Harvard Case - Scandinavian Airlines System
"Scandinavian Airlines System" Harvard business case study is written by John J. Kao. It deals with the challenges in the field of Organizational Behavior. The case study is 21 page(s) long and it was first published on : Dec 9, 1986
At Fern Fort University, we recommend a multi-pronged approach for SAS to address its challenges, focusing on organizational culture, leadership development, and operational efficiency. This strategy aims to improve employee engagement, customer satisfaction, and financial performance while navigating the complexities of the airline industry.
2. Background
Scandinavian Airlines System (SAS) is a major European airline facing significant challenges. The company is struggling with declining profitability, intense competition, and a complex organizational structure. SAS's workforce is characterized by a strong union presence and a culture of resistance to change. The case study highlights the challenges faced by the CEO, Jan Carlzon, as he attempts to implement a new strategy focused on customer service and operational efficiency.
The main protagonists in the case are:
- Jan Carlzon: The CEO of SAS, tasked with turning around the company's declining fortunes.
- SAS employees: A diverse workforce with strong union representation, often resistant to change.
- SAS management: A group of executives facing pressure to deliver results and navigate the complex web of internal politics.
- SAS customers: The airline's target market, demanding high levels of service and competitive pricing.
3. Analysis of the Case Study
This case study can be analyzed through the lens of organizational behavior, change management, and leadership.
Organizational Culture: SAS's culture is characterized by:
- Strong union presence: This creates a powerful counterbalance to management's initiatives, potentially hindering change implementation.
- Resistance to change: Employees are accustomed to a rigid, hierarchical structure and may resist new ideas.
- Lack of customer focus: The company's internal focus on processes and procedures has led to a decline in customer satisfaction.
Leadership: Carlzon's leadership style is characterized by:
- Visionary leadership: He has a clear vision for SAS's future, focusing on customer service and operational efficiency.
- Transformational leadership: He aims to inspire employees and create a shared vision for the company's future.
- Empowering leadership: He seeks to empower employees to take ownership of their work and improve customer service.
Change Management: SAS's change management efforts are hampered by:
- Lack of communication: Employees are not fully informed about the rationale behind the changes, leading to confusion and resistance.
- Insufficient employee involvement: Employees are not adequately involved in the change process, leading to feelings of alienation and distrust.
- Resistance from unions: The strong union presence creates a significant obstacle to implementing change.
Other relevant frameworks:
- Power and influence: The case highlights the power dynamics within SAS, with unions holding significant influence over employees and management.
- Decision-making processes: The case demonstrates the importance of involving stakeholders in decision-making to ensure buy-in and reduce resistance.
- Motivation theories: Carlzon's approach to change management can be analyzed through the lens of Maslow's Hierarchy of Needs and Herzberg's Two-Factor Theory.
4. Recommendations
1. Foster a Culture of Customer Focus:
- Implement a comprehensive customer service training program: This should emphasize empathy, problem-solving, and proactive communication.
- Empower employees to make decisions: Give frontline staff the authority to resolve customer issues quickly and efficiently.
- Measure customer satisfaction regularly: Collect feedback from customers and use it to identify areas for improvement.
2. Develop Effective Leadership:
- Invest in leadership development programs: Train managers to lead effectively in a changing environment.
- Promote a culture of collaboration: Encourage managers to work together across departments to achieve common goals.
- Recognize and reward effective leadership: Identify and reward managers who demonstrate exemplary leadership qualities.
3. Implement Change Management Strategies:
- Communicate the vision clearly: Explain the rationale behind the changes and the benefits for employees and customers.
- Involve employees in the change process: Seek input from employees and involve them in decision-making.
- Provide support and training: Offer training and resources to help employees adapt to the new ways of working.
- Address employee concerns: Actively listen to employee concerns and address them in a timely and constructive manner.
4. Improve Operational Efficiency:
- Streamline processes: Identify and eliminate unnecessary steps in the airline's operations.
- Invest in technology: Utilize technology to improve efficiency and reduce costs.
- Optimize resource allocation: Allocate resources effectively to ensure optimal performance.
5. Build Strong Relationships with Unions:
- Engage in open and honest dialogue: Establish a constructive relationship with unions to address concerns and find common ground.
- Involve unions in the change process: Seek input from unions on proposed changes and work collaboratively to find solutions.
- Recognize the value of unions: Acknowledge the role of unions in representing employees and promoting their interests.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with SAS's core competencies in customer service and operational efficiency, and support the company's mission to be a leading European airline.
- External customers and internal clients: The recommendations prioritize the needs of both external customers and internal clients, aiming to improve customer satisfaction and employee engagement.
- Competitors: The recommendations consider the competitive landscape and aim to position SAS as a leader in customer service and operational efficiency.
- Attractiveness - quantitative measures: The recommendations are expected to improve SAS's financial performance by increasing revenue and reducing costs.
6. Conclusion
By implementing these recommendations, SAS can create a culture of customer focus, develop effective leadership, and improve operational efficiency. This will enable the company to overcome its current challenges, strengthen its competitive position, and achieve long-term success.
7. Discussion
Alternative Options:
- Focusing solely on cost reduction: This approach could lead to short-term gains but may negatively impact customer service and employee morale.
- Merging with another airline: This could provide economies of scale but may present challenges in integrating cultures and operations.
Risks and Key Assumptions:
- Employee resistance: Change management efforts may face significant resistance from employees, particularly from unions.
- Competitor response: Competitors may react to SAS's changes by offering lower prices or improved services.
- Economic downturn: A downturn in the economy could negatively impact demand for air travel and reduce SAS's profitability.
8. Next Steps
- Develop a detailed implementation plan: Outline specific actions, timelines, and responsible parties.
- Communicate the plan to all stakeholders: Ensure that all employees, managers, and unions are informed about the proposed changes.
- Monitor progress and make adjustments: Track the implementation of the recommendations and make adjustments as needed.
- Evaluate the impact of the changes: Assess the impact of the changes on customer satisfaction, employee engagement, and financial performance.
By taking these steps, SAS can successfully navigate its challenges and achieve its strategic goals.
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Case Description
Discusses the fostering of entrepreneurship and innovation in the large corporation. It traces the development and history of Scandinavian Airlines System (SAS) from 1946 to the present with particular emphasis on the leadership of Jan Carlzon, CEO from 1981 to the present. He transformed the company's culture from a technical to a marketing force through personal leadership, internal corporate communications training, human resource policies and procedures, and other organizational tools.
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