southwest airlines case

PRESENTED BYGROUP-5

SARVPREET BHATTI-169MANPREET SINGH-151

GOLDI-137ATUL VIKAS-159

KUMAR ASHISH-171RAVI KUMAR- 136

SOUTHWEST AIRLINES

SOUTHWEST AIRLINES 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.

You put your employees first. If your employees are treated right , they will treat your customers right, your customers will come back, and that’s what makes your shareholders happy.

MISSION

The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. It primarily provides short haul, high-frequency, point-to-point, low-fare air transportation service among 58 cities (59 airports) in the United States.

Incorporated in Texas in U.S. by Herb Kelleher and Rollin king in 1971

Commenced customer service with 3 boeing 737 aircraft

Now operates more than 500 boeing 737 aircraft

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 “discount airline” since 1973

INTRODUCTION

For the 12th year in a row, FORTUNE magazine recognized Southwest Airlines in its annual survey of corporate reputations in 2008.

2003 Selected as “AIRLINE FOR THE YEAR” 2007 included in top 100 most innovative

technology organization First airline to establish a home page on

internet Ranked number one in customer service 36 consecutive year of profitability

ACHIEVEMENTS

Defined as: “art of motivating a group of people to act towards

achieving a 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

situations and be able to act on their own decision Employees should be able to lead other employees to

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

his employees

LEADERSHIP

.

humour •Work should be fun ...it can be play . . . Enjoy it.•Both at workplace and inside the plane

altruism •Work is important ...don’t spoil with seriousness.•Welfare of people comes first

luv •People are important...each one makes a different.•Employee and customer commitment

Southwest’s Values, Philosophy, and Spirit

SUCCESS IS HOW HIGH YOU BOUNCE WHEN YOU HIT BOTTOM

WHY IT IS SUCCESSFUL ?

WHY IT IS SUCCESSFUL ?

Competitive advantage

Internal customers

Management style Leadership

Work-culture

Family spirit

Trust

•Open sharing of information Training

Collective bargaining

Flexibility

Discounted stock purchase

Creative spirit

•People consider it as crusade instead of business.•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 major role with his unique mgmt style.•Team of PARKER, COLLIN to handle .

LEADERSHIP

4

• Trust of customers declared it as most admired airlines and company.TRUST

• Respects ideas of employees.• Committee of managers, employee

interaction.

OPEN SHARING OF INFORMATION

• Respect for sense of humor.• Compatible attitude of learning.CREATIVITY SPIRIT

• Employee satisfaction

• Customer service

• Low fares• Stable

profitability• Scheduled

service• Leadership

• No international flight.

• Carry small amout of freight and cargo.

• Inconvenience to business customers

• Government regulations and restrictions

• Fluctuation in gas and oil prices

• Operate At International Level

• Focus On Popular Destinations

Strengths Weakness

ThreatsOpportunity

SWOT

CUSTOMERS

EMPLOYEES

MANAGEMENT

INVERTED PYRAMID APPROACH

STRATEGIES Integrated Low Cost/Differentiation Strategy

Use a single aircraft model (Boeing 737)Use secondary airportsFly short routesLow cost meals15 minute turnaround timeNo reserved seatsNo travel agent reservations

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 Katrina

Operated only one model of aircraft Boeing 737, medium range-narrow body

commercial passenger jet aircraft Easy to replace parts and ground support

equipment

PROFITABILITY

PRICE ELASTICITY OF DEMAND

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

PRICE DISCRIMINATION STRATEGY

The firm identifies different consumer groups, in the 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.

THIRD-DEGREE PRICE DISCRIMINATION

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

CONCLUSION