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  1. 1. SOUTHWESTSOUTHWESTAIRLINESAIRLINESPresented by :Presented by :The Ultimate ManagersThe Ultimate Managers
  2. 2. The SouthwestBackground
  3. 3. StrategyImpactAnalysisBackgroundmajor domestic airline thatprovides :…♥ primarily short haul♥ high-frequency♥ point-to-point♥ low-fare serviceCompany Overview...Company Overview...Founded 1971Fleet size 472Destination 63Headquarter Dallas,TexasThe third-largest airline in theworld by number of passengerscarried and the largest in theUnited States by number ofpassengers carried domestically.
  4. 4. StrategyImpactAnalysisBackground First-time Fliers Business Travelers (Point – to –Point) Dissatisfied customers from full-service airlines People who travel by Road, Rail Leisure family travelersTarget Market…………
  5. 5. Business Description ...Business Description ...Geographical SegmentationSouthwest flies to 62 cities in 32 states in AmericaAlbany Columbus Indianapolis Midland/Odessa Philadelphia San DiegoAlbuquerque Corpus Christi Long Island Nashville Phoenix San JoseAmarillo Dallas (Love Field) Jackson New Orleans Pittsburgh Seattle/TacomaAustin Denver Jacksonville Norfolk Portland SpokaneBaltimore/Washington Detroit (Metro) Kansas City North Virginia (Dulles) Providence TampaBirmingham El Paso Las Vegas Oakland Raleigh-Durham TucsonBoise Ft. Lauderdale/Hollywood Little Rock Oklahoma City Reno TulsaBuffalo Ft. Myers/Naples Los Angeles (LAX) Omaha Sacramento West Palm BeachBurbank Harlingen/South Padre Island Louisville Ontario St. LouisChicago (Midway) Hartford/Springfield Lubbock Orange County Salt Lake CityCleveland Houston (Hobby) Manchester Orlando San AntonioIn selecting cities, Southwest looked for city pairs that could generate substantial amounts of bothbusiness and leisure traffic.
  6. 6. The Southwest BackgroundStrategyImpactAnalysisBackground♥ Motivation– demand for routes between majorTexas cities♥ Mission– dedication to the highest quality ofcustomer service delivered with asense of warmth, friendliness,individual pride, and companyspirit
  7. 7. SS WWOO TT
  8. 8. S-W-O-T Analysis ...S-W-O-T Analysis ...Strengths♥ Low price tickets♥ Low operating costs♥ Good customer service♥ High frequency service♥ Productive pilots & ground crewsOpportunities♥ Ability to add scheduled flights♥ Low prices enable market sharegrowthThreatso Big companies emulateSouthwests low cost modelo Difficulty securing new gates atexisting airportsWeaknesso Doesn’t serve international flightso One type of airplane
  9. 9. BuildingBuildingCapable Organization ...Capable Organization ...Staffing the OrganizationCore Competencies andCompetitive CapabilitiesMatching the OrganizationStructure to StrategySouthwest’sCapability
  10. 10. Staffing ...Staffing ...“Employee come first and Customers come second”♥ Hired employee for attitude and trained them for skills♥ Analyzed each job category to determine the specificbehaviors, knowledge, and motivations that job holdersneeded and with the desired traits♥ A trait common to all job categories was teamwork♥ Developing leadership and communication skills for lowlevel management♥ Up and Coming Leaders received training in everydepartments over sixth-month periodPutting Together a Strong ManagementTeam
  11. 11. Core Competencies &Core Competencies &Competitive Capabilities ...Competitive Capabilities ...♥ Operate one type of aircraft.♥ Make reservations and purchase tickets at the company’s website.♥ Tried to steer clear of congested airports, stressing instead servingairports relatively near major metropolitan areas and in medium-sized cities.♥ Using point-to-point scheduling of flights.♥ There is no reserved seat for each passenger.♥ No first class section, no fancy clubs at terminal and no meals.♥ No baggage transfer services to other carriers.♥ Convert from cloth to leather seatsLow Operating CostDeveloping a set of competencies and capabilities
