As environmental and economic uncertainties mount, what strategic decisions and competitive
tactics should South West airlines consider to maintain their low cost competitive advantage and
customer loyalty.
External Analysis:
Factors
Political
Economic
SocioCultural
Due
to
Recession
volatile
and
unprecedented jet fuel prices
Economic downturn
Huge investment for gate acquisition
and terminal construction
Increasing operating costs for airlines
The company had the highest salaries
for pilots
Strong
leadership
and
great
relationship with employees and Union
strong commitment towards customer
service
Employees are committed to the
organization
Informal
and
conducive
work
environment
Impact
Deregulation fostered competition and
growth of new airlines, created
regional disparity in ticket prices and
adversely affected service to small
and remote communities. Safety was
a concern.
Limited fare flexibility and cut down on
extra benefits to customers. With the
co-operation
and
support
of
employees and management the
turnaround time and hence cost of
operation was brought down.
Highly
spirited
and
dedicated
employees
made
the
working
environment for productive and cost
effective.
Kelleher
and
the
management was supportive of their
employees
and
maintained
an
informal relation with all
Technologic
al
Legal
Environme
ntal
to
court
favored
Internal Analysis
Organizations perspective SWOT:
Strength
Weakness
Threats
Listing Factors:
Strong Leadership: Kellehers unconventional and unique style. Maintained cordial and
informal relationship with employees, customers and union.
Iconic brand name: Southwest airlines was famous among customers for being
champions of low-fare flight experience. This helped allot in the airlines success and
revenue growth.
Organizational Culture: The Company was known to have an informal culture which led
the management to have a more comfortable approach towards leadership. This helps in
quick learning and greater exposure.
Processes and Feedback re-addressed: Proper processes were in place and this along
with the presence of key leadership positions led to a proper mechanism for various
decisions and further re-addressing any repercussions.
Pioneer: Was an initiator when it came to many tech related industry first
Key Factors:
Constraints
Recommendation
Southwest airlines are known for their competitive advantage when it comes to low-fare services.
While their near-term outlook is cautious, they are prepared for bad times and their long term
outlook is enthusiastic.
As environmental and economic uncertainties mount, the strategic
decisions and competitive tactics considered to maintain their low cost competitive advantage
and customer loyalty should be in line with future growth opportunities. Even if the airlines
suffers a short term cost, in the long term if it is able to achieve the necessary growth targets
then that option can be taken.