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 - – competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels,
customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, 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 -
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.
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.
Sustainable margins compare to other players in Strategy & Execution industry
– Global Aircraft Manufacturing, 2002-2011 firm has clearly differentiated products in the market place. This has enabled Aircraft A380 to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Aircraft A380 to invest into research and development (R&D) and innovation.
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.
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.
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.
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.
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.
Strong track record of project management
– Aircraft A380 is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Aircraft A380 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 Global Aircraft Manufacturing, 2002-2011 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Successful track record of launching new products
– Aircraft A380 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Aircraft A380 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.
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 -
Products dominated business model
– Even though Aircraft A380 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 - Global Aircraft Manufacturing, 2002-2011 should strive to include more intangible value offerings along with its core products and services.
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.
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.
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.
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.
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 Aircraft A380 supply chain. Even after few cautionary changes mentioned in the HBR case study - Global Aircraft Manufacturing, 2002-2011, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Aircraft A380 vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Aircraft A380 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.
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.
Interest costs
– Compare to the competition, Aircraft A380 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Global Aircraft Manufacturing, 2002-2011, is just above the industry average. Aircraft A380 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.
Skills based hiring
– The stress on hiring functional specialists at Aircraft A380 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.
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 -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Aircraft A380 in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Aircraft A380 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.
Learning at scale
– Online learning technologies has now opened space for Aircraft A380 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.
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 Aircraft A380 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.
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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Aircraft A380 to increase its market reach. Aircraft A380 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.
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.
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.
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 -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Aircraft A380 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
Regulatory challenges
– Aircraft A380 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 Strategy & Execution industry regulations.
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 .
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.
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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Aircraft A380 is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Aircraft A380 needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
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.
