Delta Air Lines (A): The Low-Cost Carrier Threat SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Delta Air Lines (A): The Low-Cost Carrier Threat
In the 'Delta Air Lines (A): The Low-Cost Carrier Threat' case, the top management of Delta Air Lines must decide how to respond to the threat posed by low-cost carriers such as Southwest and JetBlue. Among the options considered is the launch of a low-cost subsidiary by Delta itself. Prior efforts to launch a low-cost subsidiary, by Delta and by other full-service airlines, have failed. Can Delta devise a better response?
Swot Analysis of "Delta Air Lines (A): The Low-Cost Carrier Threat" written by Jan W. Rivkin, Laurent Therivel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Delta Low facing as an external strategic factors. Some of the topics covered in Delta Air Lines (A): The Low-Cost Carrier Threat case study are - Strategic Management Strategies, Decision making, Financial analysis and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Delta Air Lines (A): The Low-Cost Carrier Threat casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing energy prices, challanges to central banks by blockchain based private currencies,
there is increasing trade war between United States & China, wage bills are increasing, etc
Introduction to SWOT Analysis of Delta Air Lines (A): The Low-Cost Carrier Threat
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Delta Air Lines (A): The Low-Cost Carrier Threat case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Delta Low, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Delta Low 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 Delta Air Lines (A): The Low-Cost Carrier Threat can be done for the following purposes –
1. Strategic planning using facts provided in Delta Air Lines (A): The Low-Cost Carrier Threat case study
2. Improving business portfolio management of Delta Low
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 Delta Low
Strengths Delta Air Lines (A): The Low-Cost Carrier Threat | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Delta Low in Delta Air Lines (A): The Low-Cost Carrier Threat Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Delta Low in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Delta Low digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Delta Low 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.
Low bargaining power of suppliers
– Suppliers of Delta Low in the sector have low bargaining power. Delta Air Lines (A): The Low-Cost Carrier Threat has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Delta Low to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Delta Air Lines (A): The Low-Cost Carrier Threat 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.
Analytics focus
– Delta Low 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 Jan W. Rivkin, Laurent Therivel 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.
Organizational Resilience of Delta Low
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Delta Low does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Strategy & Execution field
– Delta Low 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 Delta Low in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Delta Low 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 Delta Low is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Delta Air Lines (A): The Low-Cost Carrier Threat Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– Delta Air Lines (A): The Low-Cost Carrier Threat firm has clearly differentiated products in the market place. This has enabled Delta Low to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Delta Low to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Delta Low 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)
– Delta Low 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 Delta Air Lines (A): The Low-Cost Carrier Threat - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Delta Low is one of the leading recruiters in the industry. Managers in the Delta Air Lines (A): The Low-Cost Carrier Threat are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Delta Air Lines (A): The Low-Cost Carrier Threat | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Delta Air Lines (A): The Low-Cost Carrier Threat are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Delta Air Lines (A): The Low-Cost Carrier Threat, in the dynamic environment Delta Low has struggled to respond to the nimble upstart competition. Delta Low has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Delta Air Lines (A): The Low-Cost Carrier Threat 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 Delta Air Lines (A): The Low-Cost Carrier Threat can leverage the sales team experience to cultivate customer relationships as Delta Low is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Delta Low 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.
Skills based hiring
– The stress on hiring functional specialists at Delta Low 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.
Slow decision making process
– As mentioned earlier in the report, Delta Low 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. Delta Low 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
– Delta Low 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.
Low market penetration in new markets
– Outside its home market of Delta Low, firm in the HBR case study Delta Air Lines (A): The Low-Cost Carrier Threat needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Delta Low 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.
Capital Spending Reduction
– Even during the low interest decade, Delta Low 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 Delta Low supply chain. Even after few cautionary changes mentioned in the HBR case study - Delta Air Lines (A): The Low-Cost Carrier Threat, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Delta Low vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Delta Air Lines (A): The Low-Cost Carrier Threat, it seems that the employees of Delta Low 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.
Opportunities Delta Air Lines (A): The Low-Cost Carrier Threat | 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 Delta Air Lines (A): The Low-Cost Carrier Threat are -
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. Delta Low 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. Delta Low 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Delta Low can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Delta Low can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Delta Low 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 Delta Low to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Delta Low can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
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 Delta Low in the consumer business. Now Delta Low can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Delta Low 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 Delta Air Lines (A): The Low-Cost Carrier Threat - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Delta Low to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Delta Low has opened avenues for new revenue streams for the organization in the industry. This can help Delta Low to build a more holistic ecosystem as suggested in the Delta Air Lines (A): The Low-Cost Carrier Threat case study. Delta Low can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Delta Low 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Delta Low is facing challenges because of the dominance of functional experts in the organization. Delta Air Lines (A): The Low-Cost Carrier Threat 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.
Developing new processes and practices
– Delta Low 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.
Manufacturing automation
– Delta Low can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Delta Low can use these opportunities to build new business models that can help the communities that Delta Low operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats Delta Air Lines (A): The Low-Cost Carrier Threat External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Delta Air Lines (A): The Low-Cost Carrier Threat 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. Delta Low can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Delta Low demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Delta Low 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.
Stagnating economy with rate increase
– Delta Low 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.
Shortening product life cycle
– it is one of the major threat that Delta Low is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Delta Low 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Delta Air Lines (A): The Low-Cost Carrier Threat, Delta Low 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 .
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. Delta Low needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Regulatory challenges
– Delta Low 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.
Environmental challenges
– Delta Low 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. Delta Low can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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 Delta Low business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Delta Air Lines (A): The Low-Cost Carrier Threat 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 Delta Air Lines (A): The Low-Cost Carrier Threat 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 Delta Air Lines (A): The Low-Cost Carrier Threat 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 Delta Air Lines (A): The Low-Cost Carrier Threat 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 Delta Air Lines (A): The Low-Cost Carrier Threat 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 Delta Low needs to make to build a sustainable competitive advantage.