Case Study Description of Xiamen Airlines: Bracing for Impact
On March 31, 2014, the vice-president of Sales & Marketing at Xiamen Airlines Co. Ltd. (XiamenAir) was reviewing the minutes of the month-end meeting with his team. The meeting had focused mainly on the rapid spread of high-speed rail in China, especially along the popular and profitable routes served by his company. The new train service might become an indirect, albeit potent source of competition, redirecting existing passenger volume from airlines to a much cheaper travel option. How would its growth affect the positioning of XiamenAir as a premium service, high-priced airline? How should the company respond to this development?
Swot Analysis of "Xiamen Airlines: Bracing for Impact" written by Weifen Zhuang, Yongquan Lan, Zhaowei Miao, Kersi D. Antia includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Xiamenair Xiamen facing as an external strategic factors. Some of the topics covered in Xiamen Airlines: Bracing for Impact case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Xiamen Airlines: Bracing for Impact casestudy better are - – supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, increasing energy prices, central banks are concerned over increasing inflation, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies,
there is backlash against globalization, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Xiamen Airlines: Bracing for Impact
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Xiamen Airlines: Bracing for Impact case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xiamenair Xiamen, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xiamenair Xiamen 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 Xiamen Airlines: Bracing for Impact can be done for the following purposes –
1. Strategic planning using facts provided in Xiamen Airlines: Bracing for Impact case study
2. Improving business portfolio management of Xiamenair Xiamen
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Xiamenair Xiamen
Strengths Xiamen Airlines: Bracing for Impact | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xiamenair Xiamen in Xiamen Airlines: Bracing for Impact Harvard Business Review case study are -
High switching costs
– The high switching costs that Xiamenair Xiamen 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Xiamenair Xiamen digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Xiamenair Xiamen has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Sales & Marketing industry
– Xiamen Airlines: Bracing for Impact firm has clearly differentiated products in the market place. This has enabled Xiamenair Xiamen to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Xiamenair Xiamen to invest into research and development (R&D) and innovation.
Ability to lead change in Sales & Marketing field
– Xiamenair Xiamen 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 Xiamenair Xiamen in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Xiamenair Xiamen 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 Xiamen Airlines: Bracing for Impact HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Xiamenair Xiamen has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Xiamenair Xiamen has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Xiamenair Xiamen is present in almost all the verticals within the industry. This has provided firm in Xiamen Airlines: Bracing for Impact case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Xiamenair Xiamen 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 Xiamen Airlines: Bracing for Impact - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Xiamenair Xiamen has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Xiamen Airlines: Bracing for Impact 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.
Organizational Resilience of Xiamenair Xiamen
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Xiamenair Xiamen does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Xiamenair Xiamen in the sector have low bargaining power. Xiamen Airlines: Bracing for Impact has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Xiamenair Xiamen to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Xiamen Airlines: Bracing for Impact 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.
Weaknesses Xiamen Airlines: Bracing for Impact | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Xiamen Airlines: Bracing for Impact are -
Slow to strategic competitive environment developments
– As Xiamen Airlines: Bracing for Impact HBR case study mentions - Xiamenair Xiamen takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Xiamenair Xiamen has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Xiamenair Xiamen 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 - Xiamen Airlines: Bracing for Impact should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Xiamenair Xiamen 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.
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 Xiamenair Xiamen supply chain. Even after few cautionary changes mentioned in the HBR case study - Xiamen Airlines: Bracing for Impact, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Xiamenair Xiamen vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Xiamenair Xiamen has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Workers concerns about automation
– As automation is fast increasing in the segment, Xiamenair Xiamen needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Xiamenair Xiamen products
– To increase the profitability and margins on the products, Xiamenair Xiamen needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Xiamenair Xiamen 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Xiamen Airlines: Bracing for Impact 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 Xiamenair Xiamen 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 Xiamen Airlines: Bracing for Impact, in the dynamic environment Xiamenair Xiamen has struggled to respond to the nimble upstart competition. Xiamenair Xiamen has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Xiamen Airlines: Bracing for Impact | 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 Xiamen Airlines: Bracing for Impact are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Xiamenair Xiamen can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Xiamenair Xiamen can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Better consumer reach
– The expansion of the 5G network will help Xiamenair Xiamen to increase its market reach. Xiamenair Xiamen 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Xiamenair Xiamen can use these opportunities to build new business models that can help the communities that Xiamenair Xiamen operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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 Xiamenair Xiamen 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Xiamenair Xiamen can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Xiamenair Xiamen can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Xiamenair Xiamen 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, Xiamen Airlines: Bracing for Impact, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Xiamenair Xiamen in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Xiamenair Xiamen 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 Xiamen Airlines: Bracing for Impact - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Xiamenair Xiamen 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 Xiamenair Xiamen 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 Xiamenair Xiamen to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Xiamenair Xiamen 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.
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 Xiamenair Xiamen in the consumer business. Now Xiamenair Xiamen can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Xiamen Airlines: Bracing for Impact External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Xiamen Airlines: Bracing for Impact are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Xiamen Airlines: Bracing for Impact, Xiamenair Xiamen may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Xiamenair Xiamen in the Sales & Marketing industry. The Sales & Marketing 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.
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 Xiamenair Xiamen.
Regulatory challenges
– Xiamenair Xiamen 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 Sales & Marketing industry regulations.
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 Xiamenair Xiamen business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Xiamenair Xiamen high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.
Increasing wage structure of Xiamenair Xiamen
– 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 Xiamenair Xiamen.
Consumer confidence and its impact on Xiamenair Xiamen 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.
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. Xiamenair Xiamen 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.
Stagnating economy with rate increase
– Xiamenair Xiamen 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.
Technology acceleration in Forth Industrial Revolution
– Xiamenair Xiamen has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Xiamenair Xiamen needs to keep up with the evolution of technology in the Sales & Marketing 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.
Weighted SWOT Analysis of Xiamen Airlines: Bracing for Impact 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 Xiamen Airlines: Bracing for Impact 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 Xiamen Airlines: Bracing for Impact 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 Xiamen Airlines: Bracing for Impact 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 Xiamen Airlines: Bracing for Impact 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 Xiamenair Xiamen needs to make to build a sustainable competitive advantage.