Description
My project on MCS
Southwest Southwest Airlines Airlines
1
Group Members
? ? ? ? ? ? ? Sonam Varadkar Nirmit Thakkar Yogesh Kamat Malay Patel Siddharth Prabhu Aditya Pimple Pratik Thakker 116 104 70 76 74 106
2
Southwest Southwest Airlines
? Southwest Airlines (SWA) is a successful US national carrier since 1968 flying between 58 cities in 30 states SWA is recognized for: i. on-time performance ii. best baggage-handling iii. and fewest customer complaints Southwest is the nations low-fare, high customer satisfaction airline Fortune magazine and the Wall Street Journal put SWA in the position of being one of the most admired companies ?
? ?
Goal Congruence
? The central purpose of a management control system , is to ensure a high level of goal congruence ? It ensures that individual actions are taken to achieve personal goals also help achieve organizational goals
Southwest Airlines unique Organization Culture
? Culture is the glue that holds our organization together. Culture is not about magic formulas and secret plans; it is a combination of a thousand things. - Herbert D. Kelleher, Co-Founder and Chairman, Southwest Airlines ? A laidback approach to formal management programs ? And preferring to operate a company where employees work hard and have fun.
Building Relationships
? Southwest attempted to promote a close-knit, supportive and enduring family-like culture Employees were expected to care about people Instead of decorating the wall of its headquarters with paintings, the company hung photographs of its employees taking part at company events, news clippings, letters, articles and advertisements SWA willingly delayed the purchase of new planes & office renovations in favour of protecting the jobs of their employees ? ?
?
Vision
Open up the skies for ordinary people
7
Timeline«
o o o June 18, 1971 ? Began airline service ? Flights to Houston, Dallas, and San Antonio 1977 ? SW stock listed on NYSE as "LUV" 1982 ? Appointed Herbert D. Kelleher
? President, CEO, & Chairman of the Board
o
o
o o
1984 ? #1 in customer satisfaction (4th year in a row) 1990 ? announce billion dollar revenue mark ? Officially declared a "Major" airline! May 2003 ? Top ranked domestic passenger airliner 2006 ? Southwest¶s 34th consecutive year of profitability
8
Leadership / Structure:
Herbert D. Kelleher Gary Kelly Colleen Barrett
Executive Chairman of the Board Vice Chairman of the Board and Chief Executive Officer President, Secretary, and Director
9
Organisation Leadership
? Culture influenced by Kelleher's leadership. ? Culture had three themes: love, fun and efficiency ? Promoted family-like culture ? Initiated intimacy it with employees first ? Workers reciprocated Kelleher s personality ? Decorated walls of HQ with photographs of employees
10
Facts / Milestones«
Low-fare, high frequency Point-to-point carrier Largest domestic U.S. carrier 4th largest major airline in America More than 34,000 Employees Fly more than 64 mil. passengers a year 58 destination cities (59 airports) More than 3,200 flights a day Top competitors: AMR Corp. Continental Airlines JetBlue
11
Flight Method
Few amenities / no frills
? No assigned seats ? No meals ? Only snacks: peanuts ? No electronic entertainment ? No fees to change same-fare tickets ? Domestic flights only ? Quantity focused ? Flies only Boeing-737 aircrafts
12
Map: SW Cities / Destinations
13
Porter¶s 5 Forces
Entry
INDUSTRY
Buyers
FIRM
Rivalry
Suppliers
THREAT
Substitutes
ENTRY
The Threat of Entry
? ? This factor is closely related to weather there are barriers to entry or not. Southwest operates in a differentiation strategy that makes competitors very difficult to enter.
1. By offering, low fare (25% lower than every other company), 2. point-to-point delivery (no hub-and-spoke), 3. plastic boarding cards (to recycle back),
ENTRY (contd.)
4. No designated seats is considered a powerful advantage to burry competitors. 5. Also the offer of Chivas Regal in a double fee ticket., and 6. The short hub routes along with the philosophy
± If not now, then when? If not us, then who? ; are having the basis for a strong differentiate strategy.
BUYERS & SUPPLIERS
The Power of Buyers and Suppliers.
? The relationship of buyers and sellers can have similar effects in constraining the strategic freedom of an organization and in influencing the margins of this organization. Southwest has to deal with big groups of people, meaning that their barging power is consider strong. The company by offering the lowest prices along with satisfaction, reduces or either eliminate the barging power or the switching of suppliers . Moreover, the company by doing a FORWARD INTEGRATION makes her self a supplier, which is connected with the customers.
?
?
?
SUBSTITUTES
The Threat of Substitutes.
? Southwest understood that for short-haul destinations, surface transport (car) was a substitute of flying. By concentrating on the factors that lead people to choose one of these forms of transport over the other, and eliminating or reducing anything else, the southwest concept created. The key was to consider, why people are flying over driving for short destinations; because they want, luxury, multiple seating, meals, drinks, etc?? The answer is, NO. There is only one reason that makes people to fly over driving: speed. People fly to save time.
?
?
?
RIVALRY
Competitive Rivalry.
