Case Statement
Southwest Airlines has been known as an airline that offers cheap flights to almost anywhere in the country, however the problem has been seat selection with never being able to select where you want to sit; you are subject to first come, first serve
Vision and Mission evaluation
Southwest’s vision statement has been done very well. They have made it short and to the point. This is something that all of their employees will be able to understand and remember. Their mission statement is also done very well, although they are missing some key components. The key component that is being used is customers, specifically when they mention their customer service. The products or services, philosophy, and self-concept are all mentioned when they are talking about their warmth and friendliness. Southwest is missing markets and technology in their mission statement.
Milestones
1967 – Southwest Airlines was created
1973 – Southwest makes a profit, which continues for the next 36 years straight.
2017 – Southwest is named to FORTUNE's 2017 list of World's Most Admired Companies, marking the company's 23rd consecutive year on the list.
External Assessment
Southwest’s external assessment rating is overall very high. One of their greatest opportunities is their great advertising. Also their safety record is phenomenal. Although there are some things that Southwest can work on to improve, such as their limited international flying. Also the amount of competitors that they have is a struggle for Southwest.
Internal Assessment
Southwest has had a strong financial record having consistent revenue increase year on year. The other biggest rated strength for them is the amount of passengers that used their service. There are numerous weaknesses for Southwest. The first is that they have employees in a union. Southwest has to negotiate with several different unions such as The Transport Workers Union. The next largest issue was the use of better technology, which will lead to less people needing to fly
Industry Analysis
Threat of substitute products – There are several different types of substitute products that customers can use. These include busses, trains, cars, and numerous other modes of transportation. The biggest difference with this is although you will be paying a lot less, the time it takes to get there is extensively longer. Customers are able to enjoy more of the wilderness and country as long as there is no need to rush to get there.
Financial Analysis
Southwest has had consistent sales growth from at least 2013 averaging 4.59%. Southwest revenue in 2013 was 17.7 billion dollars and in 2017 they reported 21.17 billion dollars in revenue. The gross profit margin and net profit margin also shows that Southwest is very profitable and able to have sustainable revenue. Some key ratios that are being used to show how Southwest is doing is the current ratio, quick ratio, and the debt to equity ratio. The current ratio is considerably better than the industry at 0.67 and 0.51 respectively. Southwest’s debt to equity ratio is significant lower than the industry standard at 0.34 to 1.09 respectively.
Competitive Strategies
There were several different strategies that Southwest could look at in order to achieve better and stronger financial performances. The first strategy was making Southwest website easier to use. The second strategy was promoting capable employees. The third strategy QSPM was showing their customers that they belong in any seat
Recommended Strategy
The strategy that was ranked the highest in the QSPM was showing their customers that they belong in any seat. This strategy will give numerous benefits to Southwest. By doing this Southwest can utilize their advertising skills and show customers that are getting on their plane with several other types of customers. They could show business professionals getting on planes with a family that is going on vacation. All of these people could sit anywhere, could sit in any place and enjoy the ride.
Ethical and Social Responsibility Dimensions of the Recommended Strategy
There is clear evidence that Southwest acts ethically, socially responsibly and as a good citizen with its passengers. Providing it passengers a quality product is at the very core of what Southwest does. Southwest is usually welcomed with open arms in each community that it moves to. Not only does Southwest bring competition and lower air fares but jobs and community service. Southwest employees participate in numerous charitable drives. Their generosity and willingness to help others show the social responsibility and citizenship that all companies strive to achieve. They have a fantastic reputation that has been built on great service and good works.
Implementation Plan
Expanding the customers that use Southwest and letting them know that they can sit anywhere will be a struggle. The biggest struggle that Southwest will face in order to succeed is to get a celebrity that will be willing to be in a commercial for them. Southwest will also need to achieve some professional relationship with whichever celebrity that Southwest is able to get to be in the commercial. The major cost of this commercial will be getting the endorsement deal of the celebrity of their choosing. Currently Tom Brady makes about a $7 million a year for his endorsements. The commercial with him may be a little higher than Southwest is willing to spend. Other celebrities vary on their pricing and what is being asked of them. Southwest should use the Debt financing when they need to pay out for this commercial. Southwest will not accumulate a lot of debt when they do have to make this commercial as the cost of doing this is not that great.
