SOUTHWEST AIRLINES

Can Luv Rule the World?

Presented by Group 1:
S K Prasad
(Roll No.:32)
Himadri Sarkar (Roll No.:17)
G Rajendra
(Roll No.:16)
Amit Dubey
(Roll No.:04)

About The Southwest

Incorporated in Texas and commenced Customer Service on June
18, 1971 with 3 Boeing 737 aircrafts serving 3 cities Dallas,
Houston, and San Antonio
The company's stock ticker symbol is LUV (NYSE)

Major domestic airline that provides short haul, high frequency,

point-to-point, low fare service

Today, SW operates over 683 Boeing 737 aircrafts in over 93 cities

Lowest operating cost structure in the domestic airline industry

and consistently offers the lowest and simplest fares

41 years of consecutive profitability
all graphics and information found on Southwest Airlines website at www.iflyswa.com or www.southwest.com

Vision & Mission

Vision
We operate with a Warrior Spirit, a Servants Heart, and a
Fun-LUVing Attitude

Mission
The mission of Southwest Airlines is dedication to the highest
quality of Customer Service delivered with a sense of warmth,
friendliness, individual pride, and Company Spirit

all graphics and information found on Southwest Airlines website at www.iflyswa.com or www.southwest.com

Core Values

all graphics and information found on Southwest Airlines website at www.iflyswa.com or www.southwest.com

Landmarks
Landmarks
1971 June 1st Flight

1986 Multimillion dollar training center for flight crew

1994 1st ticketless travel
1996 own 243 aircrafts
1998 fuel hedging strategy
2004 online boarding pass

2006 No. 1 in customer satisfaction

2008 purchase airTrans Airlines (* SWAs Main Competitor)
Market Share: 4th Largest US Airlines with 15% MS ( 1994-4.4%)

Initial city coverage was 3 , now in over 93 cities

2014 June Southwest operated 683 aircrafts
all graphics and information found on Southwest Airlines website at www.iflyswa.com or www.southwest.com

Southwest-Innovation
Much of Southwest's success is due to the willingness of its
leadership to be innovative. Primary operating philosophy is low
fares and lots of flights
1st airline to offer a profit-sharing
plan to employees beginning in 1979,
employees now own about 10% of
company stock
1st major airline to offer ticketless
travel system-wide
1st major airline to enter information
superhighway by creating its own
web page
1st airline to offer online booking
No baggage charges for 2nd luggage

No assigned seat cost

Punctuality Every time on time
Implemented LUV & Fun
Southwest mixes in New Age
management techniques, such
as celebrating different
milestones, and letting love
play a part in running the
airline

all graphics and information found on Southwest Airlines website at www.iflyswa.com or www.southwest.com

Practices for Building High Performance Relationships

1.

Leading with credibility and caring

2.

Investing in frontline leadership

3.

Hiring and training for relational competence

4.

Using conflicts to build relationships

5.

Bridging the work/family divide

6.

Creating boundary spanners

7.

Measuring performance broadly,

8.

Keeping jobs flexible at the boundaries

9.

Establishing partnerships with the unions

10. Building relationships with suppliers

Core Competencies & Competitive Capabilities

Core Competencies & Competitive Capabilities

Key Success Factors

Differentiation Strategy
Others

LUV

General
Focused on long route travel

Mainly short route journey

Focused on luxury

Fun-LUVing Attitude

Disciplinary & sophisticated

travel

Pets are welcome on Southwest

(P.A.W.S)

Cost
Multiple types of aircraft used

Single type i.e. Boeing 737

Followed Hub & spoke model

Point to point model

More cabin crew (Min 6)

Maximum 3 Cabin crew

Differentiation Strategy

Others
strategy

Low-cost meal
Less turnaround time
Employee first, Customer second
policy
Bags fly free policy
Ticketless travel
Early bird check-in

Cost
Strategy

Use Secondary airports (less

congested)
Operates in mid-sized cities
Low cost pricing strategy
No complementary meals
High utilization rate of fleet

Analysis
Q1- What Challenges Southwest airlines was facing due to the changes in the
business environment?

