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Southwest’s key choices, and they are making it work. People who usually travel from one place to
another would always want to travel with low cost, high quality service. The perpetual rise in the fuel
prices has always remained a major issue for Southwest. External Environment Analysis of
Southwest Airlines. However, there can be no assurance that Southwest will be able to continue to
offset future cost increases resulting from the changing commercial airline environment. Keep on
browsing if you are OK with that, or find out how to manage cookies. The other important course of
action for Southwest Airlines in order to become more profitable in future is the introduction of
group revenue management along with online reservations. Southwest Airlines Co. (2012). Southwest
airlines interactive route map. This paper looks into the core Social Responsibility of southwest
airlines as a company. Although the airline has used strategies to prevent unpleasant surprises like
hedging the prices of fuel and insuring other volatile areas of their operations (Blanco et al 2), there
are risks that unforeseen activities can render the postulations and statistics submitted by the finance
department useless. In preparing its financial accounts, SouthWest Airlines uses Generally Accepted
Accounting Principles (GAAP) to compile the data and process it to financial information. We use
cookies to create the best experience for you. In this regard, for the purpose of keeping the airfares
cheap and simple for its large base of customers, Southwest Airlines offers approximately 2,700
regular flights that operate in over 55 cities along with 29 states. Laszlo (1999) underlined that the
employees at Southwest Airlines feel as a most essential and core part of all service system; they
have an opportunity of behaving and feeling just like at home, demonstrating fun and cheerfulness
to the customers. Let us write or edit the research paper on your topic. Low profit margins and
stunted growth are the duplicated scenarios in the American airline industry but one notable airline,
Southwest Airlines, has defeated the odds in this arena to succeed even where all the rest seem to
have failed. Southwest Airlines research paper Southwest Airlines research paper - pity, that Load
More Follow on Instagram. There are several direct competitors of Southwest Airlines. The
introduction and the application of the regular point-to-point flights is a noteworthy airport hub
strategy of Southwest Airlines that has ultimately made the business organization to attain success as
well as to maintain competitive position at large. This has happened because through the regulation
of the internal and the external environment through their code of ethics, the company has been able
to maintain its reliability in delivery of services. However, since 1993 and during the recent years
many of these start-ups have been consolidated, established and incorporated as large and major
airlines. The corporate culture at Southwest Airlines is people-centric, which means it gives equal
importance to its customers as well as employees. The company’s culture that revolves around
customer service and cost cutting measures acts as another core competence that revolves around its
process strategies. Even though the company enjoys a high volume of passenger traffic and high
turnover, it has met with various challenges. There is also the chance to reduce employee turnover
through improvement in employee motivation and morale. LUV is Southwest’s NYSE symbol,
selected to represent the company’s home at Dallas Love Field, as well as the theme of Southwest’s
employee and customer relationships Within 30 years, Southwest Airlines has become the fifth-
largest major airline company in America. In establishing business in different places in the world, the
company has ensured that it focuses on the opportunities that may exist and those that are likely to
diminish so that they can earn profit from the different ventures. Other cost cutting measures like
purchase of only Boeing 737 planes which are fuel efficient and intensified online booking have
ensured that the airline is able to breakeven even after charging low fares. This alone signifies the
performance of Southwest airlines. We use cookies to create the best experience for you.
By mid 1990s majority of new airlines merged with big ones in order to survive the competitive
arena. References Barnhart, C., Belobaba, P. and Odoni, A. (2009). The global airline industry. Pants
on Fire” 6. 7. 8. 9. 10. 11. 12. 13. 14. COST CONTROL “ Airlines don’t have revenue problems,
they have cost problems” 15. 16. 17. South west North west Number of employees Revenues per
employee Revenue Vs. In the year 2011, Southwest Airlines declared the name of Jim McKeon as a
strategic consultant or an advisor in Cargo Management Group of Southwest Airlines. However,
wages still take a huge chunk of the airline’s revenue but it is a sensitive area to try and cut on its
influence on the income statement. Keep on browsing if you are OK with that, or find out how to
manage cookies. How do hotel linen suppliers contribute to sustainable and eco-friendly pract.
SouthWest Airlines is ran by a Board of Directors and a team of Managers who handle the routine
activities of the airline. Financial Performance since Deregulation and Current Economic Standing.
