TEAM MEMBERS :KRYSTAL BROWN, JASMINE

COOLEY, ARETAS COLEMAN, JEREMY LEWIS, TERRY KERR

‹#›

OVERVIEW

‹#›

Organization History and Life Cycle External Environment Mission, Goals, and Strategies Organizational Culture and Management Interorganizational Relationships

HISTORY

“As company legend goes, the very first route map was drawn on a cocktail napkin during a meeting between Rollin King and Herb Kelleher.”

1967: Air Southwest Co. is incorporated; later in 1971 the company name was changed to Southwest Airlines Co.

Rollin King and Herb Kelleher founded Southwest Airlines with one simple goal: To serve Dallas, Houston, and San Antonio with point-to-point flights.

HISTORY

Herb Kelleher, Attorney at Law (Co-founder)

1967: Files application with TAC to serve DAL, IAH, & SAT.

Rival companies Braniff and Texas International serve the same areas; hence, they fought through the legal system to keep Air Southwest grounded.

Herb offers to represent Air Southwest’s appeal to the Texas Supreme Court. He charged no fees and paid any costs out of pocket.

1970: Texas Supreme Court overturns lowers court ruling and clears Air Southwest for “take-off.”

‹#›

HISTORY

Lamar Muse: Joins Air Southwest in 1971 as President.

Sells promissory notes to raise $1.25M in funds for aircraft and startup costs

Makes agreement with Boeing to purchase three Boeing 737s (with Boeing holding 90% of the financing)

Hires “The Over the Hill Gang” (Dick Elliot, Jack Vidal, Donald Ogden, Bill Franklin)

Made initial public offering of stock (raising $6.5M in funds)

June 18, 1970: The “Love Airline” is born; starting service to DAL, IAH, & SAT.

HISTORY1975: LUV made ticker symbol on American Stock Exchange

1976: Southwest Airlines expands service to 5 new cities in one year.

1978: Southwest Airlines purchases Midway Airline as a wholly owned subsidiary and enters the Northeast U.S. market

1978: Muse resigns as President; Herb is asked to step in as Interim President, CEO, & COB.

1981: Herb Kelleher assumes the permanent position of President and CEO

HISTORY Herb Kelleher served Southwest Airlines from 1967-2007

Profitable for 37 years

Largest U.S. based airline (by passengers)

547 Aircraft (Boeing 737)

3400 Flights A Day

One of first airlines to have a website

First airline to offer automated ticket services

“Southwest Effect”- term coined by the Department of Transportation

‹#›

LIFE CYCLE

‹#›

EXTERNAL ENVIRONMENT

‹#›

Simple + StableLow Uncertainty

Complex + StableLow Moderate Uncertainty

1. Small number of external elements, and elements are similar.

2. Elements remain the same or change slowly.

1. Large number of external elements, and elements are dissimilar.

2. Elements remain the same or change slowly.

Simple + UnstableHigh-Moderate

Uncertainty

Complex + UnstableHigh Uncertainty

1. Small number of external elements, and elements are similar.

2. Elements change frequently and unpredictably.

1. Large number of external elements, and elements are dissimilar.

2. Elements change frequently and unpredictably.

Uncertainty

EXTERNAL ENVIRONMENT

Air- Traffic Controller shortage

Competition Fuel Prices Air traffic disasters Decline in customer

demands Economic downfall

‹#›

Complex + Unstable

High Uncertainty

1. Large number of external elements, and elements are dissimilar.

2. Elements change frequently and unpredictably.

EXTERNAL ENVIRONMENT

External SWOT AnalysisOpportunities Threats

• Falling interest rates• New technologies

increasing efficient• Limited substitute products• High entry barriers• Bargaining power with

Boeing• Declining fuel prices• Receptive business

traveler• Underserved markets

• Uncertainty in fuel prices• Increased airport security• Weather• Strong power of buyers• Substitute products in

short-haul markets• Intense competition• New Northwest/Delta

merger (increased• competition)• Labor union demands

‹#›

EXTERNAL ENVIRONMENTPorter’s 5 Forces

Threat of New Entrants (L) Capital Intense Government Regulations Excess to distribution channels Economies to scale

Power of Buyers (H) Switching cost Differentiation of products Information available

‹#›

EXTERNAL ENVIRONMENTPorter’s 5 Forces Cont.

Power of Suppliers(H) Switching costs Substitutes Difference between Products

Threat of Substitutes(M) Rental Car Services Rail Bus Ship

‹#›

EXTERNAL ENVIORNMENTPorter’s 5 Forces Cont.

Rivalry of Existing Firms (H) Mergers Competition

‹#›

INTERNAL ENVIRONMENT

SWOT AnalysisStrengths Weaknesses

• Strong culture• Efficient operations• Strong customer/

employee focus• Low turnover• Young, efficient fleet• Low debt• Strong financial position• Strong leadership• Strong web site• Well respected company

• Pending/ potential expiration of fuel hedging contracts

• Increasing costs• Expiring labor contracts

‹#›

MISSION The mission of Southwest Airlines is dedication to

the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride , and Company spirit.

To Employees: We are committed to provide our Employees a stable

work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer

‹#›

GOALS AND OBJECTIVES Ensure highest quality to Customers

Provide assistance to customers Ensuring security and safety

To stay the most successful with low-fare and high frequency point-to-point carrier.

‹#›

STRATEGIES Low cost Leadership

Competitors eliminatedTries to increase market share by keeping

costs low compared to competitors

PeanutsBags fly freeConsistent Airplane

‹#›

Chart on pg 73 http://www.nytimes.com/2010/11/21/busi

ness/21south.html http://www.bloomberg.com/news/2010-0

9-27/southwest-airlines-agrees-to-buy-airtran-for-1-4-billion-in-cash-shares.html

STRATEGIES Defender strategy

Stability

Corporate Level StrategyPursed at an internal growth ( more

equipment, employees etc.)External growth (using joint ventures with

WestJet to serve Canada etc)

‹#›

‹#›

STRATEGIES Internal process

approach

Human Resources Department Happy Employees

= Happy Customers

PRODUCT AND SERVICES

‹#›

CULTURE

‹#›

CULTURE

‹#›

CULTURE

‹#›

‹#›

‹#›

MANAGEMENT

‹#›

MANAGEMENT

‹#›

‹#›

INTERORGANIZATIONAL RELATIONSHIPS

POPULATION ECOLOGY

‹#›

Resource Dependence

Population Ecology

Collaboration Network

InstitutionalismOrg

aniz

atio

n Re

lati

onsh

ips

Organization Type

Cooperative

Com

petitive

Dissimilar Similar

POPULATION ECOLOGY

‹#›

‹#›

INTERORGANIZATIONAL RELATIONSHIPS

INTERORGANIZATL RE

‹#›

‹#›

‹#›