RITICAL SUCCESS FACTORS ANALYSIS

Prepared By: Aravindhan Gopalan, Gaurav Patni, Nitu Roy, Nikhil Kasliwa
Om Prakash

Agenda
Introduction
CSFs and Goals
Sources of CSFs
CSF Methods
Southwest CSFs
Industry Matrix
CSF Analysis

Introduction
An organization has a mission describing
where it intends to go in the long term.
The goals and objectives of every staff
member are aimed towards the mission.
However this is not enough.
There are certain key areas, unique to the
organization and the industry in which it
competes, defined as the organizations
critical success factors(CSFs).
CSF Analysis

What Is a Critical Success

Factor?
A key area where satisfactory performance
is required for the organization to achieve
its goals
A means of identifying the tasks and
requirements needed for success
At the lowest level, CSFs become concrete
requirements
A means to prioritize requirements

Spring 2002

Understanding CSF Analysis

South West Airlines An

Overview
A major US Airline and the worlds largest
low cost carrier
Domestic airline that provides short haul,
high frequency, point-to-point, low fare
service
Today, SW operates over 400 Boeing 737
aircrafts in over 59 cities.
First airline to offer online booking

Relationship of Goals and CSFs

Sources of CSFs
The industry in which the
organization competes or exists
An understanding of the
organizations peers
The general business climate or
organizational environment
Problems, barriers, or challenges to
the organization
Layers of management

Industry CSFs

Competitive-Position CSFs

Environmental CSFs

Temporal CSFs

TOWS Matrix for SWA

Strengths

Weaknesses

1. High capacity usage.

2. Named the Best Low Cost Airline
leader for the last three consecutive
years.
3. Diversity in upper management.
4. Revenues increased by 8% to 5.94
billion in fiscal year 2011.
5. Net Income increased 83% to
$402million in fiscal year 2011.
6. Fourth largest domestic airline.
S-O Strategies
1. Expand into other countries or new
cities. (S2, S6,, O1, O5)

1.No international flights.

2.No segmented seating.
3.Dependent on a single producer.
(Boeing)
4.Lack of exposure towards online
booking agencies.
5.Four out five employees are
members of the union.
6.Carry a small amount of freight and
cargo.
W-O Strategies
1.
Expand into Canada.
2.
Expand into Mexico. (W1, W2, W3,
O1, O3, O4, O5)

Opportunities
1.National and International Markets
2.Growth Of business class population
3.Industrial Research and Development
4.New Technology Opens the Door for New
Products/ Services
5.Increased Internet advertising
Threats
S-T Strategies
W-T Strategies
1.Decline of leisure travel due to economy and 1. Increase advertising for southwest.com.
(S6, T2)
terrorism
2.Competing online ticket reservation systems.
3.New government regulations that make
operations costlier.
4.Gas and oil price fluctuations.
5.Terrorist attacks.
6.Annual airline security costs have increased.

Management-Position CSFs

Activities for CSF

To describe the CSF method, we have
identified five basic activities:
defining scope
collecting data
analyzing data
deriving CSFs
analyzing CSFs

Activity One: Defining CSF

Scope

Activity Two: Collecting Data

Activity Three: Analysis

Activity Statements
- Position IT as a partner to
business
and operational units.
- Position IT as an enabler of
new initiatives and
strategies.
- View IT as an investment,
not an expense.

Themes

Align
information
technology
with
strategic
planning.

Activity Four: Deriving CSFs

Activity Five: Analyzing CSFs

CSF for Aviation Industry

Optimum Capacity Utilization
Effective

Fuel

Cost

Labor

Cost

Control

(Fuel

Efficiency )
Effective

Control

(Labor

Efficiency)
Effective

Maintenance

Utilization)
Prompt Delivery to Market

Capability

(Jet

Calculation of CSF
Key Success Factors
Southwest Airlines
S
N
o
1 Optimum Capacity Utilization 74,456,710,000/88,001,550,000=
(RPM/ASM)
84.60%
2
3
4

Effective Fuel Cost Control

(Fuel Cost/ASM)
Effective Labor Cost Control
(Labor Cost/ RPM)
Effective Maintenance Capacity
(Total Direct Maintenance
Costs/RPM)
Customer Service and Satisfaction
(AQR Equation )

US Airways

68,459,000,000/85,092,000,000=
80.45%

3,027,360,000/88,001,550,000=
3.44% 2
2,637,294,000/74,456,710,000=
3.54%3

2,476,320,000/85,092,000,000=
2.91%1
1,740,423,000/68,459,000,000=
2.54%

869,818,000/74,456,710,000=
1.17%3

938,569,000/68,459,000,000=
1.37%3

(8.63 x .1406) + (-8.03 x .0129) + (8.63 x .1772) + (-8.03 x .0141) + ((-7.92 x .0343) + (-7.17 x .0021) / 7.92 x.0303) + (-7.17 x .0131) /
31.75= 2.59%3
31.75= 3.41%3

Prompt Delivery to Markets

(% of Flights on Time= # of 83.00%3
Flights on Time/Total Flights)

[1]
[2]
[3]

80.87% 3

(US Airways Group, Inc., 2009)

(Southwest Airlines Co., 2009)
(U.S. Department of Transportation)

Industry Matrix
S No.

Critical Success Factor

Weigh
t

SW Airlines

US Airlines

Ranking

Weighted
score

Ranking

Weighte
d score

1.

Optimum Capacity Utilization

(RPM/ASM)

.30

1.5

.90

2.

Effective Fuel Cost Control

(Fuel Cost/ASM)

.25

1.25

1.0

3.

Effective Labor Cost Control

(Labor Cost/ RPM)

.20

.80

.60

4.

Effective Maintenance Capacity

(Total Direct Maintenance
Costs/RPM)

.10

.40

.50

5.

Customer Service and Satisfaction

(AQR Equation see above)

.10

.50

.30

6.

Prompt Delivery to Markets

(% of Flights on Time= # of Flights
on Time/Total Flights)

.05

.15

.10

Total

1.0

4.6

3.4

Conclusion
After the key success factors have been
calculated and given distinctive
competency scores, the company that
most likely creates and sustains a
competitive advantage against the other is
Southwest Airlines. Southwest Airlines
was given higher competency scores for
five of the six key success factors.
Southwest Airlines is able to be more
efficient regarding capacity utilization, fuel
and labor costs as well as customer
service and satisfaction.

THANK YOU..