Case Study Sample - Southwest Air

8/8/2019 Case Study Sample - Southwest Air

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Southwest Airlines - 2000

Prentice Hall, 2001


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Vision Statement

To become the most cost effective airline inthe world


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Mission Statement Components

1. Customers2. Products or services

3 . M arkets4. Technology5. Concern for survival, profitability, growth

6. Philosophy7. Self-concept8. Concern for public image9. Concern for employees


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Mission StatementThe mission of Southwest Airlines is dedication to the highest quality of customer

service delivered with a sense of warmth, friendliness, individual pride and companyspirit. Southwest Airlines strives to offer low-fare, high frequency and point to pointairline carrier service (2). Our efforts currently are on the North American markets(3 ), but expansions are being explored. We are dedicated to using the mostinnovative and cost effective technologies (4) available. Our plans to conduct our operations efficiently will help provide continuous profit growth and a soundreputation, which will insure us our continued success in the airline industry (5).Southwest airlines contributes to the economic strength of society and functions as agood corporate citizen by delivering superior benefits to our customers (1),employees, shareholders and communities in which we operate (6). We arecommitted to provide our employees a stable work environment with equalopportunity for leaning and personal growth (7, 8). Creativity and innovation areencouraged for improving the effectiveness of Southwest Airlines. Above all,employees will be provided the same concern, respect and caring attitude (9) withinthe organization that they are expected to share externally with every Southwestcustomer.


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OpportunitiesDOT has regulator jurisdiction of passenger airlinesShort departure timesUse only one type of aircraft (Boeing 7 3 7) simplifiesscheduling, maintenance, flight operations and trainingactivitiesTicketless travel option via Internet

M ore than 100 cities have asked the airline to begin service

in their communitiesAir travel is expected to increaseCompetitors have higher prices


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Threats

Unpredictable cost of fuelNo locations in M exico or CanadaIncreased airport restrictionsFAA increasing restrictionsPublicized air crashes results in fear of flying


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EFE M atrixKey External Factors Weight Rating Weighted Score

OpportunitiesDOT has regulator jurisdiction of passenger airlines 0.11 2 0.22Short departure times 0.05 4 0.20Use only one type of aircraft (Boeing 7 3 7) simplifiesscheduling, maintenance, flight operations and trainingactivities

0.07 3 0.21

Ticketless travel option via Internet 0.07 3 0.21M ore than 100 cities have asked the airline to beginservice in their communities

0.15 3 0.45

Air travel is expected to increase 0.06 3 0.18Competitors have higher prices 0.08 3 0.24ThreatsUnpredictable cost of fuel 0.05 3 0.15

No locations in M exico or Canada 0.07 1 0.07Increased airport restrictions 0.12 4 0.48FAA increasing restrictions 0.12 3 0.3 6Publicized air crashes results in fear of flying 0.09 3 0.27TOTAL 1.00 3.04


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StrengthsP oint to point system for more direct nonstop routings for shorthaul customersSimple fare structure featuring low unrestricted, u limitedeveryday coach fares

Fortune 500 companyLow employee turnoverHigh employee moraleFrequent departures26 years of consecutive profits

P rices are lowYoung airline fleet


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Weaknesses

Conservative growth patternLow first quarter revenuesLow first quarter operation incomeLimited annual seat capacity at some airportsProduction delays of Boeing Jets

Only 9 reservation centers to handle allreservation calls


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TOWS AnalysisStrengths Wea k nesses1. Point to point system for more

direct nonstop routings for shorthaul customers

2. Simple fare structure featuringlow unrestricted, unlimitedeveryday coach fares

3 . Fortune 500 company4. Low employee turnover 5. High employee morale6. Frequent departures

7. 26 years of consecutive profits8. Prices are low9. oung airline fleet

1. Conservative growth pattern2. Low first quarter revenues3 . Low first quarter operating

income4. Limited annual seat capacity at

some airports5. Production delays of Boeing

Jets6. Only 9 reservation centers ton

handle all reservation calls


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TOWS Analysis continuedOpportunities S-O Strategies W-O Strategies1. DOT has regulator jurisdiction

of passenger a irlines2. Short departure times3 . Use only one type of aircraft

(Boeing 7 3 7) simplifiesscheduling, maintenance, flightoperations and training activities

