Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel
This sequel accompanies case number 2044.0. In August 2013, the Antitrust Division of the Department of Justice (DOJ) shocked many in the airline industry by filing a lawsuit to block the merger of American Airlines and US Airways on the grounds that the merger would reduce competition. The two airlines had announced their intention to merge in February, making way for the creation of the largest airline in the world. The new airline would carry roughly 200 million passengers a year, employ more than 100,000 workers, and have total revenues of nearly $40 billion. The American Airlines-US Airways merger was only the latest, albeit the largest, in a recent spate of airline mergers. During the first decade of the twenty-first century, the airline industry had been plagued by economic recession, high fuel prices, record losses and bankruptcies. Starting in the mid-2000s, airline executives responded with an aggressive program of consolidation. Mega deals, such as the merger of Delta and Northwest (in 2008), United and Continental (2010), and, Southwest and AirTran (2011), had dramatically reshaped the industry. If approved by federal authorities, the merger between American Airlines and US Airways would leave four major airlines (American, Delta, United and Southwest) in control of 80 percent of the domestic market, down from nine major carriers in 2005. Part A of this case summarizes the historical ups and downs of the volatile US airline industry, the concerns raised by the DOJ and the responses of American Airlines and US Airways, and asks students to weigh the evidence and determine if the advantages of combining the two airlines outweigh the potential harm to consumers. The case sequel describes how the DOJ eventually settled the lawsuit with the airlines, after American agreed to divest slots and gates at several airports in November 2013.
Swot Analysis of "Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel" written by Jose Gomez-Ibanez, Anjani Datla includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Airlines Airline facing as an external strategic factors. Some of the topics covered in Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel case study are - Strategic Management Strategies, Financial management, Government, Market research, Mergers & acquisitions and Global Business.
Some of the macro environment factors that can be used to understand the Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel casestudy better are - – increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google,
challanges to central banks by blockchain based private currencies, there is backlash against globalization, etc
Introduction to SWOT Analysis of Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Airlines Airline, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Airlines Airline 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel can be done for the following purposes –
1. Strategic planning using facts provided in Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel case study
2. Improving business portfolio management of Airlines Airline
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 Airlines Airline
Strengths Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Airlines Airline in Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel Harvard Business Review case study are -
Highly skilled collaborators
– Airlines Airline 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Airlines Airline is one of the most innovative firm in sector. Manager in Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Airlines Airline
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Airlines Airline does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Airlines Airline is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Airlines Airline 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 Airlines Airline is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Airlines Airline 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.
Diverse revenue streams
– Airlines Airline is present in almost all the verticals within the industry. This has provided firm in Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Airlines Airline digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Airlines Airline 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.
Analytics focus
– Airlines Airline 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 Jose Gomez-Ibanez, Anjani Datla 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.
Low bargaining power of suppliers
– Suppliers of Airlines Airline in the sector have low bargaining power. Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Airlines Airline to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Global Business industry
– Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel firm has clearly differentiated products in the market place. This has enabled Airlines Airline to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Airlines Airline to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Airlines Airline in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel are -
Workers concerns about automation
– As automation is fast increasing in the segment, Airlines Airline 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.
Increasing silos among functional specialists
– The organizational structure of Airlines Airline is dominated by functional specialists. It is not different from other players in the Global Business segment. Airlines Airline needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Airlines Airline to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel, 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.
Products dominated business model
– Even though Airlines Airline 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 - Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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 Airlines Airline 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Airlines Airline 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. Airlines Airline 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.
Capital Spending Reduction
– Even during the low interest decade, Airlines Airline 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.
Lack of clear differentiation of Airlines Airline products
– To increase the profitability and margins on the products, Airlines Airline needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Airlines Airline is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Airlines Airline 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel, it seems that the employees of Airlines Airline 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.
Opportunities Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel | 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel are -
Manufacturing automation
– Airlines Airline 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.
Building a culture of innovation
– managers at Airlines Airline 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 Global Business segment.
Loyalty marketing
– Airlines Airline 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.
Learning at scale
– Online learning technologies has now opened space for Airlines Airline 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.
Creating value in data economy
– The success of analytics program of Airlines Airline has opened avenues for new revenue streams for the organization in the industry. This can help Airlines Airline to build a more holistic ecosystem as suggested in the Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel case study. Airlines Airline can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Airlines Airline 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Airlines Airline is facing challenges because of the dominance of functional experts in the organization. Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Airlines Airline 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 Airlines Airline to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Airlines Airline 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, Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Airlines Airline can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Airlines Airline in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Buying journey improvements
– Airlines Airline can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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.
Better consumer reach
– The expansion of the 5G network will help Airlines Airline to increase its market reach. Airlines Airline will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Threats Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel, Airlines Airline 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 .
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.
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. Airlines Airline needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Airlines Airline business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Airlines Airline
– 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 Airlines Airline.
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.
Technology acceleration in Forth Industrial Revolution
– Airlines Airline has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Airlines Airline needs to keep up with the evolution of technology in the Global Business 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.
Shortening product life cycle
– it is one of the major threat that Airlines Airline is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Airlines Airline 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. Airlines Airline can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Stagnating economy with rate increase
– Airlines Airline 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.
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. Airlines Airline 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.
Consumer confidence and its impact on Airlines Airline demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Airlines Airline 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel .
Weighted SWOT Analysis of Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel 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 Airlines Airline needs to make to build a sustainable competitive advantage.
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