Group Members

Ehsan Zaib
Asad khaliq
Muhammad Tallal Sharif
Salman Shafique
Umair Imtiaz
Sarfaraz Durrani
Topic of Presentation
Case Study:
SOUTH WEST AIRLINES
Description
US based company
Founded on march 15, 1967
Positioned low cost
Headquarters in Dallas Texan
Largest in terms of passenger careers
3rd largest in terms of fleet
Operates 3510 flights daily
The freedom to fly
Mission statement
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. To give ordinary people the
opportunity to fly.
To the employees
 We are committed to provide our Employees a stable work
environment with equal opportunity for learning and personal growth.
Creativity and innovation are encouraged for improving the
effectiveness of Southwest Airlines. Above all, Employees will be
provided the same concern, respect, and caring attitude within the
organization that they are expected to share externally with every
Southwest Customer.
 Components
Mission Statement
Customer Product Markets Technology Growth Philosophy Self Public Employees
& Concept Image
serviceS

YES YES YES NO YES YES NO NO YES

New
mission statement
With our Advanced plains and up-to-
dated services, keeping track of our
competitors we can achieve
maximum market share
Vision Statement
To have a conservative increase growth, capitalize and cutback
schedules of other airlines. To continue expanding
conservatively in long-haul success.
Components
Vision Statement
What you Are? Where you want What is the plan
to be? to be there?

No No Yes
New
Vision Statement
As being in airlines industry, We would like to increase our market share
and maximize our profit by customer satisfaction and there feedback.
Awards
In 2004 Southwest Airlines is fourth largest domestic
carrier, customer boarded
In 2002 they traveled in 58 cities and 30 states, it has
been 13 years in a row that they are profitable, even after
September 11, 2001, net income fell 52.9 percent,
Southwest was the only airline company that had a profit all
the other companies were in the red
Was the first airline to achieve the Triple Crown, they had
five difference Triple Crown dedicated to the Employees of
Southwest Airlines for their excellent achievements.
Competitive Advantage
Destination to Destination
No connecting flights
 Goals and Objectives

Ensure highest quality Customer Service in the air or on the ground.

Ready to help customers under any circumstances.
Are there to ensure you make it from point A to point B safely
To stay the most successful with low-fare, high frequency point-to-point
carrier.
ASAD
KHALIQ
 EFE Matrix
KEY EXTERNAL FACTOR WEIGHTS Ratings Weighted score
0.0 TO 1.0 1 to 4
Opportunities
Key opportunity that the other 0.08 3 0.24
airlines have higher prices to the
destination that we are not
covering so it’s an opportunity of
market share that can be
captured
United Air lines bankruptcy 0.10 4 0.40
provided an opportunity to
capture the gap of that airline
customer.
Competitors are cutting back 0.10 3 0.30
there services. And we can
capture that market share
Every one require services at a 0.25 3 0.75
lower cost and easy point to
point destinations and we can use
these factors to capture market
share
Opportunity to Increase the span 0.10 3 0.30
 WEIGHTS
KEY EXTERNAL Ratings Weighted score
FACTOR 0.0 TO 1 to 4
1.0

Threats
Well established 0.08 2 0.16
Competitors
Security Problems 0.08 3 0.24
Government policies (Tax 0.05 2 0.10
rates)
Air line policies (No of 0.06 3 0.18
passengers per plane)

Total 1 3.07
IFE MATRIX

KEY internal FACTOR WEIGHTS Ratings

Weighted score
0.0 TO 1 to 4
1.0
Strengths
Point to point service 0.25 4 1.00
Quality service 0.15 4 0.60
Cost of service 0.10 4 0.40
Skilled workforce 0.11 2 0.22
IFE MATRIX
(Cont’d)
KEY internal FACTOR WEIGHTS Ratings
Weighted score
0.0 TO 1 to 4
1.0
Weakness
No of Airplanes (FLEET) 0.15 2 0.30
Span of Business 0.14 2 0.48
Cannot adopt strategies of 0.10 2 0.20
other airlines
1 3.20
 CPM

South west continental Emirates

Airlines
CSF’s Wt Rating Wt’d
Score
Rating Wt’d
Score
Rating Wt’d
Score

Market share 0.12 3 0.36 2 0.24 3 0.36

Prod. Quality 0.10 4 0.40 3 0.30 4 0.40
Cons. Loyalty 0.10 2 0.20 2 0.20 2 0.20
Global Exp. 0.20 4 0.80 3 0.60 2 0.40
 CPM
South west continental Emirates
Airlines
CSF’s (cont’d) Wt Rating Wt’d
Score
Rating Wt’d
Score
Rating Wt’d
Score

