Appendix-
BCG Matrix
BCG
Southwest’s BCG growth-share matrix is based upon the firm’s 2017 annual report (10-
K). The airline has three different divisions: passenger, cargo/freight, and other revenue. The
passenger segment is the most profitable with $19,141,000,000; however, cargo/freight revenue
is minimal at $173,000,000 while the top competitor in the industry has a cargo/freight revenue
of$813,000,000.Passengersegmentisroughlyinthemiddleofthematrixwithmostofitfalling on the
stars and cash cow sides. The cargo/freight segment is considered a “dog” in the BCG Matrix
and indicates that Southwest should harvest/divest this division (Rothaermel, 2017, p.
280). Other revenue is somewhat better off than freight with revenue of $1,857,000,000 and is
considereda“questionmark.”Thisindicatesthatearningiseitherlowandunstableorpossibly
growing. Investing in this segment could possibly push it to become a “star” unless a shift in the
market causes a downturn into a “dog” (Rothaermel, 2017, p. 281). Competitors and industry
leadersusedwithinthematrixincludeAmericanAirlines,DeltaAirlines,andSouthwestAirlines.
FinancialStatements
NetPresentValue.
Passenger
2017:19141
2016: 18594
Freight
2017:173
2016:171
Other
2017:1857
2016:1660
Competitors:American,Delta,United
Rival Firm: American
Stockholdersequity3926
netincome 1919
eps3.92
#sharesoutstanding507
stock price
goodwill&intangibles6294
(CurrentYear-PreviousYear)/PreviousYear
Revenues from Divisions
AmericanDivisionRevenues
Passenger 36133,34579
Cargo800,700
Other5274,4901
Delta
Passenger34782,34954
Cargo813,934
Other5109,4474
Passenger
19141+36133+34782=90056currentyear
18594+34954+34579=88127 previous
(90056-88127)/88127=0.022
Cargo
173+800+813=1786current
171+934+700=1805 previous
(1786-1805)/1805=-0.012
Other
1857+5274+5109=12240 current
1660+4474+4901=11035 previous
(12240-11035)/11035=0.11
