Southwest Airlines: Culture, Values and Operating Practices

Rollin King planned to start low cost airlines that would shuttle passengers between San Antonio, Dallas and Houston. This idea came in his mind due to the complaint of businessmen about the delay of airlines. When all airlines were in losses at that time the Southwest Airlines were earning profit. It was because of the business strategy. They offered lowest and simple charges to get passengers to their destination on time and Muse wanted his executive team to be willing to think independently instead of worked on the institutional practices. One of the things that attract me a lot that there was a plan of profit sharing with senior employees that was first in the airline industry (Arthur A. Thompson, 2008).

What grade would you give Southwest management for the job it has done in crafting the company’s strategy? What is it that you like or dislike about the strategy? Does Southwest have a winning strategy?

Southwest airlines performed successful in the airlines industry. The company demonstrated the ability to quickly dominate markets. Here are some strategies that were really appreciable:

Product Positioning Strategy:

Southwest airlines carefully projected its image in front of customers and competitors. It offered ticketless travelling by not assigning seats to the passengers so that they could reach the destination on time (Arthur A. Thompson, 2008).

Price Strategy:

Southwest airlines had offered the lowest domestic airlines charges. There was a plan of profit sharing with senior employees that was first in the airline industry (instituted in 1973) (Arthur A. Thompson, 2008).

Promotion Strategy:

Southwest airlines wanted to concentrate more on customer preference and benefits. It encouraged its employees to dress casually at work and this created a positive image in front of the customers. (Arthur A. Thompson, 2008).

Digital Media Promotion:

This was a first airline that developed a web site and online booking facility (Arthur A. Thompson, 2008).

One drawback of southwest airlines was that it was taking 6 to 12 rounds in a day. Fuel, air frames and diesel were very costly and southwest airline were not fully boarded. Hence the revenue generation was minimal and the airlines could not make sufficient profits (Arthur A. Thompson, 2008).

QUESTION 3

What are the key policies, procedures, operating practices, and core values underlying Southwest’s efforts to implement and execute its low-cost/no frills strategy?

Some policies for the low cost are:

• The company was operating only one type of aircraft having 737 seats which minimized the spare parts, inventories, maintenance training, and proficient improvement.
• The company offered ticketless journey which eliminated the expenses of printing and processing paper tickets.
• The company was serving airports near metropolitan areas and medium sized cities that minimized fuel cost and helped to reach destination on time.
• Southwest was using point-to-point scheduling of flights instead of hub-and-spoke system which was more efficient in comparison with the later.
• Southwest didn’t have first class section in any of the flights and offered only beverages and snacks (Arthur A. Thompson, 2008).

QUESTION 4

What are the key elements of Southwest’s culture? Is Southwest a strong culture company? Why or why not? What problems do you foresee that Gary Kelly has in sustaining the culture now that Herb Kelleher, the company’s spiritual leader, has departed?

The company provided free and satisfied environment to the employees. It had positive, innovative and simple culture which contributed to the growth of the company. (Arthur A. Thompson, 2008).

Garry Kelly was appointed as vice chairman of the board of directors in 2004. There are some problems that I foresee when Gary Kelly has sustaining the culture:

Other rival airlines can copy their spirit and culture that can be problem for the company.

Gary was applying changes according to his taste and the company was facing continuous changes. Hence it became difficult to survive in rapidly changing environment.

There was no market stability because of the rapidly changes environment (Arthur A. Thompson, 2008).

QUESTION 5

What grade would you give Southwest management for the job it has done in implementing and executing the company’s strategy? Which of Southwest’s strategy execution approaches and operating practices do you believe have been most crucial in accounting for the success that Southwest has enjoyed in executing its strategy? Are the any policies, procedures, and operating approaches at Southwest that you disapprove of or that are not working well?

The southwest management should get the highest grade in my opinion. Employee’s maintenance has been crucial in accounting for the success of southwest airlines. The strategy of lowest price with accommodation was very tough but the southwest airlines made it easy (Arthur A. Thompson, 2008). I disapprove due to the following reasons:

Southwest should try to expand its existing route. They didn’t have Miami International airport as hub even though it is a city of population with a large number in and out flights.

Another policy was that the fat people had to take two tickets for being able to sit comfortably in the airline. This was embarrassing to the people who were overweight (Arthur A. Thompson, 2008).

QUESTION 6

What weaknesses or problems do you see at Southwest Airlines as of mid-2010?

There were some problems that came in the mid of 2010 at the southwest airlines:

It depended on only one producer. Southwest was running only one flight of 737 seats there must be some optional flight.

Booking of flights became difficult because southwest had eliminated the intervention of agents because of commission amount.

Southwest were only focusing on the economy class but have no attention towards business class who were willing to pay for their seats. Money was not the big issue for them (Arthur A. Thompson, 2008).

QUESTION 7

Does the Air Tran acquisition make good strategic sense for Southwest?

Southwest have a very distinctive and unique culture. The Air Tran acquisition put significant risk. Southwest has one type of plane 737. With the acquisition of Air Tran it started flying the 717 to Mexico and the Caribbean. It was a big shift for southwest (Arthur A. Thompson, 2008).

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The main base of Air Tran was Atlanta that was a huge delta hub while southwest had started to fly their flights out of the United States. This proves that the acquisition made a good sense not only in business perspectives but also for maintaining the cost effectiveness of the service (Arthur A. Thompson, 2008).

QUESTION 8

What strategic issues and problems do Gary Kelly and Southwest executives need to address as they proceed to close the deal with the Air Tran acquisition and contemplate how best to integrate Air Tran’s operations and Air Tran’s employees into Southwest?

Some problems that need to address Gary and the southwest executives are:

• Southwest needed to incorporate Air Tran employees into the culture of Southwest that was serving good customer service, lowest costs and lowest charges.
• To analyze the level of Air Tran employees and the Southwest employees.
• They have to look on the opportunities and try to enhance business share.
• They have to analyze that how to conduct flights outside the United States (Arthur A. Thompson, 2008).

QUESTION 9

What recommendations would you make to Gary Kelly and Southwest executives as the company heads into 2011?

The following are the recommendations for the company:

• The company has to work on the long term goals.
• Strategies should be made in accordance with the fuel prices which usually act as a barrier to conventional business growth.
• Provision should be made for reservations to be performed directly on the site of southwest.com without any intervention of third parties.
• There must be opportunity for internet marketing.
• The management of the company should start travelling outside the United States for increasing the market shares.
• The turnaround time should be improved.
• The prices of the services should be kept as low as possible.
• Offering of different types of seating classes with different rates should be helpful for increasing the revenue (Arthur A. Thompson, 2008).