E-commerce 0.08 2 0.16 2 0.16 2 0.16

Customer Serv 0.10 2 0.20 3 0.30 3 0.30
Price 0.12 4 0.48 2 0.24 3 0.36
competitive
Mgt. experience 0.03 3 0.09 3 0.09 4 0.12

Point to point 0.15 4 0.60 2 0.30 1 0.15

service
Total 1 3.29 2.43 2.45
EHSAN
ZAIB
Financial Ratios
Liquidity Ratio
 Liquidity ratio

1. Current ratio = Current Assets/Current Liabilities

=2601/2887
=0.900
2. Quick (acid-test) ratio = Cash + Accts Rcvbl / Current Liabilities
=1390+241/2887
=0.564
Leverage ratios
 Leverage ratios
1. Debt-to-total assets ratio = Total Debt/Total Assets (Debt Ratio)
=7011/13460
=0.5208
2. Debt-to-equity ratio = Total Debt/Total Equity
=7011/6449
=1.087
3. Long-term debt-to-equity ratio = Long-term Debt/Total Equity
=1567/6449
=0.242
4. Times-interest-earned (coverage) ratio = Profits B.I.T./Total interest
=790/128
=6.171
Activity ratios
 Activity ratios

1. Fixed assets turnover = Sales/Fixed Assets

=9086/13859
=0.655
2. Total assets turnover = Sales/Total Assets
=9086/13460
=0.675
Profitability Ratios
 Profitability Ratios

1. Gross profit margin = Sales-C.o.G.S./Sales

=9086-8152/9086
=0.102
2. Operating profit margin = EBIT/Sales
=790/9086
=0.086
3. Net profit margin = Net income/Sales
=499/9086
=0.054
4. Return on total assets (ROA) = Net Income/Total Assets
=499/13460
=0.037
 Profitability Ratios

5. Return on stockholders’ equity (ROE) = Net Income/Total Equity

=499/6449
= 0.077
6. Earnings per share (EPS) = Net Income/# Shares Common Stock
Out
=499/807611634
= 6.178
MUHAMMAD
TALLAL
SHARIF
SWOT MATRIX

Opportunities:
1.Some air lines are leaving the
marker share.
2.Opportunity in other markets
3.Advance Facility from different
Financial institutions.
Threats:
1.Well established Competitors
2.Security Problems
3.Government policies (Tax rates)
4.Air line policies (No of
passengers per plane)
Strengths: Weaknesses:
1.Point to point service 1.No of Airplanes(FLEET)
2.Quality service 2.Span of Business
3.Cost of service 3.Cannot adopt strategies of other
4.Skilled workforce airlines
S1,O2,O3=A very attractive opportunity W2,O2= span of business is low but there
that can be achieved I-e to increase the is an opportunity in market that we can
span of Business by providing services in avail and increase our market share.
foreign destinations. W3, W1,O3= Different financial
O1, S2, s3= Air lines that are leaving the institutions are there to provide finance to
market are providing an opportunity for us the company to acquire new planes and
to capture there marker share by thus can increase the fleet size.
attracting there customers towards out
Quality and cost of service
S1,T1= point to point service is a W1,T3= As the number of planes are
competitive advantage for South West air less they can be monitored more easily
lines. Though out competitors are well so strict check and balance should be
established but its hard for them to adopt kept in order to eliminate the security
this strategy. threat which is more then a night mare for
S4,T2= Skilled workforce work whole airline industry.
heartedly for the organizational success
so its also a remedy for Security
problems.
IE Matrix
 IFE
4.0 Strong 3.00 Average 2.00 Weak 1 WAS
3.0 - 4.0 2.0 - 2.99 1.00 - 1.99
1 2 3

EFE 3.07

IFE 3.20

4 5 6

7 8 9
1

EFE
WAS
Possible strategies:
1.Market penetration
2.Market Development
3.Product Development

Backward and forward integrations are also

feasible in but there is not any option of
Horizontal integration.

But as per my opinion South West

airlines should Hold And Maintain due to
global recession and other unforeseen
situations. That might not put the
company in any kind of trouble that the
company is not ready to overcome.
SPACE MATRIX
SPACE Factors
 SPACE Factors
Internal Strategic Position External Strategic Position

Financial Strength (FS) Environmental Stability (ES)

Technological changes (-5)

Return on investment (3)
Rate of inflation (-3)
Leverage (4)
Demand variability (-2)
Liquidity (4)
Price range of competing products (-
Working capital (3)
1)
Cash flow (4)
Barriers to entry (-5)
Competitive pressure (-4)
Price elasticity of demand (-1)
Risk involved in business (-3)
(FS) Total=18/5=3.6
(ES) Total=-24/8=-3
CA -2.6 FS 3.6
IS 3.6 ES -3
Y-Coordinate 1 X-Coordinate 0.6
 SPACE Matrix
FS
Conservative Aggressive
+6
+5
+4
+3
+2
+1

