Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital
In order to protect its operation from 2007 onwards, Dragonair needed to replace a spare engine that was deemed beyond economic repair back in late 2002. Three options were available to address this need. First, Dragonair could purchase the engine outright, which would require it to place an order with the manufacturer 12 months in advance and pay an upfront deposit. Second, the airline could choose a sale-and-leaseback transaction with a leasing company whereby it would sell the engine it purchased to the leasing company and then lease it back from the leasing company for an agreed period. Third, the airline could lease a new engine directly from a leasing company, in which case the leasing arrangement would be the same as the sale-and-leaseback transaction.
Swot Analysis of "Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital" written by Su Han Chan, Ko Wang, Andrew Lee includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Leasing Engine facing as an external strategic factors. Some of the topics covered in Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital case study are - Strategic Management Strategies, Costs and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital casestudy better are - – wage bills are increasing, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing government debt because of Covid-19 spendings, increasing energy prices, etc
Introduction to SWOT Analysis of Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Leasing Engine, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Leasing Engine 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital can be done for the following purposes –
1. Strategic planning using facts provided in Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital case study
2. Improving business portfolio management of Leasing Engine
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 Leasing Engine
Strengths Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Leasing Engine in Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital Harvard Business Review case study are -
Analytics focus
– Leasing Engine 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 Su Han Chan, Ko Wang, Andrew Lee 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)
– Leasing Engine 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Leasing Engine has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Leasing Engine to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Leasing Engine has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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.
Superior customer experience
– The customer experience strategy of Leasing Engine in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Leasing Engine is one of the leading recruiters in the industry. Managers in the Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Leasing Engine is present in almost all the verticals within the industry. This has provided firm in Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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 Finance & Accounting field
– Leasing Engine 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 Leasing Engine in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Leasing Engine has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Leasing Engine 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.
Low bargaining power of suppliers
– Suppliers of Leasing Engine in the sector have low bargaining power. Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Leasing Engine to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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.
Organizational Resilience of Leasing Engine
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Leasing Engine does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital, is just above the industry average. Leasing Engine 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.
Capital Spending Reduction
– Even during the low interest decade, Leasing Engine 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 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 Leasing Engine supply chain. Even after few cautionary changes mentioned in the HBR case study - Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Leasing Engine vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Leasing Engine 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital, in the dynamic environment Leasing Engine has struggled to respond to the nimble upstart competition. Leasing Engine has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital can leverage the sales team experience to cultivate customer relationships as Leasing Engine is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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 Leasing Engine has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Leasing Engine is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Leasing Engine needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Leasing Engine to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Leasing Engine 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.
Skills based hiring
– The stress on hiring functional specialists at Leasing Engine 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital | 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Leasing Engine 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, Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Leasing Engine 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 Finance & Accounting segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Leasing Engine can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Leasing Engine 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Leasing Engine is facing challenges because of the dominance of functional experts in the organization. Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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.
Developing new processes and practices
– Leasing Engine 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.
Learning at scale
– Online learning technologies has now opened space for Leasing Engine 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.
Leveraging digital technologies
– Leasing Engine 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.
Using analytics as competitive advantage
– Leasing Engine 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Leasing Engine to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Leasing Engine in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Leasing Engine 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, Leasing Engine can use these opportunities to build new business models that can help the communities that Leasing Engine operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Leasing Engine 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.
Threats Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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 Leasing Engine.
Consumer confidence and its impact on Leasing Engine 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.
Regulatory challenges
– Leasing Engine 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.
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. Leasing Engine 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.
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.
Technology acceleration in Forth Industrial Revolution
– Leasing Engine has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Leasing Engine needs to keep up with the evolution of technology in the Finance & Accounting 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.
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 Leasing Engine business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Leasing Engine 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.
Environmental challenges
– Leasing Engine 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. Leasing Engine can take advantage of this fund but it will also bring new competitors in the Finance & Accounting 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Leasing Engine 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital .
Shortening product life cycle
– it is one of the major threat that Leasing Engine is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Leasing Engine needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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 Hong Kong Dragon Airlines Limited (A): Determining the Cost of Capital 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 Leasing Engine needs to make to build a sustainable competitive advantage.
