Southwest airlines 2002: An Industry under siege Case by: James L. Heskett Group 1: Joseph Dady, Deron Duncan, Devon Haugan, Caitlyn Miyamoto, Kate Mulvaney-Kemp, Ryan Olson 28 September 2015

Summary Southwest Airlines, 1967 Low-cost airline Highly successful Company culture Permeated all roles within Southwest September 11th, 2001 New external changes Most harmful to small, low-cost airlines How to maintain business strategy and company culture in the face of these changes? Kate

IS Strategy Triangle Small group discussion Group 2 and Group 3 triangles Kate

IS Strategy Triangle Business Strategy Cost efficient Service to all customers Kate Organizational Strategy Flexibility Collaborative Charismatic corporate culture Information Strategy Minimalist and simple Easy to use

Organizational culture Unique hiring philosophy Consistently rated one of the best places to work Strong culture overseen by “culture committee” “Whatever it takes” attitude combined with autonomy Deron

Organizational culture Deron https://www.youtube.com/watch?v=TEhnx183xiY

Financial success Low-fare based airlines Point-to-point route system No meals Limited number of baggage Uniform configuration Team-oriented approach Handoff of flights Utilization of agents First come, first serve Customer Service Frequent Flyer Rewards Caity

Maintaining market presence Short-Term Challenges: Operating Procedures Redesign passenger and baggage handling processes Mandate early arrival Nonstop transcontinental flights Long-Term Challenges: Growth Strategies Non-stop transcontinental flights Caity

Should southwest grow? YES! Obstacles Government regulations Low-cost carrier competitors JetBlue Frontier AirTran Delta Connection services Includes 6 small regional airlines Ryan

How to grow Create long distance point-to-point flights Existing cities Expand into new markets Slow and steady growth International markets Ryan

Consequences of Reduced growth rates Past growth may not be sustainable New security measures New taxes have hit Southwest harder than other airlines. Possible losing position if: Current problems remain unfixed Entrance to a new market is forced Devon

Industry bankruptcies Post-9/11 policies forced small airlines to go out of business Creates market share that Southwest could occupy Flip the chessboard: seeing things from a different perspective Devon

Role of is/it Boarding passes Ticketing interface Security directives Loss of simplicity Joseph

Drop in profits (2008) Increased fuel prices “No hidden fees” FAA investigation Joseph

-High Capital Barriers Porter’s model Supplier Bargaining -Boeing -Unions Buyer Bargaining -Relative Standards Industry Competition -Price Competition New Entrants -High Capital Barriers -Terminals, Planes Threat of Substitutes -Nonstop Flights -Service Joseph

Recommendation Manage current issues Evolving federal regulations Updating/develop IT systems Passenger and baggage processes Resume previous growth strategy Entering new markets slowly Find markets that fit their needs