BUSINESS STRATEGY FOR SWISS INTERNATIONAL AIRLINES

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Report on Business Strategy for Swiss International Airlines

Contents
Business Strategy for Swiss International Airlines.........................................................................1

Internal Analysis: SWOT Analysis for SWISS International Airlines........................................4

Stakeholders Analysis..................................................................................................................8

References......................................................................................................................................14
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Report on Business Strategy for Swiss International Airlines

Internal Analysis: SWOT Analysis for SWISS International Airlines

SWOT analysis refers to the study that is undertaken to identify the strengths and weaknesses of
an organisation along with the threats and opportunities (Gürel and Tat, 2017). SWOT analysis is
the framework that enables a brand like Swiss international airlines in benchmarking their
performance and business compared to the other industry and competitors

Strengths: Weaknesses:
 Strong brand presence in the Europe  Limited market share
 Geographical presence indifferent  Lesser number of flight of the
region organisation
 Wide service portfolio
 Strong financial position
 High product quality
 Location advantages improves
competitive positioning
 A good focuses towards the horizontal
and vertical integration
Opportunities: Threats:
 Implementing new technology to  Increasing costs of the aviation fuel
improve the service quality  Stiff competition from other
 Expand operation in different profitable international airline organisation.
locations
 Rising level of disposable income can
help the organisation in gaining more
customers

Strengths:

The main strength of the organisation is an effective and strong brand presence in entire Europe.
This fact has helped the organisation in developing a large customer base and a compelling brand
image that has helped the organisation in securing sufficient profitability (Swiss, 2020). The
organisation has achieved the best airline award in Western Europe. Therefore, it can be said that
the organisation has a good market value in Europe that can help them in increasing their
profitability.

Swiss international airlines are the flagship organisation of Switzerland. Therefore, the
organisation secures adequate supports from the government (Swiss, 2020). For this reason, the
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Report on Business Strategy for Swiss International Airlines
organisation offers a practical and effective airport service level at the airport hub of Zurich. The
organisation has an active focus on developing better customer services so that they have a broad
base of loyal customers (Forsyth, 2018).

The organisation has secured sufficient operational efficiencies as they offer services to a limited
number of cities (Swiss, 2020). Due to the focuses on the lesser number of city, the organisation
can provide better services on the areas where they operate their business. The organisation
offers new long-haul seats for the business class that can provide flatbed comfort. This efficiency
of the organisation can provide more luxuries to the high-class customers so that they can secure
good set high-class loyal customers.

The above picture demonstrated the fact that the organisation is developing its profitability. The
organisation has a good focuses on offering better services at the lowest possible costs. The focus
of the organisation towards these facts has helped them in becoming profitable.
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Report on Business Strategy for Swiss International Airlines
Weaknesses:

The organisation offers its service in a limited number of cities that creates difficulties for the
organisation in securing high profitability. This fact can be more apparent with the help of the
below-mentioned chart:

The above description clearly states the fact that the organisation mainly operate in Europe. They
do not have focuses towards the operations outside Europe. Ineffective focuses on excellent
destinations as opposed to the leading airline player can create difficulties for Swiss international
airlines in securing colossal profitability.

Market share of the organisation is very less because they do not have focuses on offering
services in profitable destinations. This small share creates difficulties for the organisation in
maintaining sustainability. The organisation has achieved a limited market share because of the
intense competition.
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Report on Business Strategy for Swiss International Airlines
Opportunities:

The organisation has secured the ownership of the Swiss aviation training. The ownership of the
Swiss aviation training institute is helpful for the organisation in offering regular training to their
employees that helps them in increasing perfection.

The organisation is one of the subsidiary organisations of Lufthansa that can help the
organisation in expanding its business in different locations. Lufthansa is one of the international
airline groups of companies that have many airlines companies under them. Therefore, Swiss
international airlines can take the advantages of this in expanding their business in different
countries. This fact can help the organisation in securing more customers.

The organisation can improve its customer services for increasing the experiences for the
customers. This fact can help the organisation in securing a huge number of loyal customers.

Threats:

The rising price of the oil increases the operational costs of airline organisation which reduces
their profitability.

The increasing level of labour costs can create a threat to the organisation. Due to the increment
of the labour costs, the operational costs of the organisation can increase, which can reduce the
profitability of the organisation.

The organisation is facing intense competition from other organisations such as British Airways,
Air France and American airlines. Due to this fact, the organisation faces a loss of profitability.

Strategic analysis:
The concern of the customers regarding the environment is continually increasing. Therefore, it
is essential for an organisation in developing a strategy to improve the environmental condition.

