Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry
In 2004, as airlines struggled to cope with the challenges imposed on them by terrorism, SARS (Severe Acute Respiratory Syndrome), the Iraq war, a slow growing economy, and fast rising oil prices, alliances became more and more a "safe haven" that would mitigate the detrimental effects of the environment. An open issue remained until that time of whether alliances were the first step toward "real" industry consolidation, which had not been possible until then due to regulatory obstacles and national idiosyncrasies, or whether they were ends in themselves, forming the final stage of a process of "gentle consolidation" whereby airlines achieved 80% of the results with 20% of the hassle. Industry performance did not give conclusive evidence. On the one hand, the merger between AirFrance and KLM, finalized in June 2004, had been the first cross-national merger between flag carriers in the industry and might well set a precedent for the industry, as the protagonists hoped. On the other hand, alliances kept growing through the admission of new members and ever-closer integration.
Swot Analysis of "Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry" written by Africa Arino, Frank Reihl, Frank Riehl includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Alliances 2004 facing as an external strategic factors. Some of the topics covered in Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry casestudy better are - – there is backlash against globalization, geopolitical disruptions, there is increasing trade war between United States & China, increasing commodity prices, increasing transportation and logistics costs, increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies,
central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Alliances 2004, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Alliances 2004 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry can be done for the following purposes –
1. Strategic planning using facts provided in Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry case study
2. Improving business portfolio management of Alliances 2004
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 Alliances 2004
Strengths Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Alliances 2004 in Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry Harvard Business Review case study are -
Ability to recruit top talent
– Alliances 2004 is one of the leading recruiters in the industry. Managers in the Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Alliances 2004 has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Alliances 2004 to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Alliances 2004 digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Alliances 2004 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.
Successful track record of launching new products
– Alliances 2004 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Alliances 2004 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.
Ability to lead change in Strategy & Execution field
– Alliances 2004 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 Alliances 2004 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Alliances 2004 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Alliances 2004 in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Alliances 2004 in the sector have low bargaining power. Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Alliances 2004 to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Alliances 2004 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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.
Learning organization
- Alliances 2004 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 Alliances 2004 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Alliances 2004 is present in almost all the verticals within the industry. This has provided firm in Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry firm has clearly differentiated products in the market place. This has enabled Alliances 2004 to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Alliances 2004 to invest into research and development (R&D) and innovation.
Weaknesses Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry are -
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 Alliances 2004 supply chain. Even after few cautionary changes mentioned in the HBR case study - Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Alliances 2004 vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Alliances 2004, firm in the HBR case study Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Africa Arino, Frank Reihl, Frank Riehl suggests that, Alliances 2004 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.
Skills based hiring
– The stress on hiring functional specialists at Alliances 2004 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 cash cycle compare to competitors
Alliances 2004 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.
Slow decision making process
– As mentioned earlier in the report, Alliances 2004 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. Alliances 2004 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.
No frontier risks strategy
– After analyzing the HBR case study Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry, 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, Alliances 2004 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.
Increasing silos among functional specialists
– The organizational structure of Alliances 2004 is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Alliances 2004 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Alliances 2004 to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry, it seems that the employees of Alliances 2004 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.
Interest costs
– Compare to the competition, Alliances 2004 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.
Opportunities Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry | 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry are -
Developing new processes and practices
– Alliances 2004 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.
Better consumer reach
– The expansion of the 5G network will help Alliances 2004 to increase its market reach. Alliances 2004 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.
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 Alliances 2004 in the consumer business. Now Alliances 2004 can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Alliances 2004 can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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.
Learning at scale
– Online learning technologies has now opened space for Alliances 2004 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Alliances 2004 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, Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Alliances 2004 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.
Leveraging digital technologies
– Alliances 2004 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Alliances 2004 can use these opportunities to build new business models that can help the communities that Alliances 2004 operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Alliances 2004 can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Alliances 2004 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Alliances 2004 to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Alliances 2004 is facing challenges because of the dominance of functional experts in the organization. Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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.
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 Alliances 2004 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.
Threats Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry are -
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. Alliances 2004 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Alliances 2004 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry .
High dependence on third party suppliers
– Alliances 2004 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
– Alliances 2004 has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Alliances 2004 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry, Alliances 2004 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 .
Shortening product life cycle
– it is one of the major threat that Alliances 2004 is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Alliances 2004 business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Alliances 2004
– 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 Alliances 2004.
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. Alliances 2004 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Alliances 2004 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.
Stagnating economy with rate increase
– Alliances 2004 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.
Environmental challenges
– Alliances 2004 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. Alliances 2004 can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Weighted SWOT Analysis of Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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 Alliances 2004 needs to make to build a sustainable competitive advantage.
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