...(PROGRMA ACREDITADO 2011 - 2015) | | Casos en Gestión Financiera Southwest Airlines Profesor: Juan Gallegos Mardones Autores: Camila Apablaza Juan Gabriel Castillo Héctor Garrido Esteban Soto 1 de Septiembre de 2012 Desarrollo de preguntas caso: Southwest Airlines 1. Analice el mercado de las aerolíneas en el que entra a competir Southwest (competidores, consumidores, proveedores, sustitutos, intensidad de la competencia, entorno de los negocios en general, reglas del juego, etc.) Al momento de la constitución de Southwest los competidores Braniff y Texas International Airlines sostenían que no había una demanda suficiente para la existencia de tres líneas aéreas en el mercado interestatal de Texas, luego de un año y medio de operación de la compañía ambos competidores iniciaron una guerra de precios, la cual produjo que Southwest redujera en un 50% el valor del billete en la ruta Dallas-Houston. Cabe mencionar que en el año 1992 Southwest fue la única línea aérea que fu rentable en los Estados Unidos y que en Abril de 1993, Southwest era la séptima aerolínea en importancia, en relación al número de pasajeros. Además sus competidores Braniff y Texas International Airlines ya habían desaparecido en estos años. La aerolínea desde sus inicios a conservado una estrategia de vuelos de corto recorrido, alta frecuencia y de bajo costo, debido a la baja duración media de los vuelos de Southwest (65 minutos), esta veía como uno de sus principales competidores...
Words: 3076 - Pages: 13
...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...
Words: 814 - Pages: 4
...Southwest Case Southwest airline is one of the major U.S. low-cost airlines in the United States. It was founded in 1966 from an idea of Rolling King a San Antonio entrepreneur who owned small commuter air service. The original plan was fairly simple attract passenger by offering convenient schedules, getting on time to their destination while having a good experience, all these while trying to charge the most competitive prices. Over the course of the years Southwest had to fight really hard in order to establish itself in the market because of fierce competition. In order to compete with other big airline, Southwest introduced important and revolutionary concept that have deeply affected the airlines world until now a days. Just to mention a few: taking cue from its hub at Dallas Love Field they started the so called “Love campaign” (Southwest’s airplanes were Love Birds, it’s drinks Love potion etc) this set the tone for Southwest’s approach to its customers to make flying with Southwest an enjoyable and fun experience. The company decided strategically to move from big, expensive Intercontinental Airports to smaller and closer to downtown airports. They also reduced to 10 minutes the turnaround time (the time spent refueling, off-loading passengers and bags and cleaning up the airplane in order to be ready for the next flight). Southwest was also the first to differentiate among its consumers. They offered generally low fares but in certain time and on certain days it...
Words: 2987 - Pages: 12
...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...
Words: 811 - Pages: 4
...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...
Words: 2956 - Pages: 12
...QUESTION 1: What is the strategy of Southwest Airlines? Southwest’s strategy has two overarching themes: 1) Operate as a leading low-fare carrier, and 2) their mantra, “Happy employees make for happy customers.” There are several components to each, which are described in detail below. 1) OPERATING AS A LEADING LOW-FARE CARRIER There are several factors to this strategy: Low fares: SWA had the lowest fares in the industry and endeavored to keep it that way. Low costs: Southwest had the ability to charge low fares in part due to low overhead. Lost cost measures included the following: * Identical fleet of airplanes: This minimized the number of parts required for upkeep and maintenance, and it reduced carrying costs. It allowed SWA to simplify and harmonize training and operating procedures. Finally, not only was inventory “interchangeable” across the organization, staff could have moved freely from one location to the next with little to no training time required. * No meals on flights: A savings of $40 per passenger. * No seat assignments: No staff resources were required to maintain or change seat assignments, and no electronic system capacity was required to track/record such transactions. Simplified approach: Southwest kept the fare structure simple. * Only two types of fares: Regular and off-peak fares (no business class, first class.) * Consistent “within state” fares: For instance, a passenger can fly anywhere within...
Words: 760 - Pages: 4
...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...
Words: 1682 - Pages: 7
...Southwest Airlines Case Study Allen Washington November 15, 2013 Management 5590 Fall 2013 Introduction This paper is to discuss the concept of Southwest Airlines and how it related to certain aspects of reading in the text. Areas that are discussed are culture, personality and emotional intelligence and how they relate to Southwest Airlines. Also, discuss how the CEO of Southwest Airlines, Gary Kelly, concepts relate to the text and if they are good or bad for Southwest Airlines. Culture What is organization culture? Organization culture is the pervasive system of values, beliefs, and norms that exists in any organization. The organization culture can encourage or discourage effectiveness, depending on the nature of the values, beliefs, and norms (Ivancevich, Konopaske, and Matteson, 2011). How is Southwest’s culture and how does it impacts employee performance? The culture at Southwest Airlines is a strong one and that is due to the former CEO, Herb Kelleher. He was the kind of leader that worked well with his employees even when we was traveling on business to make sure that they kept a good relationship with one another ((Ivancevich, Konopaske, and Matteson, 2011). As stated in the text “The atmosphere at Southwest shows that having fun is a value that pervades every part of the organization. Joking, cajoling, and prank-pulling at Southwest Airlines are representative of the special relationships that exist among the employees in the...
Words: 1065 - Pages: 5
...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...
Words: 1291 - Pages: 6
...Southwest Airlines in 2010 (pages 401-436) Gamble, J. E., Thompson, A. A., Jr., and Peteraf, M. A. (2013). Essentials of strategic management: The quest for competitive advantage (3rd ed.). New York: McGraw-Hill/Irwin. DISCUSSION QUESTIONS 1. What are the key policies, operating practices, and core values underlying Southwest’s efforts to implement its low-cost/no frills strategy? In order for Southwest Airlines to implement its low-cost/no frills strategy, they charge the lowest price possible to make air travel affordable to a wide segment. The lowest fares were usually nonrefundable but could be applied to future travel on Southwest Airlines, while rival airlines charged a change free of $100 to $175. Southwest Airlines also implemented the “Bags Fly Free” policy. Other airlines were charging up to $120 round trip to check bags due to the increase in jet fuel costs, but Southwest chose to let fliers check bags for free, which resulted in a company-record load factor. Southwest also uses dynamic pricing to charge more during peak travel periods. Southwest was able to experience revenue gains from increased ticket sales and passenger traffic. Southwest does not use the hub-and-spoke route systems of rival airlines and instead uses point-to-point scheduling. This allows Southwest to minimize the time aircraft is at the gate to 25 minutes. Southwest’s point-to-point route system minimized connections, delays, and total trip time. Southwest also has no assigned...
Words: 1165 - Pages: 5
...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...
Words: 500 - Pages: 2
...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...
Words: 805 - Pages: 4
...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...
Words: 2339 - Pages: 10
...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...
Words: 723 - Pages: 3
...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...
Words: 822 - Pages: 4
