Scandinavian Airlines System (SAS) in 1988

Between 1981 and 1987, SAS underwent a remarkable transition under a new management team headed by Jan Carlzon. From being a loss-making, demoralised organisation that competed at the periphery of the airline industry, it has become a highly profitable, energetic company and an important player in a rapidly changing global industry. The case describes the action taken by the company to achieve such a remarkable turnaround, including the changes in its strategy, organisation, management processes, and corporate culture. The problems of the company are, nevertheless, not over. It still has to find a way of remaining a viable player in the increasingly deregulated and concentrated industry where most major players boast of size and resources considerably greater than those of SAS. Management now has to focus on the task of building a sustainable competitive advantage.

To discuss two sets of issues; the management of turnaround situations and the need for simultaneous and synchronized change in strategy, organisation, management; the tradeoffs to achieve short-term financial turnaround and those required to develop sustainable competitive advantage in a rapidly changing industry. At a more specific level, to provide insights on the strategic management of service industries and on the challenges being faced by large European companies in the context of rapid deregulation and restructuring in preparation for 1992.