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 commodity prices, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, there is backlash against globalization, increasing energy prices,
competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, 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 -
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.
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.
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.
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.
Effective Research and Development (R&D)
– Airlines Airline 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Successful track record of launching new products
– Airlines Airline has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Airlines Airline 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.
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.
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.
Ability to recruit top talent
– Airlines Airline is one of the leading recruiters in the industry. Managers in the Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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 -
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel, in the dynamic environment Airlines Airline has struggled to respond to the nimble upstart competition. Airlines Airline has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel, is just above the industry average. Airlines Airline 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.
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.
Low market penetration in new markets
– Outside its home market of Airlines Airline, firm in the HBR case study Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Jose Gomez-Ibanez, Anjani Datla suggests that, Airlines Airline 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.
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.
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 Airlines Airline supply chain. Even after few cautionary changes mentioned in the HBR case study - Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Airlines Airline vulnerable to further global disruptions in South East Asia.
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.
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.
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 -
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.
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.
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.
Using analytics as competitive advantage
– Airlines Airline 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 Airlines and Antitrust: Scrutinizing the American Airlines-US Airways Merger Sequel - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Airlines Airline to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Airlines Airline in the consumer business. Now Airlines Airline can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Airlines Airline can use these opportunities to build new business models that can help the communities that Airlines Airline operates in. Secondly it can use opportunities from government spending in Global Business sector.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Airlines Airline can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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 Airlines Airline 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.
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.
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 -
High dependence on third party suppliers
– Airlines Airline 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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Airlines Airline 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.
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.
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 Airlines Airline.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Airlines Airline 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 Airlines Airline business can come under increasing regulations regarding data privacy, data security, etc.
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.
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 Airlines Airline in the Global Business sector and impact the bottomline of the organization.
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.
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 .
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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