Southwest Airlines Capstone Group D, BUSI 400/690
To avoid the impending threat of a lack of pilots in the industry and secure market space for future growth, Southwest Airlines should implement a strategy to recruit recent graduates through a student debt forgiveness program.
Mission
The mission of Southwest Airlines is to provide high-quality, low-cost air transportation throughout the Western Hemisphere using the most advanced and eco-friendly aircraft. Southwest is committed to serving its current and future customers, employees, and stakeholders with the highest levels of warmth, friendliness, and company spirit.
Objectives
- Be fully committed to our customers by offering the highest level of Customer Service.
- Break down distance barriers between people and their loved ones.
- Offer the lowest cost of air travel on the western hemisphere.
- Accommodate all of employee, company, and shareholders needs while pursuing our vision.
Core Competencies
Low cost and high customer satisfaction
Historical Financial Statements
SWOT Overview
Bivariate SWOT Matrix Strategies
- Expand recruitment for pilots and air staff, and partner with aviation programs. (S9, T2)
- Backwards Integration: Southwest could utilize profits and current low oil and gas prices and purchase its own refinery/oil company (S6, O9).
- Market penetration: Southwest could continue to expand its international flights into Central America and the Caribbean, focusing especially on Cuba. (S7, O2, O3)
- Market penetration: Offer promotions and new campaigns to capitalize on increased travel (W8, O5).
- Market Development: Offer more discounts i.e. Senior citizen, Student, Veternan. (S1, S4, T6, T8)
Matrices Summary
The Balanced Scorecard
- Customers: Lowest Prices offered that can increase customer satisfaction measured by surveys and customer ranking. *Target: #1, Initiative: customer reward travel program, employee friendliness environment.
- Employees: (1) Create a debt forgiveness program for future pilots, (2) decrease employee turnover, and (3) increase company market share. *Target: 2976, -2%, 2% respectively. Initiative: create and offer programs, finance portion of students debt, 8% increase in industry.
- Financial:Increase Customers, and Minimize costs measured by number of flights and savings. *Target: 1.49% yearly and 2% respectively. Initiative:open new destination, proactive outreach to inexperience pilots -lower salary, offer an attractive incentives.
- Learning and Growth:Improve greenhouse gas emission and reduce waste measured by amount of gas emission and recycled. Educate pilots on new technology, measured by completing training flight simulation. *Target 5% reduction, completion 100%. Initiative: Support energy efficiency, committing to environmental sustainability, purchase four simulators.
Pilot Retention and expansion
Southwest employs 17-26% of pilots in the industry
Adding value through investing in employees and expanding services
Pilot salaries and benefits:
- Base salary: $81,000, 5% inflation each year
- Debt forgiveness: Up to $80,000 per new hire, $18,244.21 annually
- Existing pilot salaries: $109,440, 5% inflation each year
Net Present Value: $118,547,795
Internal Rate of Return: 16.17%
Pro Forma financial statements
References
Creative Commons. (2016). Adobe Slate. Retrieved from slate.adobe.com
All in text citations taken from attached research paper.
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