The Southwest Background

The Southwest Background Strategy Impact Analysis Background Southwest was founded by Rollin King and Herb Kelleher

Southwest was founded

by Rollin King and Herb Kelleher

The Southwest Background Strategy Impact Analysis Background The Congress has passed the Airline Deregulation Act

The Congress has passed

the Airline Deregulation

Act

The Southwest Background Strategy Impact Analysis Background Initiate service to noncontiguous states

Initiate service to

noncontiguous states

The Southwest Background Strategy Impact Analysis Background Acquired Muse Air

Acquired Muse Air

The Southwest Background Strategy Impact Analysis Background Acquired Morris Air

Acquired Morris Air

Route Map The Southwest Background Strategy Impact Analysis Background

Route Map

Motivation demand for routes between major Texas cities Mission dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit The Southwest Background Strategy Impact Analysis Background

Motivation

demand for routes between major Texas cities

Mission

dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit

Core Value Profitability Low cost Family Fun Love Hard work Individuality Ownership Legendary service Equalitarianism Common sense/good judgment Simplicity Altruism The Southwest Background Strategy Impact Analysis Background

Core Value

Profitability

Low cost

Family

Fun

Love

Hard work

Individuality

Ownership

Legendary service

Equalitarianism

Common sense/good judgment

Simplicity

Altruism

Love Theme Base in Dallas were called “love field” Drink severed were called “love potions” ticket machines were called “love machines” Cabin hostesses were selected for their striking appearance and dressed in suits with “hot pants” and boots The Southwest Background Strategy Impact Analysis Background

Love Theme

Base in Dallas were called “love field” Drink severed were called “love potions” ticket machines were called “love machines”

Cabin hostesses were selected for their striking appearance and dressed in suits with “hot pants” and boots

Fun e.g. announcements to passengers—sang, in-flight contests, holiday celebration Emphasized the selection of employees who could be empathic and bring pleasing personalities to the job The Southwest Background Strategy Impact Analysis Background

Fun

e.g. announcements to passengers—sang, in-flight contests, holiday celebration

Emphasized the selection of employees who could be empathic and bring pleasing personalities to the job

Organization Culture Committee Team-oriented Hire for Attitude Profit-sharing Plan The Southwest Background Strategy Impact Analysis Background

Organization

Culture Committee

Team-oriented

Hire for Attitude

Profit-sharing Plan

Strategy Fit

The Founding Strategy Triangular route (Dallas, Houston, and San Antonio) Boeing 737s (Overproduction) Low Fare Strategy Fit Strategy Impact Analysis Background

The Founding Strategy

Triangular route

(Dallas, Houston, and San Antonio)

Boeing 737s (Overproduction)

Low Fare

Innovative Adoption Ticket distribution system Frequent flier program Strategy Fit Strategy Impact Analysis Background

Innovative Adoption

Ticket distribution system

Frequent flier program

The Impact of the Events of 9/11

Immediate Responses Heightened Security and Regulation Baggage checking Time consuming Competitive disadvantage The Impact of the Events of 9/11 Strategy Impact Analysis Background

Immediate Responses

Heightened Security and Regulation

Baggage checking

Time consuming

Competitive disadvantage

Industry Bailout and Taxation Financing assistance Two types of tax increase costs New Competitive Position Labor Relations The Impact of the Events of 9/11 Strategy Impact Analysis Background

Industry Bailout and Taxation

Financing assistance

Two types of tax increase costs

New Competitive Position

Labor Relations

The Impact of the Events of 9/11 Strategy Impact Analysis Background

The Impact of the Events of 9/11 Strategy Impact Analysis Background Exhibit 9 Trends in Reported Percentage of On-Time Arrivals

Short-Term Challenges Sitting tight Reschedule the airline Redesign passenger and baggage- handling processes The Impact of the Events of 9/11 Strategy Impact Analysis Background

Short-Term Challenges

Sitting tight

Reschedule the airline

Redesign passenger and baggage- handling processes

Short-Term Challenges Adjust passenger boarding policies Abandon open seating The Impact of the Events of 9/11 Strategy Impact Analysis Background

Short-Term Challenges

Adjust passenger boarding policies

Abandon open seating

Long-Term Challenges Length flying miles Economies of Scale (Station, City) The Impact of the Events of 9/11 Strategy Impact Analysis Background

Long-Term Challenges

Length flying miles

Economies of Scale

(Station, City)

Southwest Analysis

Hub-and-Spoke Southwest Analysis Strategy Impact Analysis Background

Hub-and-Spoke

Southwest Analysis Strategy Impact Analysis Background

Demand Compete with auto travel 70% below other airlines Request airline’s service more than 50 cities, Southwest choose only 2 or 3 new cities each year Southwest Analysis Strategy Impact Analysis Background

Demand

Compete with auto travel

70% below other airlines

Request airline’s service more than 50 cities, Southwest choose only 2 or 3 new cities each year

Demand 1000 % increase in traffic on the newly served city-pair markets Southwest Analysis Strategy Impact Analysis Background

Demand

1000 % increase in traffic on the newly served city-pair markets

Supply 436 Boeing 737s (2000-2012) Southwest Analysis Strategy Impact Analysis Background

Supply

436 Boeing 737s (2000-2012)

Cost Curve Southwest Analysis Strategy Impact Analysis Background Southwest Others Quantity Average Cost

Cost Curve

Southwest Analysis Strategy Impact Analysis Background Intra competitors Braniff International Airways, Trans Texas Airways and People Express Inter competitors Continental Lite, United Shuttle, Delta Express, US Airways MetroJet Competitors Suppliers Substitutes Customers Potential Entrant

Intra competitors

Braniff International Airways, Trans Texas Airways and People Express

Inter competitors

Continental Lite, United Shuttle, Delta Express, US Airways MetroJet

Southwest Analysis Strategy Impact Analysis Background Ticketing System Company Boeing 737 Fuel Company Snacks Company Beverage Company Competitors Suppliers Substitutes Customers Potential Entrant

Ticketing System Company

Boeing 737

Fuel Company

Snacks Company

Beverage Company

Southwest Analysis Strategy Impact Analysis Background Businessman College Students Competitors Suppliers Substitutes Customers Potential Entrant

Businessman

College Students

Southwest Analysis Strategy Impact Analysis Background JetBlue (short distance) Competitors Suppliers Substitutes Customers Potential Entrant

JetBlue (short distance)

Southwest Analysis Strategy Impact Analysis Background Train Bus Webcam Competitors Suppliers Substitutes Customers Potential Entrant

Train

Bus

Webcam