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Southwest Airlines case analysis presentation (designing work organization - DWO)

Case analysis deck for classroom presentation for the popular case study on Southwest Airlines.

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Southwest Airlines case analysis presentation (designing work organization - DWO)

  1. 1. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus Southwest Airlines – Case Analysis Group Members: Aditya Kumar | Alok Goel | Anand Kishore | Mayank Tiwari | Naseer Javed
  2. 2. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus For Customers “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” For Employees (Internal Customers) “We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.” Mission Statement Pros Cons  Synchronized mission statement for both customers and employees  Simple and easy • Non-alignment with business strategy • Doesn’t reflect vision for growth and expansion
  3. 3. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus • Founded on March 16, 1967 and commenced Operations on June 18, 1971 • Headquartered at Dallas, Texas, U.S • Current (1994) fleet size: 200+ • Founders: Herb Kelleher and Rollin King 1 Involved in 4-year legal battle with competitors in 1971, at the start of its operations 2 Gained early attention through unique campaigns – “Make Love not war” theme 3 Southwest Airlines has been profitable in every one of the past years and its stock earned highest returns. 4 Grew from ZERO market share in California region in 1989 to market leader in 1993 5 To increase market share, purchased Air California and Pacific Southwest Airlines 6 In 1992,Southwest won the annual Triple Crown Award Background
  4. 4. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus Core Strategy • 200 fuel efficient Boeing 737 aircraft • Avoided hub and spoke system • Cost cutting • Simple fares: Regular coach and off- peak fare • Only frills and beverages served to passengers • Reusable plastic boarding pass • Frequent flyer program based on number of trips • Less of use of computers and artificial intelligence • Volume Pricing
  5. 5. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus PRICING STRATEGY Two-tiered pricing strategy with low cost OPERATIONS STRATEGY Fuel hedging, Point to point flight, faster turnaround time of 15 mins, frequent flights, multitasking of employees Efficient Operations PLACE STRATEGY Short haul (less than 500 miles), Booking on basis of online ticketing and vending machines PRODUCT STRATEGY No frills approach, no hub and spoke strategy, low cost Strategic Analysis HR STRATEGY Employee profit sharing, open environment for innovation and creativity, university trainings and recognition, low turnover Porter’s Generic Competitive Advantage: Adopted cost leadership strategy
  6. 6. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus OPERATIONS Southwest airlines sells tickets at the gate and not through travel agents The only food served is Peanuts and crackers The employees at Southwest are given liberties for using their creativity in understanding the needs of their Customers WORK CULTURE Southwest airlines believes in maintaining a culture consisting of “caring and fun” The unique fun loving culture of Southwest has been a core component of their success and has successfully garnered the adoration of the employees RECRUITMENT & TRAINING The most important quality to be eligible for recruitment at Southwest is “Sense of Humor” Southwest encourages its employees to innovate, communicate, understand, and care Southwest’s HR department is known as People and Leadership development department CULTURAL COMMITTEE Cultural committee consists of employees from different functional areas who meet quarterly to come up with ideas for enhancing Southwest’s corporate image The Cultural committee is a unique concept as its basic purpose is to appreciate and acknowledge the work of other employees Strategic Analysis – contd.
  7. 7. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus Southwest Airline • Costs: 7.1 cents per mile • Turn-around time: 15 minutes • Pilot Salary: $100000, 70 hours per month • 81 employees per aircraft • 2443 passengers per employee • 10.5 flights per gate • Aircraft spent 11 hours average in air daily Other Airlines Competitive Advantage • Costs: 10 or more cents per mile • Turn-around time: 35 minutes • Pilot salary: $200000, 50 hours per month • 150 employees per aircraft • 800 passengers per employee • 4.5 flights per gate • Aircraft spent an average 8 hours in air daily
  8. 8. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus • Does not offer segmented seating options. • Does not offer international flights. • Dependent on a single airplane producer. • Scrutiny of potential employees based on personality before skill could be dangerous. • Operates its own booking service Weakness • Experienced very fast growth since inception. • Offers reasonably priced travel packages with low frills and excellent customer service. • Excellent employee relations leads to higher ticket sales as they all work as a team. • Purchased only Boeing airplanes to reduce costs in repairs and get a bulk discount on the purchase. Strengths • Intense competition • Exposure to shaky American economy • High unemployment and inflation keeps people from flying • Southwest is a big firm now with 14000 employees. It becomes trickier to manage people in the same way they did all along. Threat • Expansion into international and other national markets. • Extend flights to further destinations. • Expanding services to include services for leisure or business classes. • Considering applicants with large skill bases but lower amounts of enthusiasm. Opportunity SWOT
  9. 9. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus “Our competitors tried to copy our culture and failed because they couldn’t copy our people” Herb Kelleher
  10. 10. Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus THANK YOU!