Case Study Description of Global Aircraft Manufacturing, 2002-2011
At the dawn of the twenty-first century, Boeing and Airbus, the leading manufacturers of large aircraft, were locked in a battle for market share that drove down prices for their new planes. At about the same time, the two industry heavyweights began developing new aircraft families to address the future market needs they each projected. Aircraft take many years to develop, so by the time the new planes made their inaugural flights, significant changes had occurred in the global environment. First, emerging economies in the Asia-Pacific region and elsewhere were growing rapidly, spawning immediate and long-term demand for more aircraft. At the same time, changes to the market for air travel had created opportunities for new products. These opportunities had not gone unnoticed by potential new entrants, which were positioning themselves to compete against the market leaders. In October 2007, the Airbus superjumbo A380 made its first flight. The A380 carried more passengers than any other plane in history and had been touted as a solution to increased congestion at global mega-hub airports. Four years later the Boeing 787, a smaller long-range aircraft, was launched to service secondary cities in a point-to-point network. The case provides students with an opportunity to analyze the profit potential of the global aircraft manufacturing industry in 2002 and in 2011. Students can also identify the actions of participants that weakened or intensified the pressure on profits within the industry.
Authors :: Jennifer Brown, Craig Garthwaite, Susan Crowe, Charlotte Snyder
Swot Analysis of "Global Aircraft Manufacturing, 2002-2011" written by Jennifer Brown, Craig Garthwaite, Susan Crowe, Charlotte Snyder includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Aircraft A380 facing as an external strategic factors. Some of the topics covered in Global Aircraft Manufacturing, 2002-2011 case study are - Strategic Management Strategies, Marketing, Product development, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Global Aircraft Manufacturing, 2002-2011 casestudy better are - – talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, increasing transportation and logistics costs, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, geopolitical disruptions,
increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Global Aircraft Manufacturing, 2002-2011
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Global Aircraft Manufacturing, 2002-2011 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Aircraft A380, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Aircraft A380 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 Global Aircraft Manufacturing, 2002-2011 can be done for the following purposes –
1. Strategic planning using facts provided in Global Aircraft Manufacturing, 2002-2011 case study
2. Improving business portfolio management of Aircraft A380
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Aircraft A380
Strengths Global Aircraft Manufacturing, 2002-2011 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Aircraft A380 in Global Aircraft Manufacturing, 2002-2011 Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Aircraft A380 digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Aircraft A380 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.
Innovation driven organization
– Aircraft A380 is one of the most innovative firm in sector. Manager in Global Aircraft Manufacturing, 2002-2011 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Aircraft A380 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 Brown, Craig Garthwaite, Susan Crowe, Charlotte Snyder 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.
Training and development
– Aircraft A380 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Global Aircraft Manufacturing, 2002-2011 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.
Cross disciplinary teams
– Horizontal connected teams at the Aircraft A380 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.
High switching costs
– The high switching costs that Aircraft A380 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.
Effective Research and Development (R&D)
– Aircraft A380 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 Global Aircraft Manufacturing, 2002-2011 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Aircraft A380 has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Aircraft A380 to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Aircraft A380 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 Aircraft A380 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Global Aircraft Manufacturing, 2002-2011 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Aircraft A380
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Aircraft A380 does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Global Aircraft Manufacturing, 2002-2011 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.
Low bargaining power of suppliers
– Suppliers of Aircraft A380 in the sector have low bargaining power. Global Aircraft Manufacturing, 2002-2011 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Aircraft A380 to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Global Aircraft Manufacturing, 2002-2011 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Global Aircraft Manufacturing, 2002-2011 are -
Slow decision making process
– As mentioned earlier in the report, Aircraft A380 has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Aircraft A380 even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Need for greater diversity
– Aircraft A380 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Global Aircraft Manufacturing, 2002-2011, in the dynamic environment Aircraft A380 has struggled to respond to the nimble upstart competition. Aircraft A380 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Global Aircraft Manufacturing, 2002-2011 HBR case study mentions - Aircraft A380 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, Jennifer Brown, Craig Garthwaite, Susan Crowe, Charlotte Snyder suggests that, Aircraft A380 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 Global Aircraft Manufacturing, 2002-2011 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 Aircraft A380 has relatively successful track record of launching new products.
High cash cycle compare to competitors
Aircraft A380 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.
No frontier risks strategy
– After analyzing the HBR case study Global Aircraft Manufacturing, 2002-2011, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Capital Spending Reduction
– Even during the low interest decade, Aircraft A380 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 Global Aircraft Manufacturing, 2002-2011, it seems that the employees of Aircraft A380 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.
Increasing silos among functional specialists
– The organizational structure of Aircraft A380 is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Aircraft A380 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Aircraft A380 to focus more on services rather than just following the product oriented approach.
Opportunities Global Aircraft Manufacturing, 2002-2011 | 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 Global Aircraft Manufacturing, 2002-2011 are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Aircraft A380 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 Aircraft A380 to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Aircraft A380 can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Aircraft A380 has opened avenues for new revenue streams for the organization in the industry. This can help Aircraft A380 to build a more holistic ecosystem as suggested in the Global Aircraft Manufacturing, 2002-2011 case study. Aircraft A380 can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Aircraft A380 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, Global Aircraft Manufacturing, 2002-2011, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Aircraft A380 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.
Using analytics as competitive advantage
– Aircraft A380 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 Global Aircraft Manufacturing, 2002-2011 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Aircraft A380 to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Aircraft A380 in the consumer business. Now Aircraft A380 can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Aircraft A380 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. Aircraft A380 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Aircraft A380 is facing challenges because of the dominance of functional experts in the organization. Global Aircraft Manufacturing, 2002-2011 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Aircraft A380 can use these opportunities to build new business models that can help the communities that Aircraft A380 operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Buying journey improvements
– Aircraft A380 can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Global Aircraft Manufacturing, 2002-2011 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.
Developing new processes and practices
– Aircraft A380 can develop new processes and procedures in Strategy & Execution 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.
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. Aircraft A380 can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Global Aircraft Manufacturing, 2002-2011 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Global Aircraft Manufacturing, 2002-2011 are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Aircraft A380 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 Global Aircraft Manufacturing, 2002-2011 .
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.
High dependence on third party suppliers
– Aircraft A380 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 acceleration in Forth Industrial Revolution
– Aircraft A380 has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Aircraft A380 needs to keep up with the evolution of technology in the Strategy & Execution 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.
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
– Aircraft A380 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.
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. Aircraft A380 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.
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 Aircraft A380.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Aircraft A380 with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Aircraft A380
– 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 Aircraft A380.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Global Aircraft Manufacturing, 2002-2011, Aircraft A380 may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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 Aircraft A380 in the Strategy & Execution sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Aircraft A380 in the Strategy & Execution industry. The Strategy & Execution 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.
Weighted SWOT Analysis of Global Aircraft Manufacturing, 2002-2011 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 Global Aircraft Manufacturing, 2002-2011 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 Global Aircraft Manufacturing, 2002-2011 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 Global Aircraft Manufacturing, 2002-2011 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 Global Aircraft Manufacturing, 2002-2011 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 Aircraft A380 needs to make to build a sustainable competitive advantage.