Short essay on importance of higher education, discussion essay argument difference introvert essay
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paper. In the second quarter of 2005, Southwest’s unit costs fell by 3. 5% despite a 25% increase in
jet fuel costs. Before the 1990s the industry players had a lucrative period but after this and with the
increased completion, expansion of internet and intensified competition, few airlines have
maintained a steady growth or even profitability. Southwest remained aware of their ever-changing
strengths, weaknesses, opportunities, and. In case of a crisis the company’s strategy can hurt its
revenues and its recovery. The other crucial promotional strategy that the organization initiated is
DING which acts as a tool that helps to find as well as to reserve the various flights belonging to
Southwest Airlines conveniently. For instance, over 40, 000 employees of Southwest Airline act as
the heart and soul of the company. Before having these leading changes, Southwest Airlines ’ was
very successful and competitive business that ranked on the spot of five corporations in U.S.
Southwest clearly defines its existing purposes, Which is to offer the lowest fares for commerce and
ease travellers travelling between states. We'll assign you an expert who has experience in this topic
free of charge. Southwest Airlines have dealt with more domestic passengers than any other airline.
SouthWest Airlines might therefore have difficulties trying to measure the extent to which people
can honor some customer satisfaction measures. This is because he controls to board which is
supposed to monitor the direction of the company and at the same time heads the functional
management team. Southwest Airlines has a market leadership position in the low-fares category
which to an extent has facilitated customer loyalty thereby offering fair bargaining power of buyers.
Southwest, furthermore, has “lower unit costs (adjusted for stage length), on average, than virtually
all major domestic airlines and consistently has one of the best overall Customer Service records”
(Southwest, 2013). Of the entire strategic management, southwest Airline's key role in strategic
human resource management has been an integral part. Southwest could exploit this through a merger
or a favorable acquisition. Southwest Airlines. (2012). Mission. Retrieved from. At minimum charge
provides satellite based internet service 13. Southwest's history of profitability and general success
has recently been termed as the. Principles of Accounting Boston, MA: Houghton- Mifflin Company.
2008. Print O’Connor, Thomas. The concept of NextGen improves the security, facilitates to save
fuel, diminish the delays and also reduce the adverse ecological impacts upon the aviation industry.
This is because no matter how accurate the finance department tries to be, there are many elements
of uncertainty and inherent errors that can affect the accuracy of the predictions made by managers
of the airline. Southwest is a company with such an environment where each employee is sure about
the stability of their working position; company provides equal opportunities for the professional
education and development, and the employees’ proposals and efforts are highly rewarded.
Southwest has come under intense competition from United. Southwest has certainly conducted in-
depth research but in a different manner by setting the. Weaknesses Due to the airline’s central
strategy of low cost and low fares, its product breadth and depth is low. This paper will discuss the
important factors that helped the Southwest Airlines to be one of the most profitable airlines in
America over the last decades. Let us write or edit the research paper on your topic. This code is
made to ensure that all acts of corruption are prevented and this is an evidence of the company’s
commitment to the delivery of services at a fair competition level. This in essence means that
customers who value decoration will travel with the competitor airline at the expense of Southwest
Airlines. SouthWest Airlines might therefore have difficulties trying to measure the extent to which
people can honor some customer satisfaction measures. Promotions Rapid Reward program to earn
free air ticket Discount on air fare for 10 or more people traveling together Provide customizable
leisure vacation packages 24. The Wall Street Journal ranked it first among airlines for customer
service satisfaction. The code of ethics allows that all the employees should respond to international
and local clients according to the orders that are set out by the organizational management to ensure
that they are able to deliver services without partiality. How do hotel linen suppliers contribute to
sustainable and eco-friendly pract. This is because they need to report things as accurately as
possible and be held responsible for them. The competitors are not only operating within the airline
industry within the U.S. but they are also following a similar low-cost strategy while offering their
services to their customers. There are several actions that could trigger this block including
submitting a certain word or phrase, a SQL command or malformed data. The company has managed
to expand its business in terms of the facilities that they use so that they can satisfy the desires of the
international community. This strategy aims at creating value for the customer on product features at
relatively low fares (Stevenson, 2008). External stakeholders include other airline manufacturers,
passengers, ticket vendors, airport authorities, the Federal Aviation Authorities, the Department of
Homeland Security, Regulatory Agencies, Airline Manufacturers, Public organizations and local
business partners (mainly outsourcing partners). Moreover there has been a fluctuation in the prices
of oil and gas which has lead to increase in costs for the airlines. They provide themselves on cost
efficiencies, which enable them to offer good service at lower prices to the customer than their
competitors. Southwest has maintained a great goodwill amongst its customers and it would certainly
be difficult for a new entrant to pull that customer portfolio from established company. They visited
us one evening to discuss the job and then proceeded to transform our living room whilst we were on
holiday. Southwest Airlines research paper Southwest Airlines research paper - pity, that Load More
Follow on Instagram. The entrance of new business market participants ultimately made the airline
industry more competitive. The organization faces the issue of lack of unity among the working
personnel especially at the time of effective decision making. Perhaps some of the biggest
management strategy lessons from Southwest Airlines is the. Though Southwest Airlines offers low
airline fares to its customers that support them with increasing profitability but still the airline would
have to focus upon the airline fare management in order to manage the fares in a competitive as well
as timely way. Introduction Southwest Airlines is simply referred to as Southwest and it operates on
short haul basis with point-to-point flights.