CA IS
-6 -5 -4 -3 -2 -1 -1 +1 +2 +3 +4 +5 +6

-2
-3

-4
-5
Defensive Competitive
-6
ES
 BCG Matrix
Relative Market Share Position
High Medium Low
1.0 .50 0.0

High South
+20 WestAirlines
Current position

Stars Question Marks

II I
Medium
0

Cash Cows Dogs

III IV
a S yrt s udnI

Low
-20
 BCG Matrix Interpretation

1. Represents the organization best long term

opportunities for growth and profitability.
2. Horizontal integration, market penetration, market
development, product development, and joint
ventures are appropriate for south west airlines.
3. Joint ventures is the best possible strategy for
southwest airlines with emirates, British airways, or
US air ways.
4. Horizontal Integration is also an alternative but
despite of SOUTHWEST air lines current financial
position it is not at all recommended by our group.
 KEY FACTORS WEIGHT Market expansion Joint venture
Opportunities AS TAS AS TAS
Key opportunity that the 0.10 4 0.40 1 0.10
other airlines have higher
prices to the destination that
we are not covering so it’s an
opportunity of market share
that can be captured
United Air lines bankruptcy 0.07 4 0.28 1 0.07
provided an opportunity to
capture the gap of that airline
customer.
Competitors are cutting back 0.10 3 0.30 2 0.20
there services. And we can
capture that market share
Every one require services at 0.20 4 0.80 3 0.60
a lower cost and easy point
to point destinations and we
can use these factors to
capture market share

Opportunity to Increase the 0.10 3 0.30 2 0.20

 Threats
terrorism has decreased 0.08 1 0.08 4 0.32
consumer air travel

Rising repair and maintenance 0.06 2 0.12 3 0.18

cost.

Government policies (Tax 0.10 2 0.14 3 0.30

Rates)
&
Air lines policies(NTSB)
Possibility of competitors to 0.09 3 0.18 4 0.36
adopt out strategies

Well Established Competitors 0.10 4 0.28 3 0.30

Total 1.0
 Strengths
Very few customer complaints 0.09 4 0.36 3 0.27
first among airlines for 0.10 4 0.40 3 0.30
customer service satisfaction
One of the largest domestic 0.04 4 0.16 2 0.08
carrier in terms of customers
boarded
“Triple crown holder” 0.07 4 0.21 3 0.21
Lowest Fares 0.06 4 0.24 3 0.18
Southwest has new automated 0.03 3 0.09 2 0.06
systems and technologies that
have streamlined the check-in
process

Efficient employees 0.02 3 0.06 2 0.04

Employees loyalty 0.01 3 0.03 2 0.02
Time Punctuality 0.05 4 0.20 1 0.05
Offers non-stop flights 0.10 3 0.30 1 0.10
 Weaknesses
Limited Span of Business 0.10 4 0.28 2 0.20
(only domestic)
Span of Business 0.20 3 0.30 2 0.40

Cannot adopt strategies of other 0.13 2 0.16 1 0.13

airlines

TOTAL 1 5.67 4.67

 RAPID MARKET GROWTH
Quadrant II Quadrant I
1. Market development 1. Market development
2. Market penetration 2. Market penetration
3. Product development 3. Product development
4. Horizontal integration 4. Forward integration
5. Divestiture 5. Backward integration
6. Liquidation 6. Horizontal integration
WEAK 7. Concentric diversification STRONG
COMPETITIVE COMPETITIVE
POSITION Quadrant III Quadrant IV POSITION
1. Retrenchment 1. Concentric diversification
2. Concentric diversification 2. Horizontal diversification
3. Horizontal diversification 3. Conglomerate
4. Conglomerate diversification
diversification 4. Joint ventures
5. Liquidation
SLOW MARKET GROWTH
Sarfaraz
 Annual Objectives

•To start flights to places where we have not been to most

probable Emirates and Asian countries.

•Keep our employees trained and up-to-date.

•Budget for R&D and also for marketing and sales team for
promotion of our organization.

• Bringing employees near and provide them to talk on the

situation of airline and any new ideas will be encouraged.
Policies
Strict check and balance on every region especially the
places where we are facing any problems

By following international standard of Hiring and firing

and training.

Offering discounts on special eves.

