Sas Case Analysis

International Case #: 6-2 T h e C a s e o f (Scandinavian Airlines S A S System) INTRODUCTION SCANDINAVIAN AIRLINES SYSTEM (SAS) originated when the airlines of Sweden, Norway and Denmark formed a consortium. 1970’s – competition are fierce and resulted in a loss market share. 1981 – Jan Carlzon, The CEO, undertook drastic decentralization. Top-Down authority replaced by open communication. SAS Strategies is to become known as â€Å"the businessman’s strategy† (with rather high fares), with upgraded service, on-time performance, good food and comfort. For the Future SAS has 2 goals 1. To become the most efficient airline in Europe by 1992 2. To be one of the five major airlines in Europe after 1995 Keystone is SAS’s global strategy is to form strategic alliances. -? An agreement to exchange equities with Swissair was reached in 1989. -? Alliance was also made with All Nippon Airways, LanChile, Canadian Airlines Intl and Finnair. I. TIME CONTEXT II. VIEWPOINT 1981 Jan Carlzon SAS CEO III. CENTRAL PROBLEM Fierce competition, Loss of market share & Reduced profitability IV. STATEMENT OF OBJECTIVE Must: to cope up with competition Wants: to become the most efficient airline in Europe by 1992 and to be one of the five major airlines in Europe after 1995 V. AREAS OF CONSIDERATION THREATS 1.? Competition with larger airlines 2.? High fuel price 3.? Rising operational costs 4.? Decrease in demand for air service 5.? Price Wars OPPORTUNITIES 1.? Strategic alliances with other airlines 2.? Offer high-quality service V. AREAS OF CONSIDERATION WEAKNESSES 1.? Deterioration of services 2.? Low morale of the workforce STRENGTH 1.? Workforce 2.? Upgraded Services 3.? On-time performance 4.? Good food & comfort 5.? Decentralization VI. ALTERNATIVE COURSES OF ACTION 1. Continuous implementation of decentralization (+) Faster decision-making Address and solve the problem right away Open communication Training and development for employees (-) Mistakes or wrong decisions are prevalent Policies and rule must be reviewed and change Training cost Great deal of time in communication a.? b.? c.? d.? a.? b.? c.? d.? VI. ALTERNATIVE COURSES OF ACTION 2. Strategic alliance with other airlines (+) Access to different airlines hub Leverage Able to compete with larger airlines Opportunity to sell shares (-) a.? Control issue b.? Possible waste of money a.? b.? c.? d.? VI. ALTERNATIVE COURSES OF ACTION 3. Upgrade service strategy (+) a.? High-quality service b.? Punctual and on-time performance (-) a.? High fares b.? Research and development cost c.? Training cost VII. RECOMMENDATION Adapt ACA 2 (Strategic Alliance) VIII. ACTION PLAN Person Responsible Jan Carlzon / Marketing Research Jan Carlzon Jan Carlzon Jan Carlzon / Negotiating Team Negotiating Team Jan Carlzon / Allies Finance Department Activities Gather data through business intelligence & competitive analysis Set a meeting with the SAS Board Form a negotiating team Set meetings with possible allies Time Frame 30 days 1 day 7 days Prepare proposals/MOA/Service agreement Contract signing / sign-off Prepare budget 3 days 1 day 5 days â€Å"Mistakes can usually be corrected later; the time that is lost in not making a decision can never be retrieved†. – Jan Carlzon