Southwest Airlines has been known as an airline that offers cheap flights to almost anywhere in the country, however the problem has been seat selection with never being able to select where you want to sit; you are subject to first come, first serve
Vision and Mission evaluation
Southwest’s vision statement has been done very well. They have made it short and to the point. This is something that all of their employees will be able to understand and remember. Their mission statement is also done very well, although they are missing some key components. The key component that is being used is customers, specifically when they mention their customer service. The products or services, philosophy, and self-concept are all mentioned when they are talking about their warmth and friendliness. Southwest is missing markets and technology in their mission statement.
Milestones
1967 – Southwest Airlines was created
1973 – Southwest makes a profit, which continues for the next 36 years straight.
2017 – Southwest is named to FORTUNE's 2017 list of World's Most Admired Companies, marking the company's 23rd consecutive year on the list.
External Assessment
Southwest’s external assessment rating is overall very high. One of their greatest opportunities is their great advertising. Also their safety record is phenomenal. Although there are some things that Southwest can work on to improve, such as their limited international flying. Also the amount of competitors that they have is a struggle for Southwest.
Internal Assessment
Southwest has had a strong financial record having consistent revenue increase year on year. The other biggest rated strength for them is the amount of passengers that used their service. There are numerous weaknesses for Southwest. The first is that they have employees in a union. Southwest has to negotiate with several different unions such as The Transport Workers Union. The next largest issue was the use of better technology, which will lead to less people needing to fly
Industry Analysis
Threat of substitute products – There are several different types of substitute products that customers can use. These include busses, trains, cars, and numerous other modes of transportation. The biggest difference with this is although you will be paying a lot less, the time it takes to get there is extensively longer. Customers are able to enjoy more of the wilderness and country as long as there is no need to rush to get there.
Financial Analysis
Southwest has had consistent sales growth from at least 2013 averaging 4.59%. Southwest revenue in 2013 was 17.7 billion dollars and in 2017 they reported 21.17 billion dollars in revenue. The gross profit margin and net profit margin also shows that Southwest is very profitable and able to have sustainable revenue. Some key ratios that are being used to show how Southwest is doing is the current ratio, quick ratio, and the debt to equity ratio. The current ratio is considerably better than the industry at 0.67 and 0.51 respectively. Southwest’s debt to equity ratio is significant lower than the industry standard at 0.34 to 1.09 respectively.
Competitive Strategies
There were several different strategies that Southwest could look at in order to achieve better and stronger financial performances. The first strategy was making Southwest website easier to use. The second strategy was promoting capable employees. The third strategy QSPM was showing their customers that they belong in any seat
Recommended Strategy
The strategy that was ranked the highest in the QSPM was showing their customers that they belong in any seat. This strategy will give numerous benefits to Southwest. By doing this Southwest can utilize their advertising skills and show customers that are getting on their plane with several other types of customers. They could show business professionals getting on planes with a family that is going on vacation. All of these people could sit anywhere, could sit in any place and enjoy the ride.
Ethical and Social Responsibility Dimensions of the Recommended Strategy
There is clear evidence that Southwest acts ethically, socially responsibly and as a good citizen with its passengers. Providing it passengers a quality product is at the very core of what Southwest does. Southwest is usually welcomed with open arms in each community that it moves to. Not only does Southwest bring competition and lower air fares but jobs and community service. Southwest employees participate in numerous charitable drives. Their generosity and willingness to help others show the social responsibility and citizenship that all companies strive to achieve. They have a fantastic reputation that has been built on great service and good works.
Implementation Plan
Expanding the customers that use Southwest and letting them know that they can sit anywhere will be a struggle. The biggest struggle that Southwest will face in order to succeed is to get a celebrity that will be willing to be in a commercial for them. Southwest will also need to achieve some professional relationship with whichever celebrity that Southwest is able to get to be in the commercial. The major cost of this commercial will be getting the endorsement deal of the celebrity of their choosing. Currently Tom Brady makes about a $7 million a year for his endorsements. The commercial with him may be a little higher than Southwest is willing to spend. Other celebrities vary on their pricing and what is being asked of them. Southwest should use the Debt financing when they need to pay out for this commercial. Southwest will not accumulate a lot of debt when they do have to make this commercial as the cost of doing this is not that great.