Environmental Analysis of Scandinavian Airlines

Einsendeaufgabe , 2022 , 9 Seiten , Note: 98/100

BWL - Offline-Marketing und Online-Marketing

We will focus on internal and external circumstances challenging Scandinavian Airlines, also known as SAS. In order to run international flights, SAS was established in 1946 as a partnership between the national airlines of Norway, Sweden, and Denmark. SAS was the first airline to operate a route from Copenhagen to Tokyo in Japan across the arctic pole. However, after a lengthy history of being a well-respected airline, SAS faced two years of losses in a row in 1981 and subsequent 15-day strike action in early July 2022.

Table of Contents

Environmental analysis & importance of environmental analysis

Relevant theories/models

Brief overview of company

SAS and the 1981 crisis
SWOT analysis:
STRENGHTS
WEAKNESSES & OPPORTUNITIES
THREATS
PESTLE analysis:
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGICAL
ENVIRONMENTAL

The strike action in July 2022
SWOT & PESTLE analysis:
STRENGHTS
TECHNOLOGICAL
POLITICAL, ECONOMIC & WEAKNESSES
THREATS, & LEGAL, SOCIAL
OPPORTUNITIES & ENVIRONMENTAL

Conclusion

REFERENCES:

Environmental analysis & importance of environmental analysis

Organizations can identify internal and external factors that might impact an organization's performance by conducting an environmental study. While external components showcase possibilities and challenge the outer structure of an organization, internal components showcase the business's limitations and advantages. Businesses can foresee future opportunities and challenges by considering economic and technological variables. An understanding of environmental analysis can narrow down possible alternatives and permit the elimination of unsuitable options, allowing them to concentrate on more critical alternatives. Therefore, formulating the right strategies and modifying existing ones is essential.

Relevant theories/models

There are dozens of techniques available to conduct an environmental analysis; commonly, strategies to approach are SWOT and Pestle. A SWOT analysis evaluates four components of an organization: strengths, weaknesses, opportunities, and threats. Its purpose is to assist you in identifying the current strengths of your business and developing a successful strategy for the future. An organization's primary external influences-political, economic, sociological, technological, legal, and environmental-are examined through a pestle analysis. It can be applied in various situations and assist senior managers and human resource experts in making strategic decisions.

Brief overview of company

We will focus on internal and external circumstances challenging Scandinavian Airlines, also known as SAS. In order to run international flights, SAS was established in 1946 as a partnership between the national airlines of Norway, Sweden, and Denmark. SAS was the first airline to operate a route from Copenhagen to Tokyo in Japan across the arctic pole (Hardiman, 2021). However, after a lengthy history of being a well-respected airline, SAS faced two years of losses in a row in 1981 and subsequent 15-day strike action in early July 2022.

SAS and the 1981 crisis

SWOT analysis:

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STRENGHTS

SAS's reputation and strengths were based primarily on the quality of its services and punctuality, which was its main sales advantage. However, this characteristic declined drastically in 1981, forcing SAS to develop new strategies to secure its future in the aviation industry. This is where Jan Carlzon came in. When he took over the helmet, the company was in profound financial difficulties and had an international reputation for always being late.

WEAKNESSES & OPPORTUNITIES

The dynamics in the organization were poorly managed, and it was challenging to make decisions when it came to focusing on customers, shareholders, and employees. Jon Carlzon led the company back to success and profitability through his achievements in developing and implementing a winning strategy. Unfortunately, SAS failed to realize that its primary customer source was quality service. As a result, they became greedy, a product-oriented company that focused on technology instead of a service-oriented company that provided outstanding quality of service that put them on top from the beginning.

THREATS

SAS' primary difficulties were its high operational costs caused by expensive employees, internal red tape, and overloading its fleet capacity. Furthermore, the U.S. airline industry was slowly but surely entering the European market and challenging SAS for its share, which posed a significant threat to the company.

PESTLE analysis:

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POLITICAL

Due to the substantial ownership stakes that Denmark, Sweden, and Norway possess, the political stability of the Scandinavian countries guarantees a high credit rating (Country Risk Classifications, 2012).

ECONOMIC

The aviation industry has been under significant pressure due to the global crisis, high oil prices, and high-interest rates. SAS was particularly severely impacted because of its high personnel costs.

SOCIAL

Its geographic location, it was even more challenging for SAS to compete with other, more centralized airlines such as KLM or British Airways. In addition, a full-fare international airline like SAS could not be supported by the limited populations of the Scandinavian countries. They also encountered difficulties implementing cost-cutting strategies such as layoffs and compensation reductions into effect because of the strong union positions in the Scandinavian nations.

TECHNOLOGICAL

The public no longer viewed the aviation sector as innovative or distinctive. Instead, customers' perceptions of the aviation market evolved, leading to increased demand for flights that catered to their needs rather than the carrier's. SAS' infrastructure was unable to meet customers' growing expectations for variable flight schedules. The majority of SAS' fleet consists of wide-body aircraft designed for long-haul flights for which they lacked a client base. Larger and more fuel-efficient aircraft were made available to the aviation industry thanks to the rapid progress of innovation in the aviation sector. However, these large aircraft brought with them the problem of overcapacity.

ENVIRONMENTAL

In the 1900s, globally, there was little awareness of the environment because it was not seen as a big problem then, and the big part of the issue was that social media did not exist, making it harder to spread awareness. Thus, the data is missing to analyse aviation’s industry environmental measurements.

The strike action in July 2022

SWOT & PESTLE analysis:

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STRENGHTS

Scandinavian Airlines is the biggest air shuttle company in Scandinavia and has a good reputation in Scandinavian regions. However, the COVID-19 pandemic hit the world and created a global crisis for the aviation industry, including SAS.

TECHNOLOGICAL

Under the pandemic, they put safety for travellers and employees as their highest priority and reviewed their entire customer journey by imposing their travellers to follow the general recommendations set by the health authorities in their countries and facilitating social distancing by closing all SAS lounges.

[...]

• Hochschule: Hult International Business School
• Veranstaltung: Navigating the Business Environment
• Note: 98/100
• Autor: Jirawan Pedersen (Autor:in)
• Erscheinungsjahr: 2022
• Seiten: 9
• Katalognummer: V1297307
• ISBN (PDF): 9783346770226
• Sprache: Englisch
• Schlagworte: Environmental analysis, SAS, Scandinavian Airlines, Environment report, SAS report, Scandinavian Airlines environmental analysis, SWOT, PESTLE