Many organizations today are beginning to realize other than words they need to truly cherish customers by implementing and practicing good quality customer service. Customer service along with our economy has been on the decline for some time, for instance won’t name companies however, in my area certain companies have the better product to offer and they do.
The problem is how they treat customers and the amount of negative feedback they receive. Several customers to including me are considering and most ikely will depart from this company due to a lack of respect and concern of its customers. In todays economy more than before consumers are asking themselves “can I survive without this product or service”? In most cases the answer would be yes. In reality here in our country we are one of the largest consuming nations in the world and we are also in many instances wasteful.
The point I am trying to illustrate here is that organizations must include customer service as a priority in their daily business in order to continue to operate in success. Taking a closer look at southwest airlines, they have lways been a company that have a passion to reach out to its customers by any means to include being goofy. SWA are one of the few organizations that understand that without customers your organization would not have a bottom line of earning profits.
Organizations should go as far to include customer service in its mission and vision statement that will send a message to its employees, shareholders and customers alike that they are truly sincere and serious about customer service being a priority and most of all a stepping stone in the positive direction of attaining positive results in the organizations bottom line. Companies such as SWA have received multiple awards and one of the intriguing things that have captured a lot of attention is how serious they are about customer service.
Other areas of concern will follow such as cost and processes in the production of operations internally. The following paper will illustrate the importance of customer service as it reflects a comprehensive analysis of the SW airline company by illustrating ways to improve the company’s bottom line by emphasizing on areas of relevance while identifying issues of concern. External Analysis For many years SWA has been in the front runner of profits in its industry. Even with the world changing events of 9/1 1 SWA was the only unites states carrier to report consistent profits since 9/11 New York Times, (2003).
This is a great experience and opportunity especially when tragedy such as 9/1 1 and our economy has been a tremendous challenge for the airline industry amongst other businesses worldwide. Economically, businesses must have favorable outcomes in order to succeed and to move forward. SWA has always been known as one of the cheapest airlines that operate in the U. S. Although, this may be true other areas of concern arises such as higher fuel cost therefore causing the prices to increase.
The ability to maintain and offset cost due to rise in fuel SWA could mean to implement changes in the aircraft that will allow longevity in fuel. This process would also create the opportunity for a cheaper cost in fuel. In return, cheaper fuel cost will in reality keep SWA as the frontrunner in ticket pricing. Opportunities SWA will always have room for expansion nationally and globally Positive customer service reviews will always keep SWA as one of the top tier airlines Ticket prices will always have favor in all demographic arenas Add new cities to its routes Upgrade to new aircraft that are accommodating to customers
Having the ability to add more non-stop routes Continuing to be in compliance with FAA regulations with both international and national flights Adding new equipment that will be a part of new technology that will allow improved processes for purchasing tickets, checking in and entertaining customers during flights Threats Inflation and the increase in ticketing due to fuel cost Government influence due to regulations impacting internal policy Technology such as video teleconferences would minimize travel Future transportation ventures such as a super train would influence travel type Any ncidents such as poor press due to plane malfunctions etc Market regulations such as area expansion that is controlled by our government Ticket pricing of all competitors Personal demands from loyal consumers Internal analysis The internal analysis will encompass the strengths and weaknesses of the company to include a financial analysis.
Organizations face multiple obstacles in various areas of its core. SWA and the airline industry are no different. While identifying these issues or obstacles a clear articulate form of strengths and weaknesses must be clearly identified and analyzed in the attempt to move forward on a positive note. Internal operations and other functions that are the heartbeat of the organization IS a corner stone for success of failure. In certain instances once issues have been identified, the next step in applying corrective processes are essential in the corrective measures to operate more proficiently that in the end will bring positive results in several areas of the organization.
Strengths unparallel customer service ( Amongst the best of any organization) Offers the lowest airline fares Ability to recover from poor economy (2009 recession) Continue to operate in the same manner without cutting airline perks such as nacks Has one of the largest market capitals Have flights going to major cities One of the first airlines to offer services via webpage Top tier profit making airline in the world Current with the use of technology Always looking to make changes for customer satisfaction Eliminated the process of printing airfare tickets Always looking to expand to new locations of the world Makes it a point to listen to customers and practices improvement for customers understands the value of customers High percent of customers are able to fly non-stop Has a large number of jets operating Ability to manage cost within the organization Able to maintain steady cost with the fluctuation in fuel cost The positive use of the point system with minimal or no hubs with flight routes Able to adapt and move forward with government regulations in place Ability to move forward in the midst of negative press Always recognized for its performance and service to the public Weaknesses Fly only one plane Has the most full time employees In 2008, maintenance issues arose and allegations of keeping info from the press Handicap needs unmeet NO meals offered during flights Does not offer first class seating Mission Statement could be written better Certain U. S.
