Case Study Description of Northwest Airlines: Strategic Alliance and Strategic Position--May 1996
Describes the strategic position of Northwest Airlines in 1996 and discusses its financial rebound and changes and improvements since the 1993 restructuring agreement. Describes the company's new strategy and its management of principal strategic assets, focusing at length on the strategic alliance between Northwest and KLM Royal Dutch Airlines. Describes how the alliance was formed, how it obtained antitrust immunity from the U.S. Department of Transportation, and how that ruling facilitated operating cooperation between the two partners. Concludes by considering strains in the alliance and the impact of competitive alliances formed in 1996 by leading U.S. and European airlines.
Swot Analysis of "Northwest Airlines: Strategic Alliance and Strategic Position--May 1996" written by Leonard A. Schlesinger, Davis Dyer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Northwest Alliance facing as an external strategic factors. Some of the topics covered in Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 case study are - Strategic Management Strategies, Reorganization and Technology & Operations.
Some of the macro environment factors that can be used to understand the Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 casestudy better are - – increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, geopolitical disruptions,
cloud computing is disrupting traditional business models, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Northwest Airlines: Strategic Alliance and Strategic Position--May 1996
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Northwest Alliance, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Northwest Alliance 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 Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 can be done for the following purposes –
1. Strategic planning using facts provided in Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 case study
2. Improving business portfolio management of Northwest Alliance
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 Northwest Alliance
Strengths Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Northwest Alliance in Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 Harvard Business Review case study are -
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Northwest Alliance digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Northwest Alliance has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Northwest Alliance is one of the most innovative firm in sector. Manager in Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Technology & Operations industry
– Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 firm has clearly differentiated products in the market place. This has enabled Northwest Alliance to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Northwest Alliance to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Northwest Alliance in the sector have low bargaining power. Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Northwest Alliance to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Northwest Alliance has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Northwest Alliance to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Northwest Alliance has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Alliance 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.
Superior customer experience
– The customer experience strategy of Northwest Alliance in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Northwest Alliance 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 Leonard A. Schlesinger, Davis Dyer 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.
Diverse revenue streams
– Northwest Alliance is present in almost all the verticals within the industry. This has provided firm in Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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.
Learning organization
- Northwest Alliance 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 Northwest Alliance is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 are -
High operating costs
– Compare to the competitors, firm in the HBR case study Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Alliance 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Northwest Alliance is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 cash cycle compare to competitors
Northwest Alliance 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, Northwest Alliance 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Northwest Alliance 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.
No frontier risks strategy
– After analyzing the HBR case study Northwest Airlines: Strategic Alliance and Strategic Position--May 1996, 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.
Slow to strategic competitive environment developments
– As Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 HBR case study mentions - Northwest Alliance 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.
Lack of clear differentiation of Northwest Alliance products
– To increase the profitability and margins on the products, Northwest Alliance needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Alliance has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 can leverage the sales team experience to cultivate customer relationships as Northwest Alliance is planning to shift buying processes online.
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 Northwest Alliance supply chain. Even after few cautionary changes mentioned in the HBR case study - Northwest Airlines: Strategic Alliance and Strategic Position--May 1996, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Northwest Alliance vulnerable to further global disruptions in South East Asia.
Opportunities Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 | 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 Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 are -
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. Northwest Alliance can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Northwest Alliance 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, Northwest Airlines: Strategic Alliance and Strategic Position--May 1996, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Northwest Alliance can develop new processes and procedures in Technology & Operations 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.
Learning at scale
– Online learning technologies has now opened space for Northwest Alliance 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Northwest Alliance can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Northwest Alliance in the consumer business. Now Northwest Alliance can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Northwest Alliance 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.
Creating value in data economy
– The success of analytics program of Northwest Alliance has opened avenues for new revenue streams for the organization in the industry. This can help Northwest Alliance to build a more holistic ecosystem as suggested in the Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 case study. Northwest Alliance 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 Northwest Alliance 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 Northwest Alliance to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Northwest Alliance can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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.
Loyalty marketing
– Northwest Alliance 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Northwest Alliance 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, Northwest Alliance can use these opportunities to build new business models that can help the communities that Northwest Alliance operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Threats Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Northwest Alliance with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Northwest Alliance.
Shortening product life cycle
– it is one of the major threat that Northwest Alliance is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Northwest Alliance 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.
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. Northwest Alliance 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.
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. Northwest Alliance needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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 Northwest Alliance business can come under increasing regulations regarding data privacy, data security, etc.
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.
Consumer confidence and its impact on Northwest Alliance 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Northwest Alliance 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 Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Northwest Alliance 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.
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.
Environmental challenges
– Northwest Alliance 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. Northwest Alliance can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Weighted SWOT Analysis of Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Airlines: Strategic Alliance and Strategic Position--May 1996 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 Northwest Alliance needs to make to build a sustainable competitive advantage.
