Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version
To maximize their effectiveness, color cases should be printed in color.Looks at the different business models of two highly successful and profitable airlines: Chilean-based Lan Airlines and U.S.-based Southwest Airlines. Lan Airlines pursues a hub-to-spoke international full-service model where passenger and cargo operations are highly integrated. Southwest, on the other hand, is set up for a point-to-point, low-fare, "no frill's" service with a homogenous fleet. Designed for a course on the design of business models. Includes color exhibits.
Authors :: Ramon Casadesus-Masanell, Tarun Khanna, Jordan Mitchell, Jorge Tarzijan
Swot Analysis of "Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version" written by Ramon Casadesus-Masanell, Tarun Khanna, Jordan Mitchell, Jorge Tarzijan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Airlines Lan facing as an external strategic factors. Some of the topics covered in Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version case study are - Strategic Management Strategies, Marketing, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, technology disruption, talent flight as more people leaving formal jobs,
cloud computing is disrupting traditional business models, increasing commodity prices, etc
Introduction to SWOT Analysis of Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Airlines Lan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Airlines Lan 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version can be done for the following purposes –
1. Strategic planning using facts provided in Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version case study
2. Improving business portfolio management of Airlines Lan
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 Lan
Strengths Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Airlines Lan in Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version Harvard Business Review case study are -
Successful track record of launching new products
– Airlines Lan has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Airlines Lan 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.
Effective Research and Development (R&D)
– Airlines Lan 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Airlines Lan
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Airlines Lan does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Airlines Lan 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.
Training and development
– Airlines Lan has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version 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.
High brand equity
– Airlines Lan has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Airlines Lan to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Airlines Lan is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Airlines Lan in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Airlines Lan digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Airlines Lan 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.
Innovation driven organization
– Airlines Lan is one of the most innovative firm in sector. Manager in Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Airlines Lan is present in almost all the verticals within the industry. This has provided firm in Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version 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.
Analytics focus
– Airlines Lan 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 Ramon Casadesus-Masanell, Tarun Khanna, Jordan Mitchell, Jorge Tarzijan 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version are -
Slow to strategic competitive environment developments
– As Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version HBR case study mentions - Airlines Lan 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.
Low market penetration in new markets
– Outside its home market of Airlines Lan, firm in the HBR case study Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Airlines Lan is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Airlines Lan needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Airlines Lan to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version, is just above the industry average. Airlines Lan 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.
Slow decision making process
– As mentioned earlier in the report, Airlines Lan 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. Airlines Lan 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.
Interest costs
– Compare to the competition, Airlines Lan 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Airlines Lan 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.
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 Airlines Lan supply chain. Even after few cautionary changes mentioned in the HBR case study - Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Airlines Lan vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Airlines Lan 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version 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 Lan 's lucrative customers.
Products dominated business model
– Even though Airlines Lan 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 - Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version should strive to include more intangible value offerings along with its core products and services.
Opportunities Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version | 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Airlines Lan can use these opportunities to build new business models that can help the communities that Airlines Lan operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Developing new processes and practices
– Airlines Lan 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.
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 Lan 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 Lan can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Airlines Lan 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Airlines Lan is facing challenges because of the dominance of functional experts in the organization. Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Airlines Lan 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 Lan to hire the very best people irrespective of their geographical location.
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. Airlines Lan 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. Airlines Lan 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, Airlines Lan 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.
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 Lan 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.
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 Lan in the consumer business. Now Airlines Lan can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Airlines Lan 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.
Creating value in data economy
– The success of analytics program of Airlines Lan has opened avenues for new revenue streams for the organization in the industry. This can help Airlines Lan to build a more holistic ecosystem as suggested in the Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version case study. Airlines Lan can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version are -
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 Airlines Lan in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Airlines Lan 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.
Increasing wage structure of Airlines Lan
– 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 Lan.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Airlines Lan 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.
Technology acceleration in Forth Industrial Revolution
– Airlines Lan has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Airlines Lan 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.
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.
High dependence on third party suppliers
– Airlines Lan 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.
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 Lan business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Airlines Lan 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version .
Environmental challenges
– Airlines Lan 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 Lan can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Lan.
Regulatory challenges
– Airlines Lan 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.
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 Lan can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version 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 Two Ways to Fly South: Lan Airlines and Southwest Airlines, Spanish Version 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 Lan needs to make to build a sustainable competitive advantage.
