South West Airlines Case Study - HBR

7/30/2019 South West Airlines Case Study - HBR

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PRESENTEDBY

GROUP-5SARVPREET BHATTI-169

MANPREET SINGH-151

GOLDI-137

ATUL VIKAS-159

KUMAR ASHISH-171

RAVI KUMAR- 136


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SOUTHWEST AIRLINES

If you get your passengers to their destinations when theywant to get there, on time, at the lowest possible fares, andmake darn sure they have a good time doing it, people will flyyour airline.

You put your employees first. If your employees are treatedright , they will treat your customers right, your customers willcome back, and thats what makes your shareholders happy.

MISSIONThe mission of Southwest Airlines is dedication to the highestquality of customer service delivered with a sense of warmth,friendliness, individual pride, and company spirit. It primarilyprovides short haul, high-frequency, point-to-point, low-fare airtransportation service among 58 cities (59 airports) in theUnited States.


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Incorporated in Texas in U.S. by Herb Kelleherand Rollin king in 1971

Commenced customer service with 3 boeing737 aircraft

Now operates more than 500 boeing 737aircraft

Operate more than 3300 flights a day

35000 employees engaged

The United States most successful low-fare,high frequency, point-to-point carrier

Known as a discountairline since 1973


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For the 12th year in a row, FORTUNEmagazine recognized Southwest Airlines inits annual survey of corporate reputations in2008.

2003 Selected as AIRLINE FOR THEYEAR

2007 included in top 100 most innovativetechnology organization

First airline to establish a home page oninternetRanked number one in customer service 36 consecutive year of profitability


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Defined as:

art of motivating a group of people to act towards achievinga common goal

According to HERB KELLEHER

Leadership is a way of life, culture, desire and commitment Leadership is the job of every employee, not just upper level

management

Every employee should have the ability to ascertain situationsand be able to act on their own decision

Employees should be able to lead other employees to makedecisions

He does not rule over his employee but rather, rules with hisemployees


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.

humour

Work should be fun ...it can be play . . .Enjoy it.

Both at workplace and inside the plane

altruism

Work is important ...dont spoil withseriousness.

Welfare of people comes first

luv

People are important...each one makesa different.

Employee and customer commitment


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SUCCESSISHOWHIGHYOUBOUNCEWHENYOUHITBOTTOM

WHYITISSUCCESSFUL ?


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WHYITISSUCCESSFUL ?

Competitive advantage

Internal customers

Management styleLeadership

Work-culture

Family spirit

Trust


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Open sharing of information Training

Collective bargaining

Flexibility

Discounted stock purchase

Creative spirit


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People consider it as crusade instead ofbusiness.

Most glowing star in southwest policy.

WORK

CULTURE

Eagerness to be at the top.

Challenges top competitors as US

AIR,UNITED, DELTA

COMPETITIVE

ENVIRONMENT

CEO HERB KELLEHER played majorrole with his unique mgmt style.

Team of PARKER, COLLIN to handle .

LEADERSHIP


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4

Trust of customers declared it as mostadmired airlines and company.TRUST

Respects ideas of employees. Committee of managers, employee

interaction.

OPEN SHARING OFINFORMATION

Respect for sense of humor.

Compatible attitude of learning.

CREATIVITY SPIRIT


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Governmentregulations andrestrictions

Fluctuation in gasand oil prices

Operate AtInternational Level

Focus On PopularDestinations

No internationalflight.

Carry small amoutof freight and cargo.

Inconvenience tobusiness customers

Employeesatisfaction

Customer service Low fares

Stable profitability

Scheduled service

Leadership

Strengths Weakness

ThreatsOpportunity


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Integrated Low Cost/Differentiation

Strategy

Use a single aircraft model (Boeing 737)Use secondary airportsFly short routesLow cost meals15 minute turnaround timeNo reserved seats

No travel agent reservations


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Fuel hedging Purchased fuel options for years in advance to smooth

out fluctuations in fuel costs Substantially increased its hedging in 2001 in

response to projections of increased crude oil prices

Advantaged after Sep. 11, 2001 attack, the oil shock

from Iraq War, and Hurricane KatrinaOperated only one model of aircraft Boeing 737, medium range-narrow body commercial

passenger jet aircraft

Easy to replace parts and ground support equipment


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PRICEELASTICITYOFDEMAND

The percentage change in quantity demanded (Q)that occurs in response to a percentage change inprice (P)


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The firm identifies different consumer groups, inthe market, each with a different demand curve.

Southwest Airlines recognizes that any given flights

has different types of travelers

Business travelers vs. Vacation travelers

To maximize profit, the firm sets a price for each

group by equating marginal revenue and

marginal cost.


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Southwest Airlines uses third-degree price

discrimination to fill the plane with travelers in the

most profitable way

Depending on the price of elasticity of demand for

tickets

Charge a higher price for business travelers who

have relatively inelastic demands and vice versa

Employee and customer satisfaction


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Documents

South West Airlines Case Study - HBR