasing commodity prices, increasing transportation and logistics costs, technology disruption,
cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Scandinavian Airlines: The Green Engine Decision
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Scandinavian Airlines: The Green Engine Decision case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Environmental Sas, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Environmental Sas 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 Scandinavian Airlines: The Green Engine Decision can be done for the following purposes –
1. Strategic planning using facts provided in Scandinavian Airlines: The Green Engine Decision case study
2. Improving business portfolio management of Environmental Sas
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Environmental Sas
Strengths Scandinavian Airlines: The Green Engine Decision | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Environmental Sas in Scandinavian Airlines: The Green Engine Decision Harvard Business Review case study are -
Innovation driven organization
– Environmental Sas is one of the most innovative firm in sector. Manager in Scandinavian Airlines: The Green Engine Decision Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Environmental Sas is one of the leading recruiters in the industry. Managers in the Scandinavian Airlines: The Green Engine Decision are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Environmental Sas in the sector have low bargaining power. Scandinavian Airlines: The Green Engine Decision has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Environmental Sas to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Scandinavian Airlines: The Green Engine Decision 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.
Analytics focus
– Environmental Sas 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 Jennifer Lynes 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.
Sustainable margins compare to other players in Organizational Development industry
– Scandinavian Airlines: The Green Engine Decision firm has clearly differentiated products in the market place. This has enabled Environmental Sas to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Environmental Sas to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Environmental Sas 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.
Superior customer experience
– The customer experience strategy of Environmental Sas in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Environmental Sas
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Environmental Sas does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Environmental Sas has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Scandinavian Airlines: The Green Engine Decision HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Environmental Sas 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 Scandinavian Airlines: The Green Engine Decision - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Environmental Sas is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Environmental Sas is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Scandinavian Airlines: The Green Engine Decision Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Scandinavian Airlines: The Green Engine Decision | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Scandinavian Airlines: The Green Engine Decision are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Scandinavian Airlines: The Green Engine Decision HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Environmental Sas has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Scandinavian Airlines: The Green Engine Decision, in the dynamic environment Environmental Sas has struggled to respond to the nimble upstart competition. Environmental Sas has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Environmental Sas 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 - Scandinavian Airlines: The Green Engine Decision should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Scandinavian Airlines: The Green Engine Decision, is just above the industry average. Environmental Sas needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Aligning sales with marketing
– It come across in the case study Scandinavian Airlines: The Green Engine Decision 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 Scandinavian Airlines: The Green Engine Decision can leverage the sales team experience to cultivate customer relationships as Environmental Sas is planning to shift buying processes online.
Interest costs
– Compare to the competition, Environmental Sas has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Skills based hiring
– The stress on hiring functional specialists at Environmental Sas 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.
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 Environmental Sas supply chain. Even after few cautionary changes mentioned in the HBR case study - Scandinavian Airlines: The Green Engine Decision, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Environmental Sas vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Scandinavian Airlines: The Green Engine Decision, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Scandinavian Airlines: The Green Engine Decision has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Environmental Sas 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Scandinavian Airlines: The Green Engine Decision, it seems that the employees of Environmental Sas 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.
Opportunities Scandinavian Airlines: The Green Engine Decision | 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 Scandinavian Airlines: The Green Engine Decision are -
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 Environmental Sas in the consumer business. Now Environmental Sas can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Environmental Sas to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Low interest rates
– Even though inflation is raising its head in most developed economies, Environmental Sas 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 Environmental Sas 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.
Creating value in data economy
– The success of analytics program of Environmental Sas has opened avenues for new revenue streams for the organization in the industry. This can help Environmental Sas to build a more holistic ecosystem as suggested in the Scandinavian Airlines: The Green Engine Decision case study. Environmental Sas can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Environmental Sas can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Environmental Sas 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. Environmental Sas 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.
Manufacturing automation
– Environmental Sas can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Developing new processes and practices
– Environmental Sas can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Environmental Sas can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Environmental Sas 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 Scandinavian Airlines: The Green Engine Decision - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Environmental Sas to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Environmental Sas 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 Environmental Sas to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Environmental Sas is facing challenges because of the dominance of functional experts in the organization. Scandinavian Airlines: The Green Engine Decision case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Scandinavian Airlines: The Green Engine Decision External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Scandinavian Airlines: The Green Engine Decision are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Environmental Sas in the Organizational Development industry. The Organizational Development 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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Environmental Sas needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Environmental challenges
– Environmental Sas needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Environmental Sas can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
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 Environmental Sas business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Environmental Sas is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Environmental Sas 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.
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 Environmental Sas
– 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 Environmental Sas.
Technology acceleration in Forth Industrial Revolution
– Environmental Sas has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Environmental Sas needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Scandinavian Airlines: The Green Engine Decision, Environmental Sas may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Environmental Sas can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Environmental Sas needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Environmental Sas 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 Scandinavian Airlines: The Green Engine Decision .
Weighted SWOT Analysis of Scandinavian Airlines: The Green Engine Decision 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 Scandinavian Airlines: The Green Engine Decision 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 Scandinavian Airlines: The Green Engine Decision 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 Scandinavian Airlines: The Green Engine Decision 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 Scandinavian Airlines: The Green Engine Decision 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 Environmental Sas needs to make to build a sustainable competitive advantage.
