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Southwest Airlines Case Study: Overview and Solutions

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With no prior airline industry experience, Southwest co-founder Herb Kelleher’s entrepreneurial approach and niche strategy disrupted the airline industry as traditional players were struggling. Southwest’s “fighting spirit” and competitive advantage has enabled it to fend off consistent attempts, both from competitors and political forces, to end the airline. Southwest must evaluate how it can sustain its competitive advantage, while also maintaining its core culture, reliability, and customer focus.

Southwest’s competitive advantage centers around its culture, people, and productivity – all resulting in a more efficient and profitable operating model (low fares, short-haul flights, and streamlined operations). Its low costs (20 to 30 percent lower than larger airlines) and shorter turnaround times (an average 20 minutes faster than competitors United and Continental) can be attributed to the extraordinary willingness of employees to pitch in when needed, such as pilots offering to help clean aircraft cabins between flights. Southwest embodies congruence through initiatives, like the “Day in the Field” program, which foster collaboration across every facet of the company. Interdepartmental communication and empathy influence employee morale, improve processes, and ultimately, create positive customer experiences that affect the bottom-line.

Currently, travel agents are reluctant to book Southwest because of its non-standard booking experience; agents must call Southwest directly to issue tickets. This will be increasingly problematic as competitors undercut prices and impact Southwest’s profits; Southwest will need an effective way to make the booking experience more seamless. The industry is also entering the internet period in which early adopters of and investors in technology will benefit. By investing in the technological infrastructure and creating a dedicated website, not only will bookings be more accessible and efficient for travel agents, but also for customers. As technology replaces the traditional role of travel agents, Southwest can utilize its centralized website to capitalize on web-based strategies to generate revenue.

Aside from the customer experience, Southwest’s employee experience is a fundamental aspect of its business. If employees love their jobs that attitude will be reflected in their performance, resulting in positive experiences for customers. Currently, Southwest only offers internal training, which can be myopic, especially since creativity is encouraged. Southwest should establish a policy that allows employees to participate in external training and programs of their choosing to diversify perspectives and spark new ideas. With Southwest’s new technological infrastructure, online training modules can also be made available to all employees, no matter their geographical location. This new training policy will reinforce the innovative culture Southwest seeks and further establish loyalty among its employees by tangibly investing in their development.

As Southwest scales, it must establish a succession plan. Kelleher’s approachable, transparent, people-centric management philosophy has shaped Southwest’s DNA and propelled it towards success. To uphold Kelleher’s vision, Southwest should establish an internal committee, representing various departments and roles at Southwest, that identifies and vets potential candidates that best embody the key tenets of Southwest’s culture and shepherd the company into the future.

Southwest is well-positioned for success if it can continually adapt to shifting industry trends and technological advances. Southwest can create synergies between its remarkable culture and the technological advantages that will be uncovered as the true capabilities of the internet are discovered. By cultivating and investing in innovation across all facets of its business, Southwest is creating an environment where its people – the true proprietary asset – can flourish.

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