...Case Study - Southwest Airlines: Price-Value Equation Module 7 Case Study Roderick McPeak Embry Riddle Aeronautical University Southwest Airlines has been a model of admiration for the airline industry and businesses from around the world combined. Southwest Airlines is a rag to riches story that has had to fight for everything it has become. Before Southwest was able to take on its first passengers, they had to fight competitors in the court system for nearly three and a half years. Southwest did not make its maiden voyage until 1971 – from a napkin to the airways with their runway in the Court system. When Texas Aeronautics Commission authorized Southwest to fly, their competitors grounded them within the Court system with continuous litigation for three and a half years. The litigation went as high as the Supreme Court. Finally, on June 18, 1971, Rollin King and Herb Kelleher started an airline service with one simple notion: "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." They were right about that. Southwest Airline is now a major airline, in fact, the fourth largest airliner in the United States. 1) What benefits do airline customers seek when they buy air travel tickets? They have always had the lowest price in any market they serve. Because of the cost structure that was developed, Southwest did the opposite...
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...Southwest Case Study 1. What are some of the ways in which Southwest is different than other commercialairlines? There are many elements that contribute to Southwest Airlines' success in the airline industry. These elements include service, operations, cost control, marketing, and the corporate culture. Southwest made flying fun for employees and customers by making everyone feel like they are part of one big family. Management encouraged good relations between employees and passengers that resulted in high employee job satisfaction and low turnover. From an operational perspective, Southwest Airlines distinguished themselves from other airlines by incorporating cost saving programs such as the airline doing its own ticketing and not going through a travel agent. Southwest flew passengers nonstop to their destinations and did not promote connecting services. Southwest focused on flying passengers into uncongested airports and did not transfer baggage to other airlines. Only drinks and snacks were served on board. Southwest Airlines only flew newer Boeing 737 jets, which required less maintenance, and hence reduced the time needed to "turn" an aircraft around from an industry average of 55 minutes to 15 minutes or less. Southwest Airlines emphasized cost control and all employees worked together to minimize costs. Pilots developed new procedures regarding takeoffs and landings and fuel was purchased from vendors with the lowest prices. Marketing was an important element to...
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...Southwest Airlines, Case Analysis Your name BUSN412 Business Policy August 7th, 2011 CASE ANALYSIS Southwest Airlines. COMPANY NAME: Southwest Airlines. INDUSTRY: Air Travel. COMPANY WEBSITE: (www.southwest.com) COMPANY BACKGROUND: Southwest Airlines Co. incorporated in 1967, is a passenger airline that provides scheduled air transportation in the United States. As of December 31, 2010, the company had 548 Boeing 737 aircraft serving 69 cities in 35 states (Southwest Airlines Company profile, 2011). Key officers include: Herbert D. Kelleher – Founder and Chairman Emeritus. Colleen C. Barrett – President Emeritus. Gary C. Kelly – Chairman, President & Chief Executive Officer. The Company functions primarily on point-to-point service rather than focusing on hub and spoke service. About 78% of the passengers of the airline travel on non-stop flights and the Company predominantly serve short-haul routes with flights operating highly frequent. (Southwest Airlines Company profile, 2011) SWOT ANALYSIS: Strengths: By far the biggest strength of Southwest Airlines is the ability of the company to offer reliable low-cost prices; they are also able to maintain lower operating cost which enhances its profitability. They were the first to introduce online booking, ticket less traveling, and no reserved seating, thus making it easier to turn around flights. The teamwork and efficiency within the company’s employees is widely recognized as one of the reasons...
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...The Importance of Parts Inventory Management and the Business Processes Affected Southwest Airlines is the single largest low-fare airline today, carrying more passengers to their destinations than any other airline in the world. One thing that has made Southwest Airlines so big is its commitment to customer service, an area of focus that positively affects an organization’s bottom line. While almost every major U.S. airline has declared bankruptcy within the last 10 years, Southwest Airlines has consistently generated a profit for over 40 years (Schlanger, 2012). According to Laudon and Laudon, “the basis of competition has switched from who sells the most products and services to who owns the customer, and that customer relationships represent a firm’s most valuable asset” (2011). In order for Southwest to sustain their stronghold over other airlines, they looked for additional ways to improve their already impeccable customer service. This meant revamping its parts inventory management to manage and control its supply chain and inventory at an optimal level. In order to achieve this goal, they had to sharpen some of their business processes such as their supply chain planning systems, and the factors there of, which included demand planning and supply chain execution. The problem was that as the airline grew, they found that their legacy information systems were not able to keep pace with the growing amount of data and information the firm generated. By using outdated repair...
