...become fully define and a larger framework is required. When the air transport industry was in its infancy management was a much simpler process with smaller teams and shorter communication paths between levels within the organisation. In recent years major carriers have come to employ tens of thousands of people reducing the importance and sense of contribution anyone employee has within the structure. Lines of communication have stretched between decision-making and the ground worker removing a sense of teamwork and a confusion of the ultimate goals of the airline. In the highly competitive world of air transport creating and maintaining an efficient management structure could be the difference in success or failure. Principles of Management Broadly speaking there are three major levels to management; top, middle and operating. There is also the chief governing body of the corporation known as the board of directors. This group is chosen by the shareholders of the company and is represented by individuals from fields...
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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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...Trends in the U.S. Airline Industry One trend in the Airline Industry which has not endeared them to investors has been stock prices. According to Thompson, Strickland, and Gamble, (2010) a significant trend in a drop in stock value has occurred from 2002 to 2007. Analysts indicate positive directions in the next year, however with the Airline Index at $40, Jet Blue showing $5.54, and Southwest at $11.63 one is tempted to ask if there is any direction they can take but up, or out. One can anticipate airlines seeking cost cutting measures, added with increasing revenue streams in order to revitalize the value of the companies, and through such the value of investments. Analysts indicate a trend towards an increase in airline travel demand over the next year. As one of the leading analysts Dirks (2011), points out that despite increase in Video Telecommuting for business resulting in reduction in business travel, many families are finding the cost of fuel is causing them to rethink driving and relooking at air travel. Statistics support this and reflect that as of this past November among the top six airlines, two reported their best traffic levels in 18 months. Many airlines reflected increases in miles flown per passenger, and passenger numbers have returned to the high passenger counts of 2007. These factors are supplemented by the Official Airline Guide (2011) which tracks air industry trends. The OAG reports a record number of seat bookings in April 2011....
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...Contents South West Airlines 4 Goals and Objectives 5 Their Mission and Vision Statement 5 Strengths 6 Weaknesses 6 Opportunities 8 Threats 8 Analyzing company’s external environment 9 Analyzing the nature and strength of competitive forces 11 Competitive pressure stemming from bargaining power of buyer: 16 Determining whether the collective strength of the five competitive forces is conductive to good profitability: 17 Competitive pressure from seller of substitute products 18 Sign that competition from substitute is strong 19 Competitive pressure stunning from supplier bargaining power 20 PESTEL ANALYSIS 24 SCENARIO PLANNING 56 SCENARIO NO.1 58 SCENARIO NO.2 59 SCENARIO NO.3 59 SCENARIO NO.4 60 SCENARIO NO.5 60 SCENARIO NO.6 60 SCENARIO NO.7 61 SCENARIO NO.8 61 Competitors Objectives 62 Competitor's Current Strategy 63 Competitor's Resources and Capabilities 64 Competitor’s Assumptions 66 Regional Factors 67 Value chain activities: 68 Key competitive advantages: 72 Solutions: 82 Weights of Key success factors in five airlines: 86 COMPETITIVE ADVANTAGE 92 FIVE GENERIC COMPETITIVE STRATEGIES: 92 LOW COST PROVIDER STRATEGIES: 92 DIFFERENTIATION STRATEGIES: 95 BEST-COST PROVEDER STRATEGIES: 96 FOCUS (MARKET NICHE) STRATEGY: 96 STRATEGIC ALLIANCE AND PARTNERSHIP: 97 MERGER AND ACQUISITION STRATEGIES. 98 VERTICAL INTEGRATION. 98 OUTSOURSING. 98 OFFENSIVE...
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...Chapter 2: How Airline Markets Work...Or Do They? Regulatory Reform in the Airline Industry Severin Borenstein and Nancy L. Rose October 2008 Severin Borenstein is E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business, U.C. Berkeley (www.haas.berkeley.edu), Director of the University of California Energy Institute (www.ucei.org), and a Research Associate of the National Bureau of Economic Research (www.nber.org). Address: Haas School of Business, University of California, Berkeley, CA 94720-1900. Email: borenste@haas.berkeley.edu. Nancy Rose is Professor of Economics at the Massachusetts Institute of Technology (econwww.mit.edu) and a Research Associate of the National Bureau of Economic Research. Address: MIT Department of Economics, E52-280b, 50 Memorial Drive, Cambridge MA 02142-1347. Email: nrose@mit.edu. Nancy Rose gratefully acknowledges fellowship support from the John Simon Guggenheim Memorial Foundation and MIT. We thank Andrea Martens, Jen-Jen L’ao, Yao Lu and Michael Bryant for research assistance on this project. For helpful comments and discussions, we thank Jim Dana, Joe Farrell, Michael Levine, Steven Berry, participants in the NBER conference on regulatory reform, September 2005, and seminars at University of Toronto, Northwestern University, University of Michigan, UC Berkeley, and UC Davis. This paper is forthcoming as Chapter 2 of Economic Regulation and Its Reform: What Have We Learned?, N.L....
