Cathay Pacific Airways: "Service Straight from the Heart" SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Cathay Pacific Airways: "Service Straight from the Heart"
In 1993, the cabin crew of Cathay Pacific Airways, Hong Kong's flag carrier, went on a large-scale strike, which damaged crew morale. Peter Buecking was appointed general manager of inflight services in 1995. With his inflight service strategy, he restored the morale of cabin crew and improved the quality of inflight services. With the onset of the Asian economic crisis in 1997, Cathay Pacific's revenues dwindled and profits declined. Inflight Services Department (ISD) was under tremendous pressure to cut costs. At the same time, Buecking received a promotion and left ISD. How would his successor in ISD go about cutting costs while maintaining the cabin crew's morale and the quality of inflight services?
Swot Analysis of "Cathay Pacific Airways: "Service Straight from the Heart"" written by Gerard Tocquer, Eva Y.H. Kwan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Inflight Isd facing as an external strategic factors. Some of the topics covered in Cathay Pacific Airways: "Service Straight from the Heart" case study are - Strategic Management Strategies, Motivating people, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Cathay Pacific Airways: "Service Straight from the Heart" casestudy better are - – increasing government debt because of Covid-19 spendings, geopolitical disruptions, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing household debt because of falling income levels,
cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Cathay Pacific Airways: "Service Straight from the Heart"
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cathay Pacific Airways: "Service Straight from the Heart" case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Inflight Isd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Inflight Isd 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 Cathay Pacific Airways: "Service Straight from the Heart" can be done for the following purposes –
1. Strategic planning using facts provided in Cathay Pacific Airways: "Service Straight from the Heart" case study
2. Improving business portfolio management of Inflight Isd
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 Inflight Isd
Strengths Cathay Pacific Airways: "Service Straight from the Heart" | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Inflight Isd in Cathay Pacific Airways: "Service Straight from the Heart" Harvard Business Review case study are -
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Inflight Isd digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Inflight Isd 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.
Organizational Resilience of Inflight Isd
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Inflight Isd does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Inflight Isd has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cathay Pacific Airways: "Service Straight from the Heart" 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.
Strong track record of project management
– Inflight Isd is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Inflight Isd is one of the most innovative firm in sector. Manager in Cathay Pacific Airways: "Service Straight from the Heart" Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Inflight Isd 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.
Analytics focus
– Inflight Isd 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 Gerard Tocquer, Eva Y.H. Kwan 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.
Effective Research and Development (R&D)
– Inflight Isd 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 Cathay Pacific Airways: "Service Straight from the Heart" - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Inflight Isd 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.
High brand equity
– Inflight Isd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Inflight Isd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Inflight Isd in the sector have low bargaining power. Cathay Pacific Airways: "Service Straight from the Heart" has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Inflight Isd to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Technology & Operations industry
– Cathay Pacific Airways: "Service Straight from the Heart" firm has clearly differentiated products in the market place. This has enabled Inflight Isd to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Inflight Isd to invest into research and development (R&D) and innovation.
Weaknesses Cathay Pacific Airways: "Service Straight from the Heart" | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cathay Pacific Airways: "Service Straight from the Heart" are -
Capital Spending Reduction
– Even during the low interest decade, Inflight Isd 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Cathay Pacific Airways: "Service Straight from the Heart" 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 Inflight Isd 's lucrative customers.
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 Inflight Isd supply chain. Even after few cautionary changes mentioned in the HBR case study - Cathay Pacific Airways: "Service Straight from the Heart", it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Inflight Isd vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Inflight Isd 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. Inflight Isd 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.
Need for greater diversity
– Inflight Isd has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
No frontier risks strategy
– After analyzing the HBR case study Cathay Pacific Airways: "Service Straight from the Heart", 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.
Interest costs
– Compare to the competition, Inflight Isd 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Gerard Tocquer, Eva Y.H. Kwan suggests that, Inflight Isd 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.
Aligning sales with marketing
– It come across in the case study Cathay Pacific Airways: "Service Straight from the Heart" 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 Cathay Pacific Airways: "Service Straight from the Heart" can leverage the sales team experience to cultivate customer relationships as Inflight Isd is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cathay Pacific Airways: "Service Straight from the Heart", in the dynamic environment Inflight Isd has struggled to respond to the nimble upstart competition. Inflight Isd has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Inflight Isd has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities Cathay Pacific Airways: "Service Straight from the Heart" | 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 Cathay Pacific Airways: "Service Straight from the Heart" are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Inflight Isd is facing challenges because of the dominance of functional experts in the organization. Cathay Pacific Airways: "Service Straight from the Heart" 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 Inflight Isd has opened avenues for new revenue streams for the organization in the industry. This can help Inflight Isd to build a more holistic ecosystem as suggested in the Cathay Pacific Airways: "Service Straight from the Heart" case study. Inflight Isd can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Inflight Isd 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.
Developing new processes and practices
– Inflight Isd 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.
Building a culture of innovation
– managers at Inflight Isd 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.
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 Inflight Isd in the consumer business. Now Inflight Isd can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Inflight Isd 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Inflight Isd to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Inflight Isd can use these opportunities to build new business models that can help the communities that Inflight Isd operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Using analytics as competitive advantage
– Inflight Isd 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 Cathay Pacific Airways: "Service Straight from the Heart" - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Inflight Isd to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Inflight Isd can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Inflight Isd can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Inflight Isd 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.
Threats Cathay Pacific Airways: "Service Straight from the Heart" External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cathay Pacific Airways: "Service Straight from the Heart" are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cathay Pacific Airways: "Service Straight from the Heart", Inflight Isd may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Inflight Isd with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Inflight Isd 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.
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. Inflight Isd can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Inflight Isd.
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 Inflight Isd in the Technology & Operations sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Inflight Isd has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Inflight Isd 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.
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. Inflight Isd 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.
Regulatory challenges
– Inflight Isd 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Inflight Isd 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 Cathay Pacific Airways: "Service Straight from the Heart" .
Shortening product life cycle
– it is one of the major threat that Inflight Isd is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Inflight Isd 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. Inflight Isd can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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.
Weighted SWOT Analysis of Cathay Pacific Airways: "Service Straight from the Heart" 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 Cathay Pacific Airways: "Service Straight from the Heart" 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 Cathay Pacific Airways: "Service Straight from the Heart" 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 Cathay Pacific Airways: "Service Straight from the Heart" 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 Cathay Pacific Airways: "Service Straight from the Heart" 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 Inflight Isd needs to make to build a sustainable competitive advantage.
