Mgt409 Case3

Re: Southwest Airlines

Diagnosis: The biggest problem of Southwest Airlines was that the company did not provide a sufficient international flight service. As the world becoming more and more flat, the need for fast communication across country boundaries has never been stronger. For example, according to usnews.com, more than 800,000 international students enrolled during 2012-2013 school year, and there are 40% more international students studying in the U.S than 10 years ago.1 For any industry, a increasing potential customer base indicates a surplus in demand, and the company that covers the surplus could easily gain a greater profit. Although the initial focus on domestic region helped the company stabled its share of market in America, skirting the issue of globally expansion will not only cost the opportunity of Southwest Airlines to seize a bigger market, but also limit the company's further development.

Analysis: In order to provide a clear picture of the situation of Southwest Airline, strategic group method was used to analysis the relationship of some major airline companies. Since Southwest did not have international operations yet, here is a diagram only shows the domestic part of the airline industry .

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Price and efficiency were two most representative features of Southwest Airlines, and they are also valued by price sensitive and business customer. From the perspective of these two factors, we see Southwest Airlines outruns many of its major competitors. Unlike Southwest Airlines, other major competitors tend to focus more on in-flight experiences. For instances, Delta has added fully flat-bed seat on some of its international flights.2 JetBlue had installed 36 channel DIRECTV on all its planes, with a dedicated screen in every seat, and it is working on putting Wi-Fi on all planes too.3 If the Southwest Airlines could keep its price low and operate efficiently, there will be place for the company in the international field....