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Operation Management chapter 1
Operation management approach and theories
Operation Management chapter 1
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In 1967 after its incorporation, Southwest Airlines wasn’t able to board customers until 1971, due to a lengthy struggle with the court (Southwest Corporate Fact Sheet, 2017). In the United States, Southwest is currently the largest low-cost passenger airlines, launching on high travel days over 3,800 flights daily (Armstrong, 2017). One would agree that Southwest Airlines is a popular airline used by consumers due to discount pricing, bags fly free, package discounts, budget corporate travel, and cargo flights. One would also agree Southwest is considerable for vacationers, frequent fliers, and holiday and business travelers.
Offering cheap prices to fly through the United States, Southwest is known for having a philosophy of low pricing
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Southwest believes their stakeholders are the center and dependable when implementing new innovative solutions (Cederholm, 2014). Southwest welcomes and embraces all feedback from their stakeholders and keeps them involved allowing them to give suggestions. Southwest acknowledges that “there is no better way to show our LUV than to communicate with our valued stakeholders” (Cederholm, 2014). There any many ways to get suggestions from stakeholders. It has been Southwest Airlines mission to present the best customer service quality by seeking the ideas of their stakeholders. Southwest also holds annual meetings for shareholders and investors to attend (Cederholm, 2014). Over the last five years Southwest has improved their return on investments from their shareholders (Cederholm, 2014). They were able to do so by their effective operations. Southwest investors have received over 100% stock price appreciation within the last year in addition to the normal dividends they receive (Cederholm, 2014). As a result, Southwest would be seen to shareholders as a good
Despite its growing domestic network, the company didn’t offer international flights until July 2014, and even then, it only offered limited destinations (“Southwest Corporate Fact Sheet,” n.d.). Furthermore, the company’s reliance on a single aircraft is cause for concern. Southwest Airlines was also weak with technology utilization initially but has since turned this into an asset, as described later. Finally, the company has a limitation with providing customer perks due to its low-cost operations (Ross & Beath,
Even though Southwest offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company. As mentioned, Southwest offers low prices on their airplane tickets. Also, Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures. And since people's biggest concern nowadays is money and time, having low price airline tickets to cater their traveling needs in a shorter period of time will surely satisfy them. Moreover, aside from the low prices offered, what attracts to customers is Southwest’s way in dealing with them. The employees of the airline treat their customers well and really listen to their needs.
Since 1987, when the Department of Transportation began tracking Customer Satisfaction statistics, Southwest has consistently led the entire airline industry with the lowest ratio of complaints per passengers boarded. Many airlines have tried to copy Southwest’s business model, and the Culture of Southwest is admired and emulated by corporations and organizations in all walks of life. Always the innovator, Southwest pioneered Senior Fares, a same-day air freight delivery service, and Ticketless Travel. Southwest led the way with the first airline web page—southwest.com, DING, the first-ever direct link to Customer’s computer desktops that delivers live updates on the hottest deals, and the first airline corporate blog, Nuts About Southwest. Our Share the Spirit community programs make Southwest the hometown airline of every city we serve.
The marketing approach of Southwest Airlines is built upon their strong business model. They have successfully managed to target two specific market segments of the airline industry while remaining profitable. Their strategy is simple, to offer frequent non-stop flights with the lowest costs which appeal to both the business and budget travelers. By segmenting their target audience to specific demographics and ticket pricing, passengers know exactly what they are getting for the price they pay.
In the airline industry, Southwest Airlines is considered a true innovator. By shaking up the rules of flying and improving upon inefficient industry norms, Southwest has quickly grown by leaps and bounds. From the very start, Southwest Airlines' goals were to make a profit, achieve job security for every employee, and make flying affordable for more people (Southwest,2007). Southwest has not strayed from these goals. It does not buy huge aircrafts, fly international routes or try to go head to head with the major carriers; and thanks to a great planning, Southwest airlines has become the most successful airline company in the U.S., if not the world.
Advertising: As one of the largest domestic airlines, Southwest Airlines has an enormous advertising budget to sustain its presence and increase its market share through focusing on the benefits of flying Southwest over its competitors. Southwest recognizes that flying is no longer a pleasurable experience for many customers, even on Southwest, historically a budget airline. Even though Southwest is often regarded as a no-frills airline, it still attempts to build goodwill from its customers based on its advertising. Of the $249 million it spent on advertising in 2011, Southwest Airlines is unique in that it does not sell additional ad space on the exterior of its aircraft. Many domestic airlines have begun selling aircraft exterior space as a way to increase revenue, but Southwest Airlines insists that it wants to keep its product and advertisi...
Since CEO Gary Kelly took the reins of the company back in 2004, Southwest has maintained and enhanced the company’s ability to offer customers a great flying experience for low fares. This effort start early in Mr. Kelly’s tenure when he identified four success factors
While most others in the industry have gone bankrupt in the past 15 years, Southwest has consistently made profits (Kenny, 2011). It all comes down to the culture and business practices formed in the beginning. Southwest was designed to be efficient. Employees help each other out and seek the best ways to do things. This culture has led to high efficiency, without sacrificing the customer service that sets them apart.
In this report the two Low Cost Carriers such Jet star v Southwest, will be compared and contrast such as different approaches to their market place, competition and aircraft operating strategies in the light of their ownership. Jet star is owned and controlled by Qantas internationality and domestically where Southwest is a major U.S airline that primarily provide short haul, high frequency, point to point, low fare service. Company overview Southwest Airline Southwest Airline is a major U.S airline that primarily provides short haul, high frequency, point to point, low fare service. Southwest is located in Texas and commenced their operation on June 18,1971 with three narrow body airline Boeing 737 aircraft.
Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.
Southwest believes that happy employees will provide high quality customer service. Which will give customers a positive flying experience and encourages repeat travel. Plus, to keep fares low Southwest uses various methods to cut
The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.
The low cost and no frills strategy is make travel affordable at low cost. The company only operates one type of aircraft which is Boeing 737 to help maintenance cost low. Southwest was the first airline to use E-ticketing in this way customer can reserve spot and buy ticket on their web and allow less expense in printing tickets. Medium measured airports which allowed them to produce better time performance and less fuel costs so plane do not have to wait in the line at the runway. The core value of the company of “LUV and fun” makes the company great place to work that gives customer with a great experience.
Another internal challenge for Southwest Airlines is the conflicting management style and business operation with AirTran. On top of that, the external challenges such as the increase of competitions and gas prices are some of issues f...
It all started in 1971, when Rolling King and Herb Kelleher decided to challenge the existing rut of charging high prices for air travels. They considered the railways and roadways their competitors and decided to offer cheaper travel for smaller routes. The company was incorporated in 1967, apart from initial entry troubles, Southwest has been the only US airline to have earned profits since 1973. The eccentric company’s outlandish way of conducting themselves has been the sole reason for Southwest Airlines to succeed in a highly competitive and packed industry.