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 - – challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, there is backlash against globalization, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, increasing commodity prices,
increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
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.
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.
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.
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.
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.
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.
Learning organization
- Korean Air 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 Korean Air is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Korean Air: The "Nut Rage" Incident Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
Low bargaining power of suppliers
– Suppliers of Korean Air in the sector have low bargaining power. Korean Air: The "Nut Rage" Incident has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Korean Air to manage not only supply disruptions but also source products at highly competitive prices.
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.
Innovation driven organization
– Korean Air is one of the most innovative firm in sector. Manager in Korean Air: The "Nut Rage" Incident Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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 -
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Korean Air: The "Nut Rage" Incident, it seems that the employees of Korean Air 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.
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 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.
Slow to strategic competitive environment developments
– As Korean Air: The "Nut Rage" Incident HBR case study mentions - Korean Air takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Skills based hiring
– The stress on hiring functional specialists at Korean Air 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Korean Air is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Korean Air: The "Nut Rage" Incident 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 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.
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.
Increasing silos among functional specialists
– The organizational structure of Korean Air is dominated by functional specialists. It is not different from other players in the Global Business segment. Korean Air needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Korean Air to focus more on services rather than just following the product oriented approach.
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 -
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Korean Air can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Korean Air can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Korean Air: The "Nut Rage" Incident 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.
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.
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.
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. Korean Air can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Korean Air 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 Korean Air to hire the very best people irrespective of their geographical location.
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.
Learning at scale
– Online learning technologies has now opened space for Korean Air 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.
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.
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 -
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
– Korean Air has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Korean Air 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.
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. Korean Air needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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.
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 .
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.
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.
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.
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.
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.
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.
Increasing wage structure of Korean Air
– 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 Korean Air.
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.