Hall, A. (2008). Organizational pay analysis: a case study of Southwest airlines. They need to keep
prices where they are, or even lower prices, and they advertise that fact to the public. The Southwest
Airline 's domestic operations were victims to legal statutes around the 1990s when the airline was
prohibited from flying non-stop, through the Wright Amendment Act. Southwest’s key choices, and
they are making it work. Financial Performance since Deregulation and Current Economic Standing.
This is 100% legal. You may not submit downloaded papers as your own, that is cheating. Also you.
Let us write or edit the research paper on your topic. Any time there is a major change in the business
environment, there will be the need for the company to change its strategy and methods. As for first
level of needs, essential for each person such as food or shelter, it is guaranteed at Southwest
Airlines by decent level of salaries and percent in gained profit (Smith, 2004). The two factions
tested their muscle by making allies of influential congressmen and in the end Southwest Airlines
was allowed to travel inter-state. Even more, regardless of all the successes that has been seen by the
airline in its market segment, there continues to be fierce competition among other key competitors
with no competitor having a market share of more than 30% (Prince and Simon, 2009). Assuring
such positive attitude for its employees, Southwest expects the similar attitude to the clients from its
workers. This is because the Chairman and CEO has the tendency to have and use his unfettered
power. The internal stakeholders include the Board of Directors, Senior Management (both headed
by Mr. Gary Kelly) as well as departmental leaders (some of whom are members of the strategic
planning team) and airport staff (who are the major operatives). Their marketing strategy was to
convey the message that what Southwest had to offer was of value. South West Airlines: Balancing
The Price-Value Equation. Please review our Cookie Policy to learn about it in detail and continue
using the website only if you agree to receive cookies. The strategies put together portray that doing
it better is not as important as doing it differently within this market. This therefore means that the
balance scorecard system could be a good approach but it is limited to the sustainability and
relevance of the strategy chosen by SouthWest Airlines. Southwest Airlines have kept a low profile
lobbying approach when it comes to addressing national political affairs (Moran, 2012). Pants on
Fire” 6. 7. 8. 9. 10. 11. 12. 13. 14. COST CONTROL “ Airlines don’t have revenue problems, they
have cost problems” 15. 16. 17. South west North west Number of employees Revenues per
employee Revenue Vs. What is more, demographics of travelers happens to be a majority macro
social factor that influences Southwest Airlines given that air transport is fast becoming the preserve
of the elite and that there has to be more of the higher social class emanating from society to get the
market really booming. The company has maintained a good position within the airline industry and
proved a threat for its competitors. In the year 1995, Southwest Airlines was viewed as the foremost
airline which introduced the facet of Ticketless Travel for the customers that threatened various
leading competitors of Southwest Airlines that comprise Continental Airlines, United Airlines and
Delta Airlines among others. Southwest’s employees are incredibly loyal, and they are a key part of
the company’s overall. Managers trained in this program take leadership courses that emphasize a
management style based on coaching and encouraging rather than supervising or enforcing rules. The
fuel prices are hugely driven by political agendas of the oil supplying nations and it may have
varying results for the airline industry since oil is the major expenditure that an airline company has
to endure in order to operate effectively and efficiently. PEST Analysis Political environment
Stability of the government in the Southwest Airlines market has not saved it from political
interference (Robinson, 2009). Southwest airlines have been able to successfully implement its fuel
hedging strategy to save on fuel expenses in a big way and have the largest hedging position among
other carriers. The supervisors at the check in counters have to ensure that the workers actually
perform to promote the customer friendly and convenience that the company shows to clients
(Garrison 449).