4. Ticketless travel option viaInternet

5. M ore than 100 cities have askedthe airline to begin service intheir communities

6. Air travel is expected toincrease

7. Competitors he hither prices

1. Increase the number of dailyflights (S1, S6, S7, O2, O 3 )

1. Increase number of reservationcenters (W6, O4)

2. Increase first quarter advertising(W2, W 3 , O2, O4)

Threats S-T Strategies W-T Strategies1. Unpredictable cost of fuel2. No locations in M exico or

Canada3 . Increased airport restrictions4. FAA increasing restrictions5. Publicized air crashes results in

fear of flying

1. Expand to eastern seaboard andM exico (S1, T2)

1. M erger with a major jet airline(W1, T4, T5)


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SPACE M atrix Internal strategic positionFinancial strength +4 +1 best to +6 worst axis: 4 + (- 3 ) = 1Environmental stability - 3 -6 worst to 1 best

External strategic positionCompetitive advantage -2 -6 unstable to 1 stable X axis: 4 + (-2) = 2Industry strength +4 +1 best to +6 worst

Conservative FS Aggressive

CA IS

Defensive ES Competitive


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Grand Strategy M atrixRAPID M ARKET

GROWTH

Quadrant II Quadrant I

Southwest AirlinesWEAK

CO M PETITIVE STRONG

POSITION CO M PETITIVE

POSITION

Quadrant III Quadrant IV

SLOW M ARKETGROWTH

1. M arket development2. M arket penetration3 . Product development4. Forward integration5. Backward integration6. Horizontal integration7. Concentric diversification


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The Internal-External (IE) M atrixThe IFE Total Weighted Score

trong verage Weak 3 .0 to 4.0 2.0 to 2.99 1.0 to 1.99

igh I II III3 .0 to 3 .99 S o t hw est Airli n es

M edium I I

The EFE TotalWeightedScore

2.0 to 2.99

o II III I1.0 to 1.99

G R AND BU LD


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QSP MStrategic Alternatives

Key nternal Factors Weight ncrease Advertising inFirst Quarter

uild Six NewReservation Centers

Strengths AS TAS AS TASPoint to point system for more direct nonstop routingsfor short haul customers

0.03 --- --- --- ---

Simple fare structure featuring low unrestricted,unlimited everyday coach fares

0.15 2.00 0. 3 0 3 .00 0.45

Fortune 500 company 0.05 3 .00 0.15 2.00 0.10Low employee turnover 0.08 3 .00 0.24 4.00 0. 3 2High employee morale 0.08 2.00 0.16 3 .00 0.24Frequent departures 0.09 --- --- --- ---26 years of consecutive profits 0.15 4.00 0.60 3 .00 0.45Prices are low 0.10 4.00 0.40 3 .00 0. 3 0

oung airline fleet 0.05 2.00 0.10 4.00 0.20Wea k nesses

Conservative growth pattern 0.05 2.00 0.10 4.00 0.20Low first quarter revenues 0.05 4.00 0.20 3 .00 0.15Low first quarter operation income 0.0 3 4.00 0.12 3 .00 0.09Limited annual seat capacity at some airports 0.01 --- --- --- ---Production delays of Boeing Jets 0.0 3 --- --- --- ---Only 9 reservation centers to handle all reservation calls 0.05 2.00 0.10 1.00 0.05S TOTAL 1.00 2.47 2.55


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QSP M continuedK ey ter n al actors eig h t n crease Ad vertisi n g i n

F irst arterB il S i New

R eservatio n en tersort n ities AS TA S AS TA S

T has regulator urisdiction o passenger airlines 0.11 --- --- --- ---Short departure times 0.05 --- --- --- ---

se only one type o aircra t ( oeing 7 3 7) simpli iesscheduling, maintenance, light operations and training

activities

0.07 --- --- ---

Ticketless travel option via Internet 0.07 3 .00 0.21 4.00 0.28M ore than 100 cities have asked the airline to beginservice in their communities

0.15 3 .00 0.45 4.00 0.60

ir travel is expected to increase 0.06 4.00 0.24 3 .00 0.18ompetitors have higher prices 0.08 3 .00 0.24 2.00 0.16

Th reatsnpredictable cost o uel 0.05 --- --- --- ---

o locations in M exico or anada 0.07 2.00 0.14 4.00 0.28Increased airport restrictions 0.12 --- --- --- ---

increasing restrictions 0.12 --- --- --- ---Publicized air crashes results in ear o lying 0.09 --- --- --- ---S UB T TAL 1.00 1.28 1.50S UM T TAL ATTRACTIVENE SS S C RE 3.75 4.05

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Case Study Sample - Southwest Air