Airlines technology is continually developing. Therefore, for offering more effective services to
the customers, it is essential in implementing advanced technology in the airlines of the Swiss
international organisation. This technology advancement not only helps the company in
increasing profitability, but it is also helpful in developing customer loyalty.
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Report on Business Strategy for Swiss International Airlines
Stakeholders Analysis
For analysing the stakeholders, Mendelow matrix will be utilised. Mendelow matrix refers to the
tools that are used by an organisation for considering the stakeholder’s attitude at the starting of a
project or during setting a strategic objective (Shaw, 2016). With the help of this tool, the
stakeholders are analysed based on interest and power. Mendelow matrix of Swiss International
Airlines is shown below:

High interest-high power Low interest-high power

 Shareholders  Customers
 Employees  government
 Suppliers
 Management
 Competitors
High interest and low power Little interest and low power
 Creditors and lenders  Local community
 Financial institutions

High interest and high power:

Competitors:

Swiss International Airlines has different competitors that have created stiff competition for the
organisation. There are various direct competitors of Swiss airlines that are KLM, Easy Jet, and
Austrian Airlines, AirFrance, TUI Sverige and many more. The indirect competitors of the
organisation mainly include the airlines that offer non-direct flights to the organisation. Different
alternative transportation such as train, bus and cars also creates indirect competition for the
organisation.

Shareholders:

Shareholders are associated with offering financial stability and success to the organisation. This
is because they are the owner of the organisation. Shareholders play an essential role in the
operation, financing, governance, along with the control aspects of an organisation (Freeman,
2015). Moreover, shareholders have the opportunity in selecting the top-level staff of the
organisation. As the shareholder's area associated with investing their money in the organisation,
therefore, it is the duty of the organisation in keeping their shareholders by offering them the
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Report on Business Strategy for Swiss International Airlines
budgetary expense plan and another plan. Providing this information by maintaining
transparency is helpful for the shareholders in making their decision to invest money on Swiss
international airlines. Therefore, the shareholders have a higher level of interest and high power
in the organisation.

For retaining the shareholders of the organisation, Swiss international airlines need to invest
some additional costs (Freeman, 2015). These costs mainly include the charges regarding
investor communication along with the legal and other fees. As shareholders play an essential
role for Swiss international airlines, therefore, they have high power in the organisation.

Employees:

Every employee of Swiss international airlines put their effort into the organisation and gets
money for their effort (Freeman, 2015). Every employee wants a secure income, job satisfaction
and a comfortable work environment. Therefore, employees have a higher level of interest in the
success of the company.

Suppliers:

Swiss international airlines have developed a large number of supplier base so that they can offer
better services to their customers. Their suppliers mainly include an organisation that sell fuel,
online travel agencies, airport authority, along with the catering service organisations (Freeman,
2015).

Management:

Management takes a different decision regarding their organisation so that it can help the
organisation in securing profitability. The management of an organisation put a lot of effort to
achieve greater profitability. Therefore, they have higher interest and a high level of power in
their organisation.

Low interest and high power:

Customers:
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Report on Business Strategy for Swiss International Airlines
Customers are the primary sources of organisational profit so that they have higher power
towards the organisation, but they do not have an interest in the success of the brand. Therefore,
the organisation need to retain their existing customers and attracts new customers so that they
can secure massive profitability in their business. For the success of Swiss International Airlines,
customer loyalty is highly important.

Government:

Swiss International Airlines must follow different international and domestic laws that are
developed by the government. Along with that, the organisation must pay the tax timely and
adequately so that they can avoid legal liability.

High interest and low power:

The stakeholders who have a higher level of interest in the business of Swiss International
Airlines are the creditors and lenders (Freeman, 2015).

Moreover, the different financial institution also has a high interest in the organisation because
they invest money in the organisation. However, they have lesser power in the organisation.

Low interest and low interest:

Local community:

Swiss International Airlines supports the community with the help of different charitable
activities. Swiss International Airlines is one of the socially responsible organisation that not
only creates a proper scope of employment for the local community but also donate money to the
charity.

By conducting the analysis, it can be said that stakeholders have an essential role to fulfil the end
goal of the organisation. Therefore, while making an organisational strategy, Swiss international
airlines need to involve the shareholders in the process of decision making. This is because the
involvement of the stakeholders in the decision-making process always attracts and retains the
stakeholders towards the organisation. For securing organisational success, an organisation must
develop the strategy by considering the needs as well as interests of the stakeholder so that they
can show good interest in the achievement of the organisational goals. Every stakeholder of the
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Report on Business Strategy for Swiss International Airlines
organisation have various power and interests. However, the organisation must show good
interest in fulfilling the need of every stakeholder so that they can create a good value for the
Swiss international airlines.

McKinsey's 7S model

McKinsey 7S model is the tool that is associated with analysing the design of organisation by
considering the seven key internal elements (Shiri et al. 2015). McKinsey 7S model is applicable
in different situations such as for facilitating organisational change, for implementing new
corporate strategy and for promoting the merger of an organisation with other organisation.
McKinsey 7S model of Swiss International Airlines is shown below:

Strategy:

Swiss International Airlines mainly follow a differentiation strategy. By following the

differentiation strategy, Swiss International Airlines has decided to be unique in the airline
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Report on Business Strategy for Swiss International Airlines
industries that are widely valued by the customers. The differentiation in the pricing strategy has
helped the organisation in getting more number of customers towards their organisation (Swiss,
2020). The organisation has launched an aggressive pricing strategy so that they can achieve a
competitive advantage (Swiss, 2020). The organisation offers its products and services more
clearly as well as distinctly with the help of different distribution channel so that it can help the
customers in selecting them according to their specific travel-related needs.

