Prepared By: Aravindhan Gopalan, Gaurav Patni, Nitu Roy, Nikhil Kasliwal, Om Prakash Roll No. : (341) (362) (396) (394) (397)

CSF Analysis

Agenda

•Introduction

•CSFs and Goals

•Sources of CSFs

•CSF Methods

•Southwest CSFs

•Industry Matrix

CSF Analysis

Introduction

• An organization has a mission describing where it intends to go in the long term.

• The goals and objectives of every staff member are aimed towards the mission. However this is not enough.

• There are certain key areas, unique to the organization and the industry in which it competes, defined as the organization’s critical success factors(CSFs).

Spring 2002 Understanding CSF Analysis

What Is a Critical Success Factor?

• A key area where satisfactory performance is required for the organization to achieve its goals

• A means of identifying the tasks and requirements needed for success

• At the lowest level, CSFs become concrete requirements

• A means to prioritize requirements

South West Airlines – An Overview

• A major US Airline and the world’s largest low cost carrier

• Domestic airline that provides short haul, high frequency, point-to-point, low fare service

• Today, SW operates over 400 Boeing 737 aircrafts in over 59 cities.

• First airline to offer online booking

Relationship of Goals and CSFs

Sources of CSFs

• The industry in which the organization competes or exists

• An understanding of the organization’s peers• The general business climate or organizational

environment• Problems, barriers, or challenges to the

organization• Layers of management

Industry CSFs

Competitive-Position CSFs

Environmental CSFs

Temporal CSFs

TOWS Matrix for SWAStrengths Weaknesses1. High capacity usage. 2. Named the Best Low Cost Airline leader for the last three consecutive years.3. Diversity in upper management.4. Revenues increased by 8% to 5.94 billion in fiscal year 2011.5. Net Income increased 83% to $402million in fiscal year 2011.6. Fourth largest domestic airline.

1.No international flights.2.No segmented seating.3.Dependent on a single producer. (Boeing)4.Lack of exposure towards online booking agencies.5.Four out five employees are members of the union.6.Carry a small amount of freight and cargo.

Opportunities S-O Strategies W-O Strategies 1.National and International Markets2.Growth Of business class population3.Industrial Research and Development4.New Technology Opens the Door for New Products/ Services5.Increased Internet advertising

1. Expand into other countries or new cities. (S2, S6,, O1, O5)

1. Expand into Canada.2. Expand into Mexico. (W1, W2, W3,

O1, O3, O4, O5)

Threats S-T Strategies W-T Strategies1.Decline of leisure travel due to economy and terrorism2.Competing online ticket reservation systems.3.New government regulations that make operations costlier.4.Gas and oil price fluctuations.5.Terrorist attacks.6.Annual airline security costs have increased.

1. Increase advertising for southwest.com. (S6, T2)

Management-Position CSFs

Activities for CSF

To describe the CSF method, we have identified five basic activities:

• defining scope• collecting data• analyzing data• deriving CSFs• analyzing CSFs

Activity One: Defining CSF Scope

Activity Two: Collecting Data

Activity Three: Analysis

- Position IT as a partner to businessand operational units.

- Position IT as an enabler of new initiatives and strategies.

- View IT as an investment, not an expense.

Align information technology withstrategic planning.

Activity Statements Themes

Activity Four: Deriving CSFs

Activity Five: Analyzing CSFs

CSF for Aviation Industry

• Optimum Capacity Utilization

• Effective Fuel Cost Control (Fuel Efficiency )

• Effective Labor Cost Control (Labor Efficiency)

• Effective Maintenance Capability (Jet Utilization)

• Prompt Delivery to Market

• Customer Service and Satisfaction

Calculation of CSF S

NoKey Success Factors Southwest Airlines US Airways

1 Optimum Capacity Utilization (RPM/ASM)

74,456,710,000/88,001,550,000= 84.60%

68,459,000,000/85,092,000,000= 80.45%

2 Effective Fuel Cost Control (Fuel Cost/ASM)

3,027,360,000/88,001,550,000= 3.44% 2

2,476,320,000/85,092,000,000= 2.91%1

3 Effective Labor Cost Control(Labor Cost/ RPM)

2,637,294,000/74,456,710,000= 3.54%3

1,740,423,000/68,459,000,000= 2.54%

4 Effective Maintenance Capacity (Total Direct Maintenance Costs/RPM)

869,818,000/74,456,710,000= 1.17%3

938,569,000/68,459,000,000= 1.37%3

5 Customer Service and Satisfaction(AQR Equation )

(8.63 x .1406) + (-8.03 x .0129) + (-7.92 x .0343) + (-7.17 x .0021) / 31.75= 2.59%3

(8.63 x .1772) + (-8.03 x .0141) + (-7.92 x.0303) + (-7.17 x .0131) / 31.75= 3.41%3

6 Prompt Delivery to Markets (% of Flights on Time= # of

Flights on Time/Total Flights) 83.00%3 80.87% 3

[1] (US Airways Group, Inc., 2009)[2] (Southwest Airlines Co., 2009)[3] (U.S. Department of Transportation)

Industry MatrixS No. Critical Success Factor Weight SW Airlines US Airlines

Ranking Weighted score

Ranking Weighted score

1. Optimum Capacity Utilization (RPM/ASM)

.30 5 1.5 3 .90

2. Effective Fuel Cost Control (Fuel Cost/ASM)

.25 5 1.25 4 1.0

3. Effective Labor Cost Control(Labor Cost/ RPM)

.20 4 .80 3 .60

4. Effective Maintenance Capacity (Total Direct Maintenance Costs/RPM)

.10 4 .40 5 .50

5. Customer Service and Satisfaction(AQR Equation see above)

.10 5 .50 3 .30

6. Prompt Delivery to Markets (% of Flights on Time= # of Flights on Time/Total Flights)

.05 3 .15 2 .10

Total 1.0 4.6 3.4

After the key success factors have been calculated and given distinctive competency scores, the company that most likely creates and sustains a competitive advantage against the other is Southwest Airlines. Southwest Airlines was given higher competency scores for five of the six key success factors. Southwest Airlines is able to be more efficient regarding capacity utilization, fuel and labor costs as well as customer service and satisfaction.

Conclusion