American Airlines (A): Strategy in the 1990s SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of American Airlines (A): Strategy in the 1990s
American Airlines is pursuing a growth strategy through international and domestic route expansion. At the same time, the airline is working hard to cut costs while trying to provide the best customer service possible. Is this strategy achievable given the recent surge in jet fuel prices and the competitive framework of the industry?
Authors :: Jay W. Lorsch, Gary W. Loveman, Julia Horn
Swot Analysis of "American Airlines (A): Strategy in the 1990s" written by Jay W. Lorsch, Gary W. Loveman, Julia Horn includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Airlines Achievable facing as an external strategic factors. Some of the topics covered in American Airlines (A): Strategy in the 1990s case study are - Strategic Management Strategies, Customer service, Customers, Growth strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the American Airlines (A): Strategy in the 1990s casestudy better are - – supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, wage bills are increasing, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion,
increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of American Airlines (A): Strategy in the 1990s
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in American Airlines (A): Strategy in the 1990s case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Airlines Achievable, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Airlines Achievable 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 American Airlines (A): Strategy in the 1990s can be done for the following purposes –
1. Strategic planning using facts provided in American Airlines (A): Strategy in the 1990s case study
2. Improving business portfolio management of Airlines Achievable
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 Airlines Achievable
Strengths American Airlines (A): Strategy in the 1990s | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Airlines Achievable in American Airlines (A): Strategy in the 1990s Harvard Business Review case study are -
Effective Research and Development (R&D)
– Airlines Achievable 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 American Airlines (A): Strategy in the 1990s - 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
– Airlines Achievable is one of the most innovative firm in sector. Manager in American Airlines (A): Strategy in the 1990s Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Airlines Achievable 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 Airlines Achievable is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in American Airlines (A): Strategy in the 1990s Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Airlines Achievable has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in American Airlines (A): Strategy in the 1990s 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.
Operational resilience
– The operational resilience strategy in the American Airlines (A): Strategy in the 1990s 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.
Low bargaining power of suppliers
– Suppliers of Airlines Achievable in the sector have low bargaining power. American Airlines (A): Strategy in the 1990s has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Airlines Achievable to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Airlines Achievable digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Airlines Achievable 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.
High switching costs
– The high switching costs that Airlines Achievable 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.
Successful track record of launching new products
– Airlines Achievable has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Airlines Achievable 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.
Sustainable margins compare to other players in Strategy & Execution industry
– American Airlines (A): Strategy in the 1990s firm has clearly differentiated products in the market place. This has enabled Airlines Achievable to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Airlines Achievable to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Airlines Achievable in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Airlines Achievable is present in almost all the verticals within the industry. This has provided firm in American Airlines (A): Strategy in the 1990s 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.
Weaknesses American Airlines (A): Strategy in the 1990s | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of American Airlines (A): Strategy in the 1990s are -
Aligning sales with marketing
– It come across in the case study American Airlines (A): Strategy in the 1990s 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 American Airlines (A): Strategy in the 1990s can leverage the sales team experience to cultivate customer relationships as Airlines Achievable is planning to shift buying processes online.
High cash cycle compare to competitors
Airlines Achievable 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Jay W. Lorsch, Gary W. Loveman, Julia Horn suggests that, Airlines Achievable 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 Airlines Achievable 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the American Airlines (A): Strategy in the 1990s 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 Airlines Achievable has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Airlines Achievable needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Airlines Achievable is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study American Airlines (A): Strategy in the 1990s can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Airlines Achievable products
– To increase the profitability and margins on the products, Airlines Achievable needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study American Airlines (A): Strategy in the 1990s, in the dynamic environment Airlines Achievable has struggled to respond to the nimble upstart competition. Airlines Achievable has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Airlines Achievable 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 operating costs
– Compare to the competitors, firm in the HBR case study American Airlines (A): Strategy in the 1990s 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 Airlines Achievable 's lucrative customers.
Opportunities American Airlines (A): Strategy in the 1990s | 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 American Airlines (A): Strategy in the 1990s are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Airlines Achievable 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Airlines Achievable 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 Airlines Achievable to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Airlines Achievable 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Airlines Achievable 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, American Airlines (A): Strategy in the 1990s, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Airlines Achievable can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Airlines Achievable can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Airlines Achievable in the consumer business. Now Airlines Achievable can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Airlines Achievable 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.
Learning at scale
– Online learning technologies has now opened space for Airlines Achievable 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.
Leveraging digital technologies
– Airlines Achievable 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.
Manufacturing automation
– Airlines Achievable 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.
Creating value in data economy
– The success of analytics program of Airlines Achievable has opened avenues for new revenue streams for the organization in the industry. This can help Airlines Achievable to build a more holistic ecosystem as suggested in the American Airlines (A): Strategy in the 1990s case study. Airlines Achievable can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Airlines Achievable 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 American Airlines (A): Strategy in the 1990s External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study American Airlines (A): Strategy in the 1990s are -
Increasing wage structure of Airlines Achievable
– 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 Airlines Achievable.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Airlines Achievable with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Stagnating economy with rate increase
– Airlines Achievable 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.
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 Airlines Achievable business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Airlines Achievable 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.
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. Airlines Achievable can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Airlines Achievable 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Airlines Achievable 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 American Airlines (A): Strategy in the 1990s .
Environmental challenges
– Airlines Achievable 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. Airlines Achievable can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Shortening product life cycle
– it is one of the major threat that Airlines Achievable is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Airlines Achievable has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Airlines Achievable 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.
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 Airlines Achievable.
Weighted SWOT Analysis of American Airlines (A): Strategy in the 1990s 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 American Airlines (A): Strategy in the 1990s 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 American Airlines (A): Strategy in the 1990s 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 American Airlines (A): Strategy in the 1990s 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 American Airlines (A): Strategy in the 1990s 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 Airlines Achievable needs to make to build a sustainable competitive advantage.
