Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher
This case details the history of Southwest Airlines and emphasizes the benefits of a focused strategy. The case demonstrates how a competent service strategy, together with operations efficiency, can lead to profit and explains the concept of value/cost leveraging. The case also addresses the importance of CEO Kelleher who at the time of the case is about to step down.
Swot Analysis of "Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher" written by Elliott N. Weiss, Anwar Harahsheh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kelleher Southwest facing as an external strategic factors. Some of the topics covered in Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher case study are - Strategic Management Strategies, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher casestudy better are - – supply chains are disrupted by pandemic , increasing commodity prices, central banks are concerned over increasing inflation, there is backlash against globalization, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, geopolitical disruptions,
wage bills are increasing, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kelleher Southwest, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kelleher Southwest operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher can be done for the following purposes –
1. Strategic planning using facts provided in Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher case study
2. Improving business portfolio management of Kelleher Southwest
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kelleher Southwest
Strengths Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kelleher Southwest in Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher Harvard Business Review case study are -
Organizational Resilience of Kelleher Southwest
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kelleher Southwest does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Kelleher Southwest has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Kelleher Southwest has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Kelleher Southwest is one of the leading recruiters in the industry. Managers in the Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher firm has clearly differentiated products in the market place. This has enabled Kelleher Southwest to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Kelleher Southwest to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Kelleher Southwest has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Kelleher Southwest has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Diverse revenue streams
– Kelleher Southwest is present in almost all the verticals within the industry. This has provided firm in Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Kelleher Southwest digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kelleher Southwest has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Kelleher Southwest is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Kelleher Southwest is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Kelleher Southwest in the sector have low bargaining power. Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kelleher Southwest to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher are -
Increasing silos among functional specialists
– The organizational structure of Kelleher Southwest is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Kelleher Southwest needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kelleher Southwest to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher can leverage the sales team experience to cultivate customer relationships as Kelleher Southwest is planning to shift buying processes online.
Interest costs
– Compare to the competition, Kelleher Southwest has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Lack of clear differentiation of Kelleher Southwest products
– To increase the profitability and margins on the products, Kelleher Southwest needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Kelleher Southwest needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High operating costs
– Compare to the competitors, firm in the HBR case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Kelleher Southwest 's lucrative customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Kelleher Southwest supply chain. Even after few cautionary changes mentioned in the HBR case study - Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kelleher Southwest vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Kelleher Southwest has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Kelleher Southwest has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Kelleher Southwest has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kelleher Southwest is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kelleher Southwest is facing challenges because of the dominance of functional experts in the organization. Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Kelleher Southwest has opened avenues for new revenue streams for the organization in the industry. This can help Kelleher Southwest to build a more holistic ecosystem as suggested in the Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher case study. Kelleher Southwest can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kelleher Southwest to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Kelleher Southwest to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Kelleher Southwest can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kelleher Southwest in the consumer business. Now Kelleher Southwest can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kelleher Southwest can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Kelleher Southwest can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kelleher Southwest can use these opportunities to build new business models that can help the communities that Kelleher Southwest operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Learning at scale
– Online learning technologies has now opened space for Kelleher Southwest to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kelleher Southwest can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Kelleher Southwest can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Using analytics as competitive advantage
– Kelleher Southwest has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kelleher Southwest to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Kelleher Southwest to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Building a culture of innovation
– managers at Kelleher Southwest can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Threats Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Kelleher Southwest will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Kelleher Southwest demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher, Kelleher Southwest may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Kelleher Southwest business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kelleher Southwest can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher .
High dependence on third party suppliers
– Kelleher Southwest high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Kelleher Southwest.
Technology acceleration in Forth Industrial Revolution
– Kelleher Southwest has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Kelleher Southwest needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing wage structure of Kelleher Southwest
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Kelleher Southwest.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Kelleher Southwest needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Environmental challenges
– Kelleher Southwest needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Kelleher Southwest can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Southwest Airlines: Keeping That Lovin' Feeling after Herb Kelleher is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Kelleher Southwest needs to make to build a sustainable competitive advantage.