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...Introduction: JetBlue is a low-fare airline established in 1999 by David Neeleman, a veteran in airline start-up. By adopting a high frequency, short-haul, point to point strategy that leverage on technology advantage, together with an experience management board. In April 2002, JetBlue Management decided to price the IPO of JetBlue at despite that it was during one of the worst periods in airline history. The IPO was initially priced at $22-24 per share, it was later adjusted to $25 to $26 per share due to excessive demand. On the first day of trading in April 2002, shares of JetBlue (JBLU) closed at $45, up $18 from the offer price of $27, a gain of 67% in one day. On August 1, 2013 JBLU closed at $6.59. The decision to go public As noted in the JetBlue Prospectus, the main purpose for the IPO is for working capital and capital expenditure. Hence, the decision to go public can be seen as a financing decision. Besides going public, the company may raise equity by private placement or through investment bankers and underwriters. However, there are several reasons to go public. First, going public is able to raise large amount of capital that may not be possible in other means. This is especially important as Airline industry is a capital-intensive industry and companies in their initial years has high asset growth. The total assets of JetBlue almost doubled from 2000 to 2001. Furthermore, going public is able to increase credibility, this is vital for an airline...
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...Strategic Management Case Analysis: Southwest Airlines Southwest Airlines Co. (Southwest) is often cited as a success story in terms of strategic management. Southwest is a passenger airline that provides scheduled air transportation in the United States. Primarily, the company offers passengers low-fare, point-to-point air transport services in 72 cities in 37 states all throughout America (MarketLine, 2012). Southwest is headquartered in Dallas, Texas, and has about 45,392 employees as of FY2011. For FY2011, the company generated revenues of $15.658 billion, increasing by 29.4% over FY2010 (MarketLine, 2012). Southwest reported net profit of $178 million in FY2011. It must be noted that the airline industry is famed for its cut-throat competitiveness. However, since its inception in 1971, Southwest has been able to steadily rise to the top of airline rankings due to its Low Cost Leadership strategy (Muduli & Kaura, 2011); Box & Byus, 2009). Southwest also consistently offers on-time arrival that, combined with low-priced fares, makes it highly favorable for passengers. Southwest is able to achieve its strategy by using a linear, point-to-point network and does not have an airport hub (Tierney & Kuby, 2008). As a result, the company’s aircraft are seldom idle while its competitors spend prolonged idle time while passengers switch planes at the hub (Tierney & Kuby, 2008). Because of the impact of this strategy on passengers and the industry as a whole, competitors tend to...
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...Diagnosis: In terms of airlines, Southwest is brilliant. Southwest started out as a small company, with a positive attitude and low price, and then eventually grew into one of the largest airlines in the world, with the same positive attitude and low prices. Southwest’s founders and employees knew what passengers were looking for when it came to flying, low prices and a hassle free experience and became committed to delivering both of those qualities to their customers. However, when it comes to delivering those qualities to thousands of customers all over the country daily, a company needs to be meticulous. It is my opinion that Southwest Airlines acquired AirTran too quickly, and therefore Southwest’s reputation of providing customers with low prices and a hassle free experience might compromised if the same values and positive attitudes aren’t instilled within the newly acquired AirTran employees. Analysis: I believe this is a key problem for Southwest, because Southwest built its company on its reputation. If this reputation becomes tarnished because AirTran doesn’t follow the same protocols or have the same positive attitudes that Southwest has, customers might start flying with competing airlines that provide low cost, such as JetBlue. Because Southwest spent so much money acquiring AirTran (1.4 billion dollars), if the acquisition fails, it’s not something that Southwest can just write off. Recommendation: I believe that before Southwest airlines buys AirTran, the companies...
