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Southwest Airlines

Southwest Airlines. Group 1 : Cara Paganini Meghan Johnson James Janda Chris Blake. Agenda. Executive Summary Information Systems Strategy Triangle Profit and Performance Growth Rates Competition Threats Role of IT/IS Recommendations Lessons Questions. Executive Summary .

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Southwest Airlines

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  1. Southwest Airlines Group 1 : Cara Paganini Meghan Johnson James Janda Chris Blake

  2. Agenda • Executive Summary • Information Systems Strategy Triangle • Profit and Performance • Growth Rates • Competition Threats • Role of IT/IS • Recommendations • Lessons • Questions

  3. Executive Summary • Founded in 1967 by Rolling King and Herb Kelleher out of Love Field • Company Strategy: • Provide low cost services • Air travel for less than the cost of driving between cities • Targeted business travelers • Differentiate with Southwest “Spirit” • Growth into 1-2 new cities per year • Post 9-11 regulations caused challenges for Airline Industry

  4. Information Systems Strategy Triangle • Group Questions: • Is the triangle balanced? • Why did you choose the answer you did? • Where do you feel SWA should go from here?

  5. Information Systems Strategy Triangle Business Strategy Cost Leadership, Revenue Generation, New Market Growth • Organizational Strategy • Positive corporate culture • “Spirit” of the airline • Point-to-Point Travel • Team Focus • “LUV” Culture • Focus on Business Travelers • Efficient turnarounds • IS/IT Strategy • E-tickets • SABRE ticketing process • Southwest.com • Check-In Kiosks

  6. Profit and Performance • How does Southwest make money? • Cost Leadership focus • Streamlined Operating Procedures • Team focus for employees • Contributors to financial success? • Short turnaround times • Limited markets, high frequency departures • Simple itineraries • Unique ticketing process • “Spirit” of the airline

  7. Profit and Performance How should management respond to their last minute on-time performance standings in 2002? • Stay true to core operational values • Ease and convenience of travel • Catering to last minute business and pleasure travelers • Make minor operational changes • Build small cushion into turnaround times • Eliminate the extra time that the gate and doors are left open • Further improve customer service experience • Utilize the “Spirit” • Reduce customer frustrations

  8. Profit and Performance Currently… • No notable recent profit drops • Financial collapse of 2008 devastated the entire industry • SWA remained profitable but experienced lowest levels of net income in 2009 ($99M) • Since 2009, annual profits have returned to $400M+

  9. Growth Rates Resume historic growth rate? • Growth should remain • Financial position • Non-growth Strategy means lost opportunities

  10. Growth Rates What form should this growth rate take? • Increase trips on established routes • Take-over vacated competitor routes • Expand “long-distance” to existing stations • Evaluate new stations

  11. Growth Rates How would you suggest dealing with the consequences of reduced growth? • If forced… • Staffing changes • Labor/union renegotiations • Loss of Market Share

  12. Competition Threats • September 11th 2001 • New government regulations, new tax initiatives, and airline bailouts determined by the government • Government bailout of other airlines • Southwest’s competitive advantage of being financially sound was not paying off • Southwest was able to maintain a competitive advantage • Customer Service • Other airlines not able

  13. Role of IT/IS • The first airline to master the ticketless system • Offering independent kiosks to check-in • Bypass cumbersome travel agencies and ticketing processes • Sell airline reservations directly to customers

  14. Recommendations • Growth of company • JD Power Awards • Competitor rankings • New plane expansion • New destinations (National/International • Growth of IT/IS • Mobile tickets • Apps • What competitors are doing

  15. Lessons • Adaptability • September 11, 2001 • 2008 financial and economic crisis • IT/IS growth is important • Staying competitive • Differentiation • Remaining low cost

  16. Questions?

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