? Even though this considers a philosophical term, southwest manage to eliminate competitors by using flexible strategy.
1. Expansion strategy (not less than 12 flights), 2. ideally commitment of employees, 3. concentrate on flying big number of passengers (big market share), and 4. with point-to-point, manage to be the worlds only short haul, high frequent, low fare carrier.
RIVALRY (Contd.)
Competition and Collaboration.
? Southwest followed some major steps concerning the direction and the method of developing the organizations strategy.
1. Market penetration where the attention was small. 2. Product development on existing and with new competencies ( Love field , new737, low fare, point-to-point, short hub delivery) 3. Market Development into new markets, territories (Texas, then interstate, smaller market niches in time oriented and price sensitive customers) 4. And then Diversification (no hub, point to point, 10 minutes turnaround , same airplanes, multi-operational employees)
Industry Life Cycle
21
Average data for 5 years
Southwest Return on equity Sales growth 16.3 14.5 United 27.9 5.4 - 31.4 American 12.9 3.0 30.2 Delta 19.5 6.5 15.2 Continental 38.1 11.2 8.8
Net income 26.9 growth
Data for the year 2000
Southwest Sales($B) As % of sales COGS Gross margin Operating income Net income Return on equity 76 24 23.7 10.7 18 91 9 9 0.3 12 87 13 12.8 4.3 12 83 18 17.5 4.9 17 89 11 11 3.5 30 5.6 United 19.3 American 18.1 Delta 16.7 Continental 9.9
SOUTHWEST DIFFERENCE
24
The Southwest difference
? SW did not employ the Hub and Spoke approach ? 80% of its passengers flew nonstop ? 60% of revenue was generated by online booking via SW.com ? SW reduced the head count of aircrafts to 74 from 85 in 2004
25
The Southwest difference (Contd)
? SW saved about $455 million (per year) on its fuel and oil needs ? SW did not belong to nationalized union ? After landing, SW aircraft could take off in next 20-25 min vis-à-vis United air lines was closer 30-35
26
? CEO, Herb Kelleher has philosophy of putting employees first ? SW had more than thousand MARRIED COUPLES ? SW employees were highest paid in the industry ? SW employees enjoyed low employee turnover
27
The Southwest difference (Contd)
? SW employs a rigorous approach in hiring ? SW reviewed 2,25,895 and hired 1,706 new employees ? SW hiring process is unique Pilot hiring pilot ? SW initiated first profit sharing plan in US
28
Summing UP
29
THANK YOU
30
doc_745906351.pptx
My project on MCS
Southwest Southwest Airlines Airlines
1
Group Members
? ? ? ? ? ? ? Sonam Varadkar Nirmit Thakkar Yogesh Kamat Malay Patel Siddharth Prabhu Aditya Pimple Pratik Thakker 116 104 70 76 74 106
2
Southwest Southwest Airlines
? Southwest Airlines (SWA) is a successful US national carrier since 1968 flying between 58 cities in 30 states SWA is recognized for: i. on-time performance ii. best baggage-handling iii. and fewest customer complaints Southwest is the nations low-fare, high customer satisfaction airline Fortune magazine and the Wall Street Journal put SWA in the position of being one of the most admired companies ?
? ?
Goal Congruence
? The central purpose of a management control system , is to ensure a high level of goal congruence ? It ensures that individual actions are taken to achieve personal goals also help achieve organizational goals
Southwest Airlines unique Organization Culture
? Culture is the glue that holds our organization together. Culture is not about magic formulas and secret plans; it is a combination of a thousand things. - Herbert D. Kelleher, Co-Founder and Chairman, Southwest Airlines ? A laidback approach to formal management programs ? And preferring to operate a company where employees work hard and have fun.
Building Relationships
? Southwest attempted to promote a close-knit, supportive and enduring family-like culture Employees were expected to care about people Instead of decorating the wall of its headquarters with paintings, the company hung photographs of its employees taking part at company events, news clippings, letters, articles and advertisements SWA willingly delayed the purchase of new planes & office renovations in favour of protecting the jobs of their employees ? ?
?
