Southwest Airlines Case Study
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Transcript of Southwest Airlines Case Study
John BrunoAlex Buxo
Tiffany Francois Consulting Firm B Eli
NichtbergerOctober 21, 2014
● “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
Central Issue
➢ 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?
What Happened ?
➢ 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
First Alternative:Boosting Employee Morale
➢ Rebuilding and implementing a new IT system
✧ Improve The Southwest Airlines Website
✧ Online Costumer Engagement Strategy
✧ Southwest Airlines App
✧ Better Infrastructure for Employees
Second Alternative:Implement New IT System
➢ 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
Third Alternative:Price Strategy
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
Pros/ConsBoosting Employee Morale
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
Pros/ConsImplement New IT System
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
Pros/ConsPrice Strategy
● 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
SWOT Analysis
➢ 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
BEST AlternativeImplement New IT System
➢ Features:
✧ New, Easy to Use, Redesigned Website
✧ Robust Mobile Application
✧ New Confortable Leather Seats
✧ Updated In-Flight Entertainment Options
BEST AlternativeDesign New IT System
➢ 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
OtherAirlines
Avg Ticket Price
$163 $366
After increase $174.41 Same
Implementation PlanThe Cost Involved
➢ 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
Implementation Plan
Website, App & Rewards Program
➢ 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
Implementation Plan
Loyalty Program for Travel Agents
THANK YOU!