Cities are without SWA services Shuttle Services are weak No international flight No partnerships or alliances with other airlines Has not shown any growth in strategic management No innovation towards new technology Carry small amounts of freight and cargo Does not offer assigned seating Highly dependent on passenger revenues Limited early flights No outside booking available Dependent on one manufacturer Boeing High percentage of union workers High obligations with contracts No plans for expansion Financial Analysis The financial analysis consists Of multiple elements that reflect on the inancial standings of an organization. In this instance the financial analysis will reflect over the years the income that SWA has taken in and lost. There are several factors that determine the profit gains and losses of a company. In our current financial challenges organizations are on an uneven scale of profits and losses. Although, SWA focuses on its customers the economy always has a part in the positives and negatives of business earnings and losses.
Annually, SWA has been able to earn profits ranging $ 16. 3B USD to $1 6. 9B USD In many instances the company has been able to offset the sales evoted to cost of goods sold from 82. 44% to 79. 02%. This was the leading cause that led to a bottom line growth from $421. 0M USD to $754. 0M USD Bloomberg business week, (2014). After viewing the financial ratios and other financial data such as the income statement, SWA are financially excelling and continues to soar. Although, as many organizations they have a high debt ratio the organization is maximizing its abilities to earn a profit. After incurring large profits analyst are pretty optimistic about SWA moving in a positive direction.
Certain firms are projecting as much as 87% growth for the urrent year, and over eighteen percent for next year. These estimates have also been rising and many have speculated that SWA are in the business of setting new records. Although competitors such as Jet blue and other airlines are neck and neck with SWA the airlines sure understand the concept of earning a profit. Strategies to estimate profit has been redefined with the high earnings of SWA at any given time. The new growth has caused for much speculation and is causing a new projection to be made more often. It is safe to say the financial analysis have their work cut out for them trying to project rofits for such a soaring airline such as the SWA.
LUV Industry Average Ratio data TTM as of 12/31/2013 Profitability – Southwest Airlines Co (LUV) Return on Assets Industry Comparison 4. 49% Return on Equity 10. 52% Return on Capital 8. 40% Margin Analysis – Southwest Airlines Co (LIJV) Gross Margin 24. 62% Levered Free Cash Flow Margin 4. 77% EBITDA Margin 12. 61% SG&A Margin 1. 18% Asset Turnover – Southwest Airlines Co (LUV) Total Assets Turnover 0. 9x Accounts Receivables Turnover 48. 7X Fixed Assets Turnover Inventory Turnover 28. 5X Credit Ratios – Southwest Airlines Co (LUV) Current Ratio . 8x Quick Ratio o. 6X Long-Term Solvency – Southwest Airlines Co (LIJV) Total Debt/Equity 38. 4x Total Liabilities/Total Assets 62. X Growth over Prior Year – Southwest Airlines Co (LUV) Total Revenue 3. 58% Tangible Book Value 5. 37% EBITDA 35. 21% Gross Profit 18. 11% Receivables 9. 04% Inventory -043% Diluted EPS Before Extra 88. 24% Capital Expenditures cash From ops. 20. 01 % Levered Free Cash Flow 127. 66% Income Statement SWA over the last few years have been a profit earning organization. Looking at the financial statements from the year 2010 until current profit has been on the rise. In my opinion SWA are in a strong position financially at this current time, they shown increase in excess of 80%. The financial statements of SWA show improvement and growth between 2010 and 2013. Each year was shown to be profitable in earnings.
The financial strategy SWA are using is indeed working by the numbers. Over the last decade SWA has been the leader in the airline industry. The commitment to customer service and dedication to low fares. From the early millennium until now southwest has more than doubles its revenue in the billions despite the economy setbacks due to the recession Motley, (2014). Strategic Issues All organizations have issues that arise and must be dealt with in a swift professional manner. Several issues derive from ethics and or legality issues that must have a resolve. In this instance with SWA a certain issue with maintenance of the aircraft was in the spotlight.
Included with the issue of maintenance was some upper leadership that was attempting to keep the issue quiet. This type of behavior cannot be tolerated and one solution is to send a message through-out the organization letting everyone knows that we are in the business on conducting ourselves professionally which includes thically at all times. Anyone that is proven to operate outside Of our scope Of integrity such as the maintenance incident will not be tolerated and will be dealt with swiftly. Negative behavior and bad press is a black eye on the organization and in some instances is a killer due to the organization being unable to recover and recapture its image. In this instance we will be sure to conduct ourselves accordingly in the future.