Vision
Open up the skies for ordinary people
7
Timeline«
o o o June 18, 1971 ? Began airline service ? Flights to Houston, Dallas, and San Antonio 1977 ? SW stock listed on NYSE as "LUV" 1982 ? Appointed Herbert D. Kelleher
? President, CEO, & Chairman of the Board
o
o
o o
1984 ? #1 in customer satisfaction (4th year in a row) 1990 ? announce billion dollar revenue mark ? Officially declared a "Major" airline! May 2003 ? Top ranked domestic passenger airliner 2006 ? Southwest¶s 34th consecutive year of profitability
8
Leadership / Structure:
Herbert D. Kelleher Gary Kelly Colleen Barrett
Executive Chairman of the Board Vice Chairman of the Board and Chief Executive Officer President, Secretary, and Director
9
Organisation Leadership
? Culture influenced by Kelleher's leadership. ? Culture had three themes: love, fun and efficiency ? Promoted family-like culture ? Initiated intimacy it with employees first ? Workers reciprocated Kelleher s personality ? Decorated walls of HQ with photographs of employees
10
Facts / Milestones«
Low-fare, high frequency Point-to-point carrier Largest domestic U.S. carrier 4th largest major airline in America More than 34,000 Employees Fly more than 64 mil. passengers a year 58 destination cities (59 airports) More than 3,200 flights a day Top competitors: AMR Corp. Continental Airlines JetBlue
11
Flight Method
Few amenities / no frills
? No assigned seats ? No meals ? Only snacks: peanuts ? No electronic entertainment ? No fees to change same-fare tickets ? Domestic flights only ? Quantity focused ? Flies only Boeing-737 aircrafts
12
Map: SW Cities / Destinations
13
Porter¶s 5 Forces
Entry
INDUSTRY
Buyers
FIRM
Rivalry
Suppliers
THREAT
Substitutes
ENTRY
The Threat of Entry
? ? This factor is closely related to weather there are barriers to entry or not. Southwest operates in a differentiation strategy that makes competitors very difficult to enter.
1. By offering, low fare (25% lower than every other company), 2. point-to-point delivery (no hub-and-spoke), 3. plastic boarding cards (to recycle back),
ENTRY (contd.)
4. No designated seats is considered a powerful advantage to burry competitors. 5. Also the offer of Chivas Regal in a double fee ticket., and 6. The short hub routes along with the philosophy
± If not now, then when? If not us, then who? ; are having the basis for a strong differentiate strategy.
BUYERS & SUPPLIERS
The Power of Buyers and Suppliers.
? The relationship of buyers and sellers can have similar effects in constraining the strategic freedom of an organization and in influencing the margins of this organization. Southwest has to deal with big groups of people, meaning that their barging power is consider strong. The company by offering the lowest prices along with satisfaction, reduces or either eliminate the barging power or the switching of suppliers . Moreover, the company by doing a FORWARD INTEGRATION makes her self a supplier, which is connected with the customers.
?
?
?
SUBSTITUTES
The Threat of Substitutes.
? Southwest understood that for short-haul destinations, surface transport (car) was a substitute of flying. By concentrating on the factors that lead people to choose one of these forms of transport over the other, and eliminating or reducing anything else, the southwest concept created. The key was to consider, why people are flying over driving for short destinations; because they want, luxury, multiple seating, meals, drinks, etc?? The answer is, NO. There is only one reason that makes people to fly over driving: speed. People fly to save time.
?
?
?
RIVALRY
Competitive Rivalry.
? Even though this considers a philosophical term, southwest manage to eliminate competitors by using flexible strategy.
1. Expansion strategy (not less than 12 flights), 2. ideally commitment of employees, 3. concentrate on flying big number of passengers (big market share), and 4. with point-to-point, manage to be the worlds only short haul, high frequent, low fare carrier.
RIVALRY (Contd.)
Competition and Collaboration.
? Southwest followed some major steps concerning the direction and the method of developing the organizations strategy.
1. Market penetration where the attention was small. 2. Product development on existing and with new competencies ( Love field , new737, low fare, point-to-point, short hub delivery) 3. Market Development into new markets, territories (Texas, then interstate, smaller market niches in time oriented and price sensitive customers) 4. And then Diversification (no hub, point to point, 10 minutes turnaround , same airplanes, multi-operational employees)
Industry Life Cycle
21
Average data for 5 years
Southwest Return on equity Sales growth 16.3 14.5 United 27.9 5.4 - 31.4 American 12.9 3.0 30.2 Delta 19.5 6.5 15.2 Continental 38.1 11.2 8.8
Net income 26.9 growth
Data for the year 2000
Southwest Sales($B) As % of sales COGS Gross margin Operating income Net income Return on equity 76 24 23.7 10.7 18 91 9 9 0.3 12 87 13 12.8 4.3 12 83 18 17.5 4.9 17 89 11 11 3.5 30 5.6 United 19.3 American 18.1 Delta 16.7 Continental 9.9
SOUTHWEST DIFFERENCE
24
The Southwest difference
? SW did not employ the Hub and Spoke approach ? 80% of its passengers flew nonstop ? 60% of revenue was generated by online booking via SW.com ? SW reduced the head count of aircrafts to 74 from 85 in 2004
25
The Southwest difference (Contd)
? SW saved about $455 million (per year) on its fuel and oil needs ? SW did not belong to nationalized union ? After landing, SW aircraft could take off in next 20-25 min vis-à-vis United air lines was closer 30-35
26
? CEO, Herb Kelleher has philosophy of putting employees first ? SW had more than thousand MARRIED COUPLES ? SW employees were highest paid in the industry ? SW employees enjoyed low employee turnover
27
The Southwest difference (Contd)
? SW employs a rigorous approach in hiring ? SW reviewed 2,25,895 and hired 1,706 new employees ? SW hiring process is unique Pilot hiring pilot ? SW initiated first profit sharing plan in US
28
Summing UP
29
THANK YOU
30
doc_745906351.pptx