VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America
The case describes the emergence and business model of VivaColombia, a low-cost Colombian airline. The airline was established in 2008, although it did not begin operations until May 2012. Since its inception, VivaColombia has grown within both the domestic and international markets. It provides passenger transportation services to major and intermediate cities in Colombia and to major cities in international destinations. In 2015, VivaColombia had nine Airbus A320 aircraft serving 21 routes in Colombia and six international routes in North, Central, and South America. It had over 500 employees. In 2015, it carried over 2.9 million passengers on domestic and international flights, with sales of $US119.2 million and profits of more than $US971,000. Although VivaColombia's board of directors was satisfied with the results achieved to date, they disagreed about how to proceed. Some board members believed that VivaColombia should consolidate its domestic operations. They were concerned about the large number of customer service complaints that had accompanied its rapid growth. In addition, two low-cost international carriers were planning to enter the Colombian market, which the board feared would jeopardize VivaColombia's position in the domestic market. Other board members thought VivaColombia should take advantage of the opportunity to expand into Brazil, a major Latin American market, presented by Aerocivil, Colombia's civil aviation authority, which had authorized VivaColombia to operate the Bogota, Colombia-Sao Paulo, Brazil route. Students must decide whether the company should expand into Brazil or consolidate operations in the domestic market.
Swot Analysis of "VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America" written by Elkin Rave, Juan Franco includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vivacolombia Domestic facing as an external strategic factors. Some of the topics covered in VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America case study are - Strategic Management Strategies, Decision making, Supply chain and Global Business.
Some of the macro environment factors that can be used to understand the VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America casestudy better are - – there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, increasing transportation and logistics costs, increasing energy prices, cloud computing is disrupting traditional business models,
there is backlash against globalization, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vivacolombia Domestic, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vivacolombia Domestic 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America can be done for the following purposes –
1. Strategic planning using facts provided in VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America case study
2. Improving business portfolio management of Vivacolombia Domestic
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Vivacolombia Domestic
Strengths VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vivacolombia Domestic in VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Vivacolombia Domestic 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.
Ability to recruit top talent
– Vivacolombia Domestic is one of the leading recruiters in the industry. Managers in the VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Vivacolombia Domestic has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vivacolombia Domestic to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Vivacolombia Domestic 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 Global Business segment
- digital transformation varies from industry to industry. For Vivacolombia Domestic digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vivacolombia Domestic 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.
Effective Research and Development (R&D)
– Vivacolombia Domestic 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Vivacolombia Domestic 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Vivacolombia Domestic in the sector have low bargaining power. VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vivacolombia Domestic to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Vivacolombia Domestic in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Vivacolombia Domestic is present in almost all the verticals within the industry. This has provided firm in VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America 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.
Ability to lead change in Global Business field
– Vivacolombia Domestic 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 Vivacolombia Domestic in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Vivacolombia Domestic
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vivacolombia Domestic does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America are -
Skills based hiring
– The stress on hiring functional specialists at Vivacolombia Domestic 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.
Low market penetration in new markets
– Outside its home market of Vivacolombia Domestic, firm in the HBR case study VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Elkin Rave, Juan Franco suggests that, Vivacolombia Domestic 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.
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 Vivacolombia Domestic supply chain. Even after few cautionary changes mentioned in the HBR case study - VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Vivacolombia Domestic vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Vivacolombia Domestic 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 - VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Vivacolombia Domestic is dominated by functional specialists. It is not different from other players in the Global Business segment. Vivacolombia Domestic needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vivacolombia Domestic to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America, it seems that the employees of Vivacolombia Domestic 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.
Slow to strategic competitive environment developments
– As VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America HBR case study mentions - Vivacolombia Domestic takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, firm in the HBR case study VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America 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 Vivacolombia Domestic 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America, it seems that company is thinking about the frontier risks that can impact Global Business 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America, in the dynamic environment Vivacolombia Domestic has struggled to respond to the nimble upstart competition. Vivacolombia Domestic has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America | 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America are -
Creating value in data economy
– The success of analytics program of Vivacolombia Domestic has opened avenues for new revenue streams for the organization in the industry. This can help Vivacolombia Domestic to build a more holistic ecosystem as suggested in the VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America case study. Vivacolombia Domestic can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Vivacolombia Domestic can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Learning at scale
– Online learning technologies has now opened space for Vivacolombia Domestic 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.
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 Vivacolombia Domestic 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Vivacolombia Domestic 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 Vivacolombia Domestic to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Vivacolombia Domestic can develop new processes and procedures in Global Business 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.
Buying journey improvements
– Vivacolombia Domestic can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America 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.
Leveraging digital technologies
– Vivacolombia Domestic 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Vivacolombia Domestic 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. Vivacolombia Domestic can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Vivacolombia Domestic 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. Vivacolombia Domestic 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vivacolombia Domestic 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Vivacolombia Domestic 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, VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America, 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America are -
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 Vivacolombia Domestic.
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. Vivacolombia Domestic 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Vivacolombia Domestic in the Global Business industry. The Global Business 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Vivacolombia Domestic with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Vivacolombia Domestic business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Vivacolombia Domestic 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.
Increasing wage structure of Vivacolombia Domestic
– 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 Vivacolombia Domestic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Vivacolombia Domestic 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America .
Consumer confidence and its impact on Vivacolombia Domestic 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.
Stagnating economy with rate increase
– Vivacolombia Domestic 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.
Regulatory challenges
– Vivacolombia Domestic 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 Global Business industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America, Vivacolombia Domestic may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Shortening product life cycle
– it is one of the major threat that Vivacolombia Domestic is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America 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 VivaColombia: The Challenge of Growing a Low-Cost Airline in Latin America 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 Vivacolombia Domestic needs to make to build a sustainable competitive advantage.