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...Southwest Airlines Case Study After the acquisition of AirTran, Southwest Airlines (SWA), a company with years of profitability in airline industry is now facing challenges in both external and internal environment. The strength of success in marketing strategy and organizational management and the threats from uncertainty environment exist at the same time. This paper is a brief analysis of the company’s strategy and estimated future performance. External Environment Airlines in United States present a wide variety of services based on their strategies to satisfy different needs of the leisure travelers group and business travelers group. There are three main groups of airlines, which are national airlines, regional airlines and commuter or feeder carriers. Based on the territories they serve, airlines differ in routes. The two major types are point-to-point and hub-and-spoke. Both strategies have their own inherent costs and organizational implications. An airline can provide plenty of services: while most airlines have two classes of service, there are also airlines providing services in different selected classes. After the complete removal of government controls, airlines industry is going on a shakeout under the severe competition which is expected to last a long period. The industry is so difficult that its suppliers have high bargaining power; business requires large expenditures; and the price wars are extreme intensive. To survive and compete in this environment...
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...MBA 610 Case Study: Southwest Airlines Corporation 1. Southwest Airlines Corporation is an extremely popular and profitable company due to their strategy of being the nations’ low-fare, high customer satisfaction airline. Southwest is able to offer the nation’s lowest fares due in part to their low operating-cost structure, the lowest in the domestic airline industry. This low operating-cost structure (refer to Exhibit 1 for 5 year financial highlights and 2004 data) is the basis on which Southwest builds its competitive advantage, as it allows Southwest to sell low fare tickets while still enjoying a gross margin percentage of sales (29.2% of sales in 2004) much higher than United Airlines (22.7% of sales), American Airlines (1.9% of sales), and Delta Airlines (18.9% of sales). Southwest achieved this low cost operating structure through eschewing the traditional “hub-and-spoke” approach used by their competitors, and instead flying short haul, medium haul, and point-to-point flights, allowing for more frequent flights. As a result, about 80% of Southwest’s passengers fly non-stop and the overall passenger length is approximately 758 miles. Additionally, Southwest consistently seeks out ways to improve its efficiencies and low cost structure. For an example, at Southwest, turnaround time (from the time a plane lands until it is ready for takeoff) takes approximately 20-25 minutes and requires a ground crew of four plus two people at the gate. By comparison, turnaround times...
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...Southwest Airlines Calsouthern University Introduction “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else (Sam Walton, 2015).” Millions of people fly everyday. Southwest airlines provide low-fare travel among 58 cities in the United States. Although the airline industry suffered greatly in the aftermath of September 11, Southwest was able to continue to hold strong. Southwest airline continues to maintain steady sales as much of the industry was affected by changes in laws/regulations and competition entering the market. In the following report there is a brief introduction to Southwest Airlines and their strategy and then what, if anything, they need to do or not do to remain at the top and competitive in the airline industry. The Problem The major problem of the company is whether they can continue growing and at the same time keep offering the same services to their clients. To continue growing, Southwest Airlines needs to analyze the external environment in order to ensure their success. The solutions that will be presented for Southwest airlines have to attack two main issues: 1. How will they be able to keep their “Southwest airlines LUV” 2. How to keep their expansion and not affect the image of the airline. Southwest Airlines has a list of infinite options, many will hinder their image from the inside out (employees to costumers) while providing a set of services...
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...Case #20 – Southwest Airlines Marisa Melchiorre Amber Harrison Emeka Onyia Company History 1966 Rollin King approached Herb Kelleher’s law office with plan to start low-cost/lowfare airline Ran into legal problems, rival airlines in Texas did everything they could to block new airline Herb Kelleher was determined to start up airline 1971 – Lamar Muse Southwest CEO, background in industry to get it up and starting Raised $7 million in capital and private investors to purchase planes and equipment Flights started between Dallas, San Antonio, and Houston known as the “Golden Triangle” First ever annual profit in 1973 2010 – market share leader in domestic air travel in US, consistently profitable even during down turning economy, profit every year since 1973 Number of passengers increased by more than 28 million 1. Is there anything that you find particularly impressive about Southwest Airlines? One of the most impressive characteristics about Southwest Airlines is their fun, loving, determined company culture that believes first in making employees happy which then results in happy customers. Herb Kelleher was adamant about listening and allowing employees to think and to most importantly be heard. The strong value of the happiness of their spunky employees is their competitive advantage against other rival airlines in the industry. Southwest is able to create a competitive advantage not only with their low prices but also offering a fun and humorous experience...
