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Business - Management
Internal Analysis and SWOT Analysis
Southwest has been a major inspiration to other low-cost carriers, and its business model has been used many times worldwide. The competitive strategy that they use joins high levels of employee and aircraft productivity with low unit expenses by reducing aircraft turnaround time predominantly at the gate (Bamber, Gittell, Kochan, & von Nordenflytch, 2009). When doing an internal analysis and SWOT Analysis it is important to look at a company's tangible and intangible resources.
Southwest Airlines has tangible resources of financial resources, physical resources and human resources. In 2099, Southwest Airlines had revenues over ten million dollars. They are the largest airline in the world by boarded amount of originating passengers boarded. They are the third-largest passenger fleet of aircraft amid all of the world's commercial airlines. They have carried more passengers than any other U.S. airline since August 2006 for shared domestic and international passengers according to the U.S. Depart of Transportation's Bureau of Transportation Statistics. And lastly they have had 37 consecutive years of profitability (Fact Sheet, 2010).
The company's physical resources include the planes that they fly. Southwest Airlines flies only Boeing 737 jets. It is the biggest operator of the 737 worldwide. They have been a launch customer on three models and are the world's largest operator of two models. Southwest has selected to exclusively fly the 737 because of cost benefits. Southwest's fleet includes 544 aircraft. It holds firm orders for more than one hundred additional 737s as well as over one hundred options and purchasing rights for succeeding aircraft. As of July 1, 2009, Southwest's fleet had an average age of approximately ten years. Southwest flies only the Boeing 737 because of maintenance and training cost savings. In addition, the aircraft is adaptable enough to be profitable on a variety of long-haul and short-haul routes. The 737's rapid preparation and turn-around time permits Southwest Airlines to utilize its aircraft more hours per day (Beyman, 2011).
Southwest Airlines feels that their employees are their single greatest strength and most enduring long-term competitive advantage. There are many jobs at the airline. These include people on the phone and on the plane. There are also those who fly the plane along with those who work in the hanger. All of these positions are vital because without any one of them the airline could not run. At Southwest Airlines people have the freedom to be creative, dress casually and have fun while on the job. Employees also enjoy free travel privileges, and have great benefits, like profit sharing, matching 401(k) and medical and dental insurance (Southwest Airline Careers, 2010).
Southwest Airlines intangible resources include technical resources, intellectual resources and goodwill. Southwest has done a lot over the years to enhance their technology while keeping their costs low. The first thing that they did was to become ticketless. They became electronic or ticketless back in the mid-1990s, and today are almost ninety to ninety five percent ticketless. Customers who use credit cards are entitled to online transactions, and today Southwest.com bookings account for about sixty five percent of total revenue. In the late 1980's they put into practice a reservations and ticketing system. Before that, they used cash registers (Steinert-Threlkeld, 2010)
As they integrated their ticketing and reservation processes, the boarding pass was left manual. So until 2003, all customers would gather in the gate area and exchange their boarding passes. Then they began handing out boarding passes from multiple points in an airport. Later, they added boarding-pass generation via Southwest.com. Now they have self-service kiosks, and were adding functionality to those units last year (Steinert-Threlkeld, 2010).
In an industry that frequently loses billions of dollars, Southwest Airlines has an unbroken string of thirty one consecutive years of profitability. The Southwest Airlines way is to develop high performance relationships based on shared goals, shared knowledge, and mutual respect among all levels of management, employees, and suppliers. Southwest relies so heavily on high performance relationships and shared goals, shared knowledge, and mutual respect among employees, managers, unions, and suppliers. The company uses these high performance relationships to create the huge competitive advantage Southwest has in motivation, teamwork, and coordination among workers. They foster influential cooperative relationships among their company's employees. There are tens practices that Southwest employs in order to create and nurture high performance relationships. These include:
Lead with credibility and caring
Invest in frontline leaders
Hire and train for relational competence
Use disagreements to build relationships
Make unions their partners, not their adversaries
Build relationships with their suppliers (Hoffer Gittell, 2003).
The final component of Southwest Airlines intangible sources is that of its goodwill. Last year, Southwest Airlines received almost fifteen thousand donation requests and distributed more than twenty five thousand tickets and $1,266,950 in cash in response, for a collective value of almost twelve million in total contributions. They champion causes that matter most in the neighborhoods they serve by developing relationships with nonprofit organizations on both a local and national level. Building these relationships involves committing their resources of time, tickets, and love in order to the hometown carrier that cares. Southwest employees volunteer across the nation, as well as serving on local, state, and national boards to assist nonprofit organizations in attaining their missions (Southwest Citizenship, 2010).
They believe volunteers are vital to the health of nonprofit organizations that work to meet needs in the neighborhood. Their employees volunteer their time day in and day out for the significant causes that are closest to their hearts. In 2009, Southwest Airlines Employees volunteered more than forty-five thousand hours to charities across the nation. In an effort to support these zealous employee volunteers, Southwest Airlines launched the Tickets for Time program. For every forty hours their employees volunteer for a nonprofit organization, the benefitting nonprofit organization is entitled to receive one complimentary, roundtrip ticket on Southwest Airlines for fundraising or transportation needs (Southwest Citizenship, 2010).
All together, the airline industry has a below average reputation in the U.S. market place, with four of the nine carriers showing weak reputation standings. The poor reputations of U.S. airlines today are undoubtedly a reflection of their difficulty to rate well on dimension level issues. Southwest has risen to the top as they have been able to sustain their image as a well-run low-cost carrier with a happy workforce. Increased attention to the critical areas of reputation in combination with a targeted reputation management effort may help airlines win greater support with the public (What's reputation worth? Just ask Southwest Airlines, 2011).
The Wall Street Journal says Southwest generally is regarded as the best-run domestic airline, which long has benefited from a strong safety record. The company frequently is praised for excellence. Fortune listed it among America's top 10 most admired corporations; Business Week listed the airline among its Customer Service Champs; and Hispanic Business named it one of America's top companies for diversity. While Southwest Airlines is not perfect, this company is succeeding at many levels. It has spent years cultivating loyalty by providing innovative and reliable service at reasonable costs. In an industry overwhelmed by financial issues and weakening consumer confidence, Southwest has excelled. Southwest isn't winning by resting on its past performance; it is succeeding because of its rapid and strong response in crisis. Over the years it has confessed its mistakes and took vital action to fix the troubles (What's reputation worth? Just ask Southwest Airlines, 2011).
Despite facing the most difficult economy ever for the airline industry, the leading low-cost U.S. carrier has gained market share and extended its flight map. Southwest added new routes, including gates at New York's LaGuardia, and just recently made a successful bid in to acquire Air Tran. And while other cash-strapped carriers have started adding fees for checking a bag, Southwest still…[continue]
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