RegionFly: Cutting Costs in the Airline Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of RegionFly: Cutting Costs in the Airline Industry
RegionFly is a small, private airline specializing in ultra-premium services. Founded shortly after the "Golden Age of airline travel," RegionFly's financial performance had been strong for several decades. More recently, however, the results have taken a downward trend, due in part to the impact of the Great Recession on the entire airline industry. Not only were premium service providers affected more significantly, but the recent wave of mergers and acquisitions involving large airlines also leveraged new economies of scale, thereby reducing costs and increasing the competitive pressure on air travel prices. As a result of the deterioration in their financial performance, RegionFly was recently acquired by a larger provider, and several top managers were replaced. The new management team, supported by an external consulting firm, introduced a series of aggressive cost-cutting measures that resulted in a downsizing of the workforce, and impacted some distinctive features of the services provided by RegionFly that had been historically associated with the success of the company. Additionally, top management introduced a new product profitability criterion to be used in support of strategic decisions related to the composition of the product mix offering. The application of the new criterion lead to the elimination of two of the seven routes included in RegionFly's portfolio. To the surprise of top management, however, the cost-cutting and product-cutting measures did not result in an improvement in the profitability of the company, which, in fact, deteriorated even further. As the profitability of another route falls under the threshold, management is faced with an important decision: should the product profitability criterion be enforced, thus eliminating yet another route from the portfolio? "RegionFly: Cutting Costs in the Airline Industry" provides an introduction to costs allocations, to the evaluation of product profitability, and to the impact of the methodology used to allocate fixed costs on strategic decisions, such as eliminating product lines or firm segments.
Swot Analysis of "RegionFly: Cutting Costs in the Airline Industry" written by Susanna Gallani, Eva Labro includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Regionfly Criterion facing as an external strategic factors. Some of the topics covered in RegionFly: Cutting Costs in the Airline Industry case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the RegionFly: Cutting Costs in the Airline Industry casestudy better are - – talent flight as more people leaving formal jobs, wage bills are increasing, technology disruption, increasing household debt because of falling income levels, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation,
increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of RegionFly: Cutting Costs in the Airline Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in RegionFly: Cutting Costs in the Airline Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Regionfly Criterion, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Regionfly Criterion 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 RegionFly: Cutting Costs in the Airline Industry can be done for the following purposes –
1. Strategic planning using facts provided in RegionFly: Cutting Costs in the Airline Industry case study
2. Improving business portfolio management of Regionfly Criterion
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 Regionfly Criterion
Strengths RegionFly: Cutting Costs in the Airline Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Regionfly Criterion in RegionFly: Cutting Costs in the Airline Industry Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Regionfly Criterion in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Regionfly Criterion is present in almost all the verticals within the industry. This has provided firm in RegionFly: Cutting Costs in the Airline Industry case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management
– Regionfly Criterion is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Regionfly Criterion digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Regionfly Criterion 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.
Learning organization
- Regionfly Criterion 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 Regionfly Criterion is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in RegionFly: Cutting Costs in the Airline Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Regionfly Criterion
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Regionfly Criterion does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Regionfly Criterion 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 RegionFly: Cutting Costs in the Airline Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Regionfly Criterion has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Regionfly Criterion 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.
Ability to lead change in Finance & Accounting field
– Regionfly Criterion 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 Regionfly Criterion in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Regionfly Criterion in the sector have low bargaining power. RegionFly: Cutting Costs in the Airline Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Regionfly Criterion to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Regionfly Criterion 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 Susanna Gallani, Eva Labro 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.
High brand equity
– Regionfly Criterion has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Regionfly Criterion to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses RegionFly: Cutting Costs in the Airline Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of RegionFly: Cutting Costs in the Airline Industry are -
Interest costs
– Compare to the competition, Regionfly Criterion 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.
No frontier risks strategy
– After analyzing the HBR case study RegionFly: Cutting Costs in the Airline Industry, 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.
Aligning sales with marketing
– It come across in the case study RegionFly: Cutting Costs in the Airline Industry 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 RegionFly: Cutting Costs in the Airline Industry can leverage the sales team experience to cultivate customer relationships as Regionfly Criterion is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Regionfly Criterion is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study RegionFly: Cutting Costs in the Airline Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Regionfly Criterion products
– To increase the profitability and margins on the products, Regionfly Criterion 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 RegionFly: Cutting Costs in the Airline Industry, is just above the industry average. Regionfly Criterion 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, Regionfly Criterion 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. Regionfly Criterion 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.
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 Regionfly Criterion supply chain. Even after few cautionary changes mentioned in the HBR case study - RegionFly: Cutting Costs in the Airline Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Regionfly Criterion vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Regionfly Criterion is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Regionfly Criterion needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Regionfly Criterion to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Susanna Gallani, Eva Labro suggests that, Regionfly Criterion 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Regionfly Criterion 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.
Opportunities RegionFly: Cutting Costs in the Airline Industry | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study RegionFly: Cutting Costs in the Airline Industry are -
Better consumer reach
– The expansion of the 5G network will help Regionfly Criterion to increase its market reach. Regionfly Criterion 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Regionfly Criterion is facing challenges because of the dominance of functional experts in the organization. RegionFly: Cutting Costs in the Airline Industry case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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 Regionfly Criterion in the consumer business. Now Regionfly Criterion can target international markets with far fewer capital restrictions requirements than the existing system.
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. Regionfly Criterion can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Regionfly Criterion can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. RegionFly: Cutting Costs in the Airline Industry suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Developing new processes and practices
– Regionfly Criterion 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Regionfly Criterion 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, RegionFly: Cutting Costs in the Airline Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Regionfly Criterion 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Regionfly Criterion in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Regionfly Criterion has opened avenues for new revenue streams for the organization in the industry. This can help Regionfly Criterion to build a more holistic ecosystem as suggested in the RegionFly: Cutting Costs in the Airline Industry case study. Regionfly Criterion can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Regionfly Criterion 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 Regionfly Criterion to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Regionfly Criterion can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Regionfly Criterion 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.
Threats RegionFly: Cutting Costs in the Airline Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study RegionFly: Cutting Costs in the Airline Industry are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Regionfly Criterion 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.
Environmental challenges
– Regionfly Criterion 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. Regionfly Criterion can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Regulatory challenges
– Regionfly Criterion 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.
Shortening product life cycle
– it is one of the major threat that Regionfly Criterion is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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 Regionfly Criterion in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Regionfly Criterion 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 Regionfly Criterion
– 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 Regionfly Criterion.
High dependence on third party suppliers
– Regionfly Criterion high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Regionfly Criterion can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Regionfly Criterion 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.
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 Regionfly Criterion.
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 Regionfly Criterion business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of RegionFly: Cutting Costs in the Airline Industry Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study RegionFly: Cutting Costs in the Airline Industry needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study RegionFly: Cutting Costs in the Airline Industry is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study RegionFly: Cutting Costs in the Airline Industry is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of RegionFly: Cutting Costs in the Airline Industry is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Regionfly Criterion needs to make to build a sustainable competitive advantage.