ravi southwest

8/14/2019 Ravi Southwest

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A

Presentationon

SOUTH WESTAIRLINES

Presented By:

RAVI MODH

DIPAK PRAJAPTI

MAHESH RAVAL


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Background :

- Founded in 1967 - Love Field in Dallas, TX- 35,000 Employees (started Flying in 1972)

- Nations 4th largest airline (59+ cities and 65M

Customers)

- Only two fares: regular coach and off-peak

Results and Outcomes:

- Excellent customer service (rated the best for on-time

performance, fewest lost bags; fewest customercomplaints 13 years in a row)

- Safest airline in the world (never had a fatal accident)

- Profitable every year (33 years in a row); only airline

in the world

Southwest Airlines


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History of Southwest Airlines On February 20, 1968 the Texan Aeronautical Commissions approved plans to fly

in 3 states, the c5eators are Rollin King and Herb Kelleher

Expanded through 1980s to 1990s by 1993 Southwest Airlines could fly in 34states in 15 states

They also expanded into new destinations California, Northwest, Florida, EastCoast

The competitors could not keep up, 500 pound cockroach that was too big tostamp out:

While the airfare was dropping the traffic went up tremendously, in 1994 Unitedstarted a shuttle service, the large air carriers were feeding traffic into transpacificand transcontinental routes, they could not keep up

In 2004 Southwest Airlines is fourth largest domestic carrier, customer boarded

In 2002 they traveled in 58 cities and 30 states, it has been 13 years in a row that

they are profitable, even after September 11, 2001, net income fell 52.9 percent,Southwest was the only airline company that had a profit all the other companieswere in the red

Was the first airline to achieve the Triple Crown, they had five difference TripleCrown dedicated to the Employees of Southwest Airlines for their excellentachievements.


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Southwest Airlines and Some Other Airlines: -2008 Profit/Loss

Southwest Airlines

American Airlines

U.S. Air

$63.5M$32.4M*

$(748M)

$(1.0 B)

Delta $(1 B)


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One of Best 100 Companies and in the top 10 Most

Admired companies to work for:

- FUN emphasized!

- Family emphasized!

- Caring for employees emphasized!

- Customers emphasized!- Identify with fellow employees (as internal

customers!)

- Ten-year Labor agreement! (81% unionized)

Employees Love to work there!!

SouthwestAirlines


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Mission Statement

Southwest has a dedication

to the highest quality ofcustomer service delivered

with a sense of warmth,

friendliness, individual pride,and company spirit.


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Goals and Objectives

Ensure highest quality Customer

Service in the air or on the ground.

Ready to help customers under any

circumstances.

Are there to ensure you make it from

point A to point B safely

To stay the most successful with low-

fare, high frequency point-to-point

carrier.


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Southwests Values, Philosophy, and Spirit

These are three basic values (the culture) or philosophical

pillars at Southwest Airlines:

Value 1: Work should be fun ...it can be play . . . Enjoy it.

Value 2: Work is important ...dont spoil with seriousness.

Value 3: People are important...each one makes a different.

Beliefs:

Organizations are transparent Family and Hugs


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Key Ratios

Profit Margin: 7.23% Return on Assets: 4.01% Return on Equity: 8.98%

Revenue: 7.58B Gross Profit: 2.49B Operating Cash Flow: 2.23B Market Capital: 14.41B

Current: .941 Debt to Equity: .299 Total Debt: 2.00B


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- Hard-working (94 employees per plane vs.. Americans160 and United 160 - Industry average of 130; serves2,500 passengers per employee Vs. United and Americanaverage less than 1,000)

- Motivated

- Have FUN - fun place to work

- Treat employees as internal customers

- Employees are comfortable

- Fundamental business philosophy is that employeescome first!

- Not a lot of employees!

People at Southwest:


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Internal Strengths and

Weaknesses

Strengths Best low-fare carrier

Triple Crown for annual performance

Quickly seize a strategic opportunity when arises

Team Spirit Employees come 1st not customers

Made 20% of flights to one stop

Even though Unionized still negotiate flexible workhours

Marketing on the web, 50% revenue from onlinebooking


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Weaknesses

Conservative Growth Tactics

Cuts cost in customer service areas

Not subscribed to centralized reservation

service

Other Co.s now using same managementstrategies since found out about SW

Airlines

Provides service in only 68 cities


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Market shareMarket share

Southwest

Jetblue

American Airlines

Delta

US Airways

Air Tran

23


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Airline Industry

EnvironmentFive Forces Model

Potential competitors-low

Rivalry among established companies-high

Bargaining power of buyers-high

Bargaining power of suppliers-high Threat of substitutes-low


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PEST Analysis

Political Factors

Economic Factors Social/Sociological Factors

Technological Factors


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Factors in Macro

Environment Consumer demand

Government regulations Technological advances

International agreements


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Organizational Culture

Encourage participation

Employee ownership/empowerment

Freedom, informality, interplay


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Distinctive Competencies

Organizational culture

Customer focused

Low-cost structure


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Why is Southwest

Successful? NOT because of: Only flies 737s

Only Small Airports

Low Ticket Prices Quick Turnaround

Low Cost

Customer Loyalty

Efficiency

Profitable

Rate of Productivity

All Results/

Outcomes/

Effects/

Symptoms


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Because of its Internal Business

Environment and/ or Execution Systems

the Causes:

Culture, Core Values, Philosophies andPrinciples (Vision Direction)

Effective Management of its Workplace

Effective Exemplar Structures, Systemsand Processes (fit between elements of theExecution System)

Why is Southwest

Successful?


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Southwest Airlines

Integrated Low Cost/Differentiation Strategy

Use a single aircraft model

(Boeing 737)Use secondary airports

Fly short routes

15 minute turnaround timeNo meals

No reserved seats

No travel agent reservations

Low Cost

Focus on customer

satisfaction

Focus on customer

satisfaction

New flight services for

business travelers

(phones and faxes)S.W.A.s Culture, Values,

Philosophies & Principles

New flight services for

business travelers

(phones and faxes)S.W.A.s Culture, Values,

Philosophies & Principles

High level of employee

dedication

High level of employee

dedication

DifferentiationDifferentiation


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Possible Strategies

Expand into more cities

Increase amount of shorter destination

flights into the larger airports

Increase direct flights

Purchase bigger planes

Get agreements with Airports for flights

Eventually look to acquire American

Airlines


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Business Strategies

Functional strategy

Business level strategy Strategic fit with internal organization


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Decisions

Based on QSPM, the best looking

strategy would be to expand into more

cities

The longer non-stop flights have more

of a competitive market and would be

hard to keep low cost flights


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Implementation

Increase

The number of flights per day by 5%

Increase revenue by 15%

Helps to cover new increasing cost

Flights into larger airports

Decrease

Operating costs by 10%

Flights to cities with more than 4 flights a

day


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Evaluations

Quarterly reports

Average daily flights

Average passenger per flight Quarterly meetings to evaluate current

plan and make necessary changes as

needed


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UPDATE!!

Expanded into 86 cities as of 2008

Operates over 3,500 flights per day


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Future Issues/ Problems

for SWA Going International Merger (Acquisition of another airline)

Growth: Internal? External?

Both?

Will the Corporate culture change whenHerb leaves?


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ravi southwest

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