...CASES IN FINANCIAL STRATEGY Professor J. Schallheim FOR CASE BRIEFS: The answers to the following preparatory questions are not necessary or sufficient for your Case Briefs. Rather, the questions are to serve as a guide for your group discussion of the cases and a help to getting started on each case. Your final solution the case and recommendations should not necessarily be limited to the answers to these question or the assumptions in the case. FOR INDVIDUAL ASSIGNMENTS: For individual assignments, you must answer the questions labeled “Memo.” Individual Memo for Rapid Repair Auto Parts Rapid Repair’s profitability appears good but their cash balance has shrunk. Write a report that provides a financial analysis and summarizes their current situation (Hint: ratios and cash flow analysis). What changes do your recommend, if any, in 2013? Preparatory Questions for Horniman Horticulture Horniman’s profitability appears good but their cash balance has shrunk just like the previous case. Write a report that forecasts the financial outlook for 2006 (including forecasted income statement and balance sheet). How much external funds are needed (EFN), if any, for 2006? Preparatory Questions for Panera Bread Company 1. Complete the financing portion of Panera Bread Company’s 2007 forecast financial statements, and provide a forecast for the next 5 years. A worksheet has been provided for this purpose. As an initial (base case) analysis...
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...RUNNING HEAD: THE AIRLINE INDUSTRY The Airline Industry Name College Table of contents Abstract 3 Introduction: 4 Products and services: 4 Organization: 4 Major players in the airline industry: 5 Economic impact of the airline industry: 8 Employment within the industry: 9 Key trends in the airline industry: 9 - Economic forces: 9 - Technological forces: 11 - Socio-cultural forces and political-legal forces / Government Regulations 13 Logistics and supply chain factors 14 Porter’s Five Forces Analysis: 16 Strategies used by airlines: 17 Expected Entrants: 18 Conclusion and Recommendations: 18 List of Abbreviations 20 Appendix: 20 References 21 Abstract The US airline industry is one of the key sectors of the country’s economy. Employing over ten million people, it contributes up to half a trillion dollars in annual revenues (about 5% of the US GDP). In recent years, the industry has been faced with major challenges arising from its external environment. Some of these include rising fuel prices and the global economic recession. As a result, growth in the industry has significantly slowed down with the ATA estimating that by the end of 2008 the industry had lost between $9 and $24 billion. With high intensity of industry rivalry, high supplier bargaining power, low threat from new entrants, low threat of substitution, and low buyer bargaining power; the industry’s attractiveness can be described as moderate. To be successful...
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...Case studies Learning excellence: Southwest Airlines’ approach Ulla K. Bunz and Jeanne D. Maes Introduction With the airline industry in the USA hardly making financial records, how has it been possible for a small company such as Southwest Airlines to completely satisfy their customers since 1971? (Bovier, 1993). What lessons has the management of Southwest Airlines learned in such a relatively short time period? How have these lessons enabled the company to capture such a portion of the market? (Bovier, 1993; George and Jones, 1996) Southwest Airlines began its service in 1971. Since then the killer-whale painted planes have become familiar to their customers and to corporate America. Besides being profitable, expanding constantly and defending its high place on the Fortune 500 list, Southwest has a very special trait: attitude (Bovier, 1993). The Southwest perspective stems from CEO Herb Kelleher and Southwest’s employee motivation. The purpose of this article is to discover the sources of success of Southwest Airlines as a company with high employee motivation. Three factors will be addressed: (1) Southwest as an “excellent” company; (2) the source of employee motivation in this “excellent” company; and (3) whether lessons learned can adequately address potential future problems for Southwest. The authors Ulla K. Bunz and Jeanne D. Maes are based at the University of South Alabama, Mobile, AL, USA. Abstract In an era in which adapting to change means survival, it is...
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...OVERVIEW OF THE CASE In 2002 Delta airlines faced the unfortunate realization that the competition from low cost carriers like Southwest and JetBlue was becoming a serious problem. Even though Delta had been looking at this problem for a long period of time, the business model of Delta Airlines was organized by function and their solutions generally focused on individual aspects of the firm. For example, the marketing department provided marketing ideas, the customer service department offered customer related solutions etc. Delta realized that they did not have a comprehensive solution to dealing with the low cost carriers in the market. One of the simplest solutions proposed by Delta management was the idea that Delta could launch its own low cost subsidiary, however, looking at the rest of the airline industry, low cost subsidiaries seemed to be ideas that were either immediate failures or unsustainable over time. According to experts, they had “never seen a high-cost carrier transform itself into a low cost carrier”. With or without this option, Delta would have to find a solution to this problem. The airline industry in the United States is immense, with more than 620 million passengers and over $81 billion in fares in 2001 alone. Unfortunately, while immense in size, in terms of profit, the airline industry continued to perform below the average for other industries. Many investments made by the larger carriers were not profitable and the tragedy of 9/11 put more pressure...
