1. 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

2. 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

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

4. 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

5. 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

6. Organizational culture
Deron

7. 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

8. 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

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

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

11. 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

12. 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

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

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

15. -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

16. 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