Case 5.2 Southwest Airline Company
Case 5.2 Southwest Airlines Corporation
Problem formulation
This case discusses the American based airline company Southwest Airline’s strategy and seeks to evaluate the basis on which Southwest builds its competitive advantage. Secondly, an analysis of Southwest´s control systems and what function they fill towards enabling the execution of their strategy.
Arguments
Southwest Airlines Corporation business strategy revolves around a cost-cum strategy. What this means is that their primary goal within the company is to add value in their offered services toward their customers, focusing on delivering both low cost and high quality. This is combined with a focus on the employees within the organization. CEO Herb Kelleher exemplifies this through stating that the philosophy of the company is to take good care of employees first which in result will lead to the employees taking care of the companies customers. We argue that the companies’ competitive advantage lies primarily in its cost-cum strategy.
Southwest has chosen to differentiate themselves to the domestic market which means that they reduced the geographical scope of their flightpaths to only offer domestic flights. This in combination with a decentralized organization has given the company the chance to specialize in a particular area while also allowing them to cut costs, ergo a cost-cum strategy. Another competitive advantage is gained through a loose based control strategy. We argue that Southwest works towards empowering their employees, basically giving them more responsibility and authority to manage their jobs and respective departments. An example of this is the unique hiring process they enforce, where the respective vocations interview and hire their peers. To quote the book “I hire good people and I leave them alone to do their jobs”. A quote that closely resembles CEO Herd Kelleher’s philosophy. This can also be argued as a competitive advantage for the corporation since the high level of
Problem formulation
This case discusses the American based airline company Southwest Airline’s strategy and seeks to evaluate the basis on which Southwest builds its competitive advantage. Secondly, an analysis of Southwest´s control systems and what function they fill towards enabling the execution of their strategy.
Arguments
Southwest Airlines Corporation business strategy revolves around a cost-cum strategy. What this means is that their primary goal within the company is to add value in their offered services toward their customers, focusing on delivering both low cost and high quality. This is combined with a focus on the employees within the organization. CEO Herb Kelleher exemplifies this through stating that the philosophy of the company is to take good care of employees first which in result will lead to the employees taking care of the companies customers. We argue that the companies’ competitive advantage lies primarily in its cost-cum strategy.
Southwest has chosen to differentiate themselves to the domestic market which means that they reduced the geographical scope of their flightpaths to only offer domestic flights. This in combination with a decentralized organization has given the company the chance to specialize in a particular area while also allowing them to cut costs, ergo a cost-cum strategy. Another competitive advantage is gained through a loose based control strategy. We argue that Southwest works towards empowering their employees, basically giving them more responsibility and authority to manage their jobs and respective departments. An example of this is the unique hiring process they enforce, where the respective vocations interview and hire their peers. To quote the book “I hire good people and I leave them alone to do their jobs”. A quote that closely resembles CEO Herd Kelleher’s philosophy. This can also be argued as a competitive advantage for the corporation since the high level of