Linear Air: Creating the Air Taxi Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Linear Air: Creating the Air Taxi Industry
Linear Air is an air taxi start-up established to take advantage of the emergence of Very Light Jets, which incorporate new technology that cuts jet operating costs by about 40%. Air taxis could make use of the 5400 smaller regional airports throughout the US, potentially revolutionizing air travel. But the nascent air taxi industry doesn't yet exist, and there are competing conceptions of what the industry should look like. The founder must evaluate what customer segments to target, what business model to utilize, how to encourage development of the industry ecosystem, and more broadly how to help shape the industry so that it does not develop a highly competitive structure akin to the existing airline industry.
Authors :: Mary Tripsas, Davin Chow, Adam Prewett, Kevin Yttre
Swot Analysis of "Linear Air: Creating the Air Taxi Industry" written by Mary Tripsas, Davin Chow, Adam Prewett, Kevin Yttre includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Air Taxi facing as an external strategic factors. Some of the topics covered in Linear Air: Creating the Air Taxi Industry case study are - Strategic Management Strategies, Disruptive innovation, Entrepreneurial management, Marketing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Linear Air: Creating the Air Taxi Industry casestudy better are - – wage bills are increasing, geopolitical disruptions, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, increasing energy prices, talent flight as more people leaving formal jobs,
technology disruption, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Linear Air: Creating the Air Taxi Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Linear Air: Creating the Air Taxi Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Air Taxi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Air Taxi 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 Linear Air: Creating the Air Taxi Industry can be done for the following purposes –
1. Strategic planning using facts provided in Linear Air: Creating the Air Taxi Industry case study
2. Improving business portfolio management of Air Taxi
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 Air Taxi
Strengths Linear Air: Creating the Air Taxi Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Air Taxi in Linear Air: Creating the Air Taxi Industry Harvard Business Review case study are -
Training and development
– Air Taxi has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Linear Air: Creating the Air Taxi Industry 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.
Ability to lead change in Innovation & Entrepreneurship field
– Air Taxi 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 Air Taxi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Air Taxi is present in almost all the verticals within the industry. This has provided firm in Linear Air: Creating the Air Taxi Industry 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Linear Air: Creating the Air Taxi Industry firm has clearly differentiated products in the market place. This has enabled Air Taxi to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Air Taxi to invest into research and development (R&D) and innovation.
Organizational Resilience of Air Taxi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Air Taxi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Air Taxi 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.
Successful track record of launching new products
– Air Taxi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Air Taxi 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.
Effective Research and Development (R&D)
– Air Taxi 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 Linear Air: Creating the Air Taxi Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Air Taxi 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 Mary Tripsas, Davin Chow, Adam Prewett, Kevin Yttre can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Air Taxi in the sector have low bargaining power. Linear Air: Creating the Air Taxi Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Air Taxi to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Air Taxi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Air Taxi 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.
High brand equity
– Air Taxi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Air Taxi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Linear Air: Creating the Air Taxi Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Linear Air: Creating the Air Taxi Industry are -
Lack of clear differentiation of Air Taxi products
– To increase the profitability and margins on the products, Air Taxi needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Linear Air: Creating the Air Taxi Industry, in the dynamic environment Air Taxi has struggled to respond to the nimble upstart competition. Air Taxi has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Linear Air: Creating the Air Taxi Industry HBR case study mentions - Air Taxi 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.
Increasing silos among functional specialists
– The organizational structure of Air Taxi is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Air Taxi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Air Taxi to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Mary Tripsas, Davin Chow, Adam Prewett, Kevin Yttre suggests that, Air Taxi 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.
Products dominated business model
– Even though Air Taxi 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 - Linear Air: Creating the Air Taxi Industry should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Linear Air: Creating the Air Taxi Industry, 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.
Slow decision making process
– As mentioned earlier in the report, Air Taxi 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. Air Taxi 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 operating costs
– Compare to the competitors, firm in the HBR case study Linear Air: Creating the Air Taxi Industry 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 Air Taxi 's lucrative customers.
Interest costs
– Compare to the competition, Air Taxi 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Air Taxi 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.
Opportunities Linear Air: Creating the Air Taxi Industry | 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 Linear Air: Creating the Air Taxi Industry are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Air Taxi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Air Taxi in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Air Taxi to increase its market reach. Air Taxi 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, Air Taxi 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, Linear Air: Creating the Air Taxi Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Air Taxi can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Air Taxi is facing challenges because of the dominance of functional experts in the organization. Linear Air: Creating the Air Taxi Industry 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 Air Taxi 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.
Buying journey improvements
– Air Taxi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Linear Air: Creating the Air Taxi Industry 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Air Taxi 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 Air Taxi to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Air Taxi 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 Linear Air: Creating the Air Taxi Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Air Taxi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Air Taxi 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.
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 Air Taxi 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.
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. Air Taxi can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Linear Air: Creating the Air Taxi Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Linear Air: Creating the Air Taxi Industry are -
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.
Technology acceleration in Forth Industrial Revolution
– Air Taxi has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Air Taxi needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
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. Air Taxi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Air Taxi 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.
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 Air Taxi business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Air Taxi 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 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. Air Taxi needs to understand the core reasons impacting the Innovation & Entrepreneurship 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 Air Taxi 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Air Taxi with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Linear Air: Creating the Air Taxi Industry, Air Taxi 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 .
Shortening product life cycle
– it is one of the major threat that Air Taxi is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Air Taxi 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Air Taxi 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 Linear Air: Creating the Air Taxi Industry .
Weighted SWOT Analysis of Linear Air: Creating the Air Taxi Industry 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 Linear Air: Creating the Air Taxi Industry 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 Linear Air: Creating the Air Taxi Industry 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 Linear Air: Creating the Air Taxi Industry 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 Linear Air: Creating the Air Taxi Industry 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 Air Taxi needs to make to build a sustainable competitive advantage.
