MBA FPX 5008 Assessment 2 Using Analytic Techniques to Add Meaning to Data

MBA FPX 5008 Assessment 2 Using Analytic Techniques to Add Meaning to Data

Student Name

Capella University

MBA-FPX5008 Applied Business Analytics

Prof. Name:

Date

Using Analytic Techniques to Add Meaning to Data

Southwest Airlines Co.

Southwest Airlines Co. started operations in 1971 with just three Boeing 737 aircraft, operating out of Dallas, Texas, to offer reliable, low-cost flights to its customers. By 1989, the airline had reached $1 billion in revenue (Southwest corporate fact sheet, n.d.). Initially serving the contiguous United States, Southwest expanded its service to Puerto Rico in 2013 and launched international flights to the Caribbean in 2014. By March 2020, the airline was operating in 103 cities within the United States and an additional ten countries.

Southwest’s mission is to be “the world’s most loved, most efficient, and most profitable airline,” aiming to connect people to what matters most in their lives through affordable, friendly, and reliable air travel (Purpose, vision, and the Southwest way, n.d.). This mission is driven by a blue ocean business strategy that blends cost-leadership and differentiation to create value innovation (Rothaermel, 2021). According to The Geography of Transport Systems’ report on American airlines’ market share from 1977 to 2022, Southwest held the second-largest market share in 2022 at 17.4%, following American Airlines at 18.6% and ahead of Delta at 16.9%.

From a cost-leadership perspective, Southwest operates a uniform fleet of Boeing 737 aircraft (Southwest corporate fact sheet, n.d.). This approach simplifies inventory by standardizing spare parts, allows for bulk purchasing, and reduces warehouse needs. Moreover, training requirements are streamlined for pilots and staff, allowing flexibility in crew scheduling and reducing flight cancellations due to staff shortages. The airline can also negotiate discounts on bulk purchases of new aircraft of the same model (Boon, 2019).

Southwest distinguishes itself through a customer-centric approach, including a robust points-based loyalty program that allows customers to redeem points for future travel, gift cards, vacations, and merchandise (Freedom to redeem, n.d.). Its Rapid Rewards program was named Program of the Year for the eighth consecutive year at the 2022 Freddie Awards (Eight Years, 2022). Notably, Southwest does not charge change or cancellation fees, even on the same day as the flight (Refunds and flight reservation changes, n.d.). The airline’s commitment to enhancing the customer experience was further demonstrated in 2022 with a $2 billion investment in service improvements (Customer experience enhancements, n.d.), emphasizing the philosophy that a positive employee experience drives a positive customer experience, which ultimately boosts revenue (Bova, 2020).

Graphical Representations of Data

Interpreting the Scatterplots

Scatterplots visually represent the relationship between variables on an x- and y-axis (Lind, 2022). The scatterplot in Figure 1.1 shows Southwest Airlines’ highest daily stock prices from June 29, 2021, to June 28, 2022, plotted against the corresponding dates. The highest stock prices ranged from $35.87 in June 2022 to $56.33 in October 2021. This chart was created in Excel by highlighting the relevant data and selecting the Scatter Plot function, allowing for further customization of titles, axes, and trendlines.

Figure 1.2 displays Southwest Airlines’ lowest daily stock prices over the same period. Prices ranged from $34.36 in June 2022 to $54.80 in October 2021. Like Figure 1.1, the scatterplot was generated in Excel by selecting the Date and Low columns.

Interpreting the Histograms

Histograms illustrate the frequency distribution of quantitative data (Lind, 2022). Figure 2.1 shows the range of Southwest Airlines’ adjusted closing stock prices, with values grouped into $2.4 intervals. The x-axis reflects the price ranges, while the y-axis shows the frequency of occurrences within each range.

Figure 2.2 presents daily stock trading volumes, separated into 1,500,000-share intervals. Like the adjusted prices histogram, this chart uses Excel’s Histogram function to display the frequency of shares traded within each volume range.

Descriptive Statistics

Descriptive statistics summarize data into understandable formats (Lind, 2022). Key measures include the mean, median, mode, and standard deviation. The mean is the average of collected values, while the median represents the midpoint of ordered data. The mode is the most frequently occurring value, and the standard deviation measures the spread of data points around the mean. Excel provides formulas for each calculation, simplifying data analysis.

In finance, standard deviation helps gauge the volatility of an asset; a higher value indicates greater risk (Beers, 2022). To compare volatility across different datasets, the coefficient of variation (standard deviation divided by the mean) is often used (Hayes, 2022).

Mean, Median, Mode, and Standard Deviation of Adjusted Closing Stock Prices

Figure 3.1: Descriptive statistics for Southwest Airlines Co.’s adjusted closing stock price, based on Yahoo! Finance data (2022).

An analysis of Figure 2.1 shows that the most frequently occurring ranges are clustered toward the middle of the histogram, except for one outlier. Comparing these values with Figure 3.1 reveals a slight positive skew, as indicated by the mean, median, and mode values being higher than the most frequent ranges. The standard deviation of $4.25 suggests that approximately 68% of stock prices should fall between $42.02 and $50.52, covering 84% of occurrences. The coefficient of variation is 9.2%.

Mean, Median, Mode, and Standard Deviation of Daily Traded Stock Volume

Figure 3.2: Descriptive statistics for Southwest Airlines Co.’s daily traded stock volume, based on Yahoo! Finance data (2022).

The trading volume histogram (Figure 2.2) is positively skewed, showing that most data points are on the right. This skew suggests that the mean is not a reliable measure of central tendency compared to the median. The mode is not available due to a lack of repeated values. With a standard deviation of 2,794,422, the trading volume’s coefficient of variation is 36.8%.

Summary of Data Interpretation

Figures 1.1 and 1.2 indicate a general downward trend in Southwest Airlines’ stock prices over the past year, despite daily fluctuations. This trend mirrors industry-wide patterns, with airline stocks showing significant declines due to economic challenges (Josephs, 2022). Analysts suggest that despite the recent downturn, the airline industry could recover as consumer travel and financial stability improve.

References

Beers, B. (2022). Determining risk with standard deviation. Investopedia. Retrieved from https://www.investopedia.com

Boon, T. (2019). Why low cost carriers stick to one plane type. Simple Flying. Retrieved from https://simpleflying.com

MBA FPX 5008 Assessment 2 Using Analytic Techniques to Add Meaning to Data

Bova, T. (2020). Salesforce Brandvoice: Southwest on the importance of employee experience. Forbes. Retrieved from https://www.forbes.com –