Case Study Description of Frontier Airlines, Inc. (A) (Condensed)
Describes a regional airline that is on the losing end of a strategic application of information technology. Management is focusing on internal data processing issues while its principal, and larger, competitor is using its computerized reservations system to gain control of ticket distribution channels. A rewritten version of an earlier case.
Swot Analysis of "Frontier Airlines, Inc. (A) (Condensed)" written by F. Warren McFarlan, Duncan G. Copeland includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Computerized Reservations facing as an external strategic factors. Some of the topics covered in Frontier Airlines, Inc. (A) (Condensed) case study are - Strategic Management Strategies, IT, Regulation and Technology & Operations.
Some of the macro environment factors that can be used to understand the Frontier Airlines, Inc. (A) (Condensed) casestudy better are - – increasing transportation and logistics costs, central banks are concerned over increasing inflation, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion,
increasing energy prices, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Frontier Airlines, Inc. (A) (Condensed)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Frontier Airlines, Inc. (A) (Condensed) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Computerized Reservations, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Computerized Reservations 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 Frontier Airlines, Inc. (A) (Condensed) can be done for the following purposes –
1. Strategic planning using facts provided in Frontier Airlines, Inc. (A) (Condensed) case study
2. Improving business portfolio management of Computerized Reservations
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Computerized Reservations
Strengths Frontier Airlines, Inc. (A) (Condensed) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Computerized Reservations in Frontier Airlines, Inc. (A) (Condensed) Harvard Business Review case study are -
Successful track record of launching new products
– Computerized Reservations has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Computerized Reservations 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.
Training and development
– Computerized Reservations has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Frontier Airlines, Inc. (A) (Condensed) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the Frontier Airlines, Inc. (A) (Condensed) 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.
Ability to recruit top talent
– Computerized Reservations is one of the leading recruiters in the industry. Managers in the Frontier Airlines, Inc. (A) (Condensed) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Computerized Reservations in the sector have low bargaining power. Frontier Airlines, Inc. (A) (Condensed) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Computerized Reservations to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Computerized Reservations is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Computerized Reservations 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 Frontier Airlines, Inc. (A) (Condensed) - 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 switching costs
– The high switching costs that Computerized Reservations 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.
Superior customer experience
– The customer experience strategy of Computerized Reservations in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Computerized Reservations digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Computerized Reservations 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.
Sustainable margins compare to other players in Technology & Operations industry
– Frontier Airlines, Inc. (A) (Condensed) firm has clearly differentiated products in the market place. This has enabled Computerized Reservations to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Computerized Reservations to invest into research and development (R&D) and innovation.
Innovation driven organization
– Computerized Reservations is one of the most innovative firm in sector. Manager in Frontier Airlines, Inc. (A) (Condensed) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Frontier Airlines, Inc. (A) (Condensed) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Frontier Airlines, Inc. (A) (Condensed) are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Frontier Airlines, Inc. (A) (Condensed), in the dynamic environment Computerized Reservations has struggled to respond to the nimble upstart competition. Computerized Reservations has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Computerized Reservations, firm in the HBR case study Frontier Airlines, Inc. (A) (Condensed) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Frontier Airlines, Inc. (A) (Condensed) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Computerized Reservations has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Frontier Airlines, Inc. (A) (Condensed), it seems that the employees of Computerized Reservations 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.
Interest costs
– Compare to the competition, Computerized Reservations 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Computerized Reservations is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Frontier Airlines, Inc. (A) (Condensed) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners
– Because of the regulatory requirements, F. Warren McFarlan, Duncan G. Copeland suggests that, Computerized Reservations 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.
Products dominated business model
– Even though Computerized Reservations 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 - Frontier Airlines, Inc. (A) (Condensed) should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Frontier Airlines, Inc. (A) (Condensed), it seems that company is thinking about the frontier risks that can impact Technology & Operations 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.
Increasing silos among functional specialists
– The organizational structure of Computerized Reservations is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Computerized Reservations needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Computerized Reservations to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Frontier Airlines, Inc. (A) (Condensed) HBR case study mentions - Computerized Reservations 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.
Opportunities Frontier Airlines, Inc. (A) (Condensed) | 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 Frontier Airlines, Inc. (A) (Condensed) are -
Building a culture of innovation
– managers at Computerized Reservations 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 Technology & Operations segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Computerized Reservations in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Computerized Reservations 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, Computerized Reservations 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Computerized Reservations can use these opportunities to build new business models that can help the communities that Computerized Reservations operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Manufacturing automation
– Computerized Reservations can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Computerized Reservations 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. Computerized Reservations 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Computerized Reservations can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Computerized Reservations can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Computerized Reservations is facing challenges because of the dominance of functional experts in the organization. Frontier Airlines, Inc. (A) (Condensed) 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.
Creating value in data economy
– The success of analytics program of Computerized Reservations has opened avenues for new revenue streams for the organization in the industry. This can help Computerized Reservations to build a more holistic ecosystem as suggested in the Frontier Airlines, Inc. (A) (Condensed) case study. Computerized Reservations can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Computerized Reservations 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Computerized Reservations 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, Frontier Airlines, Inc. (A) (Condensed), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Frontier Airlines, Inc. (A) (Condensed) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Frontier Airlines, Inc. (A) (Condensed) are -
Regulatory challenges
– Computerized Reservations 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 Technology & Operations industry regulations.
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
– Computerized Reservations has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Computerized Reservations needs to keep up with the evolution of technology in the Technology & Operations 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.
Shortening product life cycle
– it is one of the major threat that Computerized Reservations is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Computerized Reservations.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Computerized Reservations can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Computerized Reservations 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 Computerized Reservations in the Technology & Operations sector and impact the bottomline of the organization.
Increasing wage structure of Computerized Reservations
– 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 Computerized Reservations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Computerized Reservations 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 Frontier Airlines, Inc. (A) (Condensed) .
Environmental challenges
– Computerized Reservations 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. Computerized Reservations can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Computerized Reservations in the Technology & Operations industry. The Technology & Operations 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.
Weighted SWOT Analysis of Frontier Airlines, Inc. (A) (Condensed) 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 Frontier Airlines, Inc. (A) (Condensed) 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 Frontier Airlines, Inc. (A) (Condensed) 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 Frontier Airlines, Inc. (A) (Condensed) 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 Frontier Airlines, Inc. (A) (Condensed) 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 Computerized Reservations needs to make to build a sustainable competitive advantage.
