:::Case study exam::: Answer the given question based on the attached case study. Use the textbook content to show your supportive arguments. (Textbook attached) Use the analysis (such as PESTLE, SW
Southwest Airlines- Case 2
Nicholette Myers(#1)
Katie Collier (#3)
Mujtaba Shubayni (#4)
Cortney Przywara (#2)
Michael Warren (#5)
1. Discuss the basis of Southwest’s competitive advantage and the potential challenges to its strategy. Southwest’s competitive advantage is that it is a low-cost. It is also called the “LUV airline” for their very unique strategy. They cut costs for travelers and for themselves by not offering meals, no baggage transfer, no assigned seating and only peanuts as a snack. All these polices lower the turnaround times at the gates to ensure timely departures. Southwest also hires for attitude rather than skill and is driven by hard work along with fun. This strategy has helped them become the largest and most consistently profitable discount airline in the United States. There is a potential problem with this strategy. With having all of these discounted options and no add ons available, the airline is missing out on the travelers that are willing to pay extra to be more comfortable. Southwest is losing potential revenue from the higher income families for being a discount airline.
2. What internal resources and assets does Southwest have that may give it a competitive advantage? Some internal resources and assets that Southwest Airlines has that gives them a slight competitive advantage are their location, routes, and operations. Southwest Airlines operates out of “less popular” and “less congested” airports which allows them to bypass the expensive airports in order to get their planes off the runway more efficiently in less time. Southwest Airlines also has short point-to-point flight routes that are not always offered by the bigger airline companies. Lastly Southwest Airlines also operates a single aircraft type, the Boeing 737, which allows them to keep their training costs low and personnel utilization high.
3.What are key forces in the general and industry environments that affect Southwest’s choice of strategy. Southwest was more profitable than ever in 2014 thanks to their strategy. Southwest's strategy was unique from the beginning by pioneering point to point short haul flights, which has major contributions to their efficiency right from the start. Bold moves
by CFO Gary Kelly in the early 2000s had a huge impact on the company. When he decided to appeal the Wright amendment and add 6 more gates at chicago midway airport revenue skyrocketed. These two important decisions allowed Southwest to enter in a significant number of new markets. Southwest continued to expand rapidly, dominating the flight industry. When fuel prices began to rise in 2013 Kelly vowed to counteract this by automating many of southwest's pre flight processes, laying off employees but also saving money and keeping ticket prices low. Keeping the public happy, Southwest in business, and profits high..
4. What growth strategies might Southwest pursue?Southwest airlines ought to resort to a timetable that has an adherence to the incoming flights so as to ensure that there is no lapse. However the price of oil is also a hindering factor therefore they should sought alternative sources of fuel. Southwest may also pursue more international flights. The international market is huge and could make them a lot of money and rival the larger airlines even more. They could also add more premiums and amenities to their flights to include an optional “Luxury” experience on their flights. Lastly, Southwest could continue to infiltrate airports that are dominated by certain airlines. Offering a lower cost option to customers would take market share away from their competitors.
5. Assess the effectiveness of Southwest Airlines’ leadership, and the use of strategic controls. The leadership at Southwest Airlines is very effective. They started as a low-cost airline that focused on cutting costs and providing cheap flights to now being one of the largest airlines in the United States. I see this as a very effective leadership group that knew when and how to develop this company. They had to make a name for themselves in the beginning, but also had to develop and expand to compete with the larger airlines. Each person that was/is in charge has taken the company in different directions but done it effectively. Under Kelleher, he built the image and the respect of the employees to rally behind the brand. Under Kelly, they are expanding to new markets and offering new amenities so that they can develop even further. Combining these two leadership styles together in the way that they happened is why Southwest was so effective is their growth.
