Value Chain Analysis Example for Southwest Airlines 

Value Chain Analysis Example for Southwest Airlines 

 

Be sure to describe as capabilities if possible, and then identify for each how they create value or reduce costs, and provide your opinion about the sustainability factors (V, R, I, O). 

 

Strengths	Decreases Cost	Increases Value	Sustainability:Valuable, Rare, Costly to Imitate, Organized to Capture Value
Primary Activities
Supply Chain Management:
Able to procure airplanes efficiently due to using only one type.	X		V,R
Able to maintain inventory efficiently due to using only one type of airplane	X		V,R
Reduce inventory needs due to one type of aircraft	X		V,R
Purchasing department tracks all supplies, inventory very carefully	X		V
Operations:
Continuously optimize route scheduling, using smaller hubs, point-point	X		V,R
Able to fly routes with minimal delays	X		V,R,I,O
Continuous emphasis on reducing turnaround time by multiple departments:  Gate agents, Ramp agents, dispatchers, provisioning agents, cleaning crews, pilots, mechanics.	X		V,R,I,O
Optimize baggage handling to use less labor	X		V,R
No frills: one type of aircraft, no meals, no paper tickets or assigned seats	X		V
Emphasis from multiple department on making the flight pleasant for customers – skycaps, flight attendants		X	V
Marketing and Sales:
Accentuate low cost and customer experience in advertising	X	X	V,R
Effective pricing and advertising strategies that captures demand, with continuously full flights. (Pricing reviewed continuously by Revenue management to make sure prices stay competitive).	X		V,R
Emphasis on selling additional services (rental cars, etc.)		X	V
After Sales Service:
Able to provide airport service efficiently due to continuous traffic.	X	X	V
Proactive in solving customer issues (even after the flight)		X	V,R
Support Activities
Research and Development (list resources and capabilities below):
Ability to continuously develop innovative operations and service ideas	X	X	V,R,I
Information Systems:
Supports ticketless system.	X		V
Human Resources
Practice of hiring only those with positive attitudes and good teamwork skills	X	X	V,R
Incentives such as profit sharing encourage hard work and cooperation	X	X	V
Can reduce training needs due to single airplane type.	X	X	V,R
Formalized training programs (first day; flight simulators)		X	V
Accounting and Finance:
Emphasis on accuracy in order to understand costs in multiple departments – secretaries, finance	X
Company Infrastructure:
Creation of and maintenance of consistent business model based on low cost	X		V,R,I
Able to maintain a culture of commitment to low cost and customer happiness	X	X	V,R,I,O
Leadership and support of culture by very visible and consistent CEO.	X	X	V,R,I

 

 

 

 

 

Weaknesses	Decreases Value?  Increases Costs? (list which one)
Primary Activities
Supply Chain Management: Insistence on using only one type of plane limits flexibility in pricing and volume.	Decreases Value
Operations: None identified
Distribution: None identified
Marketing and Sales:  Cannot offer International flights without a hub and spoke system.	Decreases Value
After Sales Service: Cannot transfer luggage from Southwest to another carrier.	Decreases Value
Support Activities
Research and Development: None identified
Information Systems: Complex system tying many departments together at risk for high impact if it fails. Difficult to modify and/or maintain.	Increases Costs Increases Costs
Human Resources Management: Extensive training is expensive	Increases Costs
Accounting and Finance: Substantial detailed cost accounting requires high labor costs	Increases Costs
Firm Infrastructure: Dependence on charismatic CEO	Potentially Decreases Value

 

 

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