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...People make Southwest Airlines one of the world’s most admired companies. As our greatest asset, our People create a FUN travel experience; respond with compassion when travel plans change; generate innovative ideas that enhance the Customer Experience; and donate their time and LUV to those who need it. At Southwest Airlines, we’re a Family dedicated to our Employees, our Customers, and the communities we serve. Our unique corporate Culture, commitment to giving back, and putting Employees first contributes to our being recognized as a best place to work. Southwest Airlines offers our Employees the freedom to pursue good health, create financial security, travel, make a positive difference, learn and grow, create and innovate, work hard and have FUN, and stay connected. In return, our Employees respond with passion, commitment, and a rich diversity of perspectives that translate into better Customer Service and a dedication to doing the right thing. Our Customers fly Southwest Airlines not only for programs like Bags Fly Free,® but because they like us. Together, as the hometown carrier that cares, we aspire to make a positive difference by giving back to the communities we serve. Our commitment to giving back gives our Employees a sense of pride and purpose that Southwest Airlines does the right thing. With a Warrior Spirit, a Servant’s Heart, and Fun-LUVing Attitude, we strive to do what’s right by our stakeholders and each other. It’s the Southwest Way. 2010...
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...Ferriss BA 301 Final Term Paper Section Number: 1/3/2015 Southwest Airlines Table of Contents Executive Summary………………………………………………………………….....pg. 1-2 Situation Analysis………………………………………………………………………pg. 3-8 Problem Analysis & Description……………………………………………………….pg. 8-12 Solutions, Evaluation & Recommendation……………………………………………..pg. 12-16 Implementation Plan……………………………………………………………………pg. 16-18 Success Metrics…………………………………………………………………………pg. 18-19 Bibliography……………………………………………………………………………pg. 20 Executive Summary Today we are going to be taking a look at Southwest Airlines. After being provided with a background of this wonderful company, we are going to look into some problems that they are having with their Airlines Quality Ratings (AQR). We will discuss how the lack of on-time flights, problems customers are facing with the merger of Southwest and Air Tran and the open seating policy are negatively effecting this rating. We will look into solving these problems by implementing an Employee Incentive Program, getting new merger software and adopting a different seating policy. Once all of these concerns are solved we will talk about implementation and success metrics and start raising those AQR scores so Southwest Airlines can continue to grow to one of the greatest airlines in the world. Situation Analysis Southwest Airlines strives to be a very goal oriented company. Annually, Southwest airlines distributes what they call their One Report, which covers their...
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...For the exclusive use of M. Park, 2016. CASE: HR-1A DATE: 1995 (REV’D. 04/05/06) SOUTHWEST AIRLINES (A) “The workforce is dedicated to the company. They’re Moonies basically. That’s the way they 1 operate.” —Edward J. Starkman, Airline Analyst, PaineWebber Ann Rhoades, vice president of people for Southwest Airlines, was packing her briefcase at the end of a 17-hour day. Tomorrow was an off-site meeting with the top nine executives of Southwest Airlines. The agenda for the meeting was to review Southwest’s competitive position in light of recent actions by United and Continental, both of whom had entered Southwest’s low fare market. That day’s New York Times (September 16, 1994) had an article that characterized the situation as a major showdown in airline industry: This is a battle royal that has implications for the industry, said Kevin C. Murphy, an airline stock analyst at Morgan Stanley. The battle will, after all, be as much a test of strategy as a contest between two airlines. United and other big carriers like USAir and Continental have decided that they can lower their costs by creating a so-called airline-within-an-airline that offers low fares, few flights, and frequent service. The new operations are unabashedly modeled after Southwest, the pioneer of this strategy and keeper of the healthiest balance sheet in the industry.2 The reasons for this competition were easy to understand. Over 45 percent of United’s revenues came from passengers...
