Case Study on South West Airlines Example | Topics and Well Written Essays - 2250 words

On South West Airlines - Case Study Example The company is also a fun place for people to work and is regarded very highly by employees. There are many aspects of this success of Southwest Airlines. In this essay we will present a SWOT analysis alongside with an analysis of porter’s five forces. This will also include the financials of the company. The organizational culture of the company and its operations and leadership will be discussed. Issues the company is facing currently will also be discussed and recommendations will be made. SWOT Analysis Southwest Airlines Southwest Airline has displayed cost leadership in the airline industry by turning cost effectiveness into profits. The culture of the company is also in line with the core values of the airline. Below an in depth view of strengths, weaknesses, opportunities and threats facing the company will be taken. Strengths The most impressive thing about Southwest Airlines is its financial records. The company is yet to report a loss on its balance sheets and this i s a big achievement considering the ups and downs airline industry in US faces. Since 1972 the company has given annual returns of around 25%. This shows the impressive performance of the company. The airline believes in friendliness and love in customer relationships as well as employees. One of the main reasons of success of the company is its employees. The friendly culture of the company illicit the best out of every employee of Southwest and that is why innovative ideas are given by lower and middle level employees. This is one of the reasons of Southwest Airline’s success. The management of Southwest Airlines has done an amazing job in crafting its company’s strategy. The strategy of cost leadership has done wonders for the company and I personally think that the idea of being cost effective in the airline industry great. Usually airlines have huge operational costs so they do not go for such a strategy but Southwest has shown the world that this can be done. Thi s strategy has proven itself to be a winning strategy. Southwest Airlines reported a profit of USD178 million in 2008 (Bloomberg, 2011). This was the time when recession had badly hit the US economy but still the company was able to reap profits. The operating expense of the company have not grown significantly even during recession. Operating expenses were $1,280 million in 2007 while in 2008 they grew to $1,385 million. Also the revenue in 2008 increased as compared to 2007. In 2007 revenue figure was $9,587 million and in 2008 it grew to $11,023 million. The CGS also has grown accordingly, in 2007 it was $7,235 million and in 2008 it was $8,590 million (Bloomberg, 2011). This shows that the costs of Southwest have not increased significantly. The company has tried to differentiate its policies from its competitors by doing everything in its own way. Employees were not fired in tough times, cost cutting was given attention rather than value addition, flights for shorter routes was started and a friendly work culture was introduced in the company. All this was not the usual trend in the industry but this became the basis for Southwest’s success. The company has proven that conventional thinking has led many airlines into huge loses (Freiberg & Freiberg, 1997). One of the operating practices in the company is to schedule more flights a day and pilots work an hour more than in other airline companies (Mouawad, J. 2010). The company also pays its