Airbus A3XX: Developing the World's Largest Commercial Jet (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Airbus A3XX: Developing the World's Largest Commercial Jet (A)
In July 2000, Airbus Industries' supervisory board is on the verge of approving a $13 billion investment for the development of a new super jumbo jet known as the A3XX that would seat from 550 to 1,000 passengers. Having secured approximately 20 orders for the new jet, the board must decide whether there is sufficient long-term demand for the A3XX to justify the investment. At the time, Airbus was predicting that the market for very large aircraft (VLA), those seating more than 500 passengers, would exceed 1,500 aircraft over the next 20 years and would generate sales in excess of $350 billion. According to Airbus, it needed to sell 250 aircraft to break even and could sell as many as 750 aircraft over the next 20 years. This case explores the two sets of forecasts and asks students whether they would proceed with the launch given the size of the investment and the uncertainty in long-term demand.
Swot Analysis of "Airbus A3XX: Developing the World's Largest Commercial Jet (A)" written by Benjamin C. Esty, Michael Kane includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that A3xx Airbus facing as an external strategic factors. Some of the topics covered in Airbus A3XX: Developing the World's Largest Commercial Jet (A) case study are - Strategic Management Strategies, Competitive strategy, Costs, Financial analysis, Government, Marketing, Product development, Project management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Airbus A3XX: Developing the World's Largest Commercial Jet (A) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, technology disruption,
increasing household debt because of falling income levels, increasing commodity prices, etc
Introduction to SWOT Analysis of Airbus A3XX: Developing the World's Largest Commercial Jet (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Airbus A3XX: Developing the World's Largest Commercial Jet (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the A3xx Airbus, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which A3xx Airbus 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) can be done for the following purposes –
1. Strategic planning using facts provided in Airbus A3XX: Developing the World's Largest Commercial Jet (A) case study
2. Improving business portfolio management of A3xx Airbus
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of A3xx Airbus
Strengths Airbus A3XX: Developing the World's Largest Commercial Jet (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of A3xx Airbus in Airbus A3XX: Developing the World's Largest Commercial Jet (A) Harvard Business Review case study are -
Effective Research and Development (R&D)
– A3xx Airbus 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– A3xx Airbus is present in almost all the verticals within the industry. This has provided firm in Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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 recruit top talent
– A3xx Airbus is one of the leading recruiters in the industry. Managers in the Airbus A3XX: Developing the World's Largest Commercial Jet (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– A3xx Airbus 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– A3xx Airbus is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that A3xx Airbus 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.
Operational resilience
– The operational resilience strategy in the Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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.
Successful track record of launching new products
– A3xx Airbus has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. A3xx Airbus 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
– A3xx Airbus has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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.
Ability to lead change in Finance & Accounting field
– A3xx Airbus 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 A3xx Airbus in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of A3xx Airbus in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- A3xx Airbus 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 A3xx Airbus is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Airbus A3XX: Developing the World's Largest Commercial Jet (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Airbus A3XX: Developing the World's Largest Commercial Jet (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Airbus A3XX: Developing the World's Largest Commercial Jet (A) are -
Interest costs
– Compare to the competition, A3xx Airbus 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.
Increasing silos among functional specialists
– The organizational structure of A3xx Airbus is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. A3xx Airbus needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help A3xx Airbus to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at A3xx Airbus 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Benjamin C. Esty, Michael Kane suggests that, A3xx Airbus is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, A3xx Airbus 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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 A3xx Airbus has relatively successful track record of launching new products.
Need for greater diversity
– A3xx Airbus 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.
Slow decision making process
– As mentioned earlier in the report, A3xx Airbus 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. A3xx Airbus 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, A3xx Airbus is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Airbus A3XX: Developing the World's Largest Commercial Jet (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Airbus A3XX: Developing the World's Largest Commercial Jet (A), is just above the industry average. A3xx Airbus needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Airbus A3XX: Developing the World's Largest Commercial Jet (A), in the dynamic environment A3xx Airbus has struggled to respond to the nimble upstart competition. A3xx Airbus has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Airbus A3XX: Developing the World's Largest Commercial Jet (A) | 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, A3xx Airbus can use these opportunities to build new business models that can help the communities that A3xx Airbus operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Manufacturing automation
– A3xx Airbus can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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. A3xx Airbus can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, A3xx Airbus is facing challenges because of the dominance of functional experts in the organization. Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. A3xx Airbus can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– A3xx Airbus 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help A3xx Airbus to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– A3xx Airbus can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for A3xx Airbus 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 A3xx Airbus to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects A3xx Airbus can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 A3xx Airbus 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.
Developing new processes and practices
– A3xx Airbus can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, A3xx Airbus 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.
Learning at scale
– Online learning technologies has now opened space for A3xx Airbus 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Airbus A3XX: Developing the World's Largest Commercial Jet (A) are -
Regulatory challenges
– A3xx Airbus needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Stagnating economy with rate increase
– A3xx Airbus 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.
Shortening product life cycle
– it is one of the major threat that A3xx Airbus is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– A3xx Airbus 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. A3xx Airbus can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents A3xx Airbus with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Airbus A3XX: Developing the World's Largest Commercial Jet (A), A3xx Airbus may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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 A3xx Airbus.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. A3xx Airbus can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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 A3xx Airbus in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, A3xx Airbus 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) .
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. A3xx Airbus needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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 Airbus A3XX: Developing the World's Largest Commercial Jet (A) 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 A3xx Airbus needs to make to build a sustainable competitive advantage.
