Air Deccan (A): "Simplifying" Air Travel in India SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Air Deccan (A): "Simplifying" Air Travel in India
Captain Gorur Ramaswamy Gopinath started his journey with a dream - a dream inspired by one simple statement: "I want every Indian to fly at least once in their lifetime." With a population in excess of 1 billion people, India certainly offered a vast reservoir of future air travelers. In 2002, when Capt. Gopinath first broached the idea of starting a low-cost airline to serve India's travel needs, no one took him seriously. Bankers refused to fund him, aircraft manufacturers ignored him and aviation industry observers swore that India was not ready. However, he was convinced that India's burgeoning middle class, already buying color TVs and cell phones, could be converted to air travel. In 2003 he launched the first low-cost airline company in India with a leased 48-seater ATR aircraft and $10 million from investors. By 2007, Capt. Gopinath was close to realizing his dream. Air Deccan, with a market share of 21.6%, was India's fastest-growing low-cost carrier and the second-largest airline in the country. It ran the most extensive network in India, covering 61 airports, flew some 306 scheduled flights a day and operated a brand new fleet of 14 Airbus A320 and 22 ATR Turboprops. Visionary and always optimistic, Capt. Gopinath had brought about a total revolution to the highly regulated Indian skies. But every revolution carries the seeds of its own demise. Competition was increasing rapidly now that the model had been validated, and the Indian airport infrastructure was on the verge of a massive breakdown. New business models had to be devised to remain ahead of the curve. The new logo for the company enigmatically offered a glimpse of what Capt. Gopinath had in mind: S I M P L I F L Y ... Learning objectives: Learn about new business models, innovations, growth management, low cost carrier strategies, Indian issues.
Swot Analysis of "Air Deccan (A): "Simplifying" Air Travel in India" written by Benoit Leleux, Isabelle Pigeaux includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gopinath Capt facing as an external strategic factors. Some of the topics covered in Air Deccan (A): "Simplifying" Air Travel in India case study are - Strategic Management Strategies, and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Air Deccan (A): "Simplifying" Air Travel in India casestudy better are - – cloud computing is disrupting traditional business models, increasing energy prices, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, wage bills are increasing,
central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Air Deccan (A): "Simplifying" Air Travel in India
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Air Deccan (A): "Simplifying" Air Travel in India case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gopinath Capt, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gopinath Capt 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 Air Deccan (A): "Simplifying" Air Travel in India can be done for the following purposes –
1. Strategic planning using facts provided in Air Deccan (A): "Simplifying" Air Travel in India case study
2. Improving business portfolio management of Gopinath Capt
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Gopinath Capt
Strengths Air Deccan (A): "Simplifying" Air Travel in India | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gopinath Capt in Air Deccan (A): "Simplifying" Air Travel in India Harvard Business Review case study are -
Diverse revenue streams
– Gopinath Capt is present in almost all the verticals within the industry. This has provided firm in Air Deccan (A): "Simplifying" Air Travel in India case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– Gopinath Capt is one of the leading recruiters in the industry. Managers in the Air Deccan (A): "Simplifying" Air Travel in India 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
– Gopinath Capt 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 Benoit Leleux, Isabelle Pigeaux can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Effective Research and Development (R&D)
– Gopinath Capt 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 Air Deccan (A): "Simplifying" Air Travel in India - 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 Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Gopinath Capt digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Gopinath Capt 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.
Low bargaining power of suppliers
– Suppliers of Gopinath Capt in the sector have low bargaining power. Air Deccan (A): "Simplifying" Air Travel in India has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Gopinath Capt to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Gopinath Capt 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.
Strong track record of project management
– Gopinath Capt is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Air Deccan (A): "Simplifying" Air Travel in India firm has clearly differentiated products in the market place. This has enabled Gopinath Capt to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Gopinath Capt to invest into research and development (R&D) and innovation.
Ability to lead change in Innovation & Entrepreneurship field
– Gopinath Capt 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 Gopinath Capt in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Gopinath Capt has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Gopinath Capt to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Gopinath Capt has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Air Deccan (A): "Simplifying" Air Travel in India Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses Air Deccan (A): "Simplifying" Air Travel in India | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Air Deccan (A): "Simplifying" Air Travel in India are -
Low market penetration in new markets
– Outside its home market of Gopinath Capt, firm in the HBR case study Air Deccan (A): "Simplifying" Air Travel in India needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Air Deccan (A): "Simplifying" Air Travel in India, is just above the industry average. Gopinath Capt 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.
Slow to strategic competitive environment developments
– As Air Deccan (A): "Simplifying" Air Travel in India HBR case study mentions - Gopinath Capt 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.
Need for greater diversity
– Gopinath Capt 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 bargaining power of channel partners
– Because of the regulatory requirements, Benoit Leleux, Isabelle Pigeaux suggests that, Gopinath Capt 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Gopinath Capt is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Air Deccan (A): "Simplifying" Air Travel in India can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Air Deccan (A): "Simplifying" Air Travel in India, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship 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.
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 Gopinath Capt supply chain. Even after few cautionary changes mentioned in the HBR case study - Air Deccan (A): "Simplifying" Air Travel in India, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Gopinath Capt vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Air Deccan (A): "Simplifying" Air Travel in India, it seems that the employees of Gopinath Capt 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.
Slow decision making process
– As mentioned earlier in the report, Gopinath Capt 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. Gopinath Capt 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.
High cash cycle compare to competitors
Gopinath Capt 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.
Opportunities Air Deccan (A): "Simplifying" Air Travel in India | 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 Air Deccan (A): "Simplifying" Air Travel in India are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Gopinath Capt 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 Gopinath Capt to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Gopinath Capt 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Gopinath Capt can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Gopinath Capt 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, Air Deccan (A): "Simplifying" Air Travel in India, 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. Gopinath Capt can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Gopinath Capt 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.
Manufacturing automation
– Gopinath Capt can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Gopinath Capt 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. Gopinath Capt 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Gopinath Capt can use these opportunities to build new business models that can help the communities that Gopinath Capt operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Gopinath Capt can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Gopinath Capt 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.
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 Gopinath Capt 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.
Building a culture of innovation
– managers at Gopinath Capt 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 Innovation & Entrepreneurship segment.
Threats Air Deccan (A): "Simplifying" Air Travel in India External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Air Deccan (A): "Simplifying" Air Travel in India 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 Air Deccan (A): "Simplifying" Air Travel in India, Gopinath Capt may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Increasing wage structure of Gopinath Capt
– 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 Gopinath Capt.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Gopinath Capt in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
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 Gopinath Capt business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Gopinath Capt 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. Gopinath Capt can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Regulatory challenges
– Gopinath Capt 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 Innovation & Entrepreneurship industry regulations.
High dependence on third party suppliers
– Gopinath Capt 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.
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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Gopinath Capt can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Gopinath Capt is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Gopinath Capt 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 Air Deccan (A): "Simplifying" Air Travel in India .
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. Gopinath Capt needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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 Gopinath Capt.
Weighted SWOT Analysis of Air Deccan (A): "Simplifying" Air Travel in India 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 Air Deccan (A): "Simplifying" Air Travel in India 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 Air Deccan (A): "Simplifying" Air Travel in India 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 Air Deccan (A): "Simplifying" Air Travel in India 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 Air Deccan (A): "Simplifying" Air Travel in India 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 Gopinath Capt needs to make to build a sustainable competitive advantage.