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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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...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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...Instructors Manual Case Studies Table of Contents Introduction Shipper Manufacturing Company ………………………………............ C-2 FHE, Inc. ……………………………………………………………….. C-5 Early Supplier Integration in the Design of the Skid-Steer Loader……... C-9 Process Design Eastern Gear, Inc. ………………………………………………………. C-17 Southwest Airlines: Singin’ the (Jet) Blues …………………………….. C-21 The Field Service Division of DMI ……………………………………. C-29 Pharmacy Service Improvement at CVS (A) …………………………… C-36 U.S. Stroller …………………………………………………………….. C-37 Quality Customer-Driven Learning at Radisson Hotels Worldwide ……………. C-41 Quality at Gillette Argentina …………………………………………… C-46 Bayfield Mud Company ………………………………………………… C-47 Six Sigma at 3M, Inc. …………………………………………………... C-53 Capacity and Scheduling Crocs: Revolutionizing an Industry’s Supply Chain Model for Competitive Advantage …………………………………….. C-58 Unifine Richardson …………………………………………………….. C-59 eBags: Managing Growth ……………………………………………… C-60 Merriwell Bag Company ……………………………………………….. C-69 Lawn King, Inc. ………………………………………………………… C-74 World Industrial Abrasives ……………………………………………... C-84 Inventory Consolidated Electric …………………………………………………... C-88 Southern Toro Distributor, Inc. ………………………………………… C-93 ToysPlus, Inc. …………………………………………………………... C-99 SHIPPER MANUFACTURING COMPANY Teaching Notes Synopsis and Purpose Shipper Manufacturing Company is a manufacturer of electrical products, laminated materials...
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...THE AIRLINE INDUSTRY is in deep crisis. Losing over 100,000 jobs since September 11, 2001, and suffering major wage and benefit cuts, workers are in shock and looking for new leadership. The recent U.S. invasion and occupation of Iraq, the outbreak of the SARS epidemic and the economic downturn exacerbate the impact of the crisis on labor. Airline workers are in the forefront of discussions about their own industry and more general questions as political and social consciousness changes under the impact of the restructuring crisis. These experiences are valuable for all workers. While 9/11 and subsequent events greatly worsened the crisis, the dire state of this industry pre-dated the 9/11 attacks. The major carriers were losing millions of dollars and facing possible bankruptcy filings because of broken business models that were no longer profitable. In the capitalist system that generally means businesses fold. Bankruptcy as a Weapon Government aid still flows to the airlines, as it did after 9/11. But Wall Street and Washington are pushing the restructuring process. Meanwhile some important facts indicate the depth of the crisis and the challenge facing rank-and-file workers and their unions. Last summer US Airways, the seventh largest carrier, filed for bankruptcy and began slashing jobs, wages and benefits. It emerged from bankruptcy in the spring as a smaller carrier with lower labor costs than most of its competitors, but US Airways is still not out of turbulent...
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...roles of an industry are defining a new agenda for business and marketing strategy development. Companies are adopting market-driven strategies guided by the logic that all business strategy decisions should start with a clear understanding of markets, customers, and competitors.1 Increasingly it is clear that enhancements in customer value provide a primary route to achieving superior shareholder value.2 Consider, for example, Southwest Airlines’ market-driven strategy that has achieved a strong market position for the U.S. domestic carrier. The airline’s growth and financial performance are impressive. Although Southwest is the fourth largest U.S. airline, its market capitalization is greater than the total capitalization of AMR (American Airlines), Delta Airlines, and UAL Corp. Southwest’s revenues will approach $7.5 billion in 2002, compared with $4.2 billion in 1998. Net profits also are displaying strong records during this five-year period. Southwest uses a point-to-point route system rather than the hub-andspoke design used by many airlines. The airline offers services...