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...Professor Edward Desmarais BUS 470 Business Policy and Strategy Spring 2004 SOUTHWEST AIRLINES CASE ANALYSIS Presented by: The Stategizers Lawrence Bluemmel, Irene Johnson, Dennis Mackey, Dorothea Morgan, Elaine Pereira, Jeff Piecuch, Heather Pontifex, Nicole Soucy TABLE OF CONTENTS I. Executive Summary 3 A. Mission 3 B. Vision 3 C. Objectives 3 D. SWOT Summary 6 E. Recommendations 7 II. Current Situation 8 A. Current Performance 8 B. Strategic Posture 9 III. Corporate Governance 25 A. Board of Directors 25 B. Top Management 25 IV. External Factors 27 V. Internal Factors 118 VI. Action Plan 178 Appendix A. Stakeholders Worksheet 206 Appendix B. Answers to Panel’s Questions 212 I. EXECUTIVE SUMMARY A. Mission To provide a low-cost/low-price/no-frills, reliable, friendly service with “more value for less money” mode of transportation for consumers traveling short distances for business and/or leisure. B. Vision ...
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...Case Analysis Study Approach (CASA) (Read the case a couple of times) Describe the Following for this Case Study- 1. Industry & Market: Delta is in the airline industry. It is a major economic force, both in terms of its own operations and its impacts on related industries such as aircraft manufacturing and tourism. There are few industries that create the amount and intensity of attention that airlines receive. Delta is the world’s largest airline in terms of both fleet size and scheduled passenger traffic. Delta’s major competitors are Southwest Airlines and United Airlines. 2. External Environment: (Factors beyond the control of the firm that influence its choice of direction and action, organizational structure, and internal processes) STEP Analysis: Social- Social factors and travel practices of individuals have extensive effects on the airline industry. There are individuals from a number of income classes and the airlines have to classify these people and ought to give them what they need. Technological- as clients’ wants develop in the future and there are more technological expectations the airline industry will have to be ready to meet their clients’ wants. Delta must keep up with competition and their technological advances such as online ticketing, booking, updating flight information, baggage check-in and handling of customer complaints all on the internet. Economical- Consumers tend to reduce travel if personal economic conditions are suboptimal, forcing...
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...Group Assurance of Learning Exercise 4 October 5, 2014 Business 400_B06 Group Members: Juan Valdez Lopez Tram Trinh Brandon Weadon David Welborn Micah Whitley Heather Younger Ex. 7C (1 business) Southwest Airlines chart Southwest Airlines is a company using the divisional structure by units based on their role; there are four shortcomings for this type of structure that affect Southwest Airlines. * Lack of Teamwork: Southwest Airlines areas may have difficulties working with other functional areas. There is often a perception that they are competing with other functional areas for resources and a lack of understanding of what other areas do for the company. * Difficult Management Control: As Southwest Airlines grows larger; the functional areas can become difficult to manage due to their size. * Ignorance of Organizational Objectives: Functional areas may become distracted by their own goals and focus on them, rather than on overall company objectives. * Hurdle in Complete Development: As Southwest Airlines using divisional structure; this system is a hurdle in the way of the complete development of the employees. Each employee specializes only in a small part of the whole job. Microsoft Shortcomings * Selfish Attitude: Microsoft has many divisions. Every division tries to display a better performance, sometimes even at the cost of other divisions; this shows their selfish attitude. Consequently, it hits the interest of the concern...
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...Case Study: Economic Analysis of Gogo’s In-flight Wi-Fi November 2, 2015 Introduction Gogo pioneered and now dominates the in-flight Wi-Fi business, which allows passengers to access the Internet during their flights. In recent years, consumers have grown from anticipation to dislike towards Gogo’s services due to its steady increase in fees and rapid decrease in speed. Through a dynamic pricing strategy they hope to relieve congestion which indeed have effect, but will not last in the fierce competition of an oligopoly market structure. Unlike its monopolistic position before, Gogo now faces at least three companies—ViaSat, Global Eagle Entertainment, and Panasonic— swiftly eroding its market share with cheaper and faster in-flight Wi-Fi services using satellites instead of antennas. Gogo’s own next-generation technology 2Ku, to come online in 2016, uses satellites that hopefully would achieve better prices with higher speed. To analyze the market for in-flight Wi-Fi and the pricing strategies of Gogo, our paper will discuss five core areas: The price elasticity of demand for Gogo’s service, and how it varies with price levels The market structure Gogo is operating in Its dynamic pricing How the demand for in-flight Wi-Fi has changed over time, technological changes over the past 15-20 years that has affected demand Technological factors that affect supply, how congestion affects pricing and our recommendation Price Elasticity of Demand...