No international flights
No segmented seating
Dependent on a single producer
Lack of exposure towards online booking agencies
Four out of five employees are members of the union
Carry a small amount of freight and cargo
Do not use chat communication such as e-mail

Do not offer morning flights

Do not operate in bad weather conditioned city

Analysis
Q1- What Challenges Southwest airlines was facing due to the changes in the
business environment?

Gas and oil price fluctuations

Unable to cater all type of customers as they operate only in
secondary airports
Competition with new entrants in same short haul segments
Existing & new airlines emulating southwest strategy
Decline of leisure travel due to economy and terrorism
Competing online ticket reservation systems

Analysis
Q1- What Challenges Southwest airlines was facing due to the changes in the
business environment?

New government regulations that make operations costlier

Demand for air travel has dropped sharply since September 11th

Terrorist attacks
Increased restrictions to limit noise (including restrictions on types

of aircraft used and limits on number of operations)

Annual airline security costs have increased

Analysis
Q2- What strategy would you like to recommend to southwest to achieve
sustainable growth?

Recommendations:
A) Organization Design: The Organic Model

Organization Design Models

The Mechanistic Model

Emphasizes importance
of achieving high levels
of production and
efficiency through:
Extensive use of rules
and procedures
Centralized authority
High specialization of
labor

The Organic Model

Emphasizes importance of
achieving high levels of
production and efficiency
through:
Limited use of rules and
procedures
Decentralized authority
Relatively low degrees of
specialization

Comparison of Mechanistic and Organic

Structures (1 of 3)
Process

Mechanistic Structure

Organic Structure

1. Leadership

Includes no perceived
confidence and trust
between superiors and
subordinates.

Includes perceived
confidence and trust between
superiors and subordinates.

2. Motivation

Taps only physical, security, Taps a full range of motives

and economic motives,
through participatory
through use of fear and
methods.
sanctions.

3. Communication

Information flows downward

and tends to be distorted,
inaccurate, and viewed with
suspicion by subordinates.

Information flows freely:

upward, downward, and
laterally. The information is
accurate and undistorted.

Comparison of Mechanistic and Organic Structures

(2 of 3)
Process

Mechanistic Structure

Organic Structure

4. Interaction

Closed and restricted.

Subordinates have little
effect on departmental
goals, methods, and
activities.

Open and extensive. Both

superiors and subordinates
are able to affect
departmental goals, methods,
and activities.

5. Decision

Relatively centralized.
Occurs only at the top of
the organization.

Relatively decentralized.
Occurs at all levels through
group processes.

6. Goal setting

Located at the top of the

Encourages group
organization, discouraging participation in setting high,
group participation.
realistic objectives.

Comparison of Mechanistic and Organic Structures

(3 of 3)
Process

Mechanistic Structure

Organic Structure

7. Control

Centralized. Emphasizes
fixing blame for mistakes.

Dispersed throughout the

organization. Emphasizes
self-control and problem
solving.

8. Performance
goals

Low and passively sought

by managers, who make
no commitment to
developing the
organizations human
resources.

High and actively sought by

superiors, who recognize
the need for full commitment
to developing, through
training, the organizations
human resources.

Analysis
Q2- What strategy would you like to recommend to southwest to achieve
sustainable growth?

Recommendations:
B) Interorganizational Framework: Collaborative Network

Analysis

Dissimilar

Similar

Competitive

Resource
Dependence

Population
Ecology

Cooperative

Organisational Relationship

Organisation Type

Collaborative
Network

Institutionalism

Analysis
Resource Dependence
Organizations try to minimize their dependence on other organizations
for supply of important resources.
Focus on independence & autonomy
Assert control over external resources eg- Purchasing ownership in
suppliers, Develop long-term contracts & joint ventures lock in necessary
resources

Population Ecology

Organization engaged in similar activities

Compete for similar resources & customers
Fill niches left open by established organizations
Rich variety of new organizational forms benefits society

Analysis
Collaborative Network

Dependent on other organization to increase value & productivity for all

Exchange of designs, production facility, cost sharing, customers
More innovations
Recognized each others strength

Institutionalism
Organizations legitimate themselves in larger environment & design
structure by borrowing ides
Success & survival through congruence b/w organizations and
environment
Environment is composed of norms & value from stakeholders