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
Research Objectives and Topics
The primary objective of this study is to conduct a comprehensive environmental analysis of Scandinavian Airlines (SAS) to identify the internal and external factors influencing its organizational performance and strategic challenges. The paper explores the impact of historical and recent operational crises on the airline's market position and management effectiveness.
- Application of SWOT and PESTLE analytical frameworks to the aviation industry.
- Evaluation of the 1981 financial crisis and organizational turnaround strategies.
- Analysis of external pressures including economic fluctuations, personnel costs, and high-interest rates.
- Examination of the July 2022 strike action and its implications for labor relations and company operations.
- Assessment of the role of management philosophy in sustaining competitive advantage and service quality.
Excerpt from the Book
PESTLE analysis:
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.
Summary of Chapters
Environmental analysis & importance of environmental analysis: This chapter introduces the necessity of assessing internal and external factors to determine organizational strategy and competitive positioning.
Relevant theories/models: This section details the application of SWOT and PESTLE frameworks as essential tools for identifying business strengths, threats, and external environmental influences.
Brief overview of company: This chapter provides historical context for SAS, outlining its founding in 1946 and its evolution into a major international carrier despite facing significant financial hurdles.
SAS and the 1981 crisis: This section investigates the first major operational crisis of the company, highlighting the role of poor management and the subsequent strategic shift.
SWOT analysis: This chapter provides a detailed breakdown of SAS's internal and external status at various developmental stages, examining service quality and organizational reputation.
PESTLE analysis: This chapter applies political, economic, social, technological, legal, and environmental variables to explain the broader industry challenges faced by SAS.
The strike action in July 2022: This chapter analyzes the causes and consequences of the pilot union strikes and the subsequent impact on operations and bankruptcy protection.
SWOT & PESTLE analysis: This section synthesizes late-stage data regarding the pandemic's impact on SAS, evaluating the company's responses and structural weaknesses.
Conclusion: This final chapter synthesizes the findings, arguing that poor management and product-driven mindsets have hindered the company's stability and sustainability.
Keywords
Scandinavian Airlines, SAS, Environmental Analysis, SWOT Analysis, PESTLE Analysis, Aviation Industry, Strike Action, Management, Operational Costs, COVID-19, Financial Crisis, Labor Relations, Sustainability, Strategic Planning, Airline Performance.
Frequently Asked Questions
What is the core focus of this research paper?
The paper focuses on performing an environmental analysis of Scandinavian Airlines to determine why the organization frequently encounters financial and operational crises.
What are the primary theoretical frameworks used?
The research relies on SWOT analysis to examine internal strengths and weaknesses, and PESTLE analysis to evaluate external political, economic, social, technological, legal, and environmental influences.
What is the main organizational challenge highlighted?
The paper identifies recurring financial difficulties, high operational costs, and ineffective management strategies as the central challenges facing SAS.
How does the paper categorize the strike action of July 2022?
It identifies the strike as an escalation of labor disputes caused by worsened working conditions and the company's attempt to reduce costs, leading to massive flight cancellations and financial turmoil.
What is the conclusion regarding SAS management?
The author concludes that management, under the guidance of CEOs like Anko van der Werff, often adopts a product-driven mindset that overlooks service quality, contributing to recurring crises.
Which specific external factors are considered most impactful to SAS?
The paper highlights political stability as a strength, while economic factors (high oil prices/interest rates) and industrial/union relations are cited as critical pressures.
What unique role did Jan Carlzon play in the history of SAS?
Jan Carlzon is credited with successfully pivoting the company during the 1981 financial crisis by shifting focus toward profitability and improved strategic management.
How did the pandemic influence the organizational structure presented in the paper?
The pandemic forced SAS to reduce capacity, implement layoffs, and move toward hiring cheaper, less experienced pilots, which eventually broke the trust with established unions.
- Quote paper
- Jirawan Pedersen (Author), 2022, Environmental Analysis of Scandinavian Airlines, Munich, GRIN Verlag, https://www.grin.com/document/1297307