Furthermore, in the year 1995, Southwest Airlines was positioned at the 434th place in the segment
of Fortune 500 companies and was ranked first on Fortune’s Corporate Reputation Survey conducted
by Fortune Magazine (Southwest Airlines, 2012). Please review our Cookie Policy to learn about it
in detail and continue using the website only if you agree to receive cookies. Southwest, furthermore,
has “lower unit costs (adjusted for stage length), on average, than virtually all major domestic
airlines and consistently has one of the best overall Customer Service records” (Southwest, 2013).
Case study on medical errors and negligence, descriptive essay on market scene what is sport
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museums. Southwest airlines business model case study My characteristics essay. Who controls and
how the business is controlled is very important because of three reasons (Grant 7). We use cookies
to create the best experience for you. Southwest does not subscribe to the big reservation computers
used by travel agents. The most common instruments used by airlines in hedging are swaps, futures,
call options, average price options, and collars (Spinetta, L. In this context, Southwest Airlines
focused upon the aspect of innovation as well as creativity in order to enhance the competence of the
organization. For the cancellation as well as change in flights, the business organization performs its
operations by an Automated Outbound Notification System through which it can easily trail the
various records of the cancelled flights as well as alterations made in flight schedules. Although
O’Connor (256) states that the company has an independent strategic planning team that the CEO
and Chairman does not belong to, there are questions of the limits of the power wielded by the
strategic planning team. By continuing we’ll assume you’re on board with our. Although the airline
has used strategies to prevent unpleasant surprises like hedging the prices of fuel and insuring other
volatile areas of their operations (Blanco et al 2), there are risks that unforeseen activities can render
the postulations and statistics submitted by the finance department useless. Southwest works more
than 3,600 flights a day, serving 95 destinations over the Finance and Accounting Southwest
Airlines, Fiscal Year Finance and Accounting Southwest Airlines, Fiscal Year The US aviation
industry is one of the best served in the world with over 100 certified passenger airlines and over
eleven million flight departures every year. Kelly, G., (2008). Southwest cares. Southwest Report
2008. Conclusion Southwest Airlines is a low-cost and a low-fares airline that has stood above the
rest in the American market for four decades. Unlike its competitors, Southwest did not believe in
the hub-and-spoke system as it resulted in congestion and a lot of time wasted in the process of
waiting for customers to arrive from other airports. New entrant would certainly not be able to
compete head-on with Southwest because of this. Controllership at SouthWest Airlines
Controllership involves the provision of support services to managers and management to ensure that
the organization meets its strategic objectives (Bragg 9). Herdman, A. (2011). Future growth of the
airline industry. It has accomplished this through perfection and continuous appraisal of its core
competences mostly towards product strategy, forecasting, facility location and process strategies.
Moreover, the intensive competitive business market environment of the airline industry will also
drive innovation significantly in the long-term. This means that it is easier than ever to start up and
airline and try and compete with Southwest. Customers can easily see Southwest’s low-cost,
employee-driven strategies, but what they. Take this opportunity to get a plagiarism-free paper that
will perfectly meet your requirements. Y employees, workers at Southwest enjoy their jobs and see
them as a natural part of their. In order to determine the predicted airline status into the next decade,
it is required to possess a deeper understanding about the different stages that poses considerable
impact upon the development of the airline industry. Any time there is a major change in the business
environment, there will be the need for the company to change its strategy and methods. Southwest’s
strong link with its suppliers (Boeing) is an influential matter which has always remained pivotal in
providing an enhanced financial performance for the company. The economic recession, which has
over the years become unpredictable, and growing inflation problems are some macro economic
factors that affect the company.