29091698 Southwest Airlines Case Study
Content
CASE PRESENTATION ON
SOUTHWEST AIRLINES
Presented to:
Prof. Yogesh Jadhav
Presented By: Amit Dewani Ajay K. Dwevedi Bhumika Kothari M.Musaddiq Shalom S. Singh
Introduction
• Southwest Airlines was established in 1971 in Texas with 3 planes and routes between Dallas, Houston and San Antonio. • Business model was simply: “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.” • Today Southwest Airlines is the 4thlargest airline in the United States servicing 58 cities with a fleet of 366 planes and is on its 29thstraight year of profitability.
Porters’ Three Generic Strategies:
COMPETITIVE ADVANTAGE
C O M P E T I T I V E
S C O P E
1. COST LEADERSHIP
2. DIFFRENTIATION
3.A) COST FOCUS
3.B) DIFFRENTIATION FOCUS
Competitive Advantage, Scope: Low Cost
•Use a single aircraft model (Boeing 737) •Use secondary airports that are under-utilized and close to metropolitan areas •Fly short routes •No meals •15 minute turnaround time no hub necessary avoids delays •Planes average 11 hours in air (Industry average = 8.0) • Planes average 10.5 flights per gate (Industry average = 4.5)
Differentiation
•Focus on customer satisfaction •High level of employee dedication •Flight services for business travelers.
Organizational Culture
Southwest’s Values, Philosophy, and Spirit
Value 1: Work should be fun ...it can be play . . . Enjoy it. Value 2: Work is important ...don’t spoil with seriousness. Value 3: People are important...each one makes a different.
Beliefs: Organizations are transparent
Family and “Love” -Simplify the operations (no meals, no seat assignments; frequent flying)
• Success Factors (per the Company’s behavior): Employees come 1st Customers – 2nd Shareholders – 3rd
Organization:
Stable working environment (never had a layoff) • People orientated culture (informal egalitarianism) • Equal Opportunity for learning and personal growth • Creativity and innovation encouraged and rewarded • Same caring, concern, respect within the organization as outside (with customers) • Catastrophe fund for employees • Celebrations (for achievements) • Contests • Lots of companies say “employees are important” -however, their behaviors speak louder than words!! • Flat/Lean organization structure, Effective Management of its Workplace •Assets are managed and low variable costs • Focus on Human Capital - unleash their innovation and increase their capabilities •Everyone receives a “raise” on his/her birthday •High level of employee trust •Rewards and Recognition
SWOT ANALYSIS
STRENGTHS
•Low price tickets • Low operating costs • Good customer service • High frequency service • Productive pilots & crews •In 2003 posted a profit for the 31st consecutive year
WEAKNESSES
•No international flights •No segmented seating •Dependent on a single producer •Carry a small amount of freight and cargo
OPPORTUNITIES
•International markets • Longer flights • Can use better plane models for much better services
STRENGTHS
•Decline of leisure travel due to economy and terrorism since September 11th •Gas and oil price fluctuations. •Annual airline security costs have increased.
•New government regulations that make operations costlier
PEST ANALYSIS
Political:
Government aid after 9/11 attack New government regulations
Economical
No layoff Operating cost Economical crisis due to terrorist attcak
Social
People trust SW Employee trust
Technological
Other planes can be used with better technlogy
Mickenseys’ 7S Model
1) Strategy
A set of actions that you start with and must maintain. SW start with its core values and beliefs that they maintained like no layoffs etc
2) Structure How people and tasks, work are organized. Flat and lean organization structure Effective management and Workforce 3) Systems All the processes and information flows that link the organization together. Communication between upper management and employee is so easy, egalitarian treatment for all 4) Style How managers behave. Style of Keheller was supportive and motivating his employees 5) Staff
How you develop managers (current and future). They hire for attitude and develop for skills.
7 S MODEL CONTD…….
6) Super ordinate Goals Longer-term vision, and all that values that shapes the destiny of the organization. “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.” Employees are the internal customers. 7) Skills Dominant attributes or capabilities that exist in the organization. Competitive advantage that they have
Conclusion ...
To reduce their losses, the airline industry cut the number of flights by 20% and laid off 16% of their workforces. One airline had its own unique approach to the crisis. Southwest avoided layoffs (no-layoff policy) and stuck to its mission of caring for its employees. It was felt that avoiding layoffs in the face of a dramatic decline in demand would jeopardize short-term prospects. "It's part of our culture. We've always said we'll do whatever we can to take care of our people. That's what we've tried to do.“ Southwest Airlines was able to operate their business relatively undisturbed. It was only in the poor economic conditions that suddenly Southwest Airlines' method of operation became the ideal model for its competitors.
