John BrunoAlex Buxo

Tiffany Francois Consulting Firm B Eli

NichtbergerOctober 21, 2014

● “Southwest Airlines’ competitive labor costs, low fares and unique corporate culture comprised its best arsenal against competitors”

● Growth and fierce competition has caused Southwest to lose touch with its core values

Central Issue

➢ Southwest is losing its competitive advantage and market share

➢ Airlines like JetBlue offering more amenities at similar fares

➢ Now employing “Profit Boosting Strategy” instead of “Customer Friendly Strategy”

➢ Shift towards less employee centered culture with the growth of the company

➢ What can we do to fix this?

What Happened ?

➢ To build a HR department that focuses

on restoring and strengthening employee moral

✧ Focus on rebuilding, through starting multiple committees based on employee moral

✧ Start social groups in the organization based on people whose job functions are similar

✧ Show employees that we care by offering rewards that recognizes outstanding work

First Alternative:Boosting Employee Morale

➢ Rebuilding and implementing a new IT system

✧ Improve The Southwest Airlines Website

✧ Online Costumer Engagement Strategy

✧ Southwest Airlines App

✧ Better Infrastructure for Employees

Second Alternative:Implement New IT System

➢ To change the firms strategy from a low cost airline to middle cost airline to regain its competitive advantage.

➢ SWA is only the cheaper option 40% of the time

Third Alternative:Price Strategy

Pros

●Motivates employees to work harder

●Focuses on Corporate original Mission Statement of keeping employee happy

●Happy employees are productive, efficient, and helpful employees

● High morale will drive your staff to do their best

Cons

●Doesn’t focus on changing times in Technology

●Having happy employees has many benefits—but also costs that can sometimes outweigh the benefits

●Doesn’t help Southwest deal with competitors

Pros/ConsBoosting Employee Morale

Pros

●Introducing a new technology decrease costs (Cost effectiveness)

●Flexibility in adapting to a business environment in constant flux, so their IT functions have to respond quickly to changing demands

●The customer can use SWA’s app anytime 24x7

Cons

●Relying more on information technology than

●If employees see new system they would want to be compensated as well

●Provide training to employees on how to use new IT system

Pros/ConsImplement New IT System

Pros

●Help Southwest increase the profit margins

●Put Southwest in better place to compete for Market shares

●Helps Southwest expand even more and can complete more mergers.

Cons

●It could lead to customer relations problems.

●SWA customers tend to associate the brand’s image with low price, and they may be unable to accept it if the price goes high

●Employees would feel more alienated

Pros/ConsPrice Strategy

● Opportunities

o Investment in New Tech

o Acquisition of AirTrain

o Write Amendment Repeal

● Strengths

o Well-known Brand Name

o Low Fare Airline

o Friendly Staff

● Weaknesses

o Change of Leadership

& Culture

o Unreliable Service

● Threats

o Competitors

o Economy

SWOT Analysis

➢ Solves Multiple Problems ✧ Attractive technology will help gain new customers

✧ Provides great customer service through online help or chat rooms

➢ Solves Problems that Can Occur in Future✧ It will be easier to adjust to newer technology

✧ Decreasing the workload of employees, equaling happier employees

BEST AlternativeImplement New IT System

➢ Features:

✧ New, Easy to Use, Redesigned Website

✧ Robust Mobile Application

✧ New Confortable Leather Seats

✧ Updated In-Flight Entertainment Options

BEST AlternativeDesign New IT System

➢ Changing an IT system is costly

✧ Disperse the cost directly to Customer

✧ Increase average ticket price by mere 7%

✧ Slight Increase is Well Worth Customer’s New Experience

Southwest Airlines

OtherAirlines

Avg Ticket Price

$163 $366

After increase $174.41 Same

Implementation PlanThe Cost Involved

➢ Begin offering rewards for customers

✧ Loyalty Program

✧ 'App-Exclusive’ Promotions

✧ Helps Customers Find Deals Better

✧ 60% of US Owns a Smartphone

✧ Gives Customers incentive to fly Southwest

Implementation Plan

Website, App & Rewards Program

➢ Focus on Creating Commission Incentives with Travel Agents➢ Unique Influence with Clients

➢ Currently No Domestic Commissions➢ Only International

➢ Agents Will Book More Clients on Southwest➢ Increase Revenue & Market Share

Implementation Plan

Loyalty Program for Travel Agents

THANK YOU!