American Airlines Group Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a strategic planning tool that can be used by American Airlines Group Inc. managers to do a situational analysis of the firm . It is a handy technique to analyze the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) American Airlines Group Inc. is facing in its current business environment.

The American Airlines Group Inc. is one of the leading firms in its industry. American Airlines Group Inc. maintains its prominent position in market by critically analyzing and reviewing the SWOT analysis.  SWOT analysis a highly interactive process and requires effective coordination among various departments within the organization such as – marketing, finance, operations, management information systems and strategic planning.


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The SWOT Analysis framework helps an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the American Airlines Group Inc. to develop four types of strategies:

• SO (strengths-opportunities) Strategies
• WO (weaknesses-opportunities) Strategies
• ST (strengths-threats) Strategies
•  WT (weaknesses-threats) Strategies

SWOT Matrix Strategies Objective

The main purpose of SWOT matrix is to identify the strategies that a firm can utilize to exploit external opportunities, counter threats, and build on & protect American Airlines Group Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to American Airlines Group Inc. SWOT Analysis

Strengths of American Airlines Group Inc. – Internal Strategic Factors

As one of the leading companies in its industry, American Airlines Group Inc. has numerous strengths that enable it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of American Airlines Group Inc. are –

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• Superb Performance in New Markets – American Airlines Group Inc. has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.
• Automation of activities brought consistency of quality to American Airlines Group Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
• High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
• Strong Free Cash Flow – American Airlines Group Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
• Successful track record of developing new products – product innovation.
• Strong distribution network – Over the years American Airlines Group Inc. has built a reliable distribution network that can reach majority of its potential market.
• Strong dealer community – It has built a culture among distributor & dealers where the dealers not only promote company’s products but also invest in training the sales team to explain to the customer how he/she can extract the maximum benefits out of the products.

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Weakness of American Airlines Group Inc. – Internal Strategic Factors

Weakness are the areas where American Airlines Group Inc. can improve upon. Strategy is about making choices and weakness are the areas where a firm can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

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• Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present.
• Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
• Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its competitors. One of the reason why the days inventory is high compare to its competitors is that American Airlines Group Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
• The profitability ratio and Net Contribution % of American Airlines Group Inc. are below the industry average.
• High attrition rate in work force – compare to other organizations in the industry American Airlines Group Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
• There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.
• Limited success outside core business – Even though American Airlines Group Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.

Opportunities for American Airlines Group Inc. – External Strategic Factors

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• New trends in the consumer behavior can open up new market for the American Airlines Group Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of American Airlines Group Inc..
• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided American Airlines Group Inc. an opportunity to enter a new emerging market.
• The market development will lead to dilution of competitor’s advantage and enable American Airlines Group Inc. to increase its competitiveness compare to the other competitors.
• Government green drive also opens an opportunity for procurement of American Airlines Group Inc. products by the state as well as federal government contractors.
• Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for American Airlines Group Inc. in other product categories.
• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as American Airlines Group Inc. to increase its profitability.
• The new technology provides an opportunity to American Airlines Group Inc. to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.

Threats American Airlines Group Inc. Facing - External Strategic Factors

• Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
• Imitation of the counterfeit and low quality product is also a threat to American Airlines Group Inc.’s product especially in the emerging markets and low income markets.
• Rising raw material can pose a threat to the American Airlines Group Inc. profitability.
• Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
• As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
• New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.

Limitations of SWOT Analysis for American Airlines Group Inc.

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

• Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
• SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
• The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of American Airlines Group Inc.
• SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
• SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

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Weighted SWOT Analysis of American Airlines Group Inc.

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis American Airlines Group Inc. managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of American Airlines Group Inc.

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

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Example of Weighted SWOT Analysis

You can email us to get an example document of Weighted SWOT analysis.

SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

• M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
• A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
• O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
• L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
• R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)