Scandinavian airlines v1.5


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  • Margo
  • Margo
  • Margo
  • Rekha
  • Rekha- I calculated the cost in US Dollars and have changed the figures in terms of whole fleet, please cross check it once.
  • Jane
  • Jane
  • Anamika
  • Anamika
  • Margo
  • Scandinavian airlines v1.5

    1. 1. Scandinavian Airlines: The Green Engine Decision<br />MBA 241<br />Anamika Bhardwaj<br />Jane Finnegan<br />Margaret Hwang<br />Rekha Srivatsan<br />
    2. 2. Company Profile<br />Largest airline in Scandinavia, serving 32 million people<br />4th largest in Europe, important player in global airline market<br />Pioneers and forward-thinkers<br />1st to have a female pilot<br />1st to offer business class<br />2<br />
    3. 3. Company Profile<br />Environmental management was elevated to a strategic level in 1995<br />First environmental director – Niels Eirik Nertun<br /><ul><li>Influential player in decision making processes
    4. 4. Able to justify expense of environmental initiatives
    5. 5. Competitors reacting to pressure
    6. 6. Corporate customers demanded reaction</li></ul>3<br />
    7. 7. The Issue<br />SAS has made the decision to purchase 55 Boeing-737s <br />- Senior management must decide on an engine<br />Purchasing a “Green” engine<br /><ul><li>Progressive option that aligns with the company’s environmental reputation
    8. 8. Financial, cultural, and political drivers must all be considered in the decision-making process</li></ul>4<br />
    9. 9. Green Engine<br />Bengt-Olov Nas, Director of Aircraft and Engine Analysis, must convince the management team to purchase the green engine<br />Two-stage dual annular combustion (DAC)<br /><ul><li>Developed in the 1970s, but has not been commercialized
    10. 10. Produced significantly lower NOx emissions
    11. 11. Represents a strong environmental commitment
    12. 12. “Green” engine would add approximately 2 billion US dollars to the whole fleet
    13. 13. No specific figures on company economic impact</li></ul>5<br />
    14. 14. Environmental Image of SAS<br />“First Mover” in environmentally sustainable strategies<br />- Implementation of Environmental Audits<br />Forward-thinking leader in the airline industry<br />SAS’s environmental image now prevails over the overall company image <br /><ul><li>See Exhibit 4, Pg. 11
    15. 15. EmissionCalculator
    16. 16.</li></ul>6<br />
    17. 17. Environmental Concerns in the Airline Industry <br />Airline’s environmental impact<br />90% comes from flight operations<br />5% comes from cabin operations<br />5% comes from ground operations<br />Emissions from aircrafts are thought to have global warming effects up to three times greater than ground transportation<br />7<br />
    18. 18. Political and Regulatory Drivers<br />Airline industry is governed by international, federal, regional, and local legislation<br />Environmental standards have been developed by the United Nations International Civil Aviation Organization<br />Sweden is one of the leaders in managing the environmental impacts of air travel <br />8<br />
    19. 19. Cultural Drivers<br />Scandinavian culture<br />Associated with deep set of values and beliefs regarding the importance of caring for the environment<br />Strong role in reacting to environmental challenges faced within the airline industry<br />CAA recognizes Scandinavian countries as exceeding their commitment to the environment<br />9<br />
    20. 20. Deterrents and Incentives of Purchasing Green Engine Technology<br />Deterrents:<br />- High Cost of the technology<br />- Opportunity Costs<br />- Potential of technical complications<br />Incentives:<br />- Upholding brand image<br />- Anticipation of market demands and emission caps<br />- Establishing a leadership role as a First Mover<br />10<br />
    21. 21. Activity<br />Group 1 (Team 1 & 3)<br />Group 2 (Team 2 & 4)<br />List the environmental impact (s) of aircraft engine performance. Which of these impacts were key factors in the DAC engine decision?<br />How do you think Scandinavian culture affected SAS’s decision?<br />Should corporations make environmentally responsible investments even if they don’t have a shorter term payback ?<br />11<br />
    22. 22. Vote for each of them<br />Given external and internal influences at the time of the decision, what would SAS’s motivations have been for purchasing the engines? Use the following list as a guide to discussing which motivations were most relevant to the SAS decision and why.<br />Desire to avoid or anticipate future regulatory action<br />Financial benefits (short term and long term and/or money saved and money earned through corporate greening)<br />Competitive advantage<br />Stakeholder pressures<br />Enhancing image, being a good corporate citizen<br />12<br />
    23. 23. Activity Continued…<br />Group 1<br />List the arguments FOR purchasing the more expensive green engines from the point of view of the director of aircraft and engine analysis.<br />Group 2<br />List the arguments AGAINST purchasing the more expensive green engines from the point of view of the SAS management team.<br />13<br />
    24. 24. What is our Decision???<br />14<br />DAC<br />