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...with its employees and how they were managed. Successful human resource practices are a key essential for this to be accomplished. Southwest has encouraged its employees to recognize with others at the company to deliver exceptional customer service and to have fun at the workplace. One possible reason Southwest outperforms other airlines serving the same customers and market is their strategy of low costs, low fares, and frequent flights. Southwest also keeps its fares simple. Unlike other airlines that rely heavily on computers and artificial intelligence to maximize flight revenue, Southwest normally offers only two fares on a route, a regular coach fare and an off-peak fare. Overall, Southwest Airlines has been profitable in every one of the last 21 years from when the case study was written. The HR practices that served as sources of Southwest success start with hiring the right people into HR to begin with. Southwest transformed its Human Resource Department from “a police department” to a “People Department.” Southwest recognized that their people are the competitive advantage. They deliver the resources and services to prepare their people to be winners, to support the growth and profitability of the company, while preserving the values and special culture of Southwest Airlines. “The company is only as good as its people.” Southwest constantly reinforced that theme, which is why it has an advantage over their competition. Southwest’s attention to congruency starts...
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...Unit 8 Assignment: Case Study Analysis Read “Taking Responsibility: High-Flying Labor Relations at Southwest Airlines” at the end of Chapter 14. Answer the three questions at the end of the case in a 2-3 page paper. Follow the project guidelines below. Requirements: 1. Click to use the Case Study Template (also available in Doc Sharing). 2. Complete a 2-3 page paper (not including the title page and reference page). 3. Answer each question thoroughly. 4. Demonstrate your understanding of the information presented in the weekly reading assignments by defining terms, explaining concepts, and providing detailed examples to illustrate your points. 5. Include at least two references from your reading assignments, or other academic sources, to reinforce and support your own thoughts, ideas, and statements using APA citation style. Review the Assignment Rubric (below) before starting this Assignment. ID: MT203-08-08-A Taking Responsibility: High-Flying Relations at Southwest Airlines BU203-Human Resource Management Professor Anton Suzzanna Hernandez Kaplan University 12/8/2013 Imagine, looking out a window of a skyscraper at the line of pickets at the bottom of this building. What must be going through the head of the CEO? How can an organization stop negotiations from going this far? How do strikes help real issues and conditions? By answering the questions on the case study of Southwest Airlines, analysis will help to see how labor relations...
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...Beautifies Neighborhoods * Produces Nutritious Food * Reduces Family Food Budgets * Conserves Resources * Creates opportunity for recreation, exercise, therapy, and education * Reduces Crime * Preserves Green Space * Creates income opportunities and economic development * Reduces city heat from streets and parking lots * Provides opportunities for intergenerational and cross-cultural A community garden within the Southern Nevada area must have specific characteristics to be compatible with the dry arid climate and weather of the southwest. This paper will examine 4 case studies of successful community gardens within the Desert Southwest region. Each case study will explain the design including plant types and layout, as well as construction including materials and practices. These two case studies will provide the stepping stones into the proposed UNLV Community Garden. Case Study Number 1 –Tonopah Community Garden (http://www.tonopahcommunitygarden.org/) Location: 715 N. Tonopah Drive Las Vegas, NV 89106 Design: This community garden is on four acres of...
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...and Using Information Systems, Wiley, 2006 (3nd edition) 2. A package of Harvard Business School Case Studies Additional Readings and Cases: Class handouts as needed. Course Description and Goals This course is designed to provide the current and future managers with understanding and appreciation of the issues that are related to the organization’s information technology assets. The course is not to educate technical specialists, rather, it is to give students a managerial perspective on the use of, design of, and evaluations of information systems that exist in organizations today. The objective of this course is to prepare students to manage information services in both today’s and tomorrow’s environment with its managerial, social, political, ethical and global issues. Conduct of the Course All students are expected to read the assigned materials (text, end-of-chapter discussion board questions (DBQ) and Harvard Business School case studies- HBC) before coming to the class. Some days we will discuss the materials in the text book. You are expected to be prepared to actively participate in this discussion, answering questions such as “What are the issues involved in ...?”, “What do the authors mean by ...?”, and “Give an example of...?” The second use of class time will be group presentation on the selected cases from the case study package. You will be assigned a group and lead the discussion for this activity. Those of you not assigned for...
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