HNA Group: Moving China's Air Transport Industry in a New Direction SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of HNA Group: Moving China's Air Transport Industry in a New Direction
HNA Group, the parent company of Hainan Airlines, was positioning itself to go global and make a mark for itself as the largest private airline in China. Positioned squarely behind the "Big Three" state-owned carriers, Hainan Airlines sought to create a world-class business. Following modern management practices, keeping sharp attention to cost control and capital operations, making aggressive entries into international markets, and maintaining a special corporate culture, Chairman Chen Feng was confident these factors were the engine that would drive HNA's continued growth.
Authors :: William C. Kirby, F. Warren McFarlan, Tracy Yuen Manty
Swot Analysis of "HNA Group: Moving China's Air Transport Industry in a New Direction" written by William C. Kirby, F. Warren McFarlan, Tracy Yuen Manty includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hna Hainan facing as an external strategic factors. Some of the topics covered in HNA Group: Moving China's Air Transport Industry in a New Direction case study are - Strategic Management Strategies, Customer service, Globalization, Government and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the HNA Group: Moving China's Air Transport Industry in a New Direction casestudy better are - – talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, increasing energy prices, increasing commodity prices, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China,
technology disruption, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of HNA Group: Moving China's Air Transport Industry in a New Direction
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in HNA Group: Moving China's Air Transport Industry in a New Direction case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hna Hainan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hna Hainan 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 HNA Group: Moving China's Air Transport Industry in a New Direction can be done for the following purposes –
1. Strategic planning using facts provided in HNA Group: Moving China's Air Transport Industry in a New Direction case study
2. Improving business portfolio management of Hna Hainan
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hna Hainan
Strengths HNA Group: Moving China's Air Transport Industry in a New Direction | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hna Hainan in HNA Group: Moving China's Air Transport Industry in a New Direction Harvard Business Review case study are -
Successful track record of launching new products
– Hna Hainan has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hna Hainan 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.
Low bargaining power of suppliers
– Suppliers of Hna Hainan in the sector have low bargaining power. HNA Group: Moving China's Air Transport Industry in a New Direction has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hna Hainan to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Hna Hainan 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Hna Hainan digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hna Hainan 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– HNA Group: Moving China's Air Transport Industry in a New Direction firm has clearly differentiated products in the market place. This has enabled Hna Hainan to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Hna Hainan to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Hna Hainan is one of the leading recruiters in the industry. Managers in the HNA Group: Moving China's Air Transport Industry in a New Direction are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Hna Hainan is one of the most innovative firm in sector. Manager in HNA Group: Moving China's Air Transport Industry in a New Direction Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Hna Hainan 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 William C. Kirby, F. Warren McFarlan, Tracy Yuen Manty 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.
Superior customer experience
– The customer experience strategy of Hna Hainan in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Hna Hainan 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 HNA Group: Moving China's Air Transport Industry in a New Direction - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Hna Hainan 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.
Diverse revenue streams
– Hna Hainan is present in almost all the verticals within the industry. This has provided firm in HNA Group: Moving China's Air Transport Industry in a New Direction 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.
Weaknesses HNA Group: Moving China's Air Transport Industry in a New Direction | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HNA Group: Moving China's Air Transport Industry in a New Direction are -
Products dominated business model
– Even though Hna Hainan 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 - HNA Group: Moving China's Air Transport Industry in a New Direction should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hna Hainan is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study HNA Group: Moving China's Air Transport Industry in a New Direction can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Hna Hainan 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.
Slow decision making process
– As mentioned earlier in the report, Hna Hainan 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. Hna Hainan 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.
Skills based hiring
– The stress on hiring functional specialists at Hna Hainan 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 strategic competitive environment developments
– As HNA Group: Moving China's Air Transport Industry in a New Direction HBR case study mentions - Hna Hainan 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.
Lack of clear differentiation of Hna Hainan products
– To increase the profitability and margins on the products, Hna Hainan needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study HNA Group: Moving China's Air Transport Industry in a New Direction 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 Hna Hainan 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study HNA Group: Moving China's Air Transport Industry in a New Direction, it seems that the employees of Hna Hainan 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.
High cash cycle compare to competitors
Hna Hainan 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, Hna Hainan 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 HNA Group: Moving China's Air Transport Industry in a New Direction | 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 HNA Group: Moving China's Air Transport Industry in a New Direction are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hna Hainan in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Hna Hainan 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 Leadership & Managing People segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hna Hainan is facing challenges because of the dominance of functional experts in the organization. HNA Group: Moving China's Air Transport Industry in a New Direction 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.
Buying journey improvements
– Hna Hainan can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. HNA Group: Moving China's Air Transport Industry in a New Direction 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 Hna Hainan has opened avenues for new revenue streams for the organization in the industry. This can help Hna Hainan to build a more holistic ecosystem as suggested in the HNA Group: Moving China's Air Transport Industry in a New Direction case study. Hna Hainan can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hna Hainan 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, HNA Group: Moving China's Air Transport Industry in a New Direction, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Hna Hainan 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.
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. Hna Hainan can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Hna Hainan can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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 Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hna Hainan 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. Hna Hainan 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.
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 Hna Hainan 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.
Developing new processes and practices
– Hna Hainan can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hna Hainan 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 Hna Hainan to hire the very best people irrespective of their geographical location.
Threats HNA Group: Moving China's Air Transport Industry in a New Direction External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study HNA Group: Moving China's Air Transport Industry in a New Direction are -
Stagnating economy with rate increase
– Hna Hainan 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.
Regulatory challenges
– Hna Hainan 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 Leadership & Managing People industry regulations.
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.
Environmental challenges
– Hna Hainan 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. Hna Hainan can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hna Hainan with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Hna Hainan is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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. Hna Hainan 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.
Technology acceleration in Forth Industrial Revolution
– Hna Hainan has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Hna Hainan needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Consumer confidence and its impact on Hna Hainan demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hna Hainan 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 HNA Group: Moving China's Air Transport Industry in a New Direction .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study HNA Group: Moving China's Air Transport Industry in a New Direction, Hna Hainan may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Increasing wage structure of Hna Hainan
– 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 Hna Hainan.
Weighted SWOT Analysis of HNA Group: Moving China's Air Transport Industry in a New Direction 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 HNA Group: Moving China's Air Transport Industry in a New Direction 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 HNA Group: Moving China's Air Transport Industry in a New Direction 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 HNA Group: Moving China's Air Transport Industry in a New Direction 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 HNA Group: Moving China's Air Transport Industry in a New Direction 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 Hna Hainan needs to make to build a sustainable competitive advantage.
