Korean Air: The "Nut Rage" Incident SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Korean Air: The "Nut Rage" Incident
In December 2014, after receiving poor service on a flight, a senior vice president at Korean Air lashed out at the flight attendants and delayed the flight's departure until the chief attendant was returned to the gate. Following a tepid apology from her father, Korean Air's chief executive officer, her actions drew a public backlash because they exposed the sense of entitlement prevalent among rich family conglomerates in South Korea. How should she have reacted in the face of the service failure? Why had she become the target of a public backlash? What could Korean Air do to mitigate the negative effects of this incident? Thompson S.H. Teo is affiliated with National University of Singapore. Mei Jie Zhao is affiliated with National University of Singapore.
Swot Analysis of "Korean Air: The "Nut Rage" Incident" written by Thompson SH Teo, Mei Jie Zhao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Korean Air facing as an external strategic factors. Some of the topics covered in Korean Air: The "Nut Rage" Incident case study are - Strategic Management Strategies, Leadership, Public relations and Global Business.
Some of the macro environment factors that can be used to understand the Korean Air: The "Nut Rage" Incident casestudy better are - – there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , wage bills are increasing, geopolitical disruptions,
challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Korean Air: The "Nut Rage" Incident
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Korean Air: The "Nut Rage" Incident case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Korean Air, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Korean Air 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 Korean Air: The "Nut Rage" Incident can be done for the following purposes –
1. Strategic planning using facts provided in Korean Air: The "Nut Rage" Incident case study
2. Improving business portfolio management of Korean Air
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 Korean Air
Strengths Korean Air: The "Nut Rage" Incident | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Korean Air in Korean Air: The "Nut Rage" Incident Harvard Business Review case study are -
Ability to recruit top talent
– Korean Air is one of the leading recruiters in the industry. Managers in the Korean Air: The "Nut Rage" Incident 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
– Korean Air 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 Thompson SH Teo, Mei Jie Zhao 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.
Successful track record of launching new products
– Korean Air has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Korean Air 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.
Operational resilience
– The operational resilience strategy in the Korean Air: The "Nut Rage" Incident 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.
Effective Research and Development (R&D)
– Korean Air 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 Korean Air: The "Nut Rage" Incident - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Korean Air
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Korean Air does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Global Business field
– Korean Air 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 Korean Air in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Korean Air is present in almost all the verticals within the industry. This has provided firm in Korean Air: The "Nut Rage" Incident 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.
Highly skilled collaborators
– Korean Air 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 Korean Air: The "Nut Rage" Incident HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Korean Air are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High brand equity
– Korean Air has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Korean Air to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Korean Air digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Korean Air 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.
Weaknesses Korean Air: The "Nut Rage" Incident | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Korean Air: The "Nut Rage" Incident are -
Need for greater diversity
– Korean Air 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.
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 Korean Air supply chain. Even after few cautionary changes mentioned in the HBR case study - Korean Air: The "Nut Rage" Incident, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Korean Air vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Korean Air 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Korean Air 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 operating costs
– Compare to the competitors, firm in the HBR case study Korean Air: The "Nut Rage" Incident 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 Korean Air 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Korean Air, firm in the HBR case study Korean Air: The "Nut Rage" Incident needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Thompson SH Teo, Mei Jie Zhao suggests that, Korean Air 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.
Interest costs
– Compare to the competition, Korean Air 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.
Products dominated business model
– Even though Korean Air 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 - Korean Air: The "Nut Rage" Incident should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Korean Air: The "Nut Rage" Incident, in the dynamic environment Korean Air has struggled to respond to the nimble upstart competition. Korean Air 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 Korean Air: The "Nut Rage" Incident, is just above the industry average. Korean Air 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.
Opportunities Korean Air: The "Nut Rage" Incident | 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 Korean Air: The "Nut Rage" Incident are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Korean Air 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.
Creating value in data economy
– The success of analytics program of Korean Air has opened avenues for new revenue streams for the organization in the industry. This can help Korean Air to build a more holistic ecosystem as suggested in the Korean Air: The "Nut Rage" Incident case study. Korean Air can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Korean Air is facing challenges because of the dominance of functional experts in the organization. Korean Air: The "Nut Rage" Incident 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.
Building a culture of innovation
– managers at Korean Air 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.
Better consumer reach
– The expansion of the 5G network will help Korean Air to increase its market reach. Korean Air 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Korean Air 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, Korean Air: The "Nut Rage" Incident, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Korean Air can use these opportunities to build new business models that can help the communities that Korean Air operates in. Secondly it can use opportunities from government spending in Global Business sector.
Leveraging digital technologies
– Korean Air 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Korean Air can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Korean Air can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Loyalty marketing
– Korean Air 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Korean Air can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Korean Air 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 Korean Air: The "Nut Rage" Incident - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Korean Air 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 Korean Air in the consumer business. Now Korean Air can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Korean Air: The "Nut Rage" Incident External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Korean Air: The "Nut Rage" Incident are -
Regulatory challenges
– Korean Air needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
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 Korean Air.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Korean Air in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Korean Air with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Korean Air 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 Korean Air: The "Nut Rage" Incident .
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Korean Air can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Shortening product life cycle
– it is one of the major threat that Korean Air is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Korean Air 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.
High dependence on third party suppliers
– Korean Air 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.
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. Korean Air 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.
Environmental challenges
– Korean Air 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. Korean Air can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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 Korean Air in the Global Business sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Korean Air: The "Nut Rage" Incident 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 Korean Air: The "Nut Rage" Incident 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 Korean Air: The "Nut Rage" Incident 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 Korean Air: The "Nut Rage" Incident 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 Korean Air: The "Nut Rage" Incident 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 Korean Air needs to make to build a sustainable competitive advantage.