  12. 12. Core Competencies &Core Competencies &Competitive Capabilities ...Competitive Capabilities ...♥ Make sure passengers had a positive, fun flying experience.♥ Presenting a happy face to passengers and displaying a funloving attitude.♥ Complaint letters were seen as learning opportunities foremployees and reasons to consider making adjustmentsFocus on Customer & CustomerSatisfactionDeveloping a set of competencies andcapabilities
  13. 13. Key Success Factors (Low Cost CarrierIndustry)StrategyImpactAnalysisBackground Low Fares More destinations Operational Efficiency Turn Around TimeAircraft UtilizationOn time Performance Service Standards (Basic) Safety
  14. 14. Company Values ...Company Values ...CoreCoreValuesValuesLUVLUV•Code word for treating individuals, employees, customersCode word for treating individuals, employees, customers•Dignity, respect and caring loving attitude.Dignity, respect and caring loving attitude.•Appeared on banners and posters at company facilitiesAppeared on banners and posters at company facilitiesFunFun•Entertaining behavior of employees in performing their jobs.Entertaining behavior of employees in performing their jobs.•The ongoing pranks and jokes.The ongoing pranks and jokes.•Frequent company-sponsored parties and celebrations.Frequent company-sponsored parties and celebrations.> charity benefit games, chili cook-offs, Halloween parties> charity benefit games, chili cook-offs, Halloween parties
  15. 15. The Southwest BackgroundStrategyImpactAnalysisBackground♥ Fun– e.g. announcements to passengers—sang, in-flight contests, holidaycelebration– Emphasized the selection ofemployees who could be empathicand bring pleasing personalities tothe job
  16. 16. LEAD
  18. 18. StrategyImpactAnalysisBackgroundAirlines typically follow twotypes of business models:Airline Business ModalTHE POINT TO POINTTHE HUB-AND-SPOKE
  19. 19. Southwest AnalysisStrategyImpactAnalysisBackground ♥ Hub-and-Spoke
  20. 20. Southwest AnalysisStrategyImpactAnalysisBackground Market Share – US Low Cost carrier(LCC) IndustrySouthwest Airlines is, by far, the largest Low Cost Carrier in the US market
  21. 21. Market Share (US Airline Industry)
  22. 22. Southwest AnalysisStrategyImpactAnalysisBackgroundCompetitorSuppliersSubstitutesCustomersPotentialEntrant♥ Intra competitors– Braniff International Airways, TransTexas Airways and People Express♥ Inter competitors– Continental Lite, United Shuttle, DeltaExpress, US Airways MetroJet
  23. 23. Southwest AnalysisStrategyImpactAnalysisBackgroundCompetitorsSuppliersSubstitutesCustomersPotentialEntrant♥ Ticketing System Company♥ Boeing 737♥ Fuel Company♥ Snacks Company♥ Beverage Company
  24. 24. Southwest AnalysisStrategyImpactAnalysisBackgroundCompetitorsSuppliersSubstitutesCustomersPotentialEntrant♥ Businessman♥ College Students
  25. 25. Southwest AnalysisStrategyImpactAnalysisBackgroundCompetitorsSuppliersSubstitutesCustomersPotentialEntrant♥ JetBlue (short distance)
  26. 26. Southwest AnalysisStrategyImpactAnalysisBackgroundCompetitorsSuppliersSubstitutesCustomersPotentialEntrant♥ Train♥ Bus
  27. 27. TheImpactof theEvent of9/11
  28. 28. 9/11 Impacts ...9/11 Impacts ...Airline Industry Southwest AirlinesThe number of flights were cut byaround 20 percentNo flights were cutEmployees laid off no employees were laid offTemporary freeze on hiring until Jan2002The delivery of new aircraft onorder deferred or cancelledNegotiated a revised deliveryschedule for the 132 Boeing 737 jetson orderSpeculation on how much to cutfares to induce passenger to flyand on low long traffic might staydepressedFare sales in January, March, April,July, August, October and December2002
  29. 29. Future Improvements ...Future Improvements ...♥ It is essential for Southwest Airlines to expandon their existing achievements.♥ Better serve customers by improving theirrouting system.♥ Offering enhanced accessibility andminimizing delays.