Air Canada: Defined Benefit Pension Plan SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Air Canada: Defined Benefit Pension Plan
An investor is reviewing his investment in Air Canada to decide whether or not to sell his shares in the company. Recent weakness in the airline industry and a three-day strike by service staff has caused the investor to reevaluate Air Canada's long-term prospects. In particular, the investor wants to consider the company's pension plans in his analysis. A proposal to move new hires to defined contribution from defined benefit pension plans was a key point of contention between the company and striking workers. The investor knew the company's pension plans were underfunded and he wanted to assess what impact the underfunding would have on the company's future. Finally, the investor wanted to understand the impact that the change to International Financial Reporting Standards would have on Air Canada's pension accounting.
Authors :: Christine I. Wiedman, Darren Henderson, Pricilla Cheung
Swot Analysis of "Air Canada: Defined Benefit Pension Plan" written by Christine I. Wiedman, Darren Henderson, Pricilla Cheung includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pension Investor facing as an external strategic factors. Some of the topics covered in Air Canada: Defined Benefit Pension Plan case study are - Strategic Management Strategies, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Air Canada: Defined Benefit Pension Plan casestudy better are - – supply chains are disrupted by pandemic , technology disruption, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google,
competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, etc
Introduction to SWOT Analysis of Air Canada: Defined Benefit Pension Plan
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Air Canada: Defined Benefit Pension Plan case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pension Investor, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pension Investor 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 Air Canada: Defined Benefit Pension Plan can be done for the following purposes –
1. Strategic planning using facts provided in Air Canada: Defined Benefit Pension Plan case study
2. Improving business portfolio management of Pension Investor
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pension Investor
Strengths Air Canada: Defined Benefit Pension Plan | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pension Investor in Air Canada: Defined Benefit Pension Plan Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– Air Canada: Defined Benefit Pension Plan firm has clearly differentiated products in the market place. This has enabled Pension Investor to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Pension Investor to invest into research and development (R&D) and innovation.
Strong track record of project management
– Pension Investor is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Finance & Accounting field
– Pension Investor 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 Pension Investor in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Pension Investor has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pension Investor to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Pension Investor has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Air Canada: Defined Benefit Pension Plan 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.
Diverse revenue streams
– Pension Investor is present in almost all the verticals within the industry. This has provided firm in Air Canada: Defined Benefit Pension Plan 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.
Highly skilled collaborators
– Pension Investor 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 Air Canada: Defined Benefit Pension Plan HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Pension Investor
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pension Investor does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Pension Investor 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 Air Canada: Defined Benefit Pension Plan - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Pension Investor has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pension Investor 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.
Learning organization
- Pension Investor 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 Pension Investor is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Air Canada: Defined Benefit Pension Plan Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Pension Investor is one of the leading recruiters in the industry. Managers in the Air Canada: Defined Benefit Pension Plan are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Air Canada: Defined Benefit Pension Plan | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Air Canada: Defined Benefit Pension Plan are -
Slow to strategic competitive environment developments
– As Air Canada: Defined Benefit Pension Plan HBR case study mentions - Pension Investor 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.
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 Pension Investor supply chain. Even after few cautionary changes mentioned in the HBR case study - Air Canada: Defined Benefit Pension Plan, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pension Investor vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pension Investor is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Air Canada: Defined Benefit Pension Plan can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Air Canada: Defined Benefit Pension Plan, is just above the industry average. Pension Investor 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.
No frontier risks strategy
– After analyzing the HBR case study Air Canada: Defined Benefit Pension Plan, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Air Canada: Defined Benefit Pension Plan, it seems that the employees of Pension Investor 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.
Products dominated business model
– Even though Pension Investor 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 - Air Canada: Defined Benefit Pension Plan should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Christine I. Wiedman, Darren Henderson, Pricilla Cheung suggests that, Pension Investor 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.
Low market penetration in new markets
– Outside its home market of Pension Investor, firm in the HBR case study Air Canada: Defined Benefit Pension Plan needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Air Canada: Defined Benefit Pension Plan 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 Pension Investor 's lucrative customers.
Lack of clear differentiation of Pension Investor products
– To increase the profitability and margins on the products, Pension Investor needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Air Canada: Defined Benefit Pension Plan | 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 Air Canada: Defined Benefit Pension Plan are -
Learning at scale
– Online learning technologies has now opened space for Pension Investor 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Pension Investor can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Pension Investor can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pension Investor is facing challenges because of the dominance of functional experts in the organization. Air Canada: Defined Benefit Pension Plan 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.
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. Pension Investor can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pension Investor 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. Pension Investor 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.
Using analytics as competitive advantage
– Pension Investor 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 Air Canada: Defined Benefit Pension Plan - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pension Investor to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Pension Investor to increase its market reach. Pension Investor 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.
Developing new processes and practices
– Pension Investor can develop new processes and procedures in Finance & Accounting 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.
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 Pension Investor in the consumer business. Now Pension Investor can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pension Investor can use these opportunities to build new business models that can help the communities that Pension Investor operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pension Investor 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 Pension Investor to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Pension Investor has opened avenues for new revenue streams for the organization in the industry. This can help Pension Investor to build a more holistic ecosystem as suggested in the Air Canada: Defined Benefit Pension Plan case study. Pension Investor can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Air Canada: Defined Benefit Pension Plan External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Air Canada: Defined Benefit Pension Plan are -
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. Pension Investor needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Pension Investor has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Pension Investor needs to keep up with the evolution of technology in the Finance & Accounting 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.
Stagnating economy with rate increase
– Pension Investor 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pension Investor with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Pension Investor in the Finance & Accounting sector and impact the bottomline of the organization.
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 Pension Investor.
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 Pension Investor business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Pension Investor 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 Finance & Accounting industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Air Canada: Defined Benefit Pension Plan, Pension Investor may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pension Investor can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pension Investor in the Finance & Accounting industry. The Finance & Accounting 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.
Shortening product life cycle
– it is one of the major threat that Pension Investor is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Pension Investor 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.
Weighted SWOT Analysis of Air Canada: Defined Benefit Pension Plan 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 Air Canada: Defined Benefit Pension Plan 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 Air Canada: Defined Benefit Pension Plan 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 Air Canada: Defined Benefit Pension Plan 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 Air Canada: Defined Benefit Pension Plan 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 Pension Investor needs to make to build a sustainable competitive advantage.
