Southwest Airline Analysis

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Southwest Airline Analysis

The goal of this paper is to explain the prominent success of Southwest Airline in the United States through a single case study analysis making use of the McKinsey’s 7-S framework. Developed in the early 1980s at the McKinsey & Company consulting firm by Tom Peters and Robert Waterman, this framework looks at 7 internal factors (Structure, Strategy, Systems, Style, Staff, Skills, Super-ordinate goals) which, according to its authors, need to be aligned for an organization to be successful. In this paper, we will analyse each of its internal elements through the case study “Southwest Airlines in 2008, Culture, Values, and Operating Practices”.

Structure:

The organizational structure of Southwest Airlines is known for being functional. There are only four layers of management between a frontline supervisor and the C.E.0. This structure aims at serving more efficiently their values which are considered the core of their organization: action, reliability, quality, informal communication and feedback. At Southwest, job specialization is not as deep as in any other airlines and it is not uncommon to see pilots help cleaning the plane in order to reduce the turnaround time, a thing which barely happens elsewhere. According to Arthur A. Thompson and John E. Gamble, this proximity and flexibility between employees and top management favours considerably employee-led initiatives: “Rather than buy 800 computers for a new reservations center in Albuquerque, company employees determined that they could buy the parts and assemble the computers themselves for half the price of new ones, saving the company $1 million.”

Strategy:

Southwest Airline is following a cost leadership strategy. To keep its prices as low as possible, it implemented several practices in the past:

* An intensive use of its fleet (departure of planes every 15 minute, turnaround time of 25 minutes in 2002 versus 40 to 60 minutes for other major airlines) * The fleet is exclusively composed of Boeing 737; reducing considerably the spare parts inventories, maintenance and training costs… * Implementation of a ticketless strategy which reduces cost on printing and processing paper tickets as well as the cost for the staff required at Southwest’s reservation centers and travel agencies. * Avoiding of congested airports and preference to nearby airports to major metropolitan areas and medium-sized cities reducing the fuel and landing fees costs (departures and waiting for clearance to land are quicker). * A point-to-point routes strategy very efficient in term of personnel workloads and gate utilization (the average time for aircraft at the gate is around 25 minutes versus approximately 2 hours for the hub-and-spoke systems). * Smooth management of workload due to the steady flow of arriving and departing flights (no big drops and peaks in staff requirement). * Boarding method that automatically assigned each passenger a specific number at the time of check-in, reducing considerably the queuing and the need for staff at the boarding gate. * The cleaning is taken care of by flight attendants (no use of cleaning crews). * Minimum service : no first class, no meals served on board (only snacks and beverages); * No baggage transfer service to other carriers

* Changing from cloth to leather seats (higher initial cost more than offset by the fact that leather seats are more durable and easier to clean and maintain). * Aggressive fuel hedging strategy mitigating the increase in oil price. * Equipping of most of its planes with vertical winglets (reduction of lift drag, improved cruising performance, extended engine life, reduced maintenance costs and fuel burn).

Systems:

From 2007, Southwest started investing in new information systems to substitute to its ticketless system, back-office accounting, payroll, human resources in order to improve data flow and benefit from higher...
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