Structure:

Swiss International Airlines is the flag carrier of Switzerland that operates its business from
Europe to North America. The parent company of the organisation is the Lufthansa group.
Therefore, it can be said that the organisation mainly follows the hierarchical organisational
structure. In the hierarchical organisational structure, every entity of an organisation is the
subordinate to the other entity (Costa, 2020). As Swiss International Airlines is the entity of the
Lufthansa group; therefore, it can be said that they mainly follow the hierarchical organisational
structure (Costa, 2020). There are subsidiary companies such as Edelweiss Air or Swiss
WorldCargo under the Swiss International Airlines group.

Systems:

The organisational system of Swiss International Airlines is similar to other airline organisation
of Lufthansa airline because Lufthansa is the parent company of the organisation. For making
the departure control and developing a better check-in system, Swiss International Airlines
utilises the standardised user interface (common use terminal equipment) (lhsystems, 2020).
Swiss International Airlines mainly uses cFront/ LAGUNA. Swiss International Airlines also
gave some specific systems for checking and handling the baggage along with the entertainment
system in the flight.

Style:

For creating better customer services, Swiss International Airlines always offers practical
training to their staff. The organisation encourages their staffs in developing communication with
each other so that they can communicate with each other and understand the need of customers
with efficiencies so that they can satisfy it. Along with that, the organisation also applies an
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Report on Business Strategy for Swiss International Airlines
effective leadership style so that they can support the staffs and fulfil their needs with
efficiencies. This strategy of the organisation helps them in creating better performance.

Staff:

Swiss International Airlines always tend to hire that staffs that are efficient and service-oriented
so that they can offer a useful service to their organisation. Hiring skilled and motivated staff is
helpful for the organisation in meeting the corporate goal of the organisation.

Skills:

The organisation hired that staffs that has adequate knowledge in the respective field. For
example, they employ that flight attendant who has a useful ability in handling customers and
offering services (Swiss, 2020). After hiring those staffs, the organisation provides proper
assistance to their employees so that their skill set can be improved. The organisation has a focus
on developing and enhancing the skill of employees so that they can deliver better quality
services and products and standard customer services.

Shared values:

Swiss International Airlines have values that are widely accepted by the customers of the
organisation. The organisation has developed its shared values by considering the mission and
vision statements so that they can achieve it successfully. The organisation has improved their
shared values in the way so that they can offer high-quality services to its customers and secure
competitive advantage with efficiencies.

VRIO Framework

The VRIO framework is a tool of strategic analysis that is designed to help an organisation in
protecting and uncovering capabilities and resources that helps secure sustainable competitive
advantage. VRIO Analysis of Swiss International Airlines is shown below:
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Report on Business Strategy for Swiss International Airlines

Value:

The valuable elements of the organisation are the employees of the organisation. The
organisation offers excellent training to their employees that have made them unique, efficient,
and skilled and motivated towards their job (Swiss, 2020). Moreover, the organisation has
developed a better infrastructure for its employees that improve the skills of the employees.

Rareness:

The pricing strategy of the Swiss international airline is precious that is helpful for the
organisation in securing higher profitability. However, the pricing strategy of the organisation is
not rare (Swiss, 2020). The pricing strategy has helped them in getting a demand for their
services though it is not rare. It helps them in getting an immediate success.

Imitability:

The position of the organisation in Europe is highly valuable, which cannot be imitated by the
other airline organisation.

Organisation:
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A productive relationship among different internal stakeholders of the organisation has helped
the organisation in reducing the chances of conflicts in the organisation and reducing the
operational expenses that have helped the company in offering their services in lowest costs to
grab the attention of the customers.
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Report on Business Strategy for Swiss International Airlines

References
Costa, M. 2020. SWISS: the airline flying the flag for brand Switzerland – Marketing Week.
[online] Marketing Week. Available at: https://www.marketingweek.com/swiss-the-airline-
flying-the-flag-for-brand-switzerland/ [Accessed 6 Feb. 2020].

Forsyth, P., 2018. Competition versus Predation in aviation markets: a survey of experience in

North America, Europe and Australia. Routledge.

Freeman, R.E., 2015. Stakeholder theory. Wiley Encyclopedia of Management, pp.1-6.

Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International
Social Research, 10(51).

lhsystems, 2020. [online] Available at: https://www.lhsystems.com/article/swiss-international-

air-lines-uses-standardized-user-interface-check-systems-lufthans [Accessed 6 Feb. 2020].

Shaw, S., 2016. Airline marketing and management. Routledge.

Shiri, S., Anvari, A. and Soltani, H., 2015. Identifying and prioritising of readiness factors for
implementing ERP based on agility (extension of McKinsey 7S model). European Online
Journal of Natural and Social Sciences: Proceedings, 4(1 (s)), pp.pp-56.

Swiss. (2020). About us | Allow us to introduce ourselves | SWISS. [online] Swiss.com. Available

at: https://www.swiss.com/corporate/en/company/about-us [Accessed 6 Feb. 2020].