For example, if any issues arise and it has the potential to catch national attention we will not try and hide the problem we will address the problem and come up with a swift resolve. In the future, one thing we must do as SWA is to upgrade our airplanes to accommodate the handicapped. If we continue to let this noticeable issue go ignored we will be sending a clear message that we are not concerned with the traveling of the handicapped and this is not at all true. Therefore, we must become more innovative and resolve the issue of the handicapped not being able to fly in our airlines comfortably. In this arena just the thought of them not being able to accommodate this issue at this time is alarming and must be revisited and resolved.
To go further, we Will consider another issue such s meals on flights. Again, in our economy organizations have to make cuts where they feel necessary to cost to earn a profit. Consumers flying for hours with no meals are not the best way to have a day, with the new enforcement Of items that can be carried Onboard to include food and limited time in between flights. This is surely can be an issue. Strategic Alternatives & Recommendations Now that we have identified a few issues that must be corrected such as leadership, handicap improvements and meals we could look for solutions. The issue of leadership is an issue due to the maintenance issue and a plot to over it up.
Individuals in leadership positions here at SWA need to realize that our leadership skills are needed and if they fail the consequences could be grave for the individual’s employment and the reputation of the company. To eliminate further negative press due to poor decisions from upper leadership, all leaders will be required to attend semi-annual ethics training and also two required leadership courses from a variety of courses. This policy or change will go into effect immediately. Although, as leaders we understand the redundancy of training and a repeat of training has no uarantees to end the problem however, we do believe we can isolate further reoccurrences of the same misbehaviors in the future to come.
Other areas of concern are the accommodations for handicapped customers, first if we at southwest are very serious about customer service and that is our slogan. How can we continue to operate with-out a resolve to the situation at hand! Corrective measures will include a survey or in depth study of the issue. Once the survey is complete the findings will be forwarded to the upper leadership for decisions on how to correct the issue so that all customers can feel at home alike. One solution that is at the forefront is the front rows a few in number could be modified and equipped to accommodate the customers that are in need. A timeframe and decision to equip all planes during maintenance times Will be the ideal time to configure the planes for this upgrade.
Lastly, the meals could simply be added to a late flight at the beginning and then depending on profit more meal times through-out the day can be added. In addition, would not recommend we add other cost to our customers however, adding extra meals at a cost upon further research could also be beneficial. For example, meals that are included could be served t 4 PM and a sun,’ey can be taken from the customers on certain extras to carry onboard and if they are willing to pay. Change is often a fear for many of us as we do not know what to expect or simply don’t care for the outcome either way change is inevitable and will always exist in organizations.
Certain organizations focus on technical issues and on improving on the past. To a certain point they will be successful, however this results in becoming victims of their own success. Organizations need to move forward beyond the popular words and deciding with actions, instead they need to perform and in he end this will allow them to grow and develop organized change, (2010). Implementations & Conclusion All organizations consist of change, depending on the organization and its personal it could be a smooth change or a challenging one. While identifying issues that needed to be addressed a few goals are needed in conjunction with implementation of these changes.
The changes should come in the form of short and long term goals to be implemented and carried out. For example, the short term goal would be the acknowledgement of the issue and a short term solution. The long term goal would be to have a corrective ction plan to include cost and execute the plan. For instance, we have identified several weaknesses that are obviously a problem for the organization. One weakness was the fact that our airline does not serve full meals only snacks. The short term solution is to begin serving meals at dinner times only and not to include extra cost from the customers. The funds for this additional service at this time can come from our reserves.
At this time we are well above projected profit earnings so therefore funding should not be a factor. The long term solution would be to make this meal at this certain ime permanent and to also research the study of the desires of the customers to want to include food being available to buy. If the answer to this is positive then we move forward by stocking extra meals for purchase for the interim to work in the formula for a permanent service. To reiterate, we are in the black for funding and are over profit projections so we will not add any additional cost to our customers at this time. In closing, we understand the nature of our business.
Our goal is to continue to operate at the highest level by following our mission statement and of course working to provide our ustomers with the upmost customer service that we can provide. If we continue to operate by our values we will continue to lead the industry with our unique internal working relationships and our ability to serve. Also by equipping our employees with the leadership skills and tools to perform their duties without a doubt we will continue to operate the skies at an unprecedented level of success. To go further, by illustrating we are capable of running our organization as a whole by hitting all widgets internally ensuring all future goals are attained.