Southwest Airlines Analysis
Established in 1971 by Herbert D. Kelleher and several business partners, Southwest Airlines has secured a strong position in the airlines industry over the last 35 years. Southwest and its wholly owned subsidiary, Air Tran, serve a combined 103 destinations in 41 U.S. states, the District of Columbia, the Commonwealth of Puerto Rico, and six near-international countries (Johnson, 2011). Both entities combined offer over 4000 daily flights. The Southwest Airlines corporate vision and self-concept is "America's low-cost, low-fare airline" (West-Grubbs, 2005). This is more than an espoused philosophy -- it's part of an operational model that is permeated throughout all business operations.
Short "peanut" flights are the airline's specialty. Southwest operates almost exclusively with only one type of plane in its fleet -- the Boeing 737 -- a quieter, more fuel efficient, and easier to maintain model which has helped reduce costs. Profit potential is the driving force behind all corporate decisions, not pricing wars or an overemphasis on market share (Hill and Jones, 2009). Many employees are cross-trained. The company has strategically avoided airports with high landing and gate fees. These practices and more all contribute to the company being able to successfully live up to its vision.
Introduction
This paper will highlight ways that Southwest Airlines' operations have supported its corporate objectives of providing excellent customer service and low-cost fares. The company's unique approach has allowed it to weather recent unfavorable economic conditions -- unlike much of its competition who are in deep debt or bankrupt. In the words of Herbert Kelleher, Chairman, President and CEO, "southwest Airlines has never deviated from its niche: short-haul, high frequency, low-fare service, all delivered with award-winning customer service" (West-Grubbs, 2005). There are also areas that if nurtured would position the company for even greater success. We will also take a look at those in more detail.
Company Analysis
Southwest has successfully adopted a cost leadership strategy, maintaining operating expenses per available seat mile at 15-20% below average. There are no major baggage handling fees, no meals, no central reservations, and no assigned seating (West-Grubbs, 2005). Standardization of the Boeing 737s has allowed for controlled maintenance costs, turnaround time and pilot and staff training. In...
The secondary gross margin measure, Gross Margin after Depreciation, shows the costs of having a rapidly growing infrastructure to support new routes and the purchase of additional planes over the five-year period. The reduction Gross Margin after Depreciation would be flat or slightly down during a strong economic period as well. This measure of gross margin indicates that the capital investments that are often amortized over seven years as
Southwest Airlines Effectiveness of Southwest Leadership Southwest management has defined a clear and simple business purpose. The management has also chosen the right business model that supports the business purpose. The management consistently demonstrates the core values and behaviors derived from the key business purpose (Emerald, 2005). The quality of the airline customer service is synonymous with warmth, friendliness, individual pride, and company spirit. This has kept the staff morale high. The
And many have got successful too in earning the market share. The emerging competition by new companies is a growing threat for the company and it should be tackled properly to avoid any future disturbances. In order to further describe the competition Southwest Airlines is facing a Competitive Profile Matrix is designed. The following Competitive Profile Matrix tells about the tough competitors which are in a good position to have
Southwest Airlines Before 1978, the federal government regulated the U.S. airline industry. Airlines were given profitable routes but were also obligated to serve unprofitable routes in the public's interest. Increases in airline costs were routinely passed along to customers due to the lack of price competition. In 1978, the airline deregulation act enabled airlines to set their own fares and enter or exit routes without government approval (Lam, 2003). The major airlines
Business Studies Southwest Airlines Southwest Airlines has been a highly successful airline, it has been one of the most successful airlines in U.S. history with the low cost carrier model created by Southwest emulated successfully by many other airlines across the world. Today it is the largest domestic carrier in the U.S. And has a history of consistent profits, with on a few quarters in the recent recession showing losses (Southwest Airlines,
culture in an organization using Southwest Airlines as a model. It uses Geert Hofstede Four Dimension of Culture to analyze the company and provides an over view of how the company's policies enable it to secure a top position in the industry. It uses 5 sources in MLA Format. Globalization has changed the way people do business today. Factors like strategies, resources or capacity to produce has become secondary to
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now