Juanita van Zyl 21663327 Southwest Airlines: Case study

Question 1 There are a number of things impressive about Southwest Airlines: Their culture They have a culture at Southwest that keeps everyone motivated, friendly and productive. They have a fun and loving vibe in the workplace. They also focus on low-cost and their culture support that goal. Their management style Employees are encouraged to make decisions according to the situation they think is best. For example an employee came up with the idea to switch to e-tickets and also not to print the logo on the garbage bags to save $250 000 per year. Their advertising They came up with innovative and catchy ads that were remembered and effective. For example their love campaign. No-Layoff policy Southwest never laid off any employees even through the tough times. It could have saved them much money at the time but they built a loyalty with their employees that none of its competitors had. Low cost strategy Southwest saved money where they can. They only used Boeing 737s so that the training is simplified and the spare parts size is minimized. The low operations cost helped them to give lower fare rates to customers. They negotiated deals to keep fuel cost low and kept employees on and happy to reduce training costs The management team The CEO knew its employers, worked with them and never abused their power. They implemented a strategy to put their employees first and their customers second. They said that if their employees are happy they will keep their customers happy. The management team knew what they wanted to achieve and they inspired the whole company to help them to achieve their goals. Profitability Southwest was the only airline that made profit after the 9-11 incident and actually expanded during that time where all the others reduced their flights.

The recruitment process They had a very different and good recruitment process where they were more interested in the personality of the applicants than skills. They looked for employees that will fit with their culture at Southwest and learn them the necessary skills. A test for unselfishness was one of the tests the applicants needed to pass to get a job at Southwest Airlines.

Question 2 I would give Southwest management 10/10 for their job it has done in crafting the companys strategy. I like the strategy because it is wide-ranging and includes many strategy elements like marketing and promotions, customer service, operations, and customer satisfaction. They are following a Low-fare strategy. Southwest soon became famous for its low fares. In order to be able to provide customers with such low fares the needed to keep their costs as low as possible for example they didnt serve any food on the flights and didnt have any first-class. Southwest didnt use the hub-and-spoke system but the point-to-point scheduling of flights which is much more cost effective. They always landed on the airports nearest to major cities that gave them an advantage because it saved the customers a lot of time. Another strategy they implemented is the e-tickets. They encouraged the customers to buy e-tickets to reduce cost. Other strategies implemented by Southwest are that they had excellent customer service, they expanded step-for-step to new cities and their flying times was convenient and punctual. I would say that they definitely have a winning strategy because all the things they implemented were a success and leaded to a bigger profit. They follow a low fare strategy but also have other strategies to help achieve their low fare goal.

Question 3 Southwest used their key values as a focus to implement their low cost strategy. The airline focuses on its people and culture along with a focus on core values. They also knew that is was crucial for them as a low cost company to keep their operating costs as low as possible. Some of the strategies they implemented to keep their operating costs low: They only use Boeing 737s to minimize the size of parts they need, to simplify training, and to speed up maintenance routines. Their point-to-point scheduling of flights which is much more cost effective than the hub-and-spoke systems of their competitors. They implemented ticketless travel that reduced costs to print and book tickets. The customers can do it online (Southwest website). Flight attendants were also responsible for cleaning up the trash and making the plane presentable for the passengers boarding for the next flight. The planes didnt have a first class section and also didnt have fancy clubs for their frequent flyers to relax in at terminals They made use of secondary airports in medium cities. This helped with lower fuel costs of planes waiting in line at crowded airports and also helped with better-thanaverage on-time performance. Southwest didnt offer any baggage transfer to other carriers. They converted all their planes for cloth to leather seats which will be more durable and easier to maintain. They invested in technology and software to replace its ticketless system and its back-office accounting, payroll and human resource information systems as to enhance data flow, operational efficiency and customer service capability. Southwest was one of the first US airlines in employing fuel hedging and derivative contracts to counteract the rising price of crude oil and jet fuel.

Question 4 They key elements of Southwests strategy are that its focus is on its employees as major assets and make sure that they know it. Their operative principle is that employees come first and customers come second. Focusing on the employees well-being tells us indirectly that the manager wants so deliver excellent service and for that to be done they need passionate employees, that knows the company is genuinely concerned for their well-being and offers them job security. This can be done through the efficient recruitment, training, development, promotion and compensation of the employees. Their low cost fare advantage is also a major element of the culture of the company since they manage to continue that strategy. Because every employee has the same goal, to keep the costs low, and do whatever it takes to create, enhance and enrich the Southwest culture and spirit its such a wonderful company. It feels like big family.

