Software Engineering Director

Strategic Management---Southwest airlines

1.What does it take to make money in this business?

• Airline industry is a fierce competitive market, they have some large players and a number of smaller ones. Among them most of them are losing money.

• To make money in this market, the player need to do the following thing:

o Keep airfare low

o Maintain a good relationship with employees and labor union

o Keep customers happy and provide a good flying service: this is measured by on-time performance, having the fewest lost bags and having the fewest customer complaints

2. What is Southwest’s strategy? What does it take to execute the strategy?

• Southwest’s strategy is simple, they keep cost low by treating employee well at the same time.

3. What are the sources of Southwest Airlines’ competitive advantages?

• Low cost is one of the significant factors for Southwest’s success. Their costs averaged roughly 7.1, while larger airlines had costs up to 10 cents or more per mile. Southwest is 20~30 percent lower than other players.

• One source is their remarkable productivity getting from work force.

o They routinely turn around an aircraft in 15 minutes from the time it arrives at the gate. Their major competitors are ~35 minutes.

o Their work force wages are lower and work harder than other airlines.

o Their employees routinely volunteer to help customers in need.

• They emphasize customer service. As a matter of fact, Southwest is the Triple Crown award winners in 1992, 1993 and 1994.

• Another competitive advantage is their leadership team. They understand the biz very well and make a lot of fun in the working environment. Their leadership team create a culture of trust, hard-working, communicating and relaxing.

• The people department know what of people they are hiring. Their workforce is young and diversified, the company help...