Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
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 - – digital marketing is dominated by two big players Facebook and Google, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, geopolitical disruptions,
competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, 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 -
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.
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.
Innovation driven organization
– Alliances 2004 is one of the most innovative firm in sector. Manager in Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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.
Organizational Resilience of Alliances 2004
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Alliances 2004 does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Alliances 2004 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.
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.
Highly skilled collaborators
– Alliances 2004 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 Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 star products
– The top 2 products and services of the firm as mentioned in the Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry 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 Alliances 2004 has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry, is just above the industry average. Alliances 2004 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.
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.
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.
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.
Lack of clear differentiation of Alliances 2004 products
– To increase the profitability and margins on the products, Alliances 2004 needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Alliances 2004 is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Alliances 2004 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.
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 -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Alliances 2004 can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
Building a culture of innovation
– managers at Alliances 2004 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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Alliances 2004 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 Alliances 2004 to hire the very best people irrespective of their geographical location.
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.
Creating value in data economy
– The success of analytics program of Alliances 2004 has opened avenues for new revenue streams for the organization in the industry. This can help Alliances 2004 to build a more holistic ecosystem as suggested in the Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry case study. Alliances 2004 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 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.
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.
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.
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 -
Consumer confidence and its impact on Alliances 2004 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.
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.
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.
Regulatory challenges
– Alliances 2004 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.
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.
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. Alliances 2004 needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
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.
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.
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.
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.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Alliances 2004.
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.
Feel free to connect with us if you need business research.
You can download Excel Template of Case Study Solution & Analysis of Airline Industry Alliances in 2004: Improving Performance in the Beleaguered Airline Industry