Hainan Airlines B (900945) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Hainan Airlines B (China)

Based on various researches at Oak Spring University , Hainan Airlines B is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, increasing energy prices, increasing commodity prices, talent flight as more people leaving formal jobs, wage bills are increasing, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Hainan Airlines B

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Hainan Airlines B can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hainan Airlines B, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hainan Airlines B 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Hainan Airlines B can be done for the following purposes –
1. Strategic planning of Hainan Airlines B
2. Improving business portfolio management of Hainan Airlines B
3. Assessing feasibility of the new initiative in China
4. Making a Airline sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hainan Airlines B

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Strengths of Hainan Airlines B | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Hainan Airlines B are -

Effective Research and Development (R&D)

– Hainan Airlines B has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Hainan Airlines B staying ahead in the Airline industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Digital Transformation in Airline industry

- digital transformation varies from industry to industry. For Hainan Airlines B digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hainan Airlines B 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.

Successful track record of launching new products

– Hainan Airlines B has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hainan Airlines B 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.

Learning organization

- Hainan Airlines B 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 Hainan Airlines B is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Hainan Airlines B emphasize – knowledge, initiative, and innovation.

Operational resilience

– The operational resilience strategy of Hainan Airlines B 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.

High switching costs

– The high switching costs that Hainan Airlines B 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.

Sustainable margins compare to other players in Airline industry

– Hainan Airlines B has clearly differentiated products in the market place. This has enabled Hainan Airlines B to fetch slight price premium compare to the competitors in the Airline industry. The sustainable margins have also helped Hainan Airlines B to invest into research and development (R&D) and innovation.

Training and development

– Hainan Airlines B 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.

Strong track record of project management in the Airline industry

– Hainan Airlines B is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Superior customer experience

– The customer experience strategy of Hainan Airlines B in Airline industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

High brand equity

– Hainan Airlines B has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hainan Airlines B to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to lead change in Airline

– Hainan Airlines B is one of the leading players in the Airline industry in China. Over the years it has not only transformed the business landscape in the Airline industry in China but also across the existing markets. The ability to lead change has enabled Hainan Airlines B in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

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Weaknesses of Hainan Airlines B | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Hainan Airlines B are -

High operating costs

– Compare to the competitors, Hainan Airlines B has high operating costs in the Airline industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Hainan Airlines B lucrative customers.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hainan Airlines B is slow explore the new channels of communication. These new channels of communication can help Hainan Airlines B to provide better information regarding Airline products and services. It can also build an online community to further reach out to potential customers.

Aligning sales with marketing

– From the outside it seems that Hainan Airlines B needs to have more collaboration between its sales team and marketing team. Sales professionals in the Airline industry have deep experience in developing customer relationships. Marketing department at Hainan Airlines B can leverage the sales team experience to cultivate customer relationships as Hainan Airlines B is planning to shift buying processes online.

Interest costs

– Compare to the competition, Hainan Airlines B 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 Airline industry, Hainan Airlines B 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.

Compensation and incentives

– The revenue per employee of Hainan Airlines B is just above the Airline industry average. It 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.

Increasing silos among functional specialists

– The organizational structure of Hainan Airlines B is dominated by functional specialists. It is not different from other players in the Airline industry, but Hainan Airlines B needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hainan Airlines B to focus more on services in the Airline industry rather than just following the product oriented approach.

High bargaining power of channel partners in Airline industry

– because of the regulatory requirements in China, Hainan Airlines B 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.

Employees’ less understanding of Hainan Airlines B strategy

– From the outside it seems that the employees of Hainan Airlines B 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.

Products dominated business model

– Even though Hainan Airlines B 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. Hainan Airlines B should strive to include more intangible value offerings along with its core products and services.

Skills based hiring in Airline industry

– The stress on hiring functional specialists at Hainan Airlines B 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.

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Hainan Airlines B Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Hainan Airlines B are -

Buying journey improvements

– Hainan Airlines B 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.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Hainan Airlines B 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. Hainan Airlines B 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. Hainan Airlines B 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 Hainan Airlines B 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.

Manufacturing automation

– Hainan Airlines B 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Hainan Airlines B 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 Hainan Airlines B to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Using analytics as competitive advantage

– Hainan Airlines B 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 Hainan Airlines B to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hainan Airlines B 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 Hainan Airlines B in the Airline industry. Now Hainan Airlines B can target international markets with far fewer capital restrictions requirements than the existing system.

Leveraging digital technologies

– Hainan Airlines B can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Building a culture of innovation

– managers at Hainan Airlines B 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 Airline industry.

Creating value in data economy

– The success of analytics program of Hainan Airlines B has opened avenues for new revenue streams for the organization in Airline industry. This can help Hainan Airlines B to build a more holistic ecosystem for Hainan Airlines B products in the Airline industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Hainan Airlines B is facing challenges because of the dominance of functional experts in the organization. Hainan Airlines B can utilize new technology in the field of Airline industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hainan Airlines B 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 Hainan Airlines B to hire the very best people irrespective of their geographical location.

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Threats Hainan Airlines B External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Hainan Airlines B are -

Technology acceleration in Forth Industrial Revolution

– Hainan Airlines B has witnessed rapid integration of technology during Covid-19 in the Airline industry. As one of the leading players in the industry, Hainan Airlines B needs to keep up with the evolution of technology in the Airline 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.

High dependence on third party suppliers

– Hainan Airlines B 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.

Stagnating economy with rate increase

– Hainan Airlines B 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 Airline industry.

Environmental challenges

– Hainan Airlines B 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. Hainan Airlines B can take advantage of this fund but it will also bring new competitors in the Airline industry.

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. Hainan Airlines B 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 Hainan Airlines B business can come under increasing regulations regarding data privacy, data security, etc.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Airline industry are lowering. It can presents Hainan Airlines B 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 Hainan Airlines B in the Airline sector and impact the bottomline of the organization.

Increasing wage structure of Hainan Airlines B

– 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 Hainan Airlines B.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Hainan Airlines B 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.

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.

Shortening product life cycle

– it is one of the major threat that Hainan Airlines B is facing in Airline sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Regulatory challenges

– Hainan Airlines B 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.

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Weighted SWOT Analysis of Hainan Airlines B Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Hainan Airlines B 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 Hainan Airlines B 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 Hainan Airlines B 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 Hainan Airlines B 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 Hainan Airlines B needs to make to build a sustainable competitive advantage.

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