Elements of Southwests culture: Implementation of LUV This creates a caring, supportive and loving environment not only for the employees but also for the customers and the community. Fun atmosphere The work circumstances at Southwest is favourable and its a fun atmosphere. They entertain, make jokes, do pranks ect. The employees are really enjoying their work. Employee empowerment Employees are encouraged to make their own decisions and this makes them feel like their opinions count and that they are listened to. Helps to keep employees motivated. Low cost orientated All the employees are focused to keep the costs as low as possible where they can. Can do attitudes of employees Employees are motivated and adopted the attitude that they can do what they are suppose to do. This makes them more productive and efficient. I would say that that Southwest is a strong culture company. They implement their culture and values in their everyday tasks. They use it to develop the skills of their employees and to reach their goals. Their core culture is to focus on employees and putting them first, then they will put the customers first and keep them happy. This will develop to customer loyalty and then more profit. Because their culture is so well implemented, Southwest is indeed a strong culture company.

Although Kelly and Kelleher think very similar there are still some areas that could cause problems. The first thing that I picked up is that Kelly doesnt have that same colourful and flamboyant personality as Kelleher. This means that the employees (if not managed very well and strategic) can easily become more negative and less productive. Another problem can be that their management styles are different. The employees will have to learn and adapt to the new management style. There can also be problems by becoming too spiritual and that the family feeling created can cause employees to be too at home and not as productive as they could be. All the employees knew and loved Kelleher and can maybe change their attitudes since he is not around anymore. All the problems that they can possibly experience are small and can be managed.

Question 5 I would give the management team a well deserved 10/10 for implementing and executing the companys strategy. The low cost strategy is the most crucial in accounting for the success of the company, I would say. The management knew in order to have low fares, they need to keep their costs low. Some of the strategies implemented over the years to keep operating costs below those of competitors: They only use Boeing 737s to minimize the size of parts they need, to simplify training, and to speed up maintenance routines. Their point-to-point scheduling of flights which is much more cost effective than the hub-and-spoke systems of their competitors. They implemented ticketless travel that reduced costs to print and book tickets. The customers can do it online (Southwest website). Flight attendants were also responsible for cleaning up the trash and making the plane presentable for the passengers boarding for the next flight. The planes didnt have a first class section and also didnt have fancy clubs for their frequent flyers to relax in at terminals They made use of secondary airports in medium cities. This helped with lower fuel costs of planes waiting in line at crowded airports and also helped with better-thanaverage on-time performance. Southwest didnt offer any baggage transfer to other carriers.

They converted all their planes for cloth to leather seats which will be more durable and easier to maintain. They invested in technology and software to replace its ticketless system and its back-office accounting, payroll and human resource information systems as to enhance data flow, operational efficiency and customer service capability.

Southwest was one of the first US airlines in employing fuel hedging and derivative contracts to counteract the rising price of crude oil and jet fuel.

I think that their strategies are very successful and that its not necessary to redesign the wheel. One aspect that I do not fully agree with is to still only use Boeing 737s. I agree that they did that in the beginning where they didnt really have the money. But now that they are successful they should maybe start to look at other more cost effective planes.

Question 6 Southwest only depend on Boeings, if the Boeing 737s are discontinued or if Boeing experiences any kind of problems so will Southwest. The salaries of Southwest are lower than other airlines and this can be a problem because employees can feel underappreciated or they can go and work for another airline. The fact that Southwest doesnt have a first class doesnt sever meals or offer baggage carriers to other airlines. These are all strategies implemented to keep the cost low, but they should start to look at the advantages these services can offer them. Financially and in terms of better customer satisfaction. At the moment they lose all the customers that wants to fly first class Southwest only flies within the US. Its a weakness because some brand loyal passengers would like to fly worldwide with Southwest, but they only have a limited number of routes within the US. Because its a low cost airline, their revenue depends on the number of passengers. This is a risky position to be in because if something like 9-11 happens they lose millions of dollars daily.

Question 7 Expand routes outside the US. First only to nearby countries and slowly around the whole world. This will increase their market share and will also lead to more profit over the long term. Selling delicious food on the plane. This maybe in contrast with their low cost strategy but this will surly differentiate them and will improve the total customer experience and make even more profit. They must get some kind of loyalty program of offer specials for their frequent customers, to make them feel appreciated and special. This will make them even more brand loyal. They should continue to keep their prices as low as possible so that people keep flying Southwest. They can also spend a little more on getting the newest technology so they are not as far behind in terms of new technology. They must keep their employees happy and focused on lowering costs, they should also make sure that their culture stays well implemented. Focus on their strengths in marketing campaigns and maybe start to move more into the direction of online marketing and social media marketing. Give their employees a small raise only to make them feel worthy and needed.