American Airlines, Inc.: Proposal for a Three-Class Transcon Service SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
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Case Study SWOT Analysis Solution
Case Study Description of American Airlines, Inc.: Proposal for a Three-Class Transcon Service
American Airlines, Inc., the largest airline in the United States, is considering a proposal to enhance its flagship New York JFK - Los Angeles transcontinental service from a two-class (first and coach) to a three-class (first, business, and coach) product. The proposal was originated by the marketing group, and is motivated by considerations of competition, freqent-flyer upgrade policies, product consistency, and demand stimulation (for domestic business-class travel). While the new product would be consistent with American's international product, it would be inconsistent with the rest of the domestic product. More important, it would require an expensive aircraft reconfiguration and the isolation of the JFK-LAX fleet from the rest of American's fleet--at a considerable loss of flexibility.
Swot Analysis of "American Airlines, Inc.: Proposal for a Three-Class Transcon Service" written by Anirudh Dhebar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Jfk American's facing as an external strategic factors. Some of the topics covered in American Airlines, Inc.: Proposal for a Three-Class Transcon Service case study are - Strategic Management Strategies, Design, Marketing, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the American Airlines, Inc.: Proposal for a Three-Class Transcon Service casestudy better are - – talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of American Airlines, Inc.: Proposal for a Three-Class Transcon Service
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in American Airlines, Inc.: Proposal for a Three-Class Transcon Service case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jfk American's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jfk American's 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 American Airlines, Inc.: Proposal for a Three-Class Transcon Service can be done for the following purposes –
1. Strategic planning using facts provided in American Airlines, Inc.: Proposal for a Three-Class Transcon Service case study
2. Improving business portfolio management of Jfk American's
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 Jfk American's
Strengths American Airlines, Inc.: Proposal for a Three-Class Transcon Service | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jfk American's in American Airlines, Inc.: Proposal for a Three-Class Transcon Service Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Jfk American's 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.
Sustainable margins compare to other players in Sales & Marketing industry
– American Airlines, Inc.: Proposal for a Three-Class Transcon Service firm has clearly differentiated products in the market place. This has enabled Jfk American's to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Jfk American's to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Jfk American's in the sector have low bargaining power. American Airlines, Inc.: Proposal for a Three-Class Transcon Service has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Jfk American's to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Jfk American's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Jfk American's 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
– Jfk American's is present in almost all the verticals within the industry. This has provided firm in American Airlines, Inc.: Proposal for a Three-Class Transcon Service 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.
Innovation driven organization
– Jfk American's is one of the most innovative firm in sector. Manager in American Airlines, Inc.: Proposal for a Three-Class Transcon Service Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Jfk American's 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 American Airlines, Inc.: Proposal for a Three-Class Transcon Service - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Jfk American's 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 Jfk American's 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
– Jfk American's 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 Anirudh Dhebar 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.
Ability to recruit top talent
– Jfk American's is one of the leading recruiters in the industry. Managers in the American Airlines, Inc.: Proposal for a Three-Class Transcon Service are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Sales & Marketing field
– Jfk American's 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 Jfk American's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses American Airlines, Inc.: Proposal for a Three-Class Transcon Service | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of American Airlines, Inc.: Proposal for a Three-Class Transcon Service are -
Increasing silos among functional specialists
– The organizational structure of Jfk American's is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Jfk American's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Jfk American's to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Anirudh Dhebar suggests that, Jfk American's 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.
Products dominated business model
– Even though Jfk American's 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 - American Airlines, Inc.: Proposal for a Three-Class Transcon Service should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Jfk American's 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Jfk American's 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.
Aligning sales with marketing
– It come across in the case study American Airlines, Inc.: Proposal for a Three-Class Transcon Service 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 American Airlines, Inc.: Proposal for a Three-Class Transcon Service can leverage the sales team experience to cultivate customer relationships as Jfk American's is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Jfk American's 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study American Airlines, Inc.: Proposal for a Three-Class Transcon Service, it seems that the employees of Jfk American's 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.
No frontier risks strategy
– After analyzing the HBR case study American Airlines, Inc.: Proposal for a Three-Class Transcon Service, it seems that company is thinking about the frontier risks that can impact Sales & Marketing 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study American Airlines, Inc.: Proposal for a Three-Class Transcon Service, is just above the industry average. Jfk American's 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Jfk American's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study American Airlines, Inc.: Proposal for a Three-Class Transcon Service can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities American Airlines, Inc.: Proposal for a Three-Class Transcon Service | 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 American Airlines, Inc.: Proposal for a Three-Class Transcon Service are -
Manufacturing automation
– Jfk American's 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Jfk American's 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. Jfk American's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Jfk American's can use these opportunities to build new business models that can help the communities that Jfk American's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Loyalty marketing
– Jfk American's 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.
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. Jfk American's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Jfk American's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. American Airlines, Inc.: Proposal for a Three-Class Transcon Service 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Jfk American's 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 Jfk American's to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Jfk American's 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, American Airlines, Inc.: Proposal for a Three-Class Transcon Service, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Jfk American's 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
– Jfk American's 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 American Airlines, Inc.: Proposal for a Three-Class Transcon Service - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Jfk American's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Jfk American's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Jfk American's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Jfk American's 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.
Threats American Airlines, Inc.: Proposal for a Three-Class Transcon Service External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study American Airlines, Inc.: Proposal for a Three-Class Transcon Service are -
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 Jfk American's.
Environmental challenges
– Jfk American's 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. Jfk American's can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study American Airlines, Inc.: Proposal for a Three-Class Transcon Service, Jfk American's 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 .
Technology acceleration in Forth Industrial Revolution
– Jfk American's has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Jfk American's 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.
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. Jfk American's needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Jfk American's 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 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.
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 Jfk American's in the Sales & Marketing sector and impact the bottomline of the organization.
Consumer confidence and its impact on Jfk American's 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.
Shortening product life cycle
– it is one of the major threat that Jfk American's is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Jfk American's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Jfk American's business can come under increasing regulations regarding data privacy, data security, 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. Jfk American's 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.
Weighted SWOT Analysis of American Airlines, Inc.: Proposal for a Three-Class Transcon Service 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 American Airlines, Inc.: Proposal for a Three-Class Transcon Service 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 American Airlines, Inc.: Proposal for a Three-Class Transcon Service 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 American Airlines, Inc.: Proposal for a Three-Class Transcon Service 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 American Airlines, Inc.: Proposal for a Three-Class Transcon Service 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 Jfk American's needs to make to build a sustainable competitive advantage.