Southwest Airlines Case Study
- 1. John Bruno Alex Buxo Tiffany Francois Consulting Firm B Eli Nichtberger October 21, 2014
- 2. ● “Southwest Airlines’ competitive labor costs, low fares and unique corporate culture comprised its best arsenal against competitors” ● Growth and fierce competition has caused Southwest to lose touch with its core values
- 3. ➢ Southwest is losing its competitive advantage and market share ➢ Airlines like JetBlue offering more amenities at similar fares ➢ Now employing “Profit Boosting Strategy” instead of “Customer Friendly Strategy” ➢ Shift towards less employee centered culture with the growth of the company ➢ What can we do to fix this?
- 4. ➢ To build a HR department that focuses on restoring and strengthening employee moral ✧ Focus on rebuilding, through starting multiple committees based on employee moral ✧ Start social groups in the organization based on people whose job functions are similar ✧ Show employees that we care by offering rewards that recognizes outstanding work
- 5. ➢ Rebuilding and implementing a new IT system ✧ Improve The Southwest Airlines Website ✧ Online Costumer Engagement Strategy ✧ Southwest Airlines App ✧ Better Infrastructure for Employees
- 6. ➢ To change the firms strategy from a low cost airline to middle cost airline to regain its competitive advantage. ➢ SWA is only the cheaper option 40% of the time
- 7. Pros ● Motivates employees to work harder ● Focuses on Corporate original Mission Statement of keeping employee happy ● Happy employees are productive, efficient, and helpful employees ● High morale will drive your staff to do their best Cons ● Doesn’t focus on changing times in Technology ● Having happy employees has many benefits—but also costs that can sometimes outweigh the benefits ● Doesn’t help Southwest deal with competitors
- 8. Pros ● Introducing a new technology decrease costs (Cost effectiveness) ● Flexibility in adapting to a business environment in constant flux, so their IT functions have to respond quickly to changing demands ● The customer can use SWA’s app anytime 24x7 Cons ● Relying more on information technology than ● If employees see new system they would want to be compensated as well ● Provide training to employees on how to use new IT system
- 9. Pros ● Help Southwest increase the profit margins ● Put Southwest in better place to compete for Market shares ● Helps Southwest expand even more and can complete more mergers. Cons ● It could lead to customer relations problems. ●SWA customers tend to associate the brand’s image with low price, and they may be unable to accept it if the price goes high ● Employees would feel more alienated
- 10. ● Opportunities o Investment in New Tech o Acquisition of AirTrain o Write Amendment Repeal ● Strengths o Well-known Brand Name o Low Fare Airline o Friendly Staff ● Weaknesses o Change of Leadership & Culture o Unreliable Service ● Threats o Competitors o Economy
- 11. ➢ Solves Multiple Problems ✧ Attractive technology will help gain new customers ✧ Provides great customer service through online help or chat rooms ➢ Solves Problems that Can Occur in Future ✧ It will be easier to adjust to newer technology ✧ Decreasing the workload of employees, equaling happier employees
- 12. ➢Features: ✧ New, Easy to Use, Redesigned Website ✧ Robust Mobile Application ✧ New Confortable Leather Seats ✧ Updated In-Flight Entertainment Options
- 13. ➢ Changing an IT system is costly ✧ Disperse the cost directly to Customer ✧ Increase average ticket price by mere 7% ✧ Slight Increase is Well Worth Customer’s New Experience Southwest Airlines Other Airlines Avg Ticket Price $163 $366 After increase $174.41 Same
- 14. ➢ Begin offering rewards for customers ✧ Loyalty Program ✧ 'App-Exclusive’ Promotions ✧ Helps Customers Find Deals Better ✧ 60% of US Owns a Smartphone ✧ Gives Customers incentive to fly Southwest
- 15. ➢ Focus on Creating Commission Incentives with Travel Agents ➢ Unique Influence with Clients ➢ Currently No Domestic Commissions ➢ Only International ➢ Agents Will Book More Clients on Southwest ➢ Increase Revenue & Market Share
- 16. THANK YOU!