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...SOUTHWEST AIRLINES CO. 2011 ANNUAL REPORT TO SHAREHOLDERS To our Shareholders: The year 2011 was historic for Southwest Airlines. We celebrated our 40th anniversary of providing low-fare, high quality commercial air service. We launched an all new, industry-leading, frequent flyer program in March. We opened three new cities: Greenville-Spartanburg, South Carolina; Charleston, South Carolina; and Newark, New Jersey. We closed our acquisition of AirTran Airways on May 2, growing our fleet by 140 aircraft, and extending our route network domestically and to the Caribbean and Mexico. In December, we unveiled our fleet modernization plans, which include an agreement with Boeing to serve as the launch customer of the 737 MAX aircraft. And, our operations improved in 2011, closing out the year with our highest December ontime performance in 15 years. Moreover, we reported our 39th consecutive annual profit in a year that endured a $1.7 billion year-over-year increase in combined economic fuel costs. Our 2011 net income was $178 million, or $.23 per diluted share, including special items (primarily noncash, mark-to-market, and other items required for a portion of the Company’s fuel hedge portfolio, as well as costs associated with the acquisition and integration of AirTran). Excluding special items, our 2011 profit was $330 million, or $.43 per diluted share. Our financial position remains strong. Our cash and short-term investments were $3.1 billion, as of December 31, 2011, in...
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...Copyright Copyright © 2012 Joan Magretta All rights reserved No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to permissions@hbsp.harvard.edu, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163. ISBN: 978-1-4221-6059-6 By his example, Arthur Rosin, my uncle, taught me the pleasures of understanding and explaining. This book is dedicated to him, to Betty Rosin, and to my parents, Cyrille and Eugene Gorin. Contents Copyright Acknowledgments Introduction Part One: What Is Competition? 1. Competition: The Right Mind-Set 2. The Five Forces: Competing for Profits 3. Competitive Advantage: The Value Chain and Your P&L Part Two: What Is Strategy? 4. Creating Value: The Core 5. Trade-offs: The Linchpin 6. Fit: The Amplifier 7. Continuity: The Enabler Epilogue: A Short List of Implications FAQs: An Interview with Michael Porter A Porter Glossary: Key Concepts Chapter Notes and Sources About the Author Acknowledgments The Michael Porter I know is first and foremost a gifted teacher. If this book succeeds in helping readers understand Porter’s ideas in their full richness, it is thanks in large measure to his encouragement, his guidance, and his patience in explaining...
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...SOUTHWEST AIRLINES CO. 2013 ANNUAL REPORT TO SHAREHOLDERS To our Shareholders: Our goals for 2013 were ambitious. We wanted to stay on track with our five Strategic Initiatives described below. We wanted to maintain our strong Brand, unique Culture, and award-winning Customer Service. We wanted to sustain our strong ontime performance and baggage handling. Finally, we wanted to improve our cost performance, achieve our profit requirement, and return value to our Shareholders. Just like in 2011 and 2012, an enormous amount was accomplished in 2013. As a result, we produced stellar results. Our 2013 net income was a record $754 million, or $1.05 per diluted share, including special items (primarily noncash, mark-to-market, and other items required for a portion of the Company’s fuel hedge portfolio, as well as costs associated with the acquisition and integration of AirTran). Excluding special items1, our 2013 profits were also a record, increasing 93 percent year-over-year to $805 million, or $1.12 per diluted share. Our annual pre-tax return on invested capital, excluding special items (ROIC), was 13.1 percent, nearly doubling 2012’s performance. Total operating revenues were a record $17.7 billion, boosted by strong yields and an 80.1 percent load factor. Through the combination of stable fuel prices and rigorous cost control efforts, we met our goal to improve our cost performance. Despite a roller coaster economy, we achieved record earnings; and, while just short of our...
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...A Study of Motivation: How to Get Your Employees Moving SPEA Honors Thesis Spring 2012 Indiana University Kelli Burton Management May 2012 Faculty Advisor: Cheryl Hughes May 2012 Page | 1 Table of Contents Abstract ........................................................................................................................................... 3 Personal Introduction ...................................................................................................................... 4 Topic Introduction .......................................................................................................................... 4 Research Methods ........................................................................................................................... 5 Definition of Motivation ................................................................................................................. 6 Theories of Motivation ................................................................................................................... 7 Maslow’s Hierarchy of Needs .................................................................................................... 7 Herzberg’s Two-Factor Theory .................................................................................................. 9 The Four Motivations ............................................................................................................... 11 PERMA Model .............
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