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 - – increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, technology disruption, talent flight as more people leaving formal jobs, increasing transportation and logistics costs,
there is backlash against globalization, cloud computing is disrupting traditional business models, 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 -
Cross disciplinary teams
– Horizontal connected teams at the Delta Low 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.
Innovation driven organization
– Delta Low is one of the most innovative firm in sector. Manager in Delta Air Lines (A): The Low-Cost Carrier Threat 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)
– 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.
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.
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.
Diverse revenue streams
– Delta Low is present in almost all the verticals within the industry. This has provided firm in Delta Air Lines (A): The Low-Cost Carrier Threat 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.
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.
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 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.
Strong track record of project management
– Delta Low is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Delta Low has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Delta Low 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.
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.
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 -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Delta Air Lines (A): The Low-Cost Carrier Threat 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 Delta Low has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Delta Air Lines (A): The Low-Cost Carrier Threat, 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.
Slow to strategic competitive environment developments
– As Delta Air Lines (A): The Low-Cost Carrier Threat HBR case study mentions - Delta Low 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.
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.
Products dominated business model
– Even though Delta Low 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 - Delta Air Lines (A): The Low-Cost Carrier Threat 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 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Delta Air Lines (A): The Low-Cost Carrier Threat has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Delta Low 's lucrative customers.
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.
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.
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.
Lack of clear differentiation of Delta Low products
– To increase the profitability and margins on the products, Delta Low needs to provide more differentiated products than what it is currently offering in the marketplace.
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 -
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.
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.
Loyalty marketing
– Delta Low 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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Delta Low 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.
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.
Buying journey improvements
– Delta Low can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Delta Air Lines (A): The Low-Cost Carrier Threat 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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Delta Low to increase its market reach. Delta Low 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.
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 Delta Low 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.
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.
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 -
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.
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.
High dependence on third party suppliers
– Delta Low 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.
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.
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 Delta Low in the Strategy & Execution sector and impact the bottomline of the organization.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Delta Low 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 Delta Low
– 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 Delta Low.
Technology acceleration in Forth Industrial Revolution
– Delta Low has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Delta Low 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.
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.
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 .
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.