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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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...Global Human Resource Management Learning Objectives After studying this chapter, you should be able to: Describe the drivers behind globalization in the early 21st century. Discuss the role that culture plays in determining the effective use of human resource management practices in a global organization. Identify critical HRM issues faced by multinational and global organizations when they conduct business in the international marketplace. Internet/Web Resources General Sites www.expatexchange.com www.ilo.org www.odei.gov/cia/publications/factbook/ index.html www.mexicomaquila.com www.gmacglobalrelocation.com www.shrm.org globalgateway.monster.com Company Sites www.globaldynamics.com www.nortel.com www.bp.com www.dell.com www.ballygaming.com www.nestle.com www.unilever.com www.fiat.com www.volvo.com Career Challenge Chapter 4 Global Human Resource Management 97 Boswell Technologies is a computer software development firm located in Akron, Ohio. Michael Carl, vice president for human resources at Boswell Technologies, has just returned from San Benedetto, Italy. It seems that Boswell is soon going to become Boswell International. The company has just acquired a successful software firm located in San Benedetto. The purpose of the acquisition was to quickly allow Boswell to become a premier supplier of new and innovative computer software in Europe. On his first day back in Ohio, Michael has been called into the office of Boswell’s president, David Randolf, to give...
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...A Dynamic Oligopoly Game of the US Airline Industry: Estimation and Policy Experiments Victor Aguirregabiria∗ University of Toronto Chun-Yu Ho∗ Boston University This version: November 19, 2007 PRELIMINARY AND INCOMPLETE VERSION Abstract This paper estimates the contribution of demand, cost and strategic factors to explain why most companies in the US airline industry operate using a hub-spoke network. We postulate and estimate a dynamic oligopoly model where airline companies decide, every quarter, which routes (directional city-pairs) to operate, the type of product (direct flight vs. stop-flight), and the fare of each route-product. The model incorporates three factors which may contribute to the profitability of hub-spoke networks. First, consumers may value the scale of operation of an airline in the origin and destination airports (e.g., more convenient checking-in and landing facilities). Second, operating costs and entry costs may depend on the airline’s network because economies of density and scale. And third, a hub-spoke network may be an strategy to deter the entry of non hub-spoke carriers in some routes. We estimate our dynamic oligopoly model using panel data from the Airline Origin and Destination Survey with information on quantities, prices, and entry and exit decisions for every airline company over more than two thousand city-pair markets and several years. Demand and variable cost parameters are estimated using demand equations and Nash-Bertrand equilibrium...
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...382 PART 5 SHAPING THE MARKET OFFERINGS ter p ha C 14 In This Chapter, We Will Address the Following Questions 1. How do consumers process and evaluate prices? 2. How should a company set prices initially for products or services? 3. How should a company adapt prices to meet varying circumstances and opportunities? 4. When should a company initiate a price change? 5. How should a company respond to a competitor’s price change? As a high-end luxury goods provider, Tiffany & Co. knows the importance of preserving the integrity of its prices. Developing Pricing Strategies and Programs Price is the one element of the marketing mix that produces revenue; the other elements produce costs. Prices are perhaps the easiest element of the marketing program to adjust; product features, channels, and even communications take more time. Price also communicates to the market the company’s intended value positioning of its product or brand. A well-designed and marketed product can command a price premium and reap big profits. But new economic realities have caused many consumers to pinch pennies, and many companies have had to carefully review their pricing strategies as a result. For its entire century-and-a-half history, Tiffany’s name has connoted diamonds and luxury. Tiffany designed a pitcher for Abraham Lincoln’s inaugural, made swords for the Civil War, introduced sterling silver to the United States, and designed the “E Pluribus Unum” insignia that adorns $1 bills...
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...is a low-cost, low-fare airline headquartered in Dublin, Ireland, operating over 200 routes in 20 countries. The company has directly challenged the largest airlines in Europe and has built a 20-year-plus track record of incredibly strong passenger growth while progressively reducing fares. It is not unusual for one-way tickets (exclusive of taxes) to sell on Ryanair’s Web site for less than €1.00. See Exhibit 1 for an excerpt of Ryanair’s Web site, where fares between London and Stockholm, for example, are available for 19 pence (approximately US$0.33). CEO Michael O’Leary, formerly an accountant at KPMG, described the airline as follows: “Ryanair is doing in the airline industry in Europe what Ikea has done. We pile it high and sell it cheap. . . . For years flying has been the preserve of rich [people]. Now everyone can afford to fly.”1,2 Having created profitable operations in the difficult airline industry, Ryanair, as did industry analysts, likened itself to U.S. carrier Southwest Airlines, and its common stock has attracted the attention of investors in Europe and abroad. Low-Fare Airlines Historically the airline industry has been a notoriously difficult business in which to make consistent profits. Over the past several decades, low-fare airlines have been launched in an attempt to operate with lower costs, but with few exceptions, most have gone bankrupt or been swallowed up by larger carriers (see Exhibit 2 for a list of failed airlines). Given the excess capacity...
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