Business Finance - Operations Management CASE

Sample Solution

Case Study: Southwest Airlines Introduction Southwest Airlines is a major American low-cost carrier that was founded in 1967. The company is headquartered in Dallas, Texas, and operates a fleet of over 700 Boeing 737 aircraft. Southwest Airlines is known for its low fares, friendly customer service, and unique culture. Existing Mission, Objectives, and Strategies Southwest Airlines' mission statement is: "To connect people to what's important in their lives through friendly, reliable, and low-cost air travel." The company's objectives are to:

• Provide low-cost air travel to its customers.
• Offer reliable and on-time service.
• Provide friendly and customer-focused service.
• Be a profitable company.

Southwest Airlines' strategies to achieve its objectives include:

• Operating a single fleet type of Boeing 737 aircraft. This reduces costs and allows for more efficient operations.
• Point-to-point routes. This eliminates the need for hub-and-spoke systems, which can save time and money for customers.
• Quick turnarounds. This allows Southwest Airlines to operate more flights per day with fewer aircraft.
• No assigned seating. This allows for faster boarding and deplaning.
• No checked baggage fees. This makes Southwest Airlines more attractive to budget-minded travelers.

Analysis of the Firm's Existing Business Model Southwest Airlines' business model is based on providing low-cost air travel to its customers. The company is able to offer low fares by keeping its costs low. This is achieved through a number of factors, including:

• Operating a single fleet type of Boeing 737 aircraft.
• Point-to-point routes.
• Quick turnarounds.
• No assigned seating.
• No checked baggage fees.

Southwest Airlines also focuses on providing reliable and on-time service. This is important to customers who are using Southwest Airlines for business or personal travel. New Mission Statement I recommend that Southwest Airlines revise its mission statement to: To connect people to what's important in their lives through the world's most reliable, low-cost, and customer-focused air travel. This new mission statement is more specific and aspirational than the current mission statement. It also emphasizes Southwest Airlines' commitment to customer focus, which is one of the company's core values. Strategic Recommendations I recommend the following strategic recommendations for Southwest Airlines:

• Expand into new markets. Southwest Airlines has a strong presence in the United States, but it could expand into new international markets, such as Mexico and Canada.
• Develop new products and services. Southwest Airlines could develop new products and services, such as non-stop flights to popular destinations and premium seating options.
• Invest in new technology. Southwest Airlines could invest in new technology, such as self-service check-in kiosks and mobile boarding passes.
• Continue to focus on customer service. Southwest Airlines is known for its excellent customer service. The company should continue to focus on providing its customers with a positive experience.

Exhibits Exhibit 1: Southwest Airlines' SWOT Analysis Strengths:

• Low fares
• Reliable service
• Friendly customer service
• Strong brand reputation

Weaknesses:

• Limited number of destinations
• Limited number of flights per day
• No assigned seating
• No checked baggage fees

Opportunities:

• Expand into new markets
• Develop new products and services
• Invest in new technology

Threats:

• Competition from other airlines
• Rising fuel prices
• Economic downturns

Exhibit 2: Southwest Airlines' Competitive Landscape Southwest Airlines' main competitors are other low-cost carriers, such as Spirit Airlines and Allegiant Air. Southwest Airlines also competes with traditional airlines, such as Delta Air Lines and United Airlines. Southwest Airlines has a number of competitive advantages over its competitors. These advantages include:

• Its strong brand reputation
• Its friendly customer service
• Its low fares

Conclusion Southwest Airlines is a well-managed company with a strong business model. The company is well-positioned for continued growth and success. I recommend that Southwest Airlines expand into new markets, develop new products and services, invest in new technology, and continue to focus on customer service.