SOUTHWEST AIRLINES

Questions:
1. What is Southwests strategy? What business are they in?
2. Why is Southwest such a success? What does it take to execute this
strategy?
3. What are Southwests sources of competitive advantage? Whats their
competencies?
4. Analyse Southwests activity systems, including human capital
management. How do activity systems link to the execution of its strategy?
5. How would you describe the culture of the organization?
6. Can Southwests strategy be replicated by a competitor?

1. What is Southwests strategy? What business are they in?

Southwest Airlines employs a highly effective three pronged strategy that
focuses on the following:

Low Costs
Low Fares
Frequent Flights

Its fleet has only one type of aircraft the fuel-efficient Boing 737. It has over
200 of those and concentrates on flying to airports that are underutilized and
close to a metropolitan area, thereby cutting costs tremendously.
Southwest never offers meal services on any of its flights. With all the frills
removed, it can offer its passengers the lowest possible fares.
Southwest also emphasizes a lot on point-to-point routes with no central hubs.
By avoiding a hub and spoke model, the delays are reduced; the turnaround time
is much shorter and thus leading to frequent flight services.
2. Why is Southwest such a success? What does it take to execute this
strategy?
One of the key reasons for Southwests success was in the companys cost
structure. Southwest manages to cut down its costs through a highly operational
efficiency. Southwest has a superior turnaround time and much lesser staff. Its
pilots also spend more time in the air than their counterparts at other airlines.
The company provides very low-fare to its customers.
Apart from the low prices, it also emphasizes on the customer service. The
employees of the airline treat their customers well and really listen to their
needs. Southwest Airlines is also well-known for having a very productive and

loyal workforce. Such loyalty and productivity among the employees were
brought by the way Southwests management treats them.

5. How would you describe the culture of the organization?

The culture that pervades through the organization is one of open friendliness.
From the CEO Herb Kelleher to every employee in the company, it is the same
recurring theme of :

customer service
hard work
equality
cost consciousness
dedication
fun

There is also a feeling of trust and family spirit. By sharing information, the trust
is always building in the company. Southwests most distinctive organizational
competency is its ability to build and sustain relationships characterized by:
-

Shared goals
Shared knowledge
Mutual respect

They also have a catastrophe fund that distributes funds to Southwest

employees who needed help. Focus on relationships is the fundamental driver of
leadership, culture, strategy, and coordination at Southwest.
In short, Southwest is a place where they value their people as their most
valuable resources.
6. Can Southwests strategy be replicated by a competitor?
It would be very difficult for competitors to replicate Southwests strategy
because its competitive advantage is intangible. The company invested a lot in
its culture. While the competitors could cut costs, it may result in the eroding of
their cultures. It is because the intangible offering that truly differentiates a
company resides in its corporate soul and is created by the company's culture
and its values, not by its products, process, or structure. Products, process, and
structure can be copied, but authentic culture and values cannot. Any company
can build its own culture; one that is unique and innate to its people and
strategic objectives. But when a company tries to copy another company's
culture, it usually fails because culture, as part of the soul of a business, cannot
be replicated.