SOUTHWEST AIRLINES
Presented to:
Prof. Yogesh Jadhav
Presented By: Amit Dewani Ajay K. Dwevedi Bhumika Kothari M.Musaddiq Shalom S. Singh
Introduction
• Southwest Airlines was established in 1971 in Texas with 3 planes and routes between Dallas, Houston and San Antonio. • Business model was simply: “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.” • Today Southwest Airlines is the 4thlargest airline in the United States servicing 58 cities with a fleet of 366 planes and is on its 29thstraight year of profitability.
Porters’ Three Generic Strategies:
COMPETITIVE ADVANTAGE
C O M P E T I T I V E
S C O P E
1. COST LEADERSHIP
2. DIFFRENTIATION
3.A) COST FOCUS
3.B) DIFFRENTIATION FOCUS
Competitive Advantage, Scope: Low Cost
•Use a single aircraft model (Boeing 737) •Use secondary airports that are under-utilized and close to metropolitan areas •Fly short routes •No meals •15 minute turnaround time no hub necessary avoids delays •Planes average 11 hours in air (Industry average = 8.0) • Planes average 10.5 flights per gate (Industry average = 4.5)
Differentiation
•Focus on customer satisfaction •High level of employee dedication •Flight services for business travelers.
Organizational Culture
Southwest’s Values, Philosophy, and Spirit
Value 1: Work should be fun ...it can be play . . . Enjoy it. Value 2: Work is important ...don’t spoil with seriousness. Value 3: People are important...each one makes a different.
Beliefs: Organizations are transparent
Family and “Love” -Simplify the operations (no meals, no seat assignments; frequent flying)
• Success Factors (per the Company’s behavior): Employees come 1st Customers – 2nd Shareholders – 3rd
Organization:
Stable working environment (never had a layoff) • People orientated culture (informal egalitarianism) • Equal Opportunity for learning and personal growth • Creativity and innovation encouraged and rewarded • Same caring, concern, respect within the organization as outside (with customers) • Catastrophe fund for employees • Celebrations (for achievements) • Contests • Lots of companies say “employees are important” -however, their behaviors speak louder than words!! • Flat/Lean organization structure, Effective Management of its Workplace •Assets are managed and low variable costs • Focus on Human Capital - unleash their innovation and increase their capabilities •Everyone receives a “raise” on his/her birthday •High level of employee trust •Rewards and Recognition
SWOT ANALYSIS
STRENGTHS
•Low price tickets • Low operating costs • Good customer service • High frequency service • Productive pilots & crews •In 2003 posted a profit for the 31st consecutive year
WEAKNESSES
•No international flights •No segmented seating •Dependent on a single producer •Carry a small amount of freight and cargo
OPPORTUNITIES
•International markets • Longer flights • Can use better plane models for much better services
STRENGTHS
•Decline of leisure travel due to economy and terrorism since September 11th •Gas and oil price fluctuations. •Annual airline security costs have increased.
•New government regulations that make operations costlier
PEST ANALYSIS
Political:
Government aid after 9/11 attack New government regulations
Economical
No layoff Operating cost Economical crisis due to terrorist attcak
Social
People trust SW Employee trust
Technological
Other planes can be used with better technlogy
Mickenseys’ 7S Model
1) Strategy
A set of actions that you start with and must maintain. SW start with its core values and beliefs that they maintained like no layoffs etc
2) Structure How people and tasks, work are organized. Flat and lean organization structure Effective management and Workforce 3) Systems All the processes and information flows that link the organization together. Communication between upper management and employee is so easy, egalitarian treatment for all 4) Style How managers behave. Style of Keheller was supportive and motivating his employees 5) Staff
How you develop managers (current and future). They hire for attitude and develop for skills.
7 S MODEL CONTD…….
6) Super ordinate Goals Longer-term vision, and all that values that shapes the destiny of the organization. “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.” Employees are the internal customers. 7) Skills Dominant attributes or capabilities that exist in the organization. Competitive advantage that they have
Conclusion ...
To reduce their losses, the airline industry cut the number of flights by 20% and laid off 16% of their workforces. One airline had its own unique approach to the crisis. Southwest avoided layoffs (no-layoff policy) and stuck to its mission of caring for its employees. It was felt that avoiding layoffs in the face of a dramatic decline in demand would jeopardize short-term prospects. "It's part of our culture. We've always said we'll do whatever we can to take care of our people. That's what we've tried to do.“ Southwest Airlines was able to operate their business relatively undisturbed. It was only in the poor economic conditions that suddenly Southwest Airlines' method of operation became the ideal model for its competitors.
