Swot Analysis of ""The Mother of All (Pricing) Battles": The 1992 Airline Price War" written by David Besanko includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that 1992 War facing as an external strategic factors. Some of the topics covered in "The Mother of All (Pricing) Battles": The 1992 Airline Price War case study are - Strategic Management Strategies, Economics, Pricing and Strategy & Execution.
Some of the macro environment factors that can be used to understand the "The Mother of All (Pricing) Battles": The 1992 Airline Price War casestudy better are - – cloud computing is disrupting traditional business models, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices,
increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of "The Mother of All (Pricing) Battles": The 1992 Airline Price War
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in "The Mother of All (Pricing) Battles": The 1992 Airline Price War case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the 1992 War, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which 1992 War 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 "The Mother of All (Pricing) Battles": The 1992 Airline Price War can be done for the following purposes –
1. Strategic planning using facts provided in "The Mother of All (Pricing) Battles": The 1992 Airline Price War case study
2. Improving business portfolio management of 1992 War
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 1992 War
Strengths "The Mother of All (Pricing) Battles": The 1992 Airline Price War | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of 1992 War in "The Mother of All (Pricing) Battles": The 1992 Airline Price War Harvard Business Review case study are -
Ability to lead change in Strategy & Execution field
– 1992 War 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 1992 War in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– "The Mother of All (Pricing) Battles": The 1992 Airline Price War firm has clearly differentiated products in the market place. This has enabled 1992 War to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped 1992 War to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of 1992 War in the sector have low bargaining power. "The Mother of All (Pricing) Battles": The 1992 Airline Price War has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps 1992 War to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of 1992 War
– The covid-19 pandemic has put organizational resilience at the centre of everthing that 1992 War does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- 1992 War 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 1992 War is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in "The Mother of All (Pricing) Battles": The 1992 Airline Price War Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– 1992 War is present in almost all the verticals within the industry. This has provided firm in "The Mother of All (Pricing) Battles": The 1992 Airline Price War 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.
Effective Research and Development (R&D)
– 1992 War 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 "The Mother of All (Pricing) Battles": The 1992 Airline Price War - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– 1992 War has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled 1992 War to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– 1992 War 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 David Besanko 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.
Superior customer experience
– The customer experience strategy of 1992 War in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the "The Mother of All (Pricing) Battles": The 1992 Airline Price War 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.
Cross disciplinary teams
– Horizontal connected teams at the 1992 War 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.
Weaknesses "The Mother of All (Pricing) Battles": The 1992 Airline Price War | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of "The Mother of All (Pricing) Battles": The 1992 Airline Price War are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study "The Mother of All (Pricing) Battles": The 1992 Airline Price War, it seems that the employees of 1992 War 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.
Increasing silos among functional specialists
– The organizational structure of 1992 War is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. 1992 War needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help 1992 War to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As "The Mother of All (Pricing) Battles": The 1992 Airline Price War HBR case study mentions - 1992 War 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.
No frontier risks strategy
– After analyzing the HBR case study "The Mother of All (Pricing) Battles": The 1992 Airline Price War, 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.
Skills based hiring
– The stress on hiring functional specialists at 1992 War 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.
Products dominated business model
– Even though 1992 War 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 - "The Mother of All (Pricing) Battles": The 1992 Airline Price War should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– 1992 War has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Lack of clear differentiation of 1992 War products
– To increase the profitability and margins on the products, 1992 War needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study "The Mother of All (Pricing) Battles": The 1992 Airline Price War, is just above the industry average. 1992 War 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 cash cycle compare to competitors
1992 War 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.
Capital Spending Reduction
– Even during the low interest decade, 1992 War 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.
Opportunities "The Mother of All (Pricing) Battles": The 1992 Airline Price War | 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 "The Mother of All (Pricing) Battles": The 1992 Airline Price War are -
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 1992 War in the consumer business. Now 1992 War can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects 1992 War can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– 1992 War 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.
Using analytics as competitive advantage
– 1992 War 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 "The Mother of All (Pricing) Battles": The 1992 Airline Price War - to build a competitive advantage using analytics. The analytics driven competitive advantage can help 1992 War to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– 1992 War can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. "The Mother of All (Pricing) Battles": The 1992 Airline Price War 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.
Developing new processes and practices
– 1992 War 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.
Leveraging digital technologies
– 1992 War 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, 1992 War 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 1992 War 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 1992 War to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at 1992 War 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.
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 1992 War 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.
Learning at scale
– Online learning technologies has now opened space for 1992 War 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, 1992 War can use these opportunities to build new business models that can help the communities that 1992 War operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats "The Mother of All (Pricing) Battles": The 1992 Airline Price War External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study "The Mother of All (Pricing) Battles": The 1992 Airline Price War are -
Environmental challenges
– 1992 War 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. 1992 War can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Regulatory challenges
– 1992 War 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 wage structure of 1992 War
– 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 1992 War.
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.
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.
Technology acceleration in Forth Industrial Revolution
– 1992 War has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, 1992 War 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.
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 1992 War in the Strategy & Execution sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents 1992 War with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, 1992 War 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 "The Mother of All (Pricing) Battles": The 1992 Airline Price War .
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. 1992 War 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for 1992 War 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study "The Mother of All (Pricing) Battles": The 1992 Airline Price War, 1992 War 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 .
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. 1992 War needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Weighted SWOT Analysis of "The Mother of All (Pricing) Battles": The 1992 Airline Price War 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 "The Mother of All (Pricing) Battles": The 1992 Airline Price War 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 "The Mother of All (Pricing) Battles": The 1992 Airline Price War 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 "The Mother of All (Pricing) Battles": The 1992 Airline Price War 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 "The Mother of All (Pricing) Battles": The 1992 Airline Price War 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 1992 War needs to make to build a sustainable competitive advantage.