Deutsche Lufthansa ADR (DLAKY) SWOT Analysis / TOWS Matrix / MBA Resources
Airline
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Deutsche Lufthansa ADR (United States)
Based on various researches at Oak Spring University , Deutsche Lufthansa ADR is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing household debt because of falling income levels, increasing commodity prices, there is increasing trade war between United States & China, there is backlash against globalization, wage bills are increasing,
increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Deutsche Lufthansa ADR
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Deutsche Lufthansa ADR can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Deutsche Lufthansa ADR, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Deutsche Lufthansa ADR 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 Deutsche Lufthansa ADR can be done for the following purposes –
1. Strategic planning of Deutsche Lufthansa ADR
2. Improving business portfolio management of Deutsche Lufthansa ADR
3. Assessing feasibility of the new initiative in United States
4. Making a Airline sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Deutsche Lufthansa ADR
Strengths of Deutsche Lufthansa ADR | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Deutsche Lufthansa ADR are -
Digital Transformation in Airline industry
- digital transformation varies from industry to industry. For Deutsche Lufthansa ADR digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Deutsche Lufthansa ADR 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.
Ability to lead change in Airline
– Deutsche Lufthansa ADR is one of the leading players in the Airline industry in United States. Over the years it has not only transformed the business landscape in the Airline industry in United States but also across the existing markets. The ability to lead change has enabled Deutsche Lufthansa ADR in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Deutsche Lufthansa ADR in the Transportation sector have low bargaining power. Deutsche Lufthansa ADR has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Deutsche Lufthansa ADR to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Deutsche Lufthansa ADR
– The covid-19 pandemic has put organizational resilience at the centre of everthing Deutsche Lufthansa ADR does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Deutsche Lufthansa ADR in Airline industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy of Deutsche Lufthansa ADR comprises – understanding the underlying the factors in the Airline industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Deutsche Lufthansa ADR has one of the best training and development program in Transportation industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Learning organization
- Deutsche Lufthansa ADR 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 Deutsche Lufthansa ADR is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Deutsche Lufthansa ADR emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Deutsche Lufthansa ADR is one of the most innovative firm in Airline sector.
Successful track record of launching new products
– Deutsche Lufthansa ADR has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Deutsche Lufthansa ADR 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.
Sustainable margins compare to other players in Airline industry
– Deutsche Lufthansa ADR has clearly differentiated products in the market place. This has enabled Deutsche Lufthansa ADR to fetch slight price premium compare to the competitors in the Airline industry. The sustainable margins have also helped Deutsche Lufthansa ADR to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Deutsche Lufthansa ADR 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.
Weaknesses of Deutsche Lufthansa ADR | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Deutsche Lufthansa ADR are -
Slow decision making process
– As mentioned earlier in the report, Deutsche Lufthansa ADR has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Airline industry over the last five years. Deutsche Lufthansa ADR 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 dependence on Deutsche Lufthansa ADR ‘s star products
– The top 2 products and services of Deutsche Lufthansa ADR still accounts for major business revenue. This dependence on star products in Airline industry has resulted into insufficient focus on developing new products, even though Deutsche Lufthansa ADR has relatively successful track record of launching new products.
High bargaining power of channel partners in Airline industry
– because of the regulatory requirements in United States, Deutsche Lufthansa ADR 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 Airline industry.
Interest costs
– Compare to the competition, Deutsche Lufthansa ADR 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.
Slow to strategic competitive environment developments
– As Deutsche Lufthansa ADR is one of the leading players in the Airline industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Airline industry in last five years.
High cash cycle compare to competitors
Deutsche Lufthansa ADR has a high cash cycle compare to other players in the Airline industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Deutsche Lufthansa ADR has some of the most successful models in the Airline industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Deutsche Lufthansa ADR should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Deutsche Lufthansa ADR has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Airline industry using digital technology.
Increasing silos among functional specialists
– The organizational structure of Deutsche Lufthansa ADR is dominated by functional specialists. It is not different from other players in the Airline industry, but Deutsche Lufthansa ADR needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Deutsche Lufthansa ADR to focus more on services in the Airline industry rather than just following the product oriented approach.
Skills based hiring in Airline industry
– The stress on hiring functional specialists at Deutsche Lufthansa ADR 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.
No frontier risks strategy
– From the 10K / annual statement of Deutsche Lufthansa ADR, it seems that company is thinking out the frontier risks that can impact Airline industry. 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.
Deutsche Lufthansa ADR Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Deutsche Lufthansa ADR are -
Developing new processes and practices
– Deutsche Lufthansa ADR can develop new processes and procedures in Airline 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Deutsche Lufthansa ADR can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Airline industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Deutsche Lufthansa ADR 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. Deutsche Lufthansa ADR 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.
Creating value in data economy
– The success of analytics program of Deutsche Lufthansa ADR has opened avenues for new revenue streams for the organization in Airline industry. This can help Deutsche Lufthansa ADR to build a more holistic ecosystem for Deutsche Lufthansa ADR products in the Airline industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Deutsche Lufthansa ADR can improve the customer journey of consumers in the Airline industry by using analytics and artificial intelligence. It 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.
Manufacturing automation
– Deutsche Lufthansa ADR can use the latest technology developments to improve its manufacturing and designing process in Airline sector. 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Deutsche Lufthansa ADR 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 Deutsche Lufthansa ADR to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Deutsche Lufthansa ADR to increase its market reach. Deutsche Lufthansa ADR 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.
Loyalty marketing
– Deutsche Lufthansa ADR 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Deutsche Lufthansa ADR can use these opportunities to build new business models that can help the communities that Deutsche Lufthansa ADR operates in. Secondly it can use opportunities from government spending in Airline sector.
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 Deutsche Lufthansa ADR 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.
Using analytics as competitive advantage
– Deutsche Lufthansa ADR has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Airline sector. This continuous investment in analytics has enabled Deutsche Lufthansa ADR to build a competitive advantage using analytics. The analytics driven competitive advantage can help Deutsche Lufthansa ADR to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions in Airline industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Deutsche Lufthansa ADR in the Airline industry. Now Deutsche Lufthansa ADR can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Deutsche Lufthansa ADR External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Deutsche Lufthansa ADR 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.
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. Deutsche Lufthansa ADR 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.
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 Deutsche Lufthansa ADR business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Deutsche Lufthansa ADR in Airline industry. The Airline 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.
Regulatory challenges
– Deutsche Lufthansa ADR 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 Airline industry regulations.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Deutsche Lufthansa ADR.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Airline industry are lowering. It can presents Deutsche Lufthansa ADR with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Airline sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Deutsche Lufthansa ADR in the Airline sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Deutsche Lufthansa ADR may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Airline sector.
Environmental challenges
– Deutsche Lufthansa ADR 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. Deutsche Lufthansa ADR can take advantage of this fund but it will also bring new competitors in the Airline industry.
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. Deutsche Lufthansa ADR needs to understand the core reasons impacting the Airline industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Deutsche Lufthansa ADR 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.
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.
Weighted SWOT Analysis of Deutsche Lufthansa ADR Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Deutsche Lufthansa ADR 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 Deutsche Lufthansa ADR 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 Deutsche Lufthansa ADR 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 Deutsche Lufthansa ADR 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 Deutsche Lufthansa ADR needs to make to build a sustainable competitive advantage.
