ASSIGNMENT # 5

Analysis of Southwest Airlines

Analysis of Southwest Airlines

Corporate Culture at Southwest Airlines

The culture of the organization is normally conceived automatically, based on the values of the peak administration or the founders of an organization. Every organization has its own unique culture or value set; however, most organizations do not consciously try to create a certain culture. Corporate culture is defined as the moral, social, and behavioral norms of an organization based on the beliefs, attitudes, and priorities of its members. Southwest Airlines expends an allotment of energy in sustaining its workplace culture. Southwest is the only major airline in the United States that has been money-making in each of the last five years. It furthermore has a good status as an employer (Lauer, 2010).

Southwest Airlines has been known to be very efficient in the industry in order to achieve the success. Southwest is a stakeholder conscious organization and understands that success starts with the employees. The employees will in turn provide excellent and effective customer service to their passengers. Southwest has been able to maintain a low employee turnover ratio. Southwest has also successfully implemented an online-booking system where over 60 % of their sales are generated. They have efficient airline operations of getting from point A to point B through carefully selected airports. These ultimately help with the reduction of operating costs. The company has an efficient human resource plan when it comes to hiring new employees, their policy is they have pilots hire pilots, and gate agents hire gate agents. In addition to this, Southwest is successful in implementing their strategy, but the company's strategy can be easily duplicated by competitors and become a threat to Southwest in the long run. Another downfall to the company is their emphasis on satisfying their employees. As a result, the employees have too much authority and can ultimately control the company (Lauer, 2010).

Southwest' Financial Performance

Profitability Ratios

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

12/31/2005

12/31/2004

12/31/2003

12/31/2002

12/31/2001

ROA % (Net)

3.09

0.69

1.14

4.27

3.61

4.29

2.94

4.69

2.68

6.53

ROE % (Net)

7.84

1.9

2.98

9.63

7.6

8.98

5.9

9.33

5.71

13.69

ROI % (Operating)

10.62

2.98

5.08

9.21

11.11

10.22

7.92

7.61

6.85

12.14

EBITDA Margin %

12.36

8.89

8.56

16.47

14.11

18.62

15.07

19.52

15.08

21.24

Calculated Tax Rate %

38.39

39.63

35.97

39.04

36.84

37.3

35.99

37.57

38.64

38.24

Revenue per Employee

346,810

298,048

309,667

286,840

278,166

239,024

209,995

180,747

163,826

175,908

The profitability of southwest airline is showing that the ROA is gradually increasing after the decrease in 2008. Profitability is the relationship between the utility and the investment required to achieve it. Profitability measures the effectiveness of the management of an enterprise, as evidenced by the profits earned from sales and use of investments, their status and regularity is the tendency of profits. These utilities in turn, are the conclusion of a competent administration, an intelligent planning, comprehensive reduction of costs and expenses and general enforcement of any measure aimed at obtaining profits. In addition to this, the ROE of the company is god as compared to the previous years as a significant increase took place in the profitability of south west airlines.

Furthermore, the current situation of ROI of the southwest airline is also very good as the ROI of the southwest airline is highest as compared to the previous years. The word profit is a general term that measures the profit that can be obtained in a particular situation ...