Needed Resources
New Air Crafts
Debts from financial institutions.
 Possible Str ate gies
The best strategy for South west airlines will be to expand there SPAN OF
BUSINESS to other countries and increase the destinations and the places
they are providing the services in.
The current competitive advantage that southwest air lines got is non stop
flights means point to point services, so it should be maintained even if the
business is expanded to other places around the globe.
People acquire the services of other tourism companies. Southwest should
provide these information about different tourist spots to encourage tourism
and thus indirectly the customers for southwest airlines.
Increase direct flights
• Purchase bigger planes
• Get Cheap agreements with Airports for flights
 Implementation
To cover more destination around the globe we
would need more plains and also its an opportunity
we can get advance (loan facility) from financial
institutions and can afford new planes to increase
the fleet.
Provide the ticketing and reservation staff training
and UPDATED information about the tourism
updates from the most visited places around the
globe.
 Evaluations
As we are taking debt so special care should be taken.
Because it would increase bankruptcy risk so as much
possible the cost should be kept in control.
MONTHLY reports and keeping in mind any
environmental changes. And bring the necessary change
in our business strategy too.
Feed-back from every one in the organization i-e from
every line of managers the information should be
collected about the response of there respective clients.
Suggestions of every one among the organization and
also the customers should be considered as keeping in
mind the concept that customer is always right.
 Benefits for Emplyees

Recreational trips for the outstanding performers.

Promotions
Salary Increments
Healthy rewards for those who would produce good ideas
 Departments Names

Following are the main departments in any organization

1.Finance and accounts
2.Marketing and Sales
3.Human resource and administration
4.Technical / Operations
5.Research and Development
 Finance and Accounts
•Preparation of budget, appropriation of accounts, re-
appropriations,surrender andsavings.Control of expenditure and ways &
means position.
Audit.
•Treasury administration: Administration of Taxes i.e. Sales Tax,
Entertainment Tax, Luxury Tax and Entry Tax etc.
•Resource mobilization through loans, Institutional Finance, Small
Savings, Credit and Investment and public debt.
Financial concurrence and advice.
•Compilation of Codes, Rules and procedures concerning financial
transactions and having bearing on State finance and their
implementation.
•Safety and investment of funds from consolidated funds, contingency
fund and public account.
Contract, recovery and refund of revenue.
 Marketing and Sales
Marketing and sales differ greatly, but have the same goal.
Marketing improves the selling environment and plays a very
important role in sales. If the marketing department generates
a list of potential customers, that can benefit sales. A marketing
department in an organization has the goal increasing the
number of interactions between potential customers and the
organization. Achieving this goal may involve the sales team
using promotional techniques such as advertising, sales
promotion, publicity, and public relations, creating new sales
channels, or creating new products (new product
development), among other things. It can also include bringing
the potential customer to visit the organization's website(s) for
more information, or to contact the organization for more
information.
 Human resource and
administration
Our host organization SOUTHWEST AIR LINES Human
Resources strategically partners with all departments,
delivering programs and services to attract, motivate and retain
a talented, diverse and dedicated workforce.
Areas within Human Resources include Staffing and Recruiting,
Training and Development, Compensation, Benefits, Employee
and Labor Relations, Strategic Workforce Planning and Health
Services.

Staffing and Recruiting is responsible for attracting, screening,

interviewing and assigning candidates to their best-suited field.
This department is also charged with organizing and attending
career fairs.
 Human resource and
administration (Cont’d)
The Compensation department conducts salary surveys, analyzes and
prepares job descriptions, establishes equitable salary rates within the
organization, and provides guidance to managers on company salary
policies and practices.
The Benefits function manages the day-to-day activities involved in the
administration of major benefit programs for employees.
The Labor Relations department administers the Collective Bargaining
Agreement with the union and advises on matters pertaining to contract
negotiations, employee grievance cases, arbitrations, and federal and
state labor legislation.
Employee Relations is responsible for investigating and providing counsel
to salaried exempt and nonexempt employees and management on work-
related issues
 Life at Southwest
Life at Southwest
Happy Employees = Happy Customers. Happy
Customers keep Southwest flying. Our one of a kind
Culture includes FUN events like Halloween, deck, and
spirit parties that keep our Employees motivated and
make it worthwhile to work hard for the Company they
love!
Ref: (Copy, paste from southwest airlines)
 Technical / Operations
The aim of the operation department is the overall
management and general administration of the core
operations of the company. This department keeps a
check on the personnel, legal matters and regular
operations of the company. For example, the
operations department of an air traveling company
would be the management of carrier and monitoring the
status of carrier. Therefore, operations department play
a very important role in controlling the core activities of
the business.
 Research and
Development
The phrase research and development (also R and D
or, more often, R&D), according to the Organization for
Economic Co-operation and Development, refers to
"creative work undertaken on a systematic basis in
order to increase the stock of knowledge, including
knowledge of man, culture and society, and the use of
this stock of knowledge to devise new applications“
R&D investment generally reflects a government's or
organization's willingness to forgo current operations or
profit to improve future performance or returns, and its
abilities to conduct research and development.|
Freedom To Fly
www.southwest.com