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 - – increasing commodity prices, increasing government debt because of Covid-19 spendings, technology disruption, increasing energy prices, there is increasing trade war between United States & China, geopolitical disruptions, increasing transportation and logistics costs,
challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
Innovation driven organization
– Xiamenair Xiamen is one of the most innovative firm in sector. Manager in Xiamen Airlines: Bracing for Impact Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Learning organization
- Xiamenair Xiamen 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 Xiamenair Xiamen is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Xiamen Airlines: Bracing for Impact Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Xiamenair Xiamen has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Xiamenair Xiamen to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
Superior customer experience
– The customer experience strategy of Xiamenair Xiamen in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Xiamenair Xiamen is one of the leading recruiters in the industry. Managers in the Xiamen Airlines: Bracing for Impact are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Xiamenair Xiamen is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Xiamenair Xiamen 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 Weifen Zhuang, Yongquan Lan, Zhaowei Miao, Kersi D. Antia 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 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.
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 -
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.
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 bargaining power of channel partners
– Because of the regulatory requirements, Weifen Zhuang, Yongquan Lan, Zhaowei Miao, Kersi D. Antia suggests that, Xiamenair Xiamen is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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.
Low market penetration in new markets
– Outside its home market of Xiamenair Xiamen, firm in the HBR case study Xiamen Airlines: Bracing for Impact needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Increasing silos among functional specialists
– The organizational structure of Xiamenair Xiamen is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Xiamenair Xiamen needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Xiamenair Xiamen to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Xiamen Airlines: Bracing for Impact, it seems that the employees of Xiamenair Xiamen 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.
Skills based hiring
– The stress on hiring functional specialists at Xiamenair Xiamen 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.
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.
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 -
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Xiamenair Xiamen is facing challenges because of the dominance of functional experts in the organization. Xiamen Airlines: Bracing for Impact 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.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Xiamenair Xiamen 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.
Developing new processes and practices
– Xiamenair Xiamen can develop new processes and procedures in Sales & Marketing 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.
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.
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.
Manufacturing automation
– Xiamenair Xiamen can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
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.
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.
Loyalty marketing
– Xiamenair Xiamen has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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 -
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Xiamenair Xiamen with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Xiamenair Xiamen in the Sales & Marketing sector and impact the bottomline 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.
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.
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.
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.
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